Modulate

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Founders: Carter Huffman, Mike Pappas
Founding: 2017
Mission: Create safer and more inclusive online spaces
Employees: 50 & 80% Local
Workplace: Hybrid
Stage & Capital Raised: Series A & $36M raised
Investors: Lakestar, Everblue Management, Hyperplane Ventures
Key Customers: Activision, Rec Room, Rockstar Games, Trass Games, Schell Games
Glassdoor Rating: N/A
Valuation (estimated): $100M – $300M (assuming average equity dilution in the $30M Series A fundraise)
^ this is a useless number from MGMT Boston. There is no tangible valuation until the business is sold or goes public. Don’t forget it!

Modulate is building AI tools for a better, safer online experience. Their audio technology platform, beginning with the gaming industry, uses AI to monitor millions of voice interactions for toxicity. Now, this growth stage startup is expanding their use cases to enable better online communities and safer products across the digital consumer landscape.

Modulate’s story begins on the MIT campus. Co-Founder & CTO Carter Huffman stood in a brightly lit hallway facing a whiteboard. He was determined to solve a six line physics equation when suddenly a looming figure came up behind him, blocking out the light of the corridor. It was Mike Pappas, Modulate’s Co-Founder & CEO. Looking down at the whiteboard, Mike said “I think you’re missing a ‘-’ sign on line three”. The equation was solved. Modulate was born.

Oh come on! This isn’t the movies! But it was the start of an enduring friendship built on a mathematical foundation. After MIT, Carter went off to NASA to work in their Jet Propulsion Lab in Pasadena and Mike went to work in Finance at Bridgewater Associates before joining Boston based startup Lola.

They stayed in touch to discuss the evolution of machine learning & adversarial networks, in particular how these new technologies could be applied to media. It turns out physics and developing audio algorithms are closely linked from a tools perspective if you’re into waveforms, spectral analysis, digital signal processing, and that sort of thing.

Carter & Mike felt that there would be some important audio applications to be built using new AI research in the same way that visual & natural language research was being commercialized. Modulate was born to build these initial voice applications. 

The duo built “voice skins” to manipulate someone’s voice when they talked. The gaming industry thought it was really cool. But it wasn’t their top priority. Still, their technology impressed and they had built some strong industry relationships. The feedback they kept receiving was “could you use this technology to help identify & stop harassment on our gaming network(s)?

The video game industry is massive. It’s over $200B globally, $40B+ in the U.S., and still growing by double digit percentages annually. There are also more than 3B gamers worldwide (src). 100s of millions of people play video games that have a social component each month. Unfortunately, a small fraction of those users (<5%) exhibit toxic behavior. That small minority has a massively outsized impact on the gaming communities. Especially for newer gamers, they often churn once they are exposed to toxicity .

The Modulate team set out to solve this problem using audio algorithms to create safer gaming communities. Because even a partial solution could have a large scale impact. Taking their machine learning capabilities, they built ToxMod.

ToxMod is the only proactive voice chat moderation solution purpose-built for games and designed with player safety & privacy in mind. It can reduce the exposure of toxic behavior by 50% or more which increases retention. Their biggest competitor? The status quo (aka doing nothing).

The product triages voice chat to flag bad behavior, analyzes the nuances of each conversation to determine toxicity, and enables moderators to quickly respond to each incident by supplying relevant and accurate context. Then they refine & tune their system further for each individual customer so it gets better as it learns.

Over the pandemic the team really found their footing and, soon after hitting $1M in ARR, raised their $30M Series A (Q3 2022). The team has proven out product market fit and grown the team to 35+. Modulate is the industry leader in voice moderation for gaming, available in 18 languages and counting.

Now, Modulate is expanding their use cases to other industries that have voice as a part of their platforms. Their tools work well with social media platforms, meetup platforms or last mile delivery & rideshare platforms. Any communication network has the ability to integrate Modulate. There’s still plenty of growth in unmoderated gaming ahead too.

In addition to moderation, there is a wealth of existing data Modulate can leverage to build new products. Fraud and cheating is an ongoing concern in gaming that can be better mitigated by Modulate’s tools. They can also help model prosocial behaviors like rewarding users for good behavior. Or even share valuable feedback with gaming developers when gamers are having trouble in various parts of the game.

ToxMod’s pricing model is based on volume of content processed, today working with some of the biggest names in the industry like Call of Duty (Activision) and Grand Theft Auto (Rockstar Games) with several more flagship names to be announced before the end of 2024.

Modulate is gearing up for a big 2025 and has moderated over 160 million hours of voice data to date. They’ve helped customers take 80 million + moderator actions against harassment and toxicity to date. That’s real action! Predominantly based in Boston, they are backed by Lakestar, Everblue Management, and Hyperplane Ventures.

Operators to Know (Locally):

My investigative powers continue to need work so apologies to the Modulate team I know I missed many up & coming operators internally

Key Roles To Be Hired:

If I were interviewing here are some questions I’d ask:

  • What are the company’s strategic goals for 2025?
  • What are the biggest challenges as you scale the team past 50 employees?
  • What is the long term vision for the company?
  • What are the most important roles you’ll be looking to add in 2025 // teams that need the most help?

We’re optimizing for readability here so to learn more about Modulate you’ll have to D.Y.O.R. I’m excited to watch this team bring more gaming companies into a healthier, more positive AI age. All consumers applaud your efforts. See you around town!

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