#553: State of VR with Tipatat Chennavasin: Why He’s Continuing to Invest in VR

tipatatVirtual Reality Headsets have not sold as many units as some of the more optimistic analysts have predicted, and VR Fund’s Tipatat Chennavasin says that the relatively quick adoption of smart phone technologies have spoiled a lot of people within the investment community. But despite the adoption being slower than some had hoped, Chennavasin still sees a lot of optimistic indicators for the long-term investment of companies that are driving the evolution of the medium in different industry verticals. Some of those indicators are a Magid Insights survey that found that a majority of VR consumers “very satisfied” and say product performance exceeds expectations, that there are at least 30 VR games on Steam that have grossed more than $250,000, and that there are a number of enterprise VR companies with revenues between half a million to a million dollars.

I caught up with Chennavasin at the Silicon Virtual Reality Conference on March 31st to talk about the state of the VR ecosystem. We talked about how he sees Chinese investors could be shifting focus to AI and local Chinese companies, the market challenges for educational VR companies, and why he thinks that the lack of revenue in the 360 video could bring a reckoning moment for 360 video technology and content companies. After traveling to 36 VR conferences over the past year and seeing over 2000 VR demos, Chennavasin sees some of the most promising VR industry verticals as being healthcare, advertising technology, collaborative meeting and product design apps, enterprise applications, as well as architecture, engineering, and construction. He’s been advising companies try to create applications that could only be done in VR, and that if you build something of value then you can find a way to pay you for it.

He provides some updates on some of VR Fund’s investments including Owlchemy Labs (which was acquired by Google in May), Against Gravity’s Rec Room, Vivid Vision, and InstaVR. He’s seeing enough positive indicators form his portfolio companies to continue making strategic investments in the VR ecosystem for the long-term path towards more ubiquitous adoption.


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Rough Transcript

[00:00:05.452] Kent Bye: The Voices of VR Podcast. My name is Kent Bye and welcome to the Voices of VR Podcast. I think one of the biggest open questions within the VR industry is when is VR going to hit that like massive ubiquitous level of it just being everywhere or at least to the point where it just is completely sustainable for people to create these viable businesses within virtual reality. I think right now there's been a lot of these analysts that have come out and put out these huge numbers in terms of their predictions as to what degree they think the headsets would be at this point. And I think a lot of those predictions were overblown and too high at the very beginning. So you're in this phase of being like, okay, well, it's not quite as big as some of the most optimistic analysts have said it would be, now what? And so today I'm going to be talking to Tipitat Shivasan. He's a investor, a VC for the VR Fund, and he's basically at every single VR conference that I've ever been at. He's seen over like 2,000 demos. He's basically the man about town when it comes to virtual reality investment. And he's got some super pragmatic ideas as to what is happening in the VR industry right now. how he thinks about it, and some of the metrics that he's looking at in terms of what gives him that level of optimism to keep continuing to invest in this VR market. So I had a chance to talk to Tipitat at the Silicon Valley Virtual Reality Conference. It's in San Jose, California. And this conversation happened on the very last day, the very last interview that I did there on Friday, March 31st, 2017. So with that, let's go ahead and dive right in.

[00:01:47.889] Tipatat Chennavasin: Hello everyone. My name is Tipitat Chinavasan. I'm general partner and co-founder of the Venture Reality Fund. We're a $50 million fund that invests in early stage AR and VR startups. We were started about 14 months ago, my partner Marco and I. We just believe that VR is the next computing platform and it's going to impact all of our lives and we want to help guide the community as much as we can through our investments to figure out what's going to help make VR amazing.

[00:02:14.087] Kent Bye: Great. So I often have people ask questions about the economics of VR in terms of when's it going to reach critical mass. I'm curious to hear from your perspective as you're working with these different startups, what do you see is happening? What's the story you tell yourself about the VR ecosystem right now, where it's at, and where it's going?

[00:02:32.375] Tipatat Chennavasin: Sure. I think everyone agrees we're still at super early stages. I think I was just at a conference where Michael Yang from Comcast Ventures, who's one of the more active strategic investors in VR, said that we're in the toddler years of VR. But what's interesting is, I think investors in general have been a little bit spoiled by the scale of mobile. and how quick it seemed like smartphone adoption was. But we forget that if you consider cell phones as part of the mobile, it took a long time for these technologies to become mainstream or mass market or consumer market. And so in that lens, you know these are things that are going to take 10 years typically, right? But what's important is investing along the way at the right scale to really make the ecosystem grow and thrive. That's the most important thing and that's what we're trying to do. So we're trying to, you know, make smart bets in the space, and what we're seeing is, this is, to me, the most amazing story that people don't really talk that much about is, you know, people focus on headset sales, and how headset sales are, you know, less than what some of the crazy analysts out there predicted. But what's really interesting is that's only one part of the story. Especially for startups out there that are working in the software ecosystem of VR, you want to know about software sales, and how software sales are doing. And what's amazing is, in the SteamVR ecosystem, because that's the only one we can really get access to data to, But we can see that there's, I think it was Valve themselves that said there's 30 titles that have made over $100,000, which doesn't seem that great. But then if you actually look at the data even further and say at least 10 of those titles have made over a million dollars, and some of those titles are made by small development teams of one to five people, That's fantastic. And what that's showing is, you know, we're not going to run, but we can walk and we can, you know, teams out there, if they're smart, if they're hungry and scrappy, they can build profitable businesses in VR today, which has never existed before. And so I think that to me is like the most exciting thing. If you're an indie developer right now and you make a game that has $300 to $1 million budget, in six months time, you could not just recoup, but maybe even be profitable. And right now, if you're an indie developer and you're looking at mobile, you can't even market a game for under a million dollars right now. And so I think we're just in this interesting inflection point where it's a healthy ecosystem for indies. Still way too early for the big, large companies to get involved, but that means that's the opportunity of the indies. And so if you do this right, at least on the consumer side, there is great opportunity. And then the other two parts of it too that I think people are not paying as much attention for is Microsoft. Microsoft is throwing their hat in the ring in a couple months time supposedly. They'll have their enterprise ready VR headset that will come in at a low price point. And I think that's going to be a huge opportunity for startups that are targeting enterprise to build valuable use cases and solid companies that are addressing the enterprise market.

[00:05:24.325] Kent Bye: Yeah, interesting. And I don't know if this is another metric that is interesting or helpful, but I imagine that the people that have headsets, how much daily active users and how much use there is. And so, I mean, there's a phenomenon you can sell a headset, but yet if it's not actually being used. And so do you have a sense across the different platforms about the level of engagement that you're seeing?

[00:05:45.253] Tipatat Chennavasin: So I mean, I think if you can look at some of the more popular games, especially games like Rec Room, you can see that they've been growing a pretty decent sized user community. But again, it's hard to compare to something like mobile, where you have this mobile device on you 24-7, you're constantly checking it for messaging, emails, and all these other non-game use cases. And you have to think VR, at least as it exists today for the Vive, the HTC, the PlayStation 4, is much more like a console and how it fits in your life. And so you might use it like, you know, once or twice a week, a couple times a week, but not necessarily something that you would use daily. And you have to kind of look through it through that lens. But that being said, that doesn't mean that we're not seeing people spend. I think before people were like, oh, well, we need huge daily active numbers to unlock the spending. But here, even with less daily active users, we're seeing strong spend and we're seeing continued spend. So we feel like there's good evidence that people that were early adopters of VR have not shelved their devices and they're not sitting mothballed in closets. and that the average spend per headset has continued to grow as more and more software titles have come out. And so we feel like there is a thriving ecosystem. And one thing I like to say, I come from mobile and social gaming, is we were always looking for whales, the high spenders. It was not about trying to get millions of people and trying to make pennies off of them. It was trying to find those 10 or so crazy individuals that will spend $10,000 to $30,000 a year playing one of those click farming games. And so what we found with VR is you're actually self-selecting the whales. The people that can afford VR today are the people with the disposable income, the highest quality consumer, and they're more than happy to continue to spend for good content.

[00:07:25.116] Kent Bye: Yeah, and I'm curious to hear from your perspective, I know you have your ecosystem where you kind of lay out how you kind of think of the VR ecosystem from a VC perspective, but as you think about these different industry verticals and ones that you feel like have a little bit more traction in terms of their environment, let's say medical, for example, maybe you could, you know, from your own portfolio of the VR fund, how do you break up those different industry verticals and what's happening within those?

[00:07:52.335] Tipatat Chennavasin: I think definitely, as soon as you start seeing clusters of companies starting to address certain areas like healthcare, it becomes its own pocket vertical. And you'll see it too, another example of this, I used to group ad tech and analytics as part of just the enterprise because they were B2B solutions, but now there are enough companies that it's kind of carved out its own area. And I think we're going to see something similar for the AEC, architecture, engineering, and construction space, where there's enough VR companies that that could be its own kind of vertical. But then the thing that confuses it sometimes is the applications across those are kind of different. So some will be collaborative meetings, some will be product design, and so it starts kind of muddying up the clean, nice verticals that you have. And so sometimes they might just stay in the enterprise category. But I do feel like I am meeting more and more companies now that have done half a million, a million dollars in revenue in the past year in enterprise with VR solutions. And that they're now at that point where they've proven out the model with some beta tests and are now willing to go to scale and try to grab more customers. And I think that's also another great healthy sign of where VR is.

[00:08:57.915] Kent Bye: And maybe you could talk a bit about some of your companies that you have, because I know you also have stuff in the entertainment space and other, potentially, I don't know if there's any gaming, or maybe you could talk about some of the companies that you've announced that you funded. Absolutely.

[00:09:09.378] Tipatat Chennavasin: I mean, definitely, when we're talking, too, about this early stage of VR, we look at a company that we invested in called Alchemy Labs. not only are they winning great awards, but they announced that they made over $3 million in software sales in the first year of VR, which again, against that install base, is fantastic. And so understanding, also too, what type of VR experiences are people responding to? Another investment we did was in Against Gravity, the makers of Rec Room, and if you look up their data, they have one of the largest online communities of multiplayer of people in VR right now. Socially engaged and active, playing games together, communicating, And that's very exciting. And so I feel like beyond that too, like beyond the consumer side, we've done investment in a company called InstaVR. And what they do is they're a content management system where you can drag and drop on pretty much essentially a web template to create VR applications. And large corporations like Toyota is using it to create HR VR experiences so that they can train employees without having to handhold. Or even amusement parks like Sanrio Land. So Hello Kitty in VR. but they're actually building a VR app for their audience to download and engage with. And so, on top of that, we invested in a healthcare company called Vivid Visions, and they're curing diplopia, James Blaha. I think they're kind of one of the poster child of VR healthcare, because it's not just about training, but it's actually about treatment. And then what's really interesting, too, is he has that fantastic story where he's not just the president, but he's also like a client. He cured himself of diplopia. What he did was, you know, cured himself. Then he built out the product, got with a little bit of help from angels. took it to about 70 plus clinics, treated 2,500 patients with a 60% success rate, which was phenomenal for them, especially because they were doing this thing where right now the current therapy for diplopia or lazy eye, it's 40% effective, but only works for juveniles. And so what they found was they work 60% across the board, adults and juvenile. And so adults that really had surgery as the only option now have another non-surgical option that was huge. And so understanding how VR can be that difference maker, I think those are the things that really impress us and excite us and keep us investing heavily in the space.

[00:11:22.713] Kent Bye: Yeah, and so you've mentioned that you've seen over 1,800 demos. 2,000.

[00:11:26.174] Tipatat Chennavasin: 2,000 now. Yeah, yeah. I think I went to 36 conferences last year. I spoke at 18 of them. And then this year, I'm already on track to beat that. But I think definitely what we're seeing, though, globally, is people are waking up to VR. There was excitement for VR before. But honestly, a lot of people, until they've seen the HTC Vive or the Oculus with Touch, really didn't have a good sense of what VR was. They were excited about it conceptually. but now that they're getting their hands on it, now they're excited by the practical applications. And so we're seeing, you know, it's going to be a slow rollout just because of the nature of what VR is. You know, you got to experience it to understand it. But at the same time, I was just at a conference and there's a consumer insights company called Magid. And what they did was, you know, they talked to a whole bunch of consumers before the holidays to say, hey, will you buy VR? What's your thoughts about VR? What do you intend? And then they followed up after the holidays to see, okay, of the people who actually did buy VR, If they didn't, why didn't they? And then of the people that did, what were their thoughts? And so a couple of things, I think the one insight was that the people that didn't buy VR, it was because it was still out of the price range of where they needed to be. But the things like Oculus dropping the price by 200 bucks, by the computer hardware also just continuing to drop in price. But then also the second part of it was that of the people that got VR, and what was crazy was this was across the board, whether it was cardboard, PlayStation VR, Gear VR, or high-end VR, they all loved it. It was some of the highest consumer approval ratings that they've seen of any consumer electronic category. And so that's like the real power where it's like, okay, it's going to be slow, but the people that you do convert will love it. We'll want to continue to use it and are continuing to engage with it. And so we feel like that's a huge positive sign. And now it's really just about getting more and more people in the headsets, right?

[00:13:15.137] Kent Bye: Yeah, and I saw that you've done lots of talks and also talking about, because you are advising and working with these companies, I'm just wondering what you tell them in terms of how they should approach this time, their strategy, in terms of what sort of story you tell them in terms of their approach they should be taking, their strategies.

[00:13:33.956] Tipatat Chennavasin: I think, you know, understand too what the market factors are. Like, don't build, you know, a product thinking, okay, when VR has a million, you know, or 10 million or 100 million users, we're going to find some way to, like, entertain them. And what you really have to think is we need driver applications, right? Don't make a game that's worth, or a software experience that's worth $30, $60. It has to be worth $1,000, $2,000 because they have to buy the hardware too for the most time. Other thing I like to say is that VR is constantly evolving and the bar is being raised every day. If you're a company out there and you're trying to create a VR action shooting game, you have to understand Robo Recall is now the bar and you have to surpass that somehow. I think it can be done. I think it is a fantastic game. It's a master class in VR game design. You have to look at the lessons that it teaches people and what are the big takeaways. And I think a lot of people are like, well, you know, it's unfair. It's epic. They can make the prettiest game. But I think what makes Robo Recall really great is not the beauty of the game, which it is a beautiful game, but it's that it embraces the interactivity of VR, the physicality of VR in a way that Job Simulator did. So when I explain to people Robo Recall, I'm like, it's actually like a, a first-person shooter plus job simulator. Because what it is, is every object in that world that comes within close proximity to you is an interactable object with physics that you can grab, whether it's a bullet or a bad guy, like a robot. And what's great is, you know, it rewards you for exploring that. So you can actually rip the arm off a robot, beat the other robots down with it, or when the bullet comes, bat the bullet back at other robots, and it just treats that as a physical, real virtual world. And... it provides an experience that can't be done in any other medium. I think that's the thing I feel like, the advice I've been giving the most lately. Sorry, this is all over the place. But I feel like there's so many people still making games in VR, but not VR games. And it's this idea of, okay, why don't we take a game that we know and try to make it slightly better in VR? And I feel like the goal that we have to do right now is say, no, no, no, what are the games that have never worked before, just didn't exist that well, but now take advantage of VR and make a dream come true, or just take you to that next level. And you have to think, what's great in VR? And I don't necessarily think it's about shooting things, whether it's with a gun or a bow and arrow. I feel like if we look at time spent in VR, people are loving the creation tools like Tilt Brush. People are loving the exploration of things like Google Earth. And it's like, if you can think about those as the interaction metaphors and the mechanics, I think you can create some really interesting and unique games that could not have existed without VR. And so I'm always trying to push teams to think, OK, how can you really embrace VR and do something that, again, didn't exist before or couldn't exist before?

[00:16:23.034] Kent Bye: Yeah, and I think there's also a huge opportunity when it comes to education, cognitive enhancement, consciousness hacking, actually applying it to industry and enterprise with training and training applications, but just sort of generalized education and learning applications. I think that people who are into, you know, improving themselves in different ways, I think there's a lot of possibilities with the principles of embodied cognition and what you can do with kind of learning. And so from your perspective, what's happening in the education market and sort of generalized cognitive enhancement?

[00:16:52.973] Tipatat Chennavasin: I think there are a couple of things. In the general education market, what we've seen is there's a disconnect between the business opportunity and then what's technically possible or feasible now, and that a lot of people are building VR experiences that they think would be good for education, but that at the same time, education wouldn't necessarily spend on. And so it's hard to say, okay, like everyone's like, oh, presence is so great. Virtual field trips, no-brainer in VR. But the thing is, honestly, if you look at schools, I mean, after music and art, field trip budgets are probably the first thing cut, right? And so they have no budget to pay for these things and offering them an alternative doesn't necessarily show you a direction to create a business. And so the one thing I've been trying to tell education companies is think about places where people will finance education or will spend at really high levels. And I think that's a lot of language acquisition or standardized testing. And if you can unlock that kind of tutorial money that's outside of the system, so you're not going through government bodies and all these other things, then that's a huge opportunity. But I think you're always kind of stuck with certification, proving whether or not it really works. And I think those are big barriers. And especially, honestly, too, I think one of the biggest barriers is just the cost of creating content right now is high across the board in VR. And so one of the areas of focus that we look at a lot is how can we bring down that cost and how can we make VR content creation accessible to more people. And so I think that's going to be a huge thing that needs to be solved first that will unlock a lot of these healthcare, education and other use cases.

[00:18:30.953] Kent Bye: Yeah, in CES I had a chance to talk to HTC's Alvin Graylin, who's like the president of HTC's Chinese region there. And, you know, he was talking about how the Chinese government was investing a lot of money into virtual reality infrastructure and potentially even development of education tools. So from your perspective, kind of coming from the outside, I'm just curious to hear your take as to, you know, what's happening in China and what kind of opportunities there are for companies that may actually want to go over to China to get some venture capital money.

[00:19:00.937] Tipatat Chennavasin: So I think there's two things. So one, in terms of education in China, I do feel like they don't have the same roadblocks that US companies have because education in the US is totally underfunded, getting worse and worse every day thanks to a certain someone. But what we're seeing is in China, a communist country, they don't have that. And we've seen, I've met startups in China focused on education that have good funding and that seem to have good business relationships and have a valid go-to-market. But again, it's still kind of hypothetical and we'll have to see it proven out. The one thing I will say too though about finding investment money from China, the climate's changed a lot in the past year. I think there's a couple of things that when I was in China in December, I talked to a lot of Chinese investors and they previously were very excited for VR and already have kind of moved on to the next shiny penny of AI. And I think there's a couple of things that are contributing to that. I think one, they had made a couple of VR investments, and they hadn't panned out as well as they'd hoped. And they were in companies, again, that were building off of questionable technologies, weren't using the best of class like Oculus or Vive. or betting big on mobile VR, betting big on 360 video, and in these things that really haven't been able to prove profitable, or to have the legs of a real business. And so then, what we're seeing is, because of that, they're retreating, and they're saying, hey, no, it's not that we chose bad, it's just that VR, as an industry, is problematic, and so, too early, and so we will just wait. And so now we will look at what's next. The other thing about China, too, that's changed a lot, is that the government has been cracking down a lot on the outflow of money outside of China. And they want to make sure that there's more investment within China. And so I think it is getting harder and harder for US companies in particular to get funding from China, especially compared to where it was a year ago. But at the same time, I do feel like depending on what type of company you are, because hardware is readily available now, you can spin up projects. If you're a game studio, you can use early access, you can go to customers, and you can get funding from the people. Or if you're looking at enterprise, I think there's enough enterprise companies that are interested and excited about VR that they're willing to take a risk and spin up projects to test out and do betas and do pilots. And we're seeing that a lot more companies are engaging with small startups to do that.

[00:21:14.536] Kent Bye: Yeah, and I think just looking at the overall VR ecosystem, I think 360 video is sort of like this stepchild that the larger virtual reality community doesn't really give that much attention to a lot of times. But yet, on the mobile platforms, like the Gear VR, I think you see the level of engagement with these 360 videos, whether it's from Facebook having the video or on YouTube, I think they're doing a lot of initiatives with video. I'm curious to hear from your perspective kind of the opportunities from a VC perspective of companies that are working in this 360 video space. Is it a matter of hardware that would be serving those needs or if those big industry players are kind of already flushed out and it's more about if there's any companies that are doing something interesting on the content front as we're getting more and more live 360 video that's going to be coming.

[00:22:00.257] Tipatat Chennavasin: Yeah, I think honestly, I think if there is any place that I'm most worried about right now in VR, it is on the 360 video side. And the reason why I say that is because I think the one thing that happens is, you know, people speculatively invest, assuming that value will be created. And if not, then it's an empty hollow bubble. And so let's say for gaming, right, people invested in game studios, in game production, but what we're seeing is, okay, not every game studio, but there are enough game studios out there that are making real revenue off the game, that consumers and customers are impressed enough by the game to actually spend money. I don't know any 360 video company that is making revenue from consumers. It's still that speculative money or brand money. And there's going to be a reckoning where they're like, Oh, what's the ROI? You know, how can we do this? And it's like, if we don't find that solution quick, then it's going to be a bubble that's going to burst with nothing to backfill it. Right. Unless there's money from consumers or some kind of other, you know, I think the idea was, well, if VR can get to that huge scale that mobile did, and then we can backfill it with advertising revenue and eyeballs. But even mobile VR at five million, Gear VR is not anywhere close to where it needs to be to get that kind of economics working. And then on the other side, I look at the fundamentals. I'm happy to be proven wrong, I wanna be proven wrong, but as an investor, the things that we look at are, okay, what are the signs of a healthy community, healthy ecosystem? It's like, okay, of course, we wanna see millions, tens of millions of headsets sold. But also we want to see the non-platform guys, we want to see software startups in that ecosystem make a million dollars in revenue. Then we want to see them make 10 million dollars or a million dollars recurring monthly revenue, right? Like those are the factors, right? And I feel like in gaming I can see that. In 360 video, I don't. And that's a huge problem. And so I still kind of, you know, I just warn the 360 video people like, I mean, of course, aside from porn, but find some way where you can prove that if you release a 360, you know, movie that people will spend and that you guys can self support yourself and you don't have to keep asking for handouts from brand agencies and from platform holders because eventually that's going to dry out.

[00:24:11.085] Kent Bye: Yeah, I think I see, you know, the YouTube and Facebook as a potential revenue streams for small indie creators. And I think, I'm curious to hear from your perspective as a VC, this trend of potentially using user data as a source of funding, you know, like, I feel like privacy in VR is a big topic and that we're entering into this realm, we're going to have all sorts of new biometric data, it's going to be very intimate. Potentially advertisers are going to be able to figure out all sorts of different information about us. And I question whether or not that's a good path and whether or not, you know, I think we've kind of been trained as a culture to get everything for free. So we're not used to paying for things up front. We want to just watch it and then have ads sort of, you know, give us impressions. But I'm curious to hear your thought in terms of, you know, companies that you see are potentially going down that path of gathering in more data and sort of, you know, in some ways encroaching on our privacy.

[00:25:01.159] Tipatat Chennavasin: I mean, I think there is that concern of like, because in VR, there can be so much more data. But at the same time, you know, I think we're still very early. And even the analytics companies, it's like people aren't even able to process and do anything with that. And then I think the other side of that too is like, I mean, it's definitely something we should be concerned about, especially with the recent legislation that passed that, you know, now, The ISPs can sell the data, all of our web history and all that kind of stuff, right? It's getting worse and worse. But then at the same time, I do kind of feel like where we are at VR right now, we need that freedom to explore, that freedom to find that value and that value proposition. I hope it comes to the sense where people are, okay, this is important enough for me that I will pay for it and I won't be handing over the value and exchanging it for privacy, right? But I think we as a culture have been so ingrained that it's like a genie that's hard to get back in the bottle, right? It's really seductive, right? A little free. But I think it was like, there's that great thing. It's like, you know, if Facebook is free, I mean, you know, you are the product, right? Like you are, that's where the value is. And then your information is what's valuable. Them reselling it is how they make their money. And until we come up with a better solution than that, whether it's direct payment or finding other things that could be more valuable, I think we're going to always have this issue.

[00:26:16.819] Kent Bye: I think the operating system of our culture is the economy, which is based upon, if we think about different types of currencies, you have yuan currency, which is what we have, which is really promoting competition and zero-sum game, and the free market that's really catalyzed by that. But a yen currency would be something that would be promoting collaboration and cooperation. That would be something like bread. It would be a negative interest rate that the longer that you hoard and hold on to it, the less value that it has. And I think that we have that in our culture with open source and taxes that get paid out. sharing and communal aspect but I think because we are in an economy that's driven by this competition that is going to end up driving and shaping the future of everything. So I don't know if cryptocurrencies or other alternative solutions could bring about that cultural shift but I think that given that I think it's going to shape certain outcomes and I think if you look at the history of new mediums once the economics really settled in there's this period of exploration and then it sort of solidifies and what is kind of acceptable and going to serve the market. But we always have the internet and WebVR, which is sort of, I think, been mostly that medium to be able to freely share information out there, and there's a lot more exploration. It may not be as high quality, but you have that interconnection. So I kind of see this tension and dynamic of being able to get stuff out there, but at the end of the day, people have to get paid. So I don't know if you have any thoughts about sort of balancing these different types of currencies.

[00:27:46.737] Tipatat Chennavasin: No, I think you're right. When it comes down to it, I think we just need to focus on the fundamentals, right? And then we just have to go back to someone creates something in VR and then other people value it and they'll just pay them a living wage for creating that, right? And I think trying to shortcut it by doing things like, oh, well, once we have scale, the currency becomes attention and privacy information, like that's when things get wonky, right? So as long as we can, I don't know if we can, but as long as we can keep Cognitive about this talking about these things making sure that you know We're valuing ourselves and our privacy to a certain extent that we don't hand over things without Consciously being aware of it. I think we'll be in a good position now unfortunately past History has shown that that's never the case and I think you know, the lure of free is just too high and I don't know what that really means for us moving forward Especially once we start using AI to kind of to parse all of this data and to do more interesting things with it but I do feel like Right now, the argument we should be having about VR is, how do we build the value, not the novelty? And I worry sometimes, too, when we're fighting over these things like privacy concerns, open source, not that they're not important, but let's get the first thing first done, right? And we really need to figure out, is this something that people are going to value en masse? Will this be an industry? Let's get that problem solved. and then address these other fundamentally important issues, but ones that, again, if we focus on those too soon, will actually lead us down one path that we won't want to go.

[00:29:16.135] Kent Bye: Awesome. And finally, what do you think is kind of the ultimate potential of virtual reality and what it might be able to enable? Sure.

[00:29:23.951] Tipatat Chennavasin: I mean, you know, this is, again, one of the things I've thought a lot about, and what I've always loved is this idea that in virtual reality, if we can replicate material goods to a certain quality that there's a verisimilitude where if I owned a Ferrari or a Porsche in VR, it was as good as having it in real life, then all of these material possessions become worthless. And really, the value in life is not the material possessions, but the experiences that you have. And I feel like moving to this experience economy, and that you're the sum of not what you own, but the sum of things that you've done, or people that you've interacted with. And I think that is something that's really interesting. and that I would love to see kind of more exploration towards that. And also the switch too of going from consumer to creator and blending those lines where it's no longer, yeah, I think a lot of people have negatively been overly harsh on, you know, social media and saying, you know, like, there's so much noise, it's so much garbage. But if you think about how it used to be, you know, we would just consume information from a couple big data sources, whether that was, you know, film, print, TV, but now it's like everyone can create data, or everyone can create stories, share stories, and there might be too much noise, but at the same time, I do believe that there's just something empowering about that fact that we're not just sitting down and consuming all the time, and that we're active, participating, and creating, and thinking, and that to me is a lot of the promise of VR.

[00:30:54.800] Kent Bye: Awesome, well thank you so much.

[00:30:56.367] Tipatat Chennavasin: Always a pleasure. It was great, and I had a great time at SVVR. So I want to ask you, of the things you got to try at SVVR, what was one of your favorites?

[00:31:05.690] Kent Bye: The favorite thing... Well, I really like the BioFlight VR medical training, because I had this experience of seeing a heart and the long-term effects of sodium, and it made me think about, oh, wow, I could see how I'd want to watch more of these little video vignettes to learn more about my body. The idea that they've kind of just created this market where they're able to sell these videos to do patient education, I think, is really compelling. So I love education type of stuff. So for me, that was just super highly polished and really impactful. It sort of stuck with me.

[00:31:38.622] Tipatat Chennavasin: Awesome. Very cool. All right, thanks. All right, thank you.

[00:31:42.282] Kent Bye: So that was Tipitat Shavasan of the VR Fund. So I have a number of different takeaways about this interview is that, first of all, I think it's interesting to hear some of Tipitat's metrics or things that he's looking at as an investor. So he's saying that virtual reality is one of the highest consumer rated technologies in any category, that when people try it, they love it and they're super engaged with it. And I think that, you know, we're in this realm of moving from the information age to the experiential age. And I think that it's reflected by a little bit of what Tip Dat sees as the ultimate potential of VR is that As the level of virtual experiences reaches the fidelity of real life experiences, then the process of owning physical objects may have less of an importance in the future. And it's going to be more about having access to those experiences and just having experiences in general. We're going to be putting more and more emphasis on those experiences. I think virtual reality as a technology is training people slowly to become more and more present in these virtual experiences and then potentially more and more present in their lives. That's what I have a direct experience of in my own life. I've seen that with other people as well, is that the more you do VR, you just become more present to life and living. And I think that is a little bit like a culture shift that is also happening slowly. The people that are buying virtual reality, they're super engaged. They're buying more and more experiences. They want to see what's out there. The early adopters of virtual reality are kind of like the Merry Pranksters. They just want to have these different experiences and push the limits of what they're able to experience within these virtual worlds. Some of the verticals that he's saying that are beyond just gaming, there's the healthcare, ad technology, enterprise, the architecture, engineering, construction, collaborative meeting, product design. Some of these more enterprise medical applications, they're able to do anywhere from half a million to a million dollars in enterprise sales. There's things like that and some of those companies, a number of them that are showing at the Silicon Valley Virtual Reality Conference that are still doing like really important work and actually getting revenue with solving real problems. Architecture, engineering, design, and medical are two in particular that I think have some very clear wins. But that, you know, overall, I think that one of the questions that TipTat is asking and thinking about as he's going around and looking at all these various experiences, he's wondering, like, what is it about the VR that is unique to it? What's great in VR? Not like just porting and putting over things that already exist out there, but what are the things that can only exist within virtual reality? So some of the companies that the VR fund has invested in since the, I did this interview, alchemy labs actually got acquired by Google, which to me was a little bit surprising just because as I said, they did run $3 million in revenue. The Rick and Morty experience that they did was absolutely amazing. I think it's one of the best interactive explorations of VR that I've seen so far. And against gravity with Rec Room, there's just a lot of really innovative social VR stuff that's happening in there with the different quests and experiences and just a very engaged community that's being involved with the Rec Room. And Vivid Vision with James Waha, I've done a couple of interviews with him, and that story of what they're doing is just absolutely amazing. A 60% success rate of using virtual reality technologies in order to cure lazy eye is just pretty incredible. Using VR to essentially just rewire your brain and to train up muscles that aren't able to be trained very easily without these virtual technologies. And finally, I think the other cautionary tale that I got from this interview was TipTap talking about that at some point there's going to be a reckoning within the 360 video market and ecosystem. There's not a lot of revenue that's coming in from the consumer market and You know, there's a lot of companies like Samsung and Facebook and YouTube that are investing a lot of money in terms of content, but there's not necessarily a lot of ad money for other industry players within the 360 video content ecosystem. And so perhaps sometime later in 2017, 2018, maybe we'll start to see a shakeout of some of these 360 video camera companies or content companies to see if they're able to really make a go of having a sustainable business model. So the other thing that I just wanted to throw out there is there's a model that I looked at with Simon Wardley, who talks about this evolution of different technologies that they go through these four different distinct phases, with the first phase being the initial innovation, the second phase being the bespoke and custom built systems. The third phase being like a consumer product that is generally available. And then the fourth phase is when it reaches these mass consumer level where it's just absolutely ubiquitous and everybody has it. Cell phones, I think, pretty much achieved that level already. And so people are spoiled to looking at from that perspective of mass ubiquity with cell phones and that That's a huge scale that virtual reality is not at yet. But if we look at what's happening with these major players with Facebook, Google, Apple now really pushing a lot of augmented reality with Apple's AR kit. See like the hundreds of millions of phones having access to these. phone-based augmented reality systems and so I think that there's this roadmap and trajectory for more and more of the mobile technology being immersive and moving away from the phone and being embedded into these different classes of technology or just kind of this mass ubiquitous computing. But it's going to take a while before we make that full transition as the technology comes down, as there's these different killer applications that maybe come along. Or it could be bootstrapped by these digital out-of-home entertainment experiences, enterprise applications. higher-end custom-built solutions. It's almost like taking a step back to the industries and the businesses that are focused on those custom-built bespoke systems that are for high price points to really kind of bootstrap and sustain a lot of the different companies. And the consumer market, as we get more and more adoption, then it's going to be easier to create applications that are able to operate at scale and people will be able to really innovate and create stuff that people want. At the end of the day, tip that says, focus on the fundamentals. How do you build value? Not novelty, get the first thing done and then get it valued in mass. So focus on the fundamentals, create something. And if it's valuable, then people will pay you for that thing. So that's all that I have for today. I just wanted to thank you for listening to the Voices of VR podcast. And if you enjoyed the podcast, then please do spread the word, tell your friends. This is a good podcast to send out to all your buddies that are trying to figure out what's happening in the larger ecosystem of virtual reality, a nice overview. And if you'd like to support the podcast financially, then that would be amazing. You could be a VC, just like Tippy Tat. He's going around paying for companies. you could spend your money and invest in virtual reality by helping spread this information. Like Tiputet said, education is one of those areas where there's just not a lot of money or funding. But here at the Voices of VR podcast, I see myself as an educational entity. If you'd like to support that, get the word out, and just help this slow, monotonic growth of VR, I'm here for the long run. Hope you are too. I think VR is going to be around for a while and I'd love to help keep tracking how it evolves and continues to get to that stage of being completely ubiquitous and everybody just has it and uses it. And you will have been a part of listening to the history as it's been unfolding. So donate today at patreon.com slash voices of VR. And yeah, thanks for listening.

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