A pivot to schools 18 months ago has galvanised Queensland-based online child protection tech startup Chatstat, with its AI-powered social media monitoring and advice service clocking up a growing list of Australian clients as it prepares for US market entry.
The business now services 35 schools around the country and protects 35,000 children with its technology that detects a wide range of online threats including digital predators, cyber bullying, toxic content, eating disorders, self-harm and more.
The platform also offers guidance and tools to parents and educators when such incidents are discovered.
With its team of 15 evenly split between Brisbane and the Gold Coast, Chatstat is laying the groundwork for market entry in the US this year with its founder Lawrence Kusz anticipating revenue will triple in 2025.
The founder tells Business News Australia the company has sufficient cash flow to fund US hires in the near future, and the Australian team has developed a marketing automation system to detect cyber bullying incidents in the US to improve the effectiveness of outreach to in-need school districts.
Kusz, who hails from the US state of Michigan originally, says the business has been predominantly bootstrapped since founding in 2021, although it has been fortunate enough to receive support from the Queensland Government, the Australian Government, and City of Gold Coast.
Chatstat has also been through the University of Queensland (UQ) Ventures and LuminaX accelerator programs, and has received a small amount of funding from UniQuest. Its achievements to date earned Chatstat the Social Enterprise Pioneer of the Year Award from Social Traders in late 2024.
Unlike traditional online monitoring tools, Chatstat’s approach focuses exclusively on publicly available social media content, which eliminates the need for invasive apps on children’s devices.
"We spoke with a number of researchers, and what we found is when parents start installing apps onto the children's phone it does two things - one, it breaks down the trust between the parents and the child, and two, children are smart enough to just go get a burner phone," Kusz explains.
"Usually when people are going through these situations, they want some form of validation and so they'll actually start posting things publicly because they want people to reach out."
Kusz had the idea for Chatstat after seeing how his niece with Down Syndrome was being severely cyber bullied.
"Having worked in technology for about 15 years, I knew that there had be a better way of using technology to solve some of the problems that she was facing and that my aunt and uncle were facing," he says.
The entrepreneur-to-be was working on his PhD at UQ at the time, where he was teaching a course that just happened to have a guest lecturer who was one of Australia's social media safety consultants.
"After the course was finished I reached out to her to understand some of the problems that schools and parents face.
"From there I started building Chatstat, and started reaching out to leading researchers from around the world to understand some of these issues, understand how we might be able to use technology in ways to better solve some of these problems, and how we could use artificial intelligence.
"That was before ChatGPT so we weren’t using terms like AI. We were using terms like natural language processing and machine learning and sentiment analysis back then."
The initial focus was to focus on parents, providing them with alerts when any potential risks were detected from its multi-modal AI that analyses content, audio, imagery and video.
"One of the things we realised is that often for the children that need the most help, the parents aren't that engaged. So in addition to just providing the alert, we also start providing engagement advice to the parent based on that," he says.
"An alert without engagement really doesn't mean anything. How do you have a conversation with your child about something that you have no personal experience with?
"It's about being able to provide them engagement advice and the resources to talk to their children about these issues which are quite difficult to talk about."
According to the Australian Psychological Society, more than four in 10 Australian teens suffer from mental health distress - a figure linked to increased social media use. Reports to the e-Safety Commissioner highlight that one in six teens experienced online threat or abuse, and nearly one in three teens cited school-related bullying as a key issue.
By providing actionable insights, Chatstat enables early intervention and fosters a community of engaged caregivers. Kusz reports that partnerships with educational institutions have led to a 25 per cent increase in timely interventions, demonstrating the platform's effectiveness.
"We’ve noticed a really strong uptake with private schools, because obviously they have a risk for both their children as well as their brand, and they have the resources to be able to protect the children," the founder says.
"We're doing as much as we can to help public schools as well, especially those in low-income districts where we find that there's often higher risks. We prioritise those high-risk communities and high-risk areas, and provide our service for free into those areas."
He says the pivot to business-to-business took place around 18 months ago, as through the initial business-to-consumer approach it was more difficult to get parents on board.
"From our experience, there’s probably a reason why investors prefer B2B rather than B2C. Trying to get the customer acquisition costs right was a bit challenging in B2C," he says.
He adds that the company has expanded beyond at-risk content into analysing positive content as well, giving parents a more holistic understanding of their child.
"By looking at what the child’s engaging with, what their friends are commenting on, what’s actually getting engagement, and being able to provide that through to the parents, it can open up communication channels for the parents with the child," Kusz adds.
When asked about the Federal Government's social media ban that is planned to come into force at the end of 2025, Kusz agrees that most people under 16 probably shouldn't be using social media but believes the technical issues make such a ban very difficult to implement.
His hope is that Chatstat could form part of a "fallback position" if the proposed scheme were to fall through, and the company is starting to engage with government already.
"Trying to put a blanket ban in place is quite difficult, because other countries have tried doing the same things and there’s ways of getting around it with VPNs (virtual private networks)," he says.
"What's even more difficult is that parents will have to start registering, and I think a lot of people will be uncomfortable with having to put in their details when they want to set up a social media account.
"There's no way of knowing who's over 16 and who's under 16 until you put in those details, which means that everybody has to put in their details.
"Let's say we sorted that out with a government ID that can be verified - what about travellers? How many millions of travelers come into Australia each year? They want to share their stories on Instagram, so what do they do? Do they set up a social media account with an Australian ID that they don't have?"
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