Founding Stories: Sandbox VR

Kicking off our new series called "Founding Stories", founder & CEO Steve Zhao and President & Chief Product Officer Siqi Chen describe their journey so far in building Sandbox VR. In conversation with a16z General Partner Andrew Chen, the three of them discuss: - The origin story of Sandbox VR, how they were inspired by the “full stack” model of Hollywood studios - How founder Steve invested his entire life savings in the company when they couldn't raise money from investors against the advice of his friends & family, including Siqi (who would later join the company) - How they raised their seed and Series A rounds of financing, including which restaurant meetings (yum!) led to a term sheet from Andreessen Horowitz - The future of immersive, social experiences enabled by this new medium of virtual reality. Just as moviemakers learned new ways of telling stories, VR designers are learning new ways to immerse people more deeply into new, fun, engaging social experiences To learn more: - Watch the companion video from our The a16z Pitch Room series at https://www.youtube.com/watch?v=4T_YP1n7kSE - Check out Sandbox VR's at https://sandboxvr.com/ - Read Andrew Chen's blog post about the investment at https://a16z.com/2019/01/28/sandbox-vr/. - And also read Steve Zhao's bet-it-all story at https://medium.com/sandbox-vr/how-i-n... *** This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by AH Capital Management, L. L. C. (“a16z”). (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. Please see https://a16z.com/disclosures for additional important information.

• 0:14Speaker 3

  Hi, this is Fright Chen. Welcome to the A16Z YouTube channel. In this episode, which is part two of a two-part series that we created on Sandbox VR. What we're gonna do is talk to the entrepreneurs, Steve Zowell and Seeky Chen, about the founding story of their company. I've long been a fan of the NPR podcast, How I Built This with Guy Roz, and I've always secretly wanted to do an episode just like it. And so here it is. We're going to go to the founding story of Sandbox VR, who you'll see in conversation with the entrepreneurs is A16Z general partner Andrew Chen, who led the investment and is now a board member of the company. So enjoy this look into the founding story of Sandbox VR.

• 1:02Speaker 3

  After they finish up the founding story, they're gonna have a conversation about the future of virtual reality and storytelling, which I think you'll really enjoy because as we create a new media, we're gonna create all kinds of new genre and um conventions for stellar storytelling, and I think

• 1:22Speaker 0

  you'll really enjoy that part of the conversation as well.

• 1:25Speaker 3

  So let's drop right into the founding story of Sandbox VR. Andrew talking to Steve and Seeky. And the first thing they're gonna discuss is how the two of them were inspired by the way Hollywood grew up.

• 1:40Speaker 0

  I know one of the early things that we talked about uh, you know, in in all of this was was it kind of separate from the deck was actually the motion picture Hollywood kind of analogy. Do you guys want to say a little bit about that and and you know what what what aspect of that kind of inspires you.

• 1:59Speaker 1

  Um well, I mean, I think that's where the network effects came from, right? Uh this idea of looking back a hundred years. Um you have Nickelodeon starting up, um, and it was very bomb and pop. And over time Nickelodeon,

• 2:12Speaker 0

  not not the not the MTV channels.

• 2:15Speaker 1

  The dime movies. And over time you develop a studio system, and that became vertically integrated. Uh the studio started buying up the actual cinemas, and then all of a sudden, you know, you had the golden age Hollywood, and then in 1948, that became illegal in America through Paramount versus United States. Uh they broke up the monopoly. And so, like, you know, looking at what we're trying to do is like you can see a very similar path. Um, and so you mentioned that uh we want to do this virtual integration stuff, and it's like I think we did it because, well, actually, to be clear, Steve did it because Steve had to, right? Like, there's no technology, so we had to build technology. There's no stores to place this technology, so you had to build a store, and there's no content, so you had to build the content.

• 3:02Speaker 1

  Um but over time, as you get scale, all of that changes.

• 3:05Speaker 0

  Right. Well, I and I think it's fascinating the idea that um, you know, as an industry, what we sort of seemed to want to do with VR was basically invent the technology and then immediately bring it home, right, in into homes, right? Um and that's certainly not what happened in the in in the you know um in the film industry, because there was literally decades of content creation, you know, just in theaters before we actually got you know movies actually playing on on people's TVs, right? So I think that's like a really interesting, you know, um, you know, minute metaphor as well. So yeah. What what other um, you know, what other uh, you know, d during your fundraising process on this, I'm curious what other um objections did you hear from people? What are what what were other kind of risk points that people kind of pointed out, you know, along the way.

• 3:54Speaker 2

  So we started fundraising in Hong Kong, went to China, Japan before we went to Silicon Valley, and one of the biggest challenges was they couldn't, or it was a disconnect of what they envisioned what we had versus what we actually had, right? We didn't have a store in Japan, so they didn't they weren't able to actually try out. You know, their perception of VR was what they've seen in home. And it's something that we notice is because once we take them to our location and we see the expressions on the face, and uh even people would actually tell us like I can't believe that's possible.

• 4:31Speaker 1

  Yeah, that was my experience. Um I mean, I joined last year because I was early investor company, and Steve told me to launch it. I was I don't care about any of it.

• 4:40Speaker 0

  Right.

• 4:41Speaker 1

  Um and I tried it, right? I think that's the big difference. Um

• 4:45Speaker 0

  maybe we can get like really detailed into the differences specifically, right? So because you're using um, you know, Oculus in some places, you're using HTC Vive. So like what what what's actually different about the experience? So you go to a location. Yes, right, and you go usually with how how many people?

• 5:02Speaker 1

  Up to six.

• 5:03Speaker 0

  Up to six people. Okay. And then and then talk to us about just like the product like before you even get into the into the, you know, into the games, into the experience, you know, what what what is the what is the experience kind of you know before that?

• 5:15Speaker 1

  Yeah, so you check in. Um, our staff welcomes you. Um they start gearing you up with these markers. Um so all of us already there's a sense of, oh, this is different. Right. And I I didn't know what I was coming into, so I was like, oh, this is interesting I'm wearing these markers, I'm not sure what they're for. You walk into a room, and uh the first impression of the room is like this looks like a uh CGI motion capture studio because it's a complete green screen. Um so that was exciting. Then you gear you get geared up with uh haptic vests and then a computer and then a headset. And then the experience gets turned on. Right. Um and so you go from seeing nothing to you and all of your friends, they're there, but virtually as someone different, or in this training room case, like uh empty blue avatar.

• 6:02Speaker 1

  And and now that's that's the place where everyone starts screaming. I mean, they're that you're high-fiving people, you're shaking your hand, you're like, it's like this is crazy. And I think

• 6:14Speaker 0

  because it's it's super interesting that uh, you know, the the thing I remember the first time I used it was that um uh first, when you get all the gear up and running, you like kind of look pretty badass, right? Like you have like this best, like it's all black, like you actually kind of feel pretty badass. You see kind of on one of the walls, there's a bunch of uh you know different guns and different props, and it kind of looks like that scene in the matrix where you you know where they like hit the button, you know, and then like all the guns come out, and it's just like a wall of, you know, it's sort of like looks reminiscent of that. You're just like, well, that's like pretty cool. Um

• 6:49Speaker 1

  walking into the room and seeing the rack full of equipment uh was a magic moment as well. Right,

• 6:55Speaker 0

  right. And then and then and then you're saying like, so clarify like what is it, what does it mean that you high-five like in the game and in the role? Like what do you what do you mean by that exactly?

• 7:04Speaker 1

  Uh I mean, you know, I can see you uh with your body track correctly, and when we high-five each other in the VR game, like we

• 7:14Speaker 0

  physically also

• 7:15Speaker 1

  are like doing that, and it actually works. And so if you're used to a home VR where you can't touch anything, or it's all virtual, that is um for me was a mind-blowing moment. Like uh wow, okay. So now, you know, my imagination at the time was running, is like, okay, this I I can now become anything.

• 7:33Speaker 0

  Right.

• 7:33Speaker 1

  And I think for me, when I thought about the differences uh in terms of creative possibilities, is like if you think of a content and a home VR, the focus is around where you get to be and sort of the story and this world around you. But because of the limitations of the hardware and experience, not enough of it was about who you get to be.

• 7:54Speaker 2

  Right.

• 7:54Speaker 1

  And I think that more than anything is like a big differentiator for our content. It's like that's an embodiment and social.

• 8:04Speaker 0

  So going back to the investor reactions to you know, this kind of during your seed round kind of before before Andrews and Horowitz and also during during your pitch, like what what what were some of the other kind of points of feedback, you know, that you got from people that you know I go ahead.

• 8:18Speaker 2

  Well, we started really early. So I guess it's kind of like a founding story in a sense. Um I started this company in Hong Kong because I was building my last company in Hong Kong, and VR came about, you know, we were all very excited. So we wanted to work in VR. Um, but we approached it differently as game developers was like, what was the end experience that we wanted to create? And we saw consumer VR and we thought there was something about it that didn't feel right, right? In VR, we wanted to be essentially the holodeck or getting plugged into the matrix. So I went to my team and we thought, hey, can we build something like that? And then what would it take to build something like that? And then we realized you need a retail space, you need your own content, and you need the technology.

• 9:04Speaker 2

  And we raised um about half a million in the beginning, and we thought, well, the void has about much more than that, multiples of that. I think is a worthwhile bet.

• 9:14Speaker 1

  Yeah, I put in a thousand of that.

• 9:16Speaker 2

  So we had a lot of help from Seeky as well in the beginning.

• 9:19Speaker 0

  A thousand dollars of help from Seeky. Spend it

• 9:22Speaker 1

  all in one place. Right.

• 9:24Speaker 2

  Yeah, so that lasted us quite a while. Um that was a bet. Uh at the same time, uh Demester's friends who basically pitched in. They felt that, well, it's early, we should build a title as well. So that's what we did. We built a title and we also worked on a holodeck. So my thinking was, you know, by the time

• 9:43Speaker 0

  they built a title meaning

• 9:44Speaker 2

  uh a consumer title for the Oculus and for uh Steam.

• 9:48Speaker 0

  Right, right. Just for for in home VR. For in home VR. Okay, got it. So this is sort of like a two

• 9:54Speaker 2

  separate bets.

• 9:55Speaker 0

  Two two separate bets. One was just let's just try to do something for in home VR, also. This sort of full stack strategy.

• 10:01Speaker 2

  That's right. As well, right. So we're thinking that by the time that we're done with the title, the revenue that we'll be making from the title would hopefully break even on just that title, and we can hedge everything onto the holodeck. But that was Christmas of 2016, and we launched it, you know, based on Steam data, we were the top 20% selling game, but we lost over 90% on that title. And you know, we were very harsh reality that you know company wasn't gonna run out of money and it was gonna run out of money very soon. So what we did, going back to your questions was we needed to raise a seed round as soon as possible. So at the time we had the core technology where friends could actually high-five each other, right?

• 10:47Speaker 2

  Um multiple users. It was really cool. Um

• 10:51Speaker 0

  could you say a little bit about so the and the team right at that point was based in Hong Kong? How many folks were on the team?

• 10:58Speaker 2

  There were six people, including me. Right. Okay, great. So we had one engineer that just focused on building the holodeck, two engineers that built the content.

• 11:07Speaker 0

  Yeah,

• 11:07Speaker 2

  and then one artist and another envision in me. So you know, we had investors came in to try out the demo, and they were playing around with it. They're like, this is the beginning of 2017 when VR was starting to not be as hot, right? And they're looking at what we're trying to do, and it is a very big thing to both have uh physical store your own content and you know to flesh out the technology. So we couldn't get investors interested. Um we talked to many of them and they wouldn't even write back. I guess it would they just couldn't really think this would be a viable business. So what I did at that point was we had one month of runway, and I sat down with my team and I told them, look, guys, um, this company's gonna be gone in a month.

• 11:55Speaker 2

  And I think it's a shame because I believe that the holodeck should exist. Uh it's just unfortunate that it won't be us and someone else would be able to solve it. So at that time, I still have a nest egg saved up working at Blue T for the last 10 years. And I actually told the team, I can invest everything into this. And by the way, I I ran it by my friends and my family, and everyone's like, Steve, don't be stupid, you know, just get a normal job, don't use all your money to this company again. Yeah, that was me. Yep. Yeah,

• 12:28Speaker 1

  I told them

• 12:29Speaker 2

  that. So strongly. There's a lot, you know, it's very logical, it's very logical. It was a really risky bet. Um, but I didn't feel like giving up at that time. I felt like we should have one more shot, right? Right. So

• 12:44Speaker 0

  just to be clear, so this was this was your basically life savings that you had accumulated over the course of your previous you know, game studio company. That's

• 12:53Speaker 2

  right.

• 12:53Speaker 0

  And so this would have like this would have been like this is like a real bet for you.

• 12:57Speaker 2

  Yeah, it is a real bet. Um is real bet for me. I felt like it was also a real bet for my team as well, because they came into the company where they reduced the salary by half and then half, and they still stuck on. Right. So we sat down. It was very real. Um, you know, we were very discouraged. Um, but I said, here, we can do six more months. But you know, back then we wanted to just build a demo in six months. And I told him we don't have that luxury anymore, right? We can't convince investors, we must convince the market. So we need to get to market by six months. And I told them, look, in order for this to work, we all must say yes to this. So I remember that day we all sat down and each of us raised our hand, and we said, okay, six months, let's make this happen.

• 13:46Speaker 2

  So that was pretty much the foundation of how this uh actually became an actual product. So we worked pretty much non-stop for you know seven, seven days a week. Um, and we built the product in about four months, and we opened in late June. And at that time, we found a location which you know, uh we needed some place that was relatively cheap in rent. So we found this uh high rise in Hong Kong where there's absolutely no foot traffic. In fact, uh it was in a high rise where people don't want to be seen. There's a lot of you know membership clubs there. So it was a great space, it was cheap. So we located on a 16th floor, and we pretty much just waited. You know, we had people came in and played, we have um, you know, we had some news agency that talked about us.

• 14:34Speaker 2

  But what happened was over time people started, you know, sharing our product, and then one of the um social media channel um got the news picked up, and then everyone started sharing it, and then people started booking. I remember one afternoon, the phone wouldn't have stopped ringing for four hours straight.

• 14:54Speaker 0

  Right. Right.

• 14:55Speaker 2

  And then that's when we thought maybe we can actually make this work.

• 14:58Speaker 0

  Right.

• 14:58Speaker 2

  So that was just the beginning of the story. That's

• 15:01Speaker 0

  awesome. Okay. And it makes me think even the green room, right? For for all of us that have gone to like museum of ice cream, you know, where you go in and you're just like, it's just bright colors and you're just taking photos. Um, you know, when whenever I've been to uh you know one of the sandbox VR um, you know, locations, people start taking selfies from like almost the very beginning, right? Because it's basically like as soon as they can, they're like, oh man, I like look cool. I have these like you know, all this gear on, I'm in this like green room. It has this sort of like otherworldly feel, you know, from from you know, basically the first minute.

• 15:36Speaker 2

  That's right.

• 15:36Speaker 0

  Um and and and then obviously as as you were saying, it like you're able to generate um you know some of the the in-game footage as well, which is really interesting. Um but I wouldn't even downplay the fact that like people just start doing it, you know, by themselves, like you know, pr pretty much right away. What

• 15:52Speaker 2

  did you

• 15:53Speaker 0

  call it?

• 15:54Speaker 2

  Aggressive Starbucks.

• 15:56Speaker 1

  Oh, it's a store design. Yeah. Well, that's where we want to go, right? Um but I think uh yeah, I don't think that's what we have. Uh at least that certainly wasn't a first store, right? The first one was very run-down shabby Starbucks.

• 16:08Speaker 2

  Yeah. Uh absolutely.

• 16:09Speaker 1

  But I think, you know, certainly like the green screen, the green room is kind of a stroke of genius, right? It you come in and it all of these memories and associations of every time you see Ben or Dick Cumberbox pretend to be a dragon, right? Later filming in this stage, or when they're forming Lord of Rings, all this behind the scenes stuff, you're like, oh wow, now I'm one of them. Um so yeah, it already puts you in that mood, and then once the experience starts, yeah, it was a good setup. It

• 16:36Speaker 0

  makes you feel like a star, right? Yeah, it does that's kind of what you're saying.

• 16:39Speaker 1

  That's right.

• 16:40Speaker 0

  Um that's great. And then and then uh and talk to us about the the seed round. So, you know, in the seed round, you raised it um, you know, with with uh the entire team in Hong Kong, you know, kind of really early. Um, you know, what what what was the reaction there? And I know in Asia there's a little bit um there's some precedent because there are a lot of kind of VR arcades. There's a lot of kind of like location-based entertainment already, you know, kind of happening. So, you know, how how much did that play into it and like talk to us about sort of the the the group of investors that you were trying to put together for the C ground?

• 17:12Speaker 2

  Yeah, absolutely. So when we first started um to start pitching with investors now that we have traction in the stores, um the first question was so what is your VR and how's it different from all the other VRs I've been experiencing? So it was just first, well, why don't you try out and play it? And I think the product essentially sells itself. And I remembered we uh Alibaba Hong Kong Entrepreneurs Fund led our round, and the lead investor, he told me that look, I try a lot of VR, I get motion sick. So I don't think it's gonna be different with yours. And you know, I told him, well, if you get motion sick in our VR, don't invest in us. Right. And he came. And then when he was done, he's like that just felt like real life.

• 18:00Speaker 2

  He he played it through and he wanted to play again, actually.

• 18:04Speaker 0

  Right.

• 18:05Speaker 2

  So I think that was the really core thing, was just to let them try the product. Right, right. Yeah.

• 18:10Speaker 0

  And Siki, in your in your case, this was something where at this point you were you were at Postmates. Yep. Actually, why don't you say a little bit about what you were doing at Postmates and kind of hearing about the idea yourself and you know, and you were initially an investor, so yeah, let's talk about all that.

• 18:25Speaker 1

  Yeah. Um, if you go back to the founding of it, Steve uh described it as sort of escape rooms with VR, and I told them that is the dumbest pitch I've ever heard. Like I don't I don't get it. Um still did it anyway. Still did it anyway. I don't know. Like, yeah, there's so many dumb ideas that Steve had, it turns out to be not dumb. Um yeah, so I was up Postmates um when this thing was launched. He calls me um and I thought, alright, I I I didn't know the company was going anywhere. And he says, hey, we're sold out for the next six months. Brilliant, okay, cool. Still didn't care. Right? Because in my head, in my in my mind at the time when I heard that, it was like, you do a VR thing in Hong Kong, eight million people, high density, maybe we're gonna try it just because it's VR.

• 19:11Speaker 1

  And so, yeah, in August uh year and a half ago, right? Went to Hong Kong, tried it myself, and that's the thing that convinced me. Like, you know, over and over again, we know that this doesn't make sense unless you try it and you get it. Um it none of this makes sense unless you try it. And what I experienced was, yeah, this is like the first version of the thing I've been dreaming about since I was in high school, which is the holodeck. Right. Um to have done it with six people, like in Hong Kong with no money and have it be a working business and have a triple A piece of content that was 30 minutes long that was super high quality, done in like less than half a year, like you know, yeah. Honestly, you give me millions of dollars and you give me two years, and there's no way I would have done that.

• 19:58Speaker 1

  Right. Um so it's like almost Yeah, there's another thing was like, okay, this team is unafraid to two crazy things, and it's efficient in a way that like you just you it's not possible to do here.

• 20:10Speaker 0

  Right. And then a funny side part of the story is that um you and I talked about seed run.

• 20:17Speaker 1

  That's right. Yeah. Right? Yeah, and when you were with someone, right? You were working with someone. Um

• 20:25Speaker 0

  my friend Baba Mural. That's right, yes, yeah, exactly. We we were looking at companies together. Um and I was like, okay, Cha. So I was like, uh I haven't met the CEO, I haven't had the experience, you're excited about it, right? Uh but uh I'm kind of like, how can I possibly invest in something without seeing it?

• 20:50Speaker 1

  I don't believe me.

• 20:51Speaker 0

  Right. Yeah. Which which is great, right? I mean, you know, to be involved uh, you know, a few years later from that. So I I think I remember at that point, um, you know, I had also uh known of some of the other folks that um you know were in the industry, other location-based players, you know, it wasn't clear, like, okay, it you know, as an angel investor at the time, um, you know, do you invest in the the big guys that you know maybe had raised a whole bunch of money and this and that, or you know, is this the team? And by the way, they're also in Asia, and like are they gonna do anything in the US? How e how easily will these ideas translate into the US? And so I passed on the you know, on the seed round, which is a really interesting place to start the start the whole conversation.

• 21:36Speaker 0

  Thanks, Andrew.

• 21:37Speaker 1

  A lot of people did. Yeah.

• 21:38Speaker 0

  I didn't I didn't have a thousand dollars laying around to uh could have used that.

• 21:42Speaker 1

  It wasn't the easiest seed round and it wasn't the easiest A for those reasons. Yeah, you have to try it. Um and even if we're getting into you know, now we're getting into the story of A, but you know, we thought we would start in Asia because we have a location ready to go in Asia. And even Asian-based investors, they don't even want to go to Hong Kong. Like it's weird. Um they're in Singapore, they're in Mainland, but like, oh yeah, we have one in Hong Kong and people didn't want to go. Right. A lot of people ended regretting it, but like yeah, it's it was difficult.

• 22:11Speaker 0

  Right. The location-based aspect of it, the fact that it's so experiential, right? Those are the things that are actually so strong about this. But if you you know decide that you know you're you're not gonna you're not gonna worry about it, then you know, then off you go. Let's talk a little bit about the the series A you know, raise and some of the feedback that you guys got along the way also. So I think my maybe I'll I'll just share my experience, you know, on the whole thing. I think one of the fascinating parts about raising the Series A was um you guys came into town, we had dinner, right? Um we went to uh Avery. Avery, great restaurant by the way. Which is an amazing restaurant. Uh love it. And then what happened was um, and then you guys got the location running. And then I remember the first week that it was open, it was basically like in my social media feeds, like non-stop.

• 23:01Speaker 0

  And then I think you told me like four days in that you had you guys had already gotten a term sheet. Yeah. Right? And so, yeah, so just talk to us about that experience. Like this, you know, the the investment opportunity became white hot. Basically, we started from zero and then became white hot immediately. And so, yeah, like how did that work?

• 23:21Speaker 2

  Well, I think uh just two parts to it. Uh, one part is the amount of diligence and preparation needed for series A. And although pretty much most of the credit goes to Seeky for that uh in terms of how he can um strategize on getting investors to group up together, um, how he can kind of pace out the investor who goes first, who goes next. It's just

• 23:42Speaker 1

  much easier with a product that you know is awesome.

• 23:45Speaker 2

  So that in itself is really important how we think about um the deck, how we think about the story, like Seeky, he he has a really good way of structuring that. Um and the second part is just having to come to our store, right? And just getting it to be opened in time for an investors to be there.

• 24:03Speaker 1

  Yeah, so you know, we uh assigned a trip shooting in June. We kicked off the fundraising process internally late January, just in terms of preparation, right? So we have a CODA database of uh, I think it ended up being over 400 investors, and we went through everyone who has ever invested in any kind of game or VR uh or entertainment or media.

• 24:28Speaker 0

  Right. Um

• 24:28Speaker 1

  and so we want Crunch Base, and then we filter down by check size, who could intro us um over the right stage, then by Geo. Um and uh we you know, like I believe fundraising is about supply and demand, and you want to minimize your supply and concentrate your demand in time and space. So we tried to do that. Um Asia, the network wasn't as good, and people were willing to come. So, you know, luckily I've been in the Bay Area for 10 years, right? So once we had the store up, it was just outreach to a bunch of people. Right. People started posting. It wasn't actually, we didn't actually, to be to be quite honestly, we weren't trying to saturate the social feed.

• 25:07Speaker 0

  It

• 25:07Speaker 1

  we just wanted people to come.

• 25:08Speaker 0

  Right.

• 25:09Speaker 1

  People ended up sharing it, and then it became a little bit of a status symbol to have that on your to have that share, and people started like, I want one of those too. Um and then uh yeah, you know what's we we pitched what was funny is like when we first uh started the fundraising process in the valley, uh we met with a few investors, friends, you were one of them and some other people, and we went through the deck thinking it would be friendly, and it was right, they're still friends, but the store wasn't ready. And so on that basis, we were already dismissed. Um and then of course, once you try it, you're like, okay, never mind. Um but yeah, so it was just a lot of preparation and like making sure we concentrate as many meetings as we can in a very small amount of time.

• 25:54Speaker 0

  Right. Right. Well, awesome. And and you know, I I think the the the part of the the part of this that's my story is basically um, you know, at once you had the location up and running, you had a term sheet within a couple um a couple days. Um we visited uh you know uh a one or two days after that over the weekend, had you guys in on a Monday, and then and then my part of the story, which is really what which was really fun was I was like, well, I have to go see all the other you know location-based entertainment products right out there. And so um so I booked a flight to Vegas uh the day that you guys had had to come in and done the formal you know presentation to us. Um went to Vegas, tried out a bunch of things, and then on the flight back at the airport was like texting with you guys to set up time, you know, to meet up because I you know I got convinced.

• 26:45Speaker 0

  Um I think this part was really interesting too. I was convinced actually, because I tried all a couple different experiences, and it wasn't that you know necessarily that um the experiences were you know from a tech technology standpoint or for a content standpoint, you know, those weren't actually even the comparison points. I actually just felt like there's a lot of people trying to do something that looks more like sort of this passive experience, almost like film storytelling kind of a thing, and that the sandbox experience was actually the most like a game, and that I'll bet on something interactive any day because that's how you get the frequency, that's how you get you know, in in terms of all of our you know, interest in everything from you know esports and streaming and so on, that you sort of need to actually ultimately games DNA to get reproyability.

• 27:37Speaker 0

  And so the fact that both of you guys have um you know games DNA as opposed to Hollywood DNA was actually really part key part of the investment thesis. Um so after that, you know, um after seeing all you know, kind of a couple different other data points and you know, other products, then you know, we we we met up that that later that evening, I think we met up at like 9 or 10 p.m. We went to an in and out uh right next to SFO, so the Milbrae one, um, which was packed. It was actually completely packed. And we were like the weirdos with uh you know with the laptops out, you know, and talking and like sketching things on napkins, and we're doing spreadsheets and we were doing all this other stuff to try to get to a um you know, to try to wrap things up, and we got to a conclusion and then you know kind of went from there, which is which which is great.

• 28:28Speaker 0

  And and so we've and and obviously parts of that story are are on the internet now and and part of the TechCrunch um you know article, you know, uh about the investment. I want to actually uh you know pivot the conversation to to to you know a a different um uh aspect of this, which is in many ways um what you guys have done, what sandbox has done is to take something that is actually kind of a um kind of like a minimum viable product in many ways, right? It's sort of like the you know, um I think uh you know, we're up to three games now, right? But you know, originally all the demos, everything that you guys were doing was primarily off of Deadwood Mansion, um, which was a game that took a couple, you know, like a couple months and you know, a small amount of money, you know, and um and uh and and you know, as as you were describing, you know, putting on the markers, you know, you you you you you have these like motion capture balls attached to this like Velcro that you're putting around your wrists and all this other stuff.

• 29:30Speaker 0

  And that's where it is right now, right? Um but you know, that and the holodeck are kind of like, you know, there's a there's there's a long way to go before we can get to like Star Trek holodeck for real, right? And so let's talk about some of the technology things that need to happen, whether it's things that you know are are you know within the control of the company, things that are that are you know part of the ecosystem in order to get to like the highest expressiveness that you can. Get in in the VR medium.

• 30:01Speaker 1

  You know, I think about it in two components, right? One is like the sheer immersive quality of it, right? So, you know, I mentioned we we went through the deck, and you know, things are just going to get better from the hardware side. Um, but then there's like the kind of technology that we can invest in. Um and the other axis is how do we double down on what makes us different, which is social. So for example, you know, the fact that we can interact with each other and I can touch like Steve Children and shaking his hand and I'll have that work is critical to the experience, right? If you think about some other experiences, the focus has been on the thing, what you can touch in terms of a physical prop, like a table. And we our belief is that you know the more interesting prop to touch maybe your friend, like is to you know, work together.

• 30:48Speaker 1

  And um because we can capture your body, we can also get a sense of her body language. And so if we double down on that, then how do we go from body language, which is like really granular to emotion, right? Like I'm looking at you, there's eye contact, you just uh smiled. Um, how do we communicate all of these nonverbal things inside VR? Right? Man, you're wearing a headset, and we don't have a camera on you. We can't motionly capture your entire face yet without putting an iPhone. So how do we make that happen? And there's a lot of technology, um, you know, like there is a deep learning component that will make that happen. Um, and those are the areas that we want to invest in so that when you're in that experience with your friends, you can actually communicate both verbally from the audio cues, but nonverbally as well.

• 31:33Speaker 1

  Uh we think that's gonna be big. Um so yeah, there's you know, core technology and there's just social investment. Those are the two areas that we're pretty focused on. Right. Yeah,

• 31:43Speaker 0

  it seems like one of the big things is how do you um increase the expressiveness of the medium while minimizing the amount of hardware that you actually have to wear, you know, as part of it, right? And I know that um, you know, uh for instance, if you want to do really accurate tracking of your posture, of your fingertips, of you know, facial expressions, right? This this actually goes into this whole you know computer vision, machine learning kind of set of technologies that you know uh uh again, like 10 years ago, there was not this level of richness in the industry, you know, focused on driving that.

• 32:20Speaker 1

  Yep, yeah, a lot of the software, right? So, like how do we take everything we know about you, your oppose of your body, the location of your fingers, um, and what you say, and translated out to expression. Um, and so that's something we're really excited about doing.

• 32:34Speaker 0

  Right. Let's talk a little bit about the kinds of experiences that can be built. You know, so today what you have is you sort of have three games. You have um uh you have Deadwood Mansion, which is sort of a zombie, you know, um, you know, you're you're you're a soldier in inside of a um, you know, in in inside of a mansion with zombies attacking you. You have um, you know, you have a pirate uh themed game. You also have this now, the new one, Amber Sky, um, which is is focused on uh you know, you're you're you're an Android and you know you you're on a space, and it's really cool experience. You know, it's three shooters, right? It it sort of reminds me of um the era in in Hollywood, which everything was like uh like a spaghetti western. Yeah, you know, and that was like what what everyone was, it was all just John Wayne, and it was sort of the you know, I forget the the Italian director, you know, where like that like that's all he did, right?

• 33:26Speaker 0

  And and and this is you know, there's one genre. And then over time, you know, we in in in move in film, we've also seen um, you know, you you get the rom-com, you get the you know, period drama, you get, you know, you have all these kind of new genres of different things. So right now we're in you know, shooters, right? Like what are some of the other experiences that you you might imagine actually facilitating that might might surprise, you know, might surprise us in the future.

• 33:53Speaker 2

  There's the near-term experiences and just there's a far-off, right? So for the near terms, we are moving away from using guns. Actually, our next one, you'll be using different props that will be non-shooting related. So that would come out as soon as this summer. So from there, we're putting out experiences where we think about uh more about embodiment, actually, who do you get to be, and based on who you get to be, what type of tools will be most native to your character and your friends, right? So that's how we see in terms of near term. And you're right, we are looking to genre that extends beyond just um you know the zombie, the pirate monster, things like that. Is we think of it just like how we used to build games, um, what type of other mainstream experiences we feel like that can cater to a wider you know range of audience.

• 34:44Speaker 2

  So that's kind of the near term. And I think about the far term as um right now um a group of player plays that's inside a room of six. What does it mean one day to build these retail spaces where there's no walls? Right? You're talking about um perhaps dozens, if not hundreds of people playing at the same time. Um there could be uh immersive actors there as well. So that part is very exciting because you know what we have as a product is always evolving, right? We think of it as what type of limits we can we you know remove in the future, and from those limits that we remove what type of experiences can we create that we think people would love. Right. That's

• 35:24Speaker 0

  great. Yeah, and and and I know I mean, even in the games industry itself, it's like we're we're discovering still to this day new formats, right? It's like now all of a sudden, like this battle royale format in the last you know um couple years, right, through um, you know, uh PUBG and then you know now Fortnite, of course. Now it's sort of like every every every game needs to explore, you know, whether or not there should be a battle royale format. So it sort of feels like this is incredibly incredibly early in the whole thing, and um, you know, uh and and again going back to the film analogy, like even learning how to tell the stories um, you know, in in film and learning, you know, like the close-up shot and the shots of like um you know, uh looking up at the you know, up at the sky, like these are all things that have it had to actually be invented in order to you know tell the story.

• 36:13Speaker 0

  So it's it just feels incredibly you know early. Do you guys have any genres that you feel like are your own personal like favorites that you'd love to figure out like what is the VR you know, kind of equivalent of that?

• 36:26Speaker 1

  But I guess like just going back and riffing on what we were talking about with uh movies a bit. I mean, I I think we're even earlier than the Westerns, like I think this is the silent film era, right? Like, what we have, let's be real, like they're fun. I think I would I can honestly claim they're the most fun thing you can have, but extremely low production value, right? Um and so and just like early movies were, right? Um, and I think that'll increase. But like we I I feel like I was sort of insecure about this idea that oh, we're mostly shooters and games for a long time. And is there still a little bit of that? But you know, I recently I've come to like believe that as you did, I think during the pitch is like it's actually an enormous advantage, right? Because analogy to use to create the content is enormously important, right?

• 37:13Speaker 1

  So if your analogy is movies, then it's gonna be about movies plus plus, immersion, story, passive, and you know, we care about all those things, but because of the nature of the medium that is interactive and where consequences matter and agency matters, you need to take all of the know-how from games, which are all about that and combine that with uh movies, and and the realization is it is a brand new medium, and the analogy of games is uh perhaps a better starting point than just purely movies. And it's where it has games that have evolved to, right? If you look at Red Dead Redemption, right? That is as much of a narrative experience as a game. And I think that's the right analogy for us. Um and that's how we think about content. So, you know, yeah, we have shooters and we're gonna have all kinds of content, whether it's like esports competitive narration, narrative experiences, dance experiences, or even like training experiences, right?

• 38:07Speaker 1

  Um it's less about whether it's games or SSB piece of content, but for me it's more about this medium as a whole that feels something different than you know, VR as we commonly understand it. This is a new combination of movies and games that hasn't existed in our world. And that format is what this company I think is about.

• 38:25Speaker 3

  Well, I hope you enjoyed that episode and letting me channel my inner guy bras. It's always fun to hear the founding story of companies and boy, talk about courage, putting your entire life savings into the company. And then I love how Steve thought that was just a terrible idea, but eventually had a conversion experience and ended up joining the company. So if you liked what you saw, go ahead and subscribe. We've got plenty of other content planned for you. And we've got a comment thread open. So what inspired you? What surprised you as you heard the story of Sandbox VR? Go ahead and leave your comments, and we'll see you next episode.