This is Bruce Friedman of Adult Site Broker, and welcome to Adult Site Broker Talk, where each week we interview one of the movers and shakers of the adult industry, and we give you a tip on buying and selling websites. This week we'll be speaking with Leandro Kitamura of Protege ID. we've got an event section on our website you can find out all about the events in our industry and get discounts on some events you'll find all that and more at adultsitebroker.com we're proud to announce our latest project thewaronporn.com you'll find articles on age verification laws and other attacks on our industry. It's to raise awareness of our industry's plight in the war on porn. You'll find all that and more at thewaronporn.com. And we're always looking for buyers and sellers of adult sites and companies. Perhaps you've been thinking about either selling your site or buying one. Always feel free to contact us at adultsitebroker.com with any questions you may have. 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We have a buyer who's looking for OnlyFans agencies, chatting companies, and OnlyFans traffic sites. He owns one of the top OnlyFans agencies in the world. We're offering a growing free porn gaming site with adult sex games. The site is owned by one of the top entrepreneurs in our industry. We have a premium AI companion platform focused on emotional realism and deep memory. Users interact with lifelike companions that remember every detail respond with real emotion. They've just added advanced video capabilities. There are more properties for sale on our website. For more information on any of these listings, go to our listings page or contact us at adultsitebroker.com. Now time for this week's interview. My guest today on Adult Site Broker Talk is Leandro Kitamura of eSapiens. Leandro, thanks for being with us on Adult Site Broker Talk all the way from Brazil. Hi, Bruce. Thanks for having me here. It's a big pleasure to talk with you today and discuss this important topic. Absolutely. We'll tell everybody about you. Leandro is the CEO of eSapiens, a venture builder that invests in, develops, and acquires promising businesses to realize their full potential through technological, strategic, and financial support. An MBA and project management specialist with over 20 years of IT experience, Leandro oversees the development of teams and products through agile methodologies, I can say that, and data-driven approaches creating strategies and effective solutions for achieving high results. Protege ID is an age verification provider designed to help online platforms comply with Brazil's new age verification regulations. They got us again. They combine facial age estimation with liveness detection and automated document verification. Their focus is high-scale, low-friction compliance for traffic-intensive platforms, especially in the adult and social media industries. So, Leandro, tell us about your background and your experience in the Brazilian adult industry. Yes, thanks for the introduction. I have been working with IT for 20 years and 15 of them in the adult industry. I started in 2016, 2011, actually, with Sexlog, leading dating site for swingers in Brazil. And since then, I have led several ventures like Hot Vips, another very important fan site in Brazil. We also have dating apps like Isos. And outside the adult vertical, we have AstroLink, an astrological platform that helps people to understand better themselves with the help of astrology. You guys have your hands in everything. I love it. I've known you a long time. Can you share the scale of the businesses you've worked with or currently operate in Brazil? Today, we have 100 people working with us in our company. Yes, in our entire portfolio, we have more than 50 million users. Only with Sexlog, we have more than 24 million users since its foundation and more than a million actively every month. Wow. It's come a long way, hasn't it? Yes, it is. Sex law is the lead product in this segment in Brazil. Oh, yeah. It has been almost as long as you guys have started. Why is age verification becoming mandatory in Brazil now? What problem is the law trying to solve? This new law is trying to protect kids and minors in general. And why now? Because last year, a famous YouTuber denounced the situation where minors were being used to promote videos in YouTube in adult situations. And that's caused big discussions in Brazil between population. And then the policymakers had this urgency of respond and then they moved it fast with this new law. And it was signed last October. And now, very soon, age verification will be mandatory here. Well, I mean, here's the thing, okay? Age verification in a lot of other places, such as the UK and the US and some others, there seems to be an agenda to destroy the adult industry. And obviously, that's not just me talking. They caught one of Trump's main cabinet members on a hidden camera. I don't know if you saw that. And, you know, saying that this is the backdoor way to ban porn. Do you feel that that's what's going on in Brazil? Because I know it's a very religious country. Do you think that's what's going on in Brazil? Or are they actually really being genuine and trying to protect children? I don't believe they're trying to kill adult business. actually when everything started in Brazil we supported the creation of an adult association of companies here and that helped us a lot on opening a communication channel with regulators and they really received us and starting discussing with us about how to implement this law in the the best way as possible so it's clear to us that they don't want to kill business adult business here in Brazil, they want to find the best solution, including protecting minors. Because by the constitution of Brazil, protecting minors, it's a responsibility of everyone, of the policymakers, of the parents, the population, and also the business. So this new law tried to bring more detail about how companies must help in the protection of minors. And I'm 100% sure that they don't want to keep adult business here. Well, that's good. That's refreshing, because obviously, that's what's happening in a lot of the conservative states in the US. And I do believe it's what's happening in the UK as well. And it's nice to see that for once, some country brought the adult industry into the conversation, because that has not been happening elsewhere. That was an achievement of hers. Yeah, fantastic. Congratulations on that. Maybe you need to try to form something like that in the U.S. And, you know, I mean, we've got the Free Speech Coalition, which obviously is very strong, and they've done a good job of pushing back against the onerous laws that are creating problems, and they're also supporting device-level age verification, which that's kind of what's going on in Brazil, right? Yes, exactly. Okay, we'll talk more about your solution in a bit. Do companies based outside Brazil also need to comply if they have Brazilian traffic? And how can your platform help with this? Yes, they do. Actually, the law is very clear about that. So for every business, even if it's not based in Brazil, But if you have Brazilian traffic, if you have Brazilian users, you have to get compliant with the law. And basically what our solution does is to help companies to verify the age of the users in a way that is acceptable by the Brazilian law. Okay. How exactly does your platform work? Maybe this would be a good time to explain how your platform works and how it complies with the law. Well, basically, something that is changing with the law is that self-declaration is not accepted anymore. So the famous, I'm over 18. I'm over 18. Yeah, that's always done a lot of good, hasn't it? Yeah. Yeah. So companies and businesses need to use more sophisticated methods. And basically what we do is we verify the age with two steps. The first step, it's a liveness check with age estimation. So from a photo, from the face of the users, we can estimate the age and say over 18 or not. And if you are not sure about the age, we have a fallback with an automated ID check. So that's what we are doing. There are a lot of concerns about privacy. So we also have a double-blind architecture. So we try to preserve the personal data of users. And that's it. Basically, that's what we do. Okay. So in other words, if the face scan doesn't make you sure or make your system, obviously, it's AI, make your system sure that the person is of age, then the second step is only brought in to ask for the ID, right? Yes, yes. And we have some specific kind of documents here in Brazil. We have, in general, three types. RG, there is a personal identification. We have the license, CNH, the digital and physical version, and also passport. These are the official documents in Brazil that we are supporting. Okay. Okay. How long does the whole process take if it goes to the second step? Just few seconds, like one or two seconds, we can decide if the user is not a minor and we can redirect him to the second step or not. Just few seconds. What's the age of consent in Brazil, 18? 18, yes. Okay. So let's talk about the law itself in Brazil. Because everywhere you go, the laws are different, which is one of the real problems for the platforms. Yes. Explain the Brazilian age verification law and what are the major changes for adult platforms. Yes. Okay. So the main message with the law is that self-declaration is not accepted anymore. And the law also brings details about why it's not allowed to minors. and for example explicit content adult content dating products loot boxes for gaming and even that's in general so the law brings a new category of products that are not allowed for minors social media one of them no no the law is more it's more broad you know so there are more rules for social media, for example, you have to implement parental control. And if you have minors that are more concerns for you, but for adult business in general, that basically what we have to do is not allow minors to accessing the adult content in general. An important point, Bruce, is that at the first moment when we read the law, it says age verification mechanism shall be adopted at each user access to the content. So that's really scared us. And that's, it was one of the reasons that we have supported the creation of the adult association and started the conversation with authorities, you know, but now we let clear to them that this could kill all the adult business. And they told us, oh, we don't want this. And probably they will deliver more material, more regulations, more rules that will try to bring more details to companies. But so far, we don't have a full set of rules to follow. But we have a clear idea that they don't want to kill business. And they just want that companies to move forward to protect miners. So the law isn't really clear yet? It's like every law. They don't want to specify the technology of the rules because there are a lot of bureaucracies when you talk about the law. So what we are seeing now is that we had the law last October. The law will be effective into next month, March 18th. And let me give the disclaimer, we're recording this February 25th and it will run in June. So go ahead. Yeah, March 18th is when the law will get into force. And, you know, initially when the law was created, the company is supposed to have a year to get compliant with it. But then last October, when President Lula signed the law, he reduced this time frame for six months. This is a very short period for everyone to get adapted to this new law. Even for the regulators, they didn't have enough time to write the full set of regulations. So what we have so far is the law that is more generic. Probably before March 18th, we will have a decree signed by President Lula that will bring more details. We have been actively, we were discussing this new decree with the regulators. We have participated in workshops and with the policymaker discussing about these details. And probably just after that, the regulator agency, we will start delivering more details about how, what is the right way. It's a complex situation. It's not easy. Here's the law and we'll tell you what it is later. Yeah, yeah. Typical freaking politicians, man. They're the same everywhere, aren't they? At least they're not trying to kill you, but they're not making your life completely easy. So how do you come up with something technologically when all the rules aren't set yet? Yeah, actually, we have seen what is happening outside Brazil. You know, like Europe, it's a strong reference for policymakers here. So they are... That's what I'm afraid of. Yeah. Yeah. That's not really good, you know. And that's why we had to decide to move faster, to try to create a solution, even though we didn't have all the details about the law. So do you anticipate having to make some adjustments in your platform once you have all the rules? Yes, of course. Of course. We are working very close to the regulators and we are doing everything that is necessary. So you think you'll probably know before the public knows? Yes, yes, exactly. Actually, we are having, with the adult association, we are also having access to the documents that are being created before they are going to public. We are having this opportunity to discuss with them. When did you start working on this platform? Last year, like around July. when you started to hear that there was going to be a law there. Yes, of course. And that's a good point to know about our platform. When we started listening about this discussion, we also started looking for solutions for that. And we realized that all the solutions available were very expensive for the Brazilian economy, for the Brazilian market. For everybody, really. Yes. Especially when you're paying in real. Yeah, yeah, yeah. Because we have high volumes of traffic in Brazil, but we are not a tier one country. The pricing of the solutions could make business impractical here. This was one of the reasons that we have decided to create our own solution to help to solve our problems and also help others to solve this problem here in Brazil. Okay. Now, is your solution going to be able to be used outside of Brazil? Yes, it can be used outside Brazil, but now it's designed for Brazilians. So, for example, the first step, age estimation, can be done with everyone worldwide, but the second steps for now just work with Brazilian documents. Because they're tailored to the Brazilian ID. Exactly. Okay. Do you anticipate opening this up worldwide? I know how enterprising you are. Do you anticipate making this available worldwide at some point? Yes, of course. we are starting, yeah, because we are worldwide with our products, but with the adult products, our main market is Brazil. And I understand there are a lot of solutions outside Brazil, but in Brazil is where we see the biggest opportunity. Today, we can verify the age for less than a cent of dollars. We see this as a very competitive pricing. Yeah, that's a lot cheaper than a lot of the other solutions. Hell, if you go worldwide with that, I think you'd kick everybody's ass. Yeah, that's the idea. Yes, of course it is. And when you first came up with this, I would imagine you more had your own platforms in mind, making sure you could comply, right? Yes, yes. First, we think on our platforms, but we also started talking with other business in Brazil and discussing about what is changing and how we can help them to get compliant with this. That's awesome. How do you think users will react to these changes and what impact could it have on traffic and conversions? They are definitely not expecting that. Actually, we tried to create a campaign with influencers to make the public aware of what is changing in Brazil. But then we realized that even the influencers didn't understand exactly what we were doing. At first, they understood that we are trying to create a safe feature to avoid fake users and scammers to enter a platform. So it's very complex. No one is aware of what is happening here. Well, it sounds like you need to do some major education to the influencers before they're out there promoting you. Yeah, exactly. And talk about impact. We have done a few A-B tests on our product, Sexlock, and the impact can be huge. At first, we introduced the age gate at the sign-up process at the beginning, and we saw a drop of 50% in new sign-ups and a 30% reduction in conversion of new users. So the impact can be huge. Do you think there's anything that can be done about that? Yes. We have tried different strategies. So, for example, our first small step was trying to change the age gauge point from the beginning of the sign-up process to the end. Just with this small change, we see an improvement. Actually, the impact on conversion was minus 30%. And then we saw improvement to minus 15%. So, it was a huge improvement. That's fantastic. I guess once they've actually done some work and have some skin in the game, they're less likely to click out. Yes, exactly. And another interesting thing that we are discussing with the policymakers is about the use of the BlurGate. So we don't believe that the best solution is to use the AgeGate at the beginning of the access to all the products. This can kill the adult business in Brazil. So we are discussing the HH with the policy maker, and they understand that as a good strategy. So this is a strategy that we are testing now, and we are very excited about that. So our idea is to let the users go through the sign-up process. He will have a taste of the product, but we won't allow the users to see any explicit content or have access to communication features like our chat. So in this way, we are protecting minors because if, you know, under 18, a user accessing our product, he won't see any adult content or have access to a chat feature. And to make everything available, you just want to go through the age verification process. I think that's really good to share because when I'm looking at people's sites and the age verification pops up right away, yeah, it does really kill things for you. Because, well, if I'm just looking at a site, I don't want to go through age verification. I mean, if I'm looking at it from a business standpoint, I'm not going to do all that crap. So, yeah, I can imagine with the user, they're going to just look for a site that doesn't have it, which those are out there. By the way, there have been some recent court cases where, I don't know if you heard about the teen in Utah whose mother supposedly sued, blah, blah, blah, but it was actually an anti-porn organization that was backing him. And these cases are getting thrown out now because the user was in Utah and the sites were either in Europe or somewhere else. And the judge is saying, no. Have you heard about that and what's your take? No, I have not. You know, but talking about Brazilian law, what I'm seeing, what are the consequences that I'm seeing for companies that don't comply with Brazilian law? So first, the law brings some definitions about what's going to happen. First, they will try to warn this company. And as a second possible consequence, if the issues are not solved, they will start applying fines. And then they can move to a suspension temporarily. Or as a final consequence, a complete prohibition of the service here. An IP block. Yeah, IP blocks. So they are thinking about situations like this in Brazil, you know. So even if the company is not based in here, they must kind of get compliant with the law if they want to operate here. Apply or in the end, they're not going to be available in Brazil. Exactly. Yeah, yeah. Well, it's kind of what Pornhub's done on a proactive basis. Whenever an age verification law passes, they block in that area. So that's, of course, they're now undoing that and they're starting to bring in age verification. So it's kind of interesting. I don't know if this is a good strategy. Of course, a lot of users will use a VPN to keep accessing Pornhub, for example. But you also create an opportunity for competitors. For example, if X-Videos get compliant with the law, I understand that not 100% of users will go through HVidification gates, but many of them will. So it's an opportunity for competitors. Yeah, you talked about VPNs, and that's kind of a controversial topic, because now there's starting to be some laws against using VPNs. Yeah, I've heard about that in Europe, I think. Yeah, I mean, what do you see happening there in Brazil, or have they addressed that yet? Actually, in our conversations with authorities, they understand the implications of the use of VPNs, but they don't want to discuss this now. I don't know what's going to happen. Well, I know what's going to happen initially. People are going to use VPNs in Brazil, and they'll be able to watch the content. And that's why, in the end, these age verification laws, they largely don't work because of the presence of VPNs. As long as there's a place in the world that will allow the content, the people can point the VPN to that. Yes, yes, they can. And, you know, we have conversations about that. And it's clear to them that this new law don't create a 100% secure barrier for minors. But the general idea, you know, if you have a kid accessing an adult site by chance, in this case, this age verification will work. You know, but if you have a 17 boy trying to access an adult site, he will. They'll figure a way. And that's why the age verification laws are not necessarily the way to go. Let's face it, okay? When it comes right down to it, the people who should be doing the work are the parents. and they don't. I mean, parents are the ones who should know what their kids are doing online. And parents give their kids a device and then go to the other room and they don't check to see what their kids are doing. At least most parents don't. So, that's the unfortunate part of the whole thing. If parents were doing their job, kids wouldn't be able to access porn. And you and I both agree Kids should not be able to access porn. But kids are smart. Oh, and by the way, it sounds like your politicians there are a lot smarter than Congress in the United States. As far as, well, that's not saying much since most of those people are in their 70s and 80s. But most of those people don't even understand technology or know what a VPN is. That's the biggest problem. So I'm glad to hear that the Brazilian politicians are a little more hip to what's going on in the world. Thank the Lord somebody is. Anyway, you mentioned when the law is going to come into force. You said March, right? March 18th, yes. Okay. And what's the timeline for companies to become compliant? Actually, it's March 18th. So we don't have much time to not get compliant. And that's why what I advise to companies is that you start doing something. So self-declaration is not accepted anymore. Try to show the regulators and the agency that will fiscalize everything that we are trying to get compliant with the law. What I'm seeing in Brazil, the agency responsible for fiscalization in Brazil will be ANPD. the same agency responsible for our data protection law, and they are still preparing themselves to start applying fines. Probably, I think we will see fines being applied in Brazil only next year, but the law will be in the force next month. That's the situation. Right. By the time this airs, it will have been in effect for a few months or a couple months. So what kind of fines are we talking about? Have they said what the fines are going to be? The fines in Brazil can vary up to 10% of the Brazilian revenue in the area. If this information is not available, the fine can vary from $2 to $200 per registered user in Brazil, limited by $10 million on average. That's nice. $10 billion US dollars. Yes. My God. Bye-bye. Oh, my God. Yeah, that would put somebody out of business. A lot of people from Brazil will be selling, I guess. That might be good for me. So, from a practical standpoint, tell me how adult platforms can become compliant with the law. And what are those clear regulations that they must follow? As I told you, there are not clear regulations to follow. so what we see as a reasonable strategy is to use the age gate on the critical points of the product so we are talking about explicit content photos and videos and also communication features an interesting thing about the law is that it doesn't say anything about texts so we don't we don't have to concern about texts or even educational material so basically the main points for adult business in general are the communication features and the explicit content. Okay. And this has been done before. Can credit cards be used as a valid age verification method in Brazil or not? Unfortunately, it can't because in Brazil, if you are over 16, you can have a credit card. On the other hand, we have PIX here. PIX, it's a very common payment method using Brazil, even for adult business. and with PIX we can assure that who is doing the payment is over 18 or not and including few payment providers in Brazil are offering this kind of service so if you can imagine a strategy where you can do the age verification in the paywall of your product PIX it's a reasonable price. Actually, we are considering that in sex log, for example, we will let the users go through the sign-up process and then the user will see a blur gate. To make everything available, we will offer two options. He can do the age verification for free with our solution, age estimation, or the user can do a subscription using PIX and you can assure that it's someone over 18. Because you're hooked up with their system. Yes, that's the idea. It's another good strategy for Brazil. So, in all, what age verification methods are accepted or realistically viable in Brazil? The most basic one is to acquire ID from users, but we all know that there are a lot of privacy concerns with that. After, I think the method that will be most used is age estimation with leaveness check. Is that what we are seeing worldwide? And we believe that this will, in Brazil, will be the same. We have pigs, as I told you before. And we also heard that the government is working on a solution. But we don't have many details so far. And we don't see a big adoption of that, you know, because it's kind of awkward accessing a dot site and using a government credential to accessing. So I don't know what architecture they will use, but so far what we believe is that age estimation is the best solution and also we are considering PIX as an alternative. Okay. So there are options for age verification in Brazil. So then why would somebody use Protege ID help companies comply with the aid verification law in Brazil? Our main advantage, competitive advantage, is our pricing. So if you think in terms of Brazil, we have huge volumes of traffic and we don't make money in the same proportion. So what makes our solution very competitive is our pricing. We can do the aid verification for less than a cent of dollars. And another very important point is that we are working very close to the regulators. So we really understand what is happening here. And we can assist companies to get compliant with the new law. And last is that we have a lot of experience in the adult industry here. We are doing a lot of A-B tests on our product. So we can really support companies to get compliant with this. Okay. So currently, what markets outside of Brazil can Protege ID be used? Today, basically, it can be used worldwide. And actually, as a partner, everyone can use Protege ID. But now it's more tailored for the Brazilians. So we are just working with IDs in Brazil. But it's very simple to adapt our solution for other markets. And as soon as we see an opportunity, we can move to this direction. Sure, because it's happening worldwide now. It's really spread like wildfire. So what differentiates your platform from other age verification providers? You mentioned cost, which is very important. What makes you guys different and better? Basically, as I told you, it's pricing, the knowledge and the support that we can give to business in general. And also our knowledge about the Brazilian market, the Brazilian documents. And so we can maximize conversion in terms of age verification. Okay. What makes the Brazilian market different from adult markets all around the world? You guys have a lot of different things going, so you'd be a good one to answer that question. You know, Brazilian people really like adult services. For example, we have a very famous Squart website in Brazil called Fatal Model. And in terms of revenue, he is not the largest. We have like Skoka, like there is a worldwide solution for Escort. But if you compare just traffic, just with Brazilians, Fatal Model is bigger than Skoka, worldwide solutions. So I don't know, even if you think in terms of sex law, we have like 220 inhabitants in Brazil. We have 24 million users in sex law. So they are more liberals. They are more open to adult business, my point of view. You know, Brazil is an interesting market. If you were to give advice to someone who wanted to come into Brazil with adult products or better promote their adult products in Brazil or adult sites, what would you give them? What advice? Look for local support. There are a lot of details in Brazil. For example, the simple use of PIX. For example, in our products today, more than 50% of their sales are on PIX, not on credit cards. So if you don't understand these little details about Brazil, you won't make the most of it. So that's my main advice. Look for local support. Doesn't your company also offer consulting to companies that are coming in to Brazil? Yes, of course. We can help on that, definitely. Okay. How would someone reach you? Yes. I think we can share my email, leandro.kitamura at esapiens.com.br. And I think that's the main way to contact me. Or just go to the eSapiens website. Of course. Of course. eSapiens website is perfect. Okay. What final advice would you give to adult businesses with a lot of traffic in Brazil that haven't started preparing yet for age verification? Yes, my main advice is to do something. Try to show to the regulators that we're trying to get compliant with this new law. And as a second advice, let an open communication channel. So stay alert of any warning from the Brazilian regulators. Try to respond and keep the communication open. And as a final advice, again, look for local support. Then this will help you to maximize your conversion and reduce impact on your business. When you guys are always available to give that local support. Of course, we are here for that. Excellent. Leandro, I'd like to thank you for being with us today on Adult Site Broker Talk, and I hope we'll get a chance to do it again soon. My pleasure, Bruce. Thank you very much. Thank you. My broker tip today is part nine of what to do to make your site more valuable for when you decide to sell it later. Last week, we talked about what information to provide a potential buyer. Here's more. Tell them what's special or different about your site. How's it unique? Make sure and include a list of all the websites you're selling in addition to any domains that come along with the sale. Is there anything that adds value to the sale? Provide them with any additional information upon request. Before giving a buyer any information, have them sign a non-disclosure agreement. If you use a broker, the NDA will be provided for you. Good brokers like, oh, I don't know, Adult Site Broker, have a large resource of potential buyers that are looking for properties just like yours. And they know how to deal with potential buyers. They'll also negotiate the terms of the sale, such as price and any payment terms. Before closing the sale, find a good escrow service to make sure that both the buyer and the seller are protected. We have those resources, of course. Let's talk about some of the factors that influence the sale price of a website. Number one is always profit. It will be a multiple of the profit, and that multiple is based on whether the profit is trending up or trending down, and how fast it's trending up or down. I've seen valuations of as much as five times, although that's very rare. Normally it's in the two and a half to four times area. I've also seen valuations of one time if the profit is taking a nosedive. We'll talk about this subject more next week. And next week, we'll be speaking with Ted Buras of Collab GPS. And that's it for this week's Adult Site Broker Talk. I'd once again like to thank my guest, Leandro Kitamura of Protege ID. Talk to you again next week on Adult Site Broker Talk. I'm Bruce Friedman.