Virtual reality was one of those technologies like AI. It emerged from the labs and had a brief moment in the sun until total eclipse plunged it into darkness for years. Too expensive, too kludgey, not enough content, no tools for content development – a long list of why virtual reality has been a tiny niche in the vast expanse of the high tech field.
And so it remained until a totally unlikely founder – Palmer Luckey – virtually single handedly created a low cost consumer-friendly HDM (Head Mounted Display). I’ve gotten very interested in VR lately, not because I’m a game player as virtually all VR advocates are, nor because I want to watch video in the immersion of my HDM. I’ve found that VR is a great way to manage pain. More about that at some other time. Not only is The History of the Future: Oculus, Facebook, and the Revolution That Swept Virtual Reality by Blake J. Harris an incredibly detailed and highly readable history of Oculus, the company Palmer Luckey founded, but it holds many lessons for founders of tech-based startups.
Luckey goes from 19 year old inventor living in a trailer to selling his startup for almost $2 billion to Facebook to – spoiler alert! – getting kicked out of his own company. Along the way you’ll find a rogue’s gallery of co-founders, bit players, and of course, the mega-player of them all, Mark Zuckerberg, who personally drove the acquisition of Oculus. According to Harris’ account, Zuckerberg foresaw the plateauing of the smartphone as the platform of choice and with it Facebook’s fortunes. So he was on the hunt for the Next Big Thing – what would replace the smartphone as the communications/entertainment/remote control for billions of people. Zuckerberg convinced himself that next platform was VR.
Harris conducted hundreds of interviews over three years, with inside access to both the founders of Oculus and those at Facebook intimately involved in the acquisition of Oculus. At times I found the detail overwhelming and extraneous – I really couldn’t care less what Palmer ate for lunch. But the story of the rise of the hero and his tragic downfall is totally engrossing; I plowed through the entire 400+ page book in two days. Palmer Luckey was a hardcore teenage game player who must have been an autodidact as he never took any courses in software or hardware development and seemingly learned everything he needed to know on the fly. But what he didn’t learn was how to start a business nor how to choose his partners.
Unlike Zuckerberg, who moved from dorm room hacker to a founder intent on world domination in short order, Luckey’s ambition was simply to sell a few VR kits so others could experience the VR environment he had built. But like a Hollywood starlet in the days of yesteryear, he gets discovered by a successful serial entrepreneur who virtually takes over the company and eventually plays a hand in Luckey’s getting booted out of the company he had planned to spend his life with.
One tell that was obvious to me early on was the cap table for Oculus which gave Luckey basically the exact same percentage as his co-founders, about 15%, totally ignoring the fact that Luckey was totally responsible for the first prototype. In other words, Luckey let himself be screwed from the get-go by experienced entrepreneurs who saw him as their golden goose – their ticket to riches.
I won’t spoil any more of the book for you. But even if you never pick it up keep in mind two things: choose your co-founders wisely and structure your cap table to acknowledge both past and future contributions of all founders.
As Alan Kay has pointed out, it can take about 25 years or more for a technology to go from lab to commercialization. In VR’s case it took even longer. Computer scientist legend Ivan Sutherland created what is widely considered to be the first VR HMD in 1968! In eight days Facebook’s Oculus division will release the Oculus Quest, a low cost, self-contained VR system that is the first VR product with the potential to become a mass market hit – 51 years later!