“For years, I’ve believed that the future of commerce is personality-led. I’ve now started questioning whether these personalities will be made up of flesh and bones or, rather, algorithms and pixels.”

Yesterday I bought a pair of swank bright yellow socks for $31 after seeing them on influencer Lil Miquela. The 19-year-old Brazilian-American model and Instagram personality is not real herself, but comments on real world events (she’s an advocate for Black Lives Matter), is paid to create sponsored content for real brands (ranging from Prada to Supreme), and is even creating real scandals snugging real socialites (making out with none less than Bella Hadid the other day). Recently, she launched a direct-to-consumer lifestyle brand called Club 404 — the first drop of neon-tinged crewnecks and long-sleeved T-shirts under the banner of ‘Digital Psychedelia’ is already sold out.

What compelled me to buy the socks? For years, I’ve believed that the future of commerce is personality-led (look at Kylie Jenner’s billion dollar success saga with Kylie Cosmetics). While I still believe that to be the case, I’ve started questioning whether these personalities will be made up of flesh and bones or, rather, algorithms and pixels.

As an investor constantly thinking, writing and speaking about the future of commerce and media, I’m not alone to see potential in CGI influencers. Take Brud, the LA-based transmedia studio and creator of Lil Miquela. Founded in 2016, the startup has allegedly raised between $30–40m from funds including Sequoia and Spark Capital at a $125m+ valuation. As suggested by the diverse revenue streams already associated with Lil Miquela, I believe that algorithmically created personalities will change the rules of the game in branded content, personality-lead d2c e-commerce, and interactive media. Brand-specific influencers and body-manifestations of virtual assistants like Siri also appear exciting areas of opportunity to me.

1.6m followers and counting @lilmiquela

Other investors argue that virtual influencers are a fad, suggesting that Lil Miquela’s 1.6 million followers and the brands she has worked with love her because of the novelty factor.

The counter argument is that we love her by design. If you marry the concept of social prediction with the limitless nature of what a virtual influencer can be and do, CGI influencers will inherently be hard for the target market for whom they are created to dislike. After all, social prediction means using consumer-defined category data sets to analyse a subject of interest, in relation to all the other topics in that data set to predict trends that will resonate. If you let this data driven approach determine the very characteristics of the personalities you release into the wild, they should theoretically resonate by default, and always be mysteriously ahead of trends.

Regardless of whether bullish or bearish on the market, investors are just starting to form a thesis regarding what the value chain will look like and where the most value will be unlocked. On the one hand there’s an array of companies perfecting different technical components of synthetic media production including GAN-based systems, CGI, and synthetic voice — tech that some investors believe soon will be commoditized. On the more commercial side, startups are starting to stitch together state-of-the-art technologies into compelling virtual personalities and distribute these to other startups, brands, and new talent agencies that want access — a segment I hope to see more scalable b2b2c offerings in.

As a clever colleague from betaworks — Jared — points out, many VCs are allergic to content studios and hence startups pitch their avatars as AI creations despite the manual process through which they currently come to life. To quote Jared,

“the big opportunity comes when you get truly AI-generated characters. No company has this yet. But if you’re able to make a character from scratch without human input — that’s big dollars.”

Thinking ahead, factors that will impact the market include i) hybrid influencers and other examples of algorithmically modified versions of real celebrities, and ii) the introduction of synthetic media regulation. On the latter point, virtual influencers are obviously only the very top of a large synthetic media iceberg that will impact industries ranging from politics to our legal system, in potentially scary ways. While regulation is a necessity, its introduction may also jolt innocent commercial applications.

It’s hard to be scared, however, when wearing my new bright yellow socks, playing Lil Miquela’s latest single (yes, she has a music career on the side) and scrolling through her latest instagram posts promoting keeping abortions safe and legal.

In fact, with my slight bias toward young, dynamic, mission driven, and contrarian entrepreneurs I think I’d offer Lil Miquela a term sheet if she came to pitch me her next round. Combining the stardust and brand appeal of an A-list celebrity with the scalability and increasing returns of a software company certainly sounds like a winning formula to me.

(A shorter version of this article has been published in Courier Magazine and Forbes)