74. Virtual Reality Investing, Part 2 (Adam Draper)

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Today we cover Part 2 of Virtual Reality Investing with Adam Draper of Boost VC. In this segment we address:

  • Draper Virtual Reality InvestingVR, in various phases of maturity, has been around for a long time. Why do you think the next few years is the right time for VR to take off and attain some mass market adoption?
  • This is an area that can be very capital intensive early-on. How does that change your approach as a startup investor when you compare it with sectors or investment areas that require very little capital to achieve product-market fit?
  • What are the economics and business models for most of your VR-based portcos (SaaS, per app download, advertising, etc.)?
  • What are some of the most significant challenges to VR, whether technological or otherwise?
  • What are some of the more exciting things to look out for in VR in the coming years?
  • Some have tabbed audio speakers, implanted in human ears, and identification sensors implanted in human hands as some of the first biological IoT w/ near-term application. Do you think it’s science-fiction or science-fact that elements of VR will eventually be integrated into human biology?
  • Is there a set of Series A investors that specialize in VR that you partner with on a frequent basis?

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Key Takeaways:

1- VR vs AR
Adam described VR as creating an entirely new environment that the user interacts with. In a virtual reality experience, the user is completly immersed in a virtual world. Whereas he described AR as augmenting the real world with digital data. So with augmented reality, the user is seeing the real world and virtual objects are introduced or overlayed within it. And in Adam’s estimation, he thinks the two will converge into the same technology. As he looks to the future, it seems more likely that the glasses, or whatever lenses cover the eyes, will be the same for both VR and AR. It’s pretty amazing to imagine that, in the future, one will not have to turn on a TV to watch a film… they could have an even better viewing experience, no matter where they are, through glasses or lenses. Or if one receives a text message, they will not have to fish their smartphone out of their pocket, they can choose to have the message appear in their peripheral vision. As Adam mentioned, it’s pretty exciting that graphics, connectivity, and data transfer are at a place that allows the new VR platforms to realize this potential.
2- Major Segments in the VR Stack
1. Tools for Creating Content
-Types of Capture (360 video, 3D Volumetric scanning, photogrammetry)
2. Infrastructure Software
-Compression Technology
-Cloud Graphics / Rendering Software for computation as a service
3. Education
-Here he provided the example of the internet, which allowed all of the information around the world to be indexed, allowing users easier access and faster consumption. And now w/ VR it indexes experiences and allows them to be accessed more easily and consumed more quickly.
3- VR Industries and Market Opportunities
When reviewing consumer applications and industries for VR, Adam mentioned opportunities within Education, Social, Retail, Media, Entertainment, Content the Gaming spaces.
Some of the longer-term opportunities included:
Education: Adam talked about how the current eduation model is one that was created hundreds of years ago. It doesn’t apply to a world that has all of this data readily accessible. Skills can be learned faster and on-demad.
Retail: On retail, Adam talked about the potential for visiting stores and viewing accurate renderings of real products without ever leaving your home. It’s tough for me to imagine shopping for clothes this way, but retail has and will continue to be disrupted even more significantly in the future.
Entertainment: Here Adam talked about how movie makers are looking for new ways to tell stories and also disrupt the old ways that movies have been created.
Some of the shorter-term opportunties included:
Content: Adam mentioned how in the early days there were be few producers of content and fewer producers of really high quality content. So, while there won’t be a mass market of users at the outset, every user will dowload the best content b/c there won’t be much out there. This reminds me a bit of the early app market in the first couple years of the iPhone. The limited number of apps that existed made the better ones extremely popular.
Gaming: More interactive and high velocity options will exist and may be one of the purchase drivers similar to the way that many bought iPhones to access some of the best mobiel games. However, even though these games will be more interactive they may not necessarily replace existing methods of gaming which relates to our tip of the week and this week’s tip is…

Tip of the Week:   Zero-Sum Tech? Addition vs Replacement