Facebook Is Going to Muscle VR into the Mainstream

At yesterday’s Oculus Connect 4 conference, Zuckerberg outlined a goal to have 1 billion VR users. This goal is rooted in his belief that once platforms reach more than 1 billion monthly users in scale, they’re impossible to compete with. He should know, given the platforms under his control including Facebook (2B), WhatsApp (1.3B), Messenger (1.2B), and Instagram (800M). Like it or not, VR will be mainstream – and we love it.

Empowering global VR adoption. While the Oculus Go hardware announcement and Zuckerberg’s billion user VR target captured yesterday’s headlines, the bigger story is that Facebook can singlehandedly turn VR from a nascent user base today into a mainstream computing platform in the next 5 years. Facebook has the capital ($502 billion market cap and $43 billion in cash) and its founder is committed to empowering global VR adoption.  It’s important to note that VR has long been a passion of Zuckerberg, and it was reportedly love at first sight when he first used Oculus. Zuckerberg’s 1 billion VR user stake in the ground will be a motivator for start-ups, private companies, and investors. We no longer have to debate if VR will be real, now it’s a function of time.

How big is the VR Market? Earlier this year we published our VR headset market share model, which calls for monthly global VR users increasing from 100 million in 2018 to 1.2 billion by 2022 and 2.4 billion by 2025. While we’re leaving our estimates unchanged following Zuckerberg’s comments, our confidence in our VR user model has increased.

How much will Facebook spend on building out VR? We estimate Facebook will spend $36 billion on R&D over the next 3 years (2018-2020). If we assume 15% is going to VR that would imply over $5.5 billion in spending, which we see as more than adequate to accomplish it’s billion user target.

Facebook gets it, VR needs to be social. Social is not only important to Facebook’s mission, but to the future of VR. Mainstream adoption of VR will not take place with the current gaming landscape, since VR is currently seen as a luxury geek item. Instead, VR will need a social aspect before there will be mass adoption of the technology. Software features like screen-sharing, virtual lounges, project collaboration, and shared experiences like watching a movie or a sports game, allow people to connect in VR.

Oculus Go is more accessible. This headset is a step toward finding the sweet spot between mobile VR and computer-based VR. Mobile VR is easy to use but offers a diminished experience, while computer-based VR offers the highest quality experience, but is far more expensive and leaves users tied down with a cable. The Oculus Go is noteworthy not only because its $199 price point is 15% of the cost of an all-in Rift system (with a compatible computer), but because it’s easier to use, offering plug-and-play with no wires and no specific smartphone needed. While the quality will not be as rich as on the Rift, it will address the need for a middle of the road system that will undergo huge improvements with further investment as more users flood to VR.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Announcing the World’s First Brain-Computer Interface for Virtual Reality

A version of this article was originally published on Medium by Michael Thompson.

Neurable’s BCI headset for HTC Vive®

Today Neurable is offering a first look at a product that is without precedent in modern tech: a brain-computer interface for virtual reality. Our integrated platform is built for one purpose: to enable developers to create brain-controlled content for virtual reality.

Imagine the power of your mind in VR. You awake hanging upside down in a snowy cave to discover you’ve been captured by a hungry Wampa. Sighting your light saber laying just out of reach, you calm yourself, concentrate, and summon the power of the force to grab your weapon. You cut yourself free just in time to slay the fearsome predator.

This dramatic close encounter is, of course, a famous scene from Star Wars. Popular fiction has explored themes like magic, telekinesis, and other super-human powers for as long as we can remember. As a society, we’re fascinated by fantasy: our imagination yearns to explore the impossible, the forbidden, the otherworldly.

The advent of immersive computing promises to bring those fantasies closer to sensory reality than we’ve ever known. Virtual and augmented reality are redrawing the boundaries of human experience. Both mediums force us to rethink how users should experience and interact with the digital world. The old rules of point-and-click no longer apply. Immersive computing demands a new approach to human-computer interaction.

The Ultimate Platform

We foresee an ecosystem of control inputs that will combine to make AR/VR environments incredibly responsive and adaptive to user behavior. Great strides have already been made with motion capture, haptics, eye-tracking, and natural language processing. What has been missing is a serious effort to link mixed reality to the ultimate computing platform — the human brain.

Neurable develops brain-computer interfaces (BCIs) for next-generation computing platforms. Our revolutionary technology allows people to interact with AR/VR environments using only their brain activity.

The benefits of a BCI in mixed reality are many and unique. BCIs analyze patterns of brain activity to determine user intent. This tech is already capable of typing on virtual keyboards and controlling prosthetic limbs, entirely from brain activity. Such intent-driven interactions hold tremendous promise for mixed reality environments, where current problems with user interaction constitute a significant barrier to more widespread adoption.

The best solution is a brain-computer interface that allows users to scroll menus, select items, launch applications, manipulate objects, and even input text using only their brain activity. Imagine the productivity revolution that a high-performance, non-invasive, intuitive BCI would unleash in mixed reality.

Combining Neurotech with VR

An illustration of Neurable’s BCI in VR

This weekend, Neurable is debuting Awakening, a VR game preview made in partnership with eStudiofuture, at SIGGRAPH 2017 in Los Angeles. Awakening is a futuristic story reminiscent of Stranger Things: you are a child held prisoner in a government science laboratory. You discover that experiments have endowed you with telekinetic powers. You must use those powers to escape your cell, defeat the robotic prison guards, and free yourself from the lab. The game allows you to manipulate objects and battle foes with your mind, and is played entirely without handheld controllers.

This incredible experience is made possible by Neurable’s machine learning platform, which interprets your brain activity in real time to afford virtual powers of telekinesis. Our complex machine learning pipeline has been distilled into an SDK compatible with Unity®. With the Neurable SDK, Unity developers can easily integrate brain-activity as a control input into any game.

Brain signal acquisition is accomplished through our upgraded headband for the HTC Vive. Simply remove the elastic straps in the back and replace them with our straps. Our solution is a demonstration prototype of how brain sensors and neurotechnology can be integrated with AR/VR devices.

Future Applications

Gaming is an exciting forum for experimenting with new technology, but the applications for BCIs extend far beyond entertainment. As AR/VR devices move from early adopters to broader use cases in health, education, industry and more, interfaces will evolve to support more complex tasks.

In the long run, we expect that AR/VR headset companies will integrate brain sensors directly into their products. They will do this because BCI systems radically empower users in mixed reality. Recent announcements and other publicly-available information confirm that major tech companies are actively developing BCI technology for commercial applications. What the touch interface became to smart phones, BCIs will become to mixed reality headsets.

How do I Build With Neurable?

We are working with content creators and location-based VR companies to bring our technology to consumers. We welcome additional partners. If you are interested in creating an experience with Neurable, please visit our Developer page at neurable.com/developers.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

Google Is Betting On The Right Long-Term Trends

Following the company’s Q2 earnings release, Google shares are down 3%, based on higher traffic acquisition costs (TAC). As a percentage of revenue, TAC increased to 11.1%, up from 8.8% a year ago. We think this is a classic example of investors looking at the near-term bumps rather than the long-term positives. We saw several positive themes in the quarter:

  1. Revenue growth has been stable over last 5 quarters. Google’s revenue grew 21% y/y. Over the last five quarters, revenue has grown between 20-22%, even though there has been anticipation that revenue growth would slow.
  2. AI is having a positive impact on Google. Sundar Pichai began his portion of the earnings call by saying: “Google continues to lead the shift to AI driven computing.” This was the third consecutive earnings call in which Sundar touched on AI during his commentary. In Q1 of this year, he said: “I’m really happy with how we are transitioning to an AI-first company.” In Q4 of 2016, Sundar stated: “Computing is moving from mobile-­first to AI­-first with more universal, ambient and intelligent computing that you can interact with naturally, all made smarter by the progress we are making with machine learning.” Google mentioned “AI” or “Machine Learning” 18 times during the Q4’16 call, 24 times on the Q1’17 call, and 21 times on the Q2’17 call. The focus on AI is important because AI will empower Google to have better, more targeted search results for consumers, higher ROI for advertisers (through Google’s smart bidding platform), lay the groundwork for natural language processing (the future of Google Home and Assistant), and improve computer vision-based search.
  3. Google remains heavily invested in the AR/VR theme. Google Lens, a computer vision platform driven by machine learning, is the foundation of Google’s future in Augmented Reality. Google is taking the long-term approach to Google Lens, as new computing form factors emerge (ie. AR Glasses) that lend themselves to input methods more natural than taking out a phone and snapping a picture. In addition, Google shared that by year end, there will be 11 Daydream-ready devices on the market. Most notable, Samsung’s Galaxy S8 and S8+ are Daydream-ready.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio.  Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.

VR Sickness Should Be Mostly Solved In 5 Years

The sickness adoption hurdle. The timing of most tech adoption curves can be anticipated by a combination of cost and utility. The lower the cost, the higher the utility, the faster the adoption. We define mass adoption as 500m or more monthly users. We estimate monthly VR users to be about 25m today. It’s still very early. In addition to the standard tech adoption factors of cost and utility, VR has a third factor: sickness. In order for VR to go mainstream, simulation sickness is a problem that needs to be solved. We expect that over the next 5 years, technology will solve most VR sickness.  It’s important to understand why we get sick in VR and what can be done to reduce VR nausea. We visited a VR arcade to further investigate the issue.

Why do we get sick in VR? Users primarily experience sickness in virtual reality simulations due to the imbalance of inputs in their vestibular and visual systems. This sensory imbalance is related to motion sickness. In a common example of motion sickness, a passenger on a boat may become sick when the visual inputs to their body appear as if they are not moving, but their vestibular inputs give their body the perception that they are moving. In this example, motion is not seen by the user, but is felt by the vestibular system. Virtual reality can cause a type of motion sickness, where motion is seen by the visual systems but not felt by the vestibular systems. The most common theory posits that the imbalance of sensory inputs causes the brain to incorrectly believe that a user is hallucinating due to poison, and will attempt to induce vomiting.

In addition to sensory and visual conflict, virtual reality sickness can also be caused between the lag in head movement and simulation refresh rate. If the simulation refresh rate can be brought down to within 5 to 10 milliseconds of our body’s movement (from on average 18 to 22 milliseconds today), sickness from refresh rate will be reduced or eliminated.

Potential fixes. As mentioned, one solution to address VR sickness is to decrease the latency, or the time between a user’s head movement and the updated display content reaching a user’s eyes, to a level between 5 to 10 milliseconds. Improving latency inside VR is challenging, but achievable, notably through the introduction of eye tracking and foveated rendering. Eye tracking is when a VR headset has the ability to identify the specific area of the screen that a user is looking at. Foveated rendering is the process of rendering the specific area of the screen a user is looking at with a higher resolution. Areas outside of focus are rendered at a lower resolution. As such, foveated rendering is dependent upon a quality eye tracking system. Foveated rendering takes stress off of the GPUs, reducing the bandwidth necessary and potentially decreasing the latency.

When it comes to sensory imbalance, there is still a lot of work to be done. There have been some VR applications that try to mimic movement in VR to limit the sensory imbalance, such as walking on a gaming treadmill. A less appealing, non-technological solution is for users to develop a tolerance for simulations and VR, slowly acclimating their sensory system to a simulated environment. Using VR more often for short periods of time can normalize one’s senses to the discrepancy between sensory inputs. We believe that over the next 5 years, technology will solve the vast majority of VR sickness.

Measuring for VR sickness, our visit to VR game location. Madeleine Winges, an intern at Loup Ventures, visited Smaaash, a VR game location at the Mall of America in Minneapolis. Madeleine’s not a gamer, which made her the right person to do the testing. Here’s her report:

A great experience, even thought I felt slightly nauseous.  Overall, I had a great experience at Smaaash.  It was my first time in a high definition VR headset, and I would recommend it to anyone, especially those curious about the world of virtual reality.  I did get slightly nauseous (average of 3.6 on my 0-10 nausea scale) in the hour I tested the different VR experiences, and the nauseous feeling lasted for 45 minutes after I left.  One complaint about the particular location-based VR experience: Players need to wait for an attendant to set up the game for you, compared to the simplicity of a classic, walk-up arcade. While I am not likely to return due to my lack of interest in gaming,  I can see why groups of people would enjoy this unique experience.Read More

Swinging for Grand Slams

If we had to sum up our investment approach in one word, it would be non-incremental. Venture capital is a power law game: the vast majority of venture returns come only from a few investments. We believe we have to have the chance to hit a grand slam on every investment we make. Therefore, we look for great teams doing something a little more out there than most. Things like brain-computer interface, or connected fabrics, or creating the future of retail. And we actually think that investing in non-incremental businesses is safer than investing in incremental ones.

Before we get to why, let’s define the difference between incremental and non-incremental.

Incremental companies build for obvious or established markets. They create products and services that are 10% or 50% or even 100% better than what’s on the market now, but they don’t create products that are 10x better. They don’t create products that transform industries and change how consumers interact with the world. And that’s ok! Incremental businesses are important to the progress of the overall ecosystem and see good exits all the time.

Non-incremental companies create products and experiences that are 10x better; those that revolutionize, not merely improve. They establish new markets that are obvious only in hindsight. They create entire ecosystems of companies trying to play in the sandbox they built. It takes a founder with a big vision and a dedicated team to build something non-incremental.

With that distinction in mind, we see three reasons why investing in non-incremental companies is safer than investing in incremental ones:

First, it’s just as hard to create a great non-incremental company as a great incremental company. Either way, the entrepreneur has to convince talented people to take a risk and come work for him or her. The entrepreneur has to retain that talent as other companies come calling with better offers. The entrepreneur has to convince skeptical customers to use his or her new product. The entrepreneur has to persevere through the rollercoaster of survival as a new business. We think that last point is the death knell for most incremental companies: the entrepreneur is beaten into submission and loses interest in the business. It’s easier to stay engaged working on non-incremental ideas than incremental ones.

Second, non-incremental companies tend to have less relative competition than incremental ones. It’s red ocean/blue ocean strategy. Since incremental companies are attacking obvious problems, the market will be full of other businesses trying to solve the same thing. A non-incremental company will have less direct competition because they’re focused on something less obvious. This means that non-incremental markets look smaller than incremental ones at first, but the early non-incremental markets tend to morph into new markets that encompass larger legacy markets over time. Airbnb is an example. Air mattresses on a stranger’s floor is a weird, non-incremental market, but a platform to rent unused housing space competes with the legacy hospitality market.

Third, non-incremental companies tend to develop things that the world needs most. What’s truly valuable about the 5th food delivery company? Or the 10th ride sharing company? Or the 100th photo sharing app? Yes, there are great potential markets there, but they’re obvious markets with lots of competition and, for the most part, undifferentiated technology that creates modest incremental value. We believe that companies tend to get rewarded in proportion to the value they create in the long term. This means that some companies can be overly rewarded in the short term (see many social plays). These short-term wins are harder to predict and are more driven by luck through rapid user adoption than true value creation. Investing in things the world really needs gives us a tangible reason for future reward.

Our downside is still zero when we invest in non-incremental businesses, but the probability of zero is lower for the three reasons mentioned above, and the potential for a unicorn-sized return is greater. Even better, and cliché as it might sound, non-incremental companies are the ones that actually change the world and shape it in our vision of the future. That’s why we swing for grand slams.

Disclaimer: We actively write about the themes in which we invest: artificial intelligence, robotics, virtual reality, and augmented reality. From time to time, we will write about companies that are in our portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making investment decisions. We hold no obligation to update any of our projections. We express no warranties about any estimates or opinions we make.