How to be a good VR startupper – Part 1

This is the week of this blog’s birthday and so I’m publishing a very special post, that I’m going to split into two parts. It’s a while that I don’t write something about entrepreneurship, so I thought it could be a good idea to give you some pieces of advice on how to be a good VR startupper. If you are not into VR, don’t worry… most of these rules apply to all kinds of companies.

These are mostly based on my experience, and I think they can be mostly useful to beginners… but I hope that also more experienced entrepreneurs will find some hints useful.

You may wonder who am I to write such a post, since I have never been featured on the front page of TIME magazine. Well, I am an entrepreneur that has made a lot of errors… so more than my successes, I am entitled to write this post because of my failures 🙂

That said, let’s start with the first list of pieces of advice!

Start with some money in your pocket

Some weeks ago, I interviewed BadVR’s CEO Suzanne Borders, and among all the other interesting things, she said this about becoming a startupper:

[…] plan your finances accordingly: get a year or two years worth of pay in the bank so you are not going to financially ruin yourself in this process. Make sure you start from a place of stability, so that you can put in and stand the ups and the downs.

Suzanne Borders

I really hope to have heard this before starting my entrepreneurial adventure in 2014. I started with almost no money in the bank, being confident of the immediate profitability of my startup and on the finances of my partners. Long story short, it has been a terrible idea.

If you want to become a startupper, please start having a solid budget in your bank. This is useful for two reasons:

1. In the beginning, you won’t earn much money with your startup, or you won’t earn money at all. This is even truer in a new and complicated market like virtual reality.
   Having the money to survive the first months is fundamental, so you don’t get crazy wondering if you will have the money to eat or to pay the rent of your house. Being without money would make you nervous, and that would hurt your ability to wisely manage your company and also the relationship with the rest of the team;
2. If you are an entrepreneur, you have to spend money on everything: the office, the website, the hardware, etc… VR is a very expensive hobby, with the headsets that cost a lot (the much-awaited Index costs at least $750 to have the headset and the controllers, for example), the required PCs that cost a lot (at least $1500), the office that must be large enough to let you play with room-scale (and so also the rent is higher) and so on. If you don’t have a budget, how are you supposed to buy all this stuff?

Someone may tell you: you find an investor. My answer is: good luck with that. Finding investors is a long process, that requires you to spend money and time (e.g. for traveling to meet them)… and so, again, you have to have a budget. Not to mention the fact that usually investors require at least a prototype of your technology, and to build it you need time and money.

The only possibility of avoiding this is funding a company with an angel investor that you already know, or as a spinoff of an existing company. In this case, it is clear that there is a cofounding entity whose purpose is taking out all the needed cash. But again, from my experience, if this is the case, make a clear agreement of what will be the expected investment of the other entity, and how many shares of the company the financing partner will take. Partnering with a friend that “has some savings” doesn’t work. Usually, the savings are not enough and if it is not clear what he/she will get from putting the money in advance will create lots of confusion.

Manage your money and time wisely

You have very finite and limited resources. Unless you are one of the lucky guys (or girls) getting millions of investment, you usually have a limited budget. And for sure you have only 24h a day. So, you have to manage both very carefully.

When I started my VR adventure with Immotionar, I was super motivated about being an entrepreneur and super enthusiast about VR. I and my partner Gianni bought every new headset on the market: the Oculus Rift DK2, the Vive, the Rift CV1, the Gear VR, etc… We also went to almost every event we were invited to, even the smallest one (I remember once we went to a public plaza with like 7 people listening to our talk about VR…). In the beginning, we also spent a lot of time demoing VR for hours to whoever asked us to try the technology, because we really wanted everyone to know how VR was cool and maybe collaborate with us. You can imagine that we wasted a lot of time and money because of that.

Now my attitude is much different: I evaluate every opportunity considering what advantage it does give to me.

For instance, there are lots of new headsets being released by hardware companies: just in the last year, there have been the Oculus Quest & Rift S, HTC Vive Focus Plus, HP Reverb, Valve Index, Acer OJO 500, and HoloLens 2… just to mention the most popular ones.

Is it necessary to own all of them? No. The only sure purchase for me on day 1 among the above devices has been the Oculus Quest. The reasons? 1. It is affordable; 2. It is the VR gadget of the year, and so as a consultant and blogger, I MUST own it. For the other ones, I will decide: if they will prove to be useful, I will buy them.

Let’s face it: current headsets are all similar. There is some difference on display type, resolution, etc… but they are more or less the same. Owning all of them is not necessary for your job. Buy only the ones that prove to be truly different, so you can experiment with them, or the ones that are necessary. With necessary I mean that they let you gain a better reputation, attract new customers or they are necessary for a project you have to develop.

Try to spare money whenever you can. When I needed a Vive OG last year to play around with eye tracking, I bought a used one. For a consultancy on HoloLens, we borrowed one. I wrote a review on Magic Leap One because my friend (and ex partner) Gianni made me try it. I try to ask for free headsets to companies that offer this opportunity to developers (and you should do it as well!). When I and Max had to find an office for our startup, we haven’t picked one of the most expensive choices, because they featured some extras that were (and are) absolutely useless for us. Invest money only in what you think will be truly useful. Buy “nice to have” things only when you can afford them. Prioritize your expenses.

And regarding your time, use the same reasonings. Is that call with that unknown Indian guy that contacted you on Linkedin because he wanted to talk about “possible collaborations” useful? Probably not, from your experience, you should know that 99% of the cases, he wants to ask you to outsource your work. Is that VR event in the mountains of Italy really a good opportunity? Mostly not, there will be few people. Do you have to demo VR to anyone you know? Most probably not: they will have fun, but then they won’t offer you a job, a collaboration, whatever. Maybe they will also become your competitor (fun fact: it has really happened to me).

Spend your time only doing stuff that could be useful for your company. Or that is worth for your personal life (hanging out with friends, having dinner with your SO, etc…). Avoid time-wasting. Don’t let your FOMO (Fear Of Missing Out) deceive you: if you feel that something has 90% of possibilities of being useless, discard it. You don’t put money on a Poker table if you have a 7 and a 2 in your hand, even if there is a little possibility that you win also in that case.

A very popular Italian blogger proposes to value your time a lot of money, so you better think about how you use it. He says he evaluates one hour of his time 1000€. So, next time you have to attend an 8-hour event to seek connections, ask yourself: is this worth 8000€? Would you waste that amount of money to go there? If you answer yes, then go, otherwise skip it.

Personally, I have still to get better at time management, but I’m doing my best.

Ask yourself always “why” you do something

Let me stress it again. To invest wisely your resources, you should always ask why you are doing something. Why are you going to buy a new device? Why are you going to that cool exhibition? Why are you experimenting with this new technology? And so on. Evaluate the pros and cons.

Shiny useless things are one of the worst problems you will have to face. For example, sometimes I read about amazing exhibitions in America, that I would love to attend. They are very famous, lots of important people go there, lots of cool VR products are showcased there. So, should I go? In that moment, I have to evaluate. What is the purpose? Why should I go there? The answer is connecting with new people, staying updated on the technology, and improving my personal brand (showing that I go to cool events). But there are also problems: I have to invest a lot of time and money to go there. I usually stress myself a lot by attending events. Furthermore, at these events very seldom I find customers for my VR consultancy business (in a VR event, people already do VR themselves) and the reports that I write about them on my blog never get traffic spikes. A lot of times, in the end, I skip the event. It would be cool going there, but it’s not useful enough and it is not worth the expense. Sometimes, it is worth it, maybe because the event lets me connect with many people, or improves my personal brand a lot. Or maybe because it’s in a period of time when I have less things to do…or it is particularly cheap and so on.

Always evaluate the pros and the cons and think if what you want do is worth it. Think about what is your purpose of doing everything you want to do, and what are the possibilities of reaching your goal. Avoid “nice to have things”, focus on “must have” ones.

Focus on how to make money

When I published the postmortem of my previous startup Immotionar, I wrote one sentence every new startupper should take in mind: “a startup is all about money”. If you don’t earn money, you don’t have a company, you have a hobby.

Apart from saving money, you should focus immediately on how to make money. Are you going to ask for an investment? Are you going to be a part-time consultant to earn the money to build the product that will make you rich in the end? Are you going to go all-in with your product? And how do you think to sell it? How do you think you will find your customers? Etc.. etc…

If you don’t make money, you shut down, this is the law of the jungle. And at the moment, in VR, is hard to make money. The technology is new, the market is unripe, so earning is not easy. There is not a clear earning strategy, so you will probably have to experiment a lot on this. If you are going to release a VR product, you’ll have to experiment with different prices and different revenue models (e.g. subscription monthly fee vs upfront cost) before finding the best fit. According to an article on Forbes of some months ago, if you have a VR game, the best strategy at the moment is selling it for an upfront cost: there are not enough customers to make revenue models based on advertisements or IAPs to work. Licensing your game to LBVR can give you extra cash in the west, while in China you must be very careful about piracy and people not paying the licenses. There are a lot of things to consider, and you will have to spend some time to find the perfect way to sell your products.

Some indie game studios that I have just interviewed for the Gamescom VR Games Showcase confirmed to me that it is impossible for a game studio to survive just selling VR games. And when I was in Taiwan, someone told me this very crude sentence:

(Almost) no one is making money in VR at this moment. The market is not there yet. The only way you have to earn money now is to have an investment.

How can you make your company survive in this complicated moment?

Talking about New Technology Walkers, the startup that I have with Max, the approach that we are having is experimenting with different possibilities and getting money from multiple sources. For instance, we don’t only make consultancies about VR or AR: I have just finished a consultancy about computer vision and now we are doing a project for a 2D touchscreen. At the same time, we are creating our mixed reality fitness game HitMotion: Reloaded, that is made in collaboration with HTC. We are also experimenting with 360 tours (if you need one, let us know 😉 ).

Regarding finding new customers, my hard work on social media pays offs to find new collaborations, but at the same local partners are giving us jobs. Here on my blog I am experimenting with different income sources (Patreon, Adsense, Amazon Affiliate, Sponsored Posts, etc…). As you can see, in this complicated moment of the market, you had better not sticking with only one income source, or only one strategy but you must try different ones after you find the best one. It is a constant work in progress.

Find a product that solves a problem

Don’t forget the old rule: make a product (or offer a service) that solves a problem. People won’t pay you “just because you use technology X”, but they will pay you because you solve a problem of theirs, “because you use technology X to solve problem Y”.

Using VR or AR won’t make you rich now (it’s the contrary)… but you can exploit VR to solve the problem of a particular market: you can help for instance companies in sparing money by offering better training solutions, and so they will pay you to have this advantage.

So, think about a solution that can solve a problem of a group of people. And remember that after you have your business idea, you have to validate it. Don’t keep it secret, don’t think that it is good enough just because you and your partners love it. Ask whoever you can what they think about it. Talk with some possible customers. If you can, prepare a dirty prototype and make your possible future customers try it. From the feedbacks you will get, you will have an understanding of if the idea can work or not, or how you can improve your idea to make it work.

More or less one year ago, we thought about developing a tool to let people prototype in VR, like the Adobe XD of VR. When we explained the idea to people, they understood it as “develop in VR without coding”, so we got that we had some communication problems. A mentor of ours also told us to abandon that project because this kind of applications are very risky. Because of all these not-positive feedback, we dropped the project… and now we are very happy of it, because the market is becoming saturated of similar tools, and some of them are even made by major companies (e.g. Maquette by Microsoft). If we had made it probably now we were struggling in finding customers and we would have just wasted some months to build it.

Don’t fall in love with the technology. Don’t fall in love with your idea.

Don’t chase the money

Just a quick reminder: following the money, just wanting to become rich won’t take you anywhere, unless you work in the world of finance, maybe. Money is just the effect of creating with passion something that people find worth paying for.

If money is your only driver, you will most probably fail. The beginning of the startup journey is made of fatigue, stress, confusion… and little money. If you have only interest in the money, you will give up soon. You must have a stronger motivation. You will have to enjoy the journey.

Furthermore “money” doesn’t mean anything… there is not actually an exact place where you can get money (unless you want to rob a bank). Money is always the effect of something else you did. Following just the money won’t give you any direction in life.

Following just the money is also stupid because, as rich people say, once you become rich, you realize that being rich is not the solution to all your problems.

Don’t follow successful people

We all like reading the stories of successful people: Steve Jobs, Elon Musk, Bill Gates, etc… But at the same time, reading all of them, you realize that they have very little in common. The founders have different characters, the companies offer different products, the business models are different, and so on. Furthermore, they often became successful in a moment that is completely different the one from the others. And throughout their story, they have also been lucky or some coincidence has helped them.

I know people that read the story of one successful company and then they say “they did this way, so I will do this way as well”… and then they fail. They don’t consider that they are living in a different context, that they are people different from the founder they are trying to emulate, that the company is different and so on.

A variation of this behavior is just cherrypicking one successful company and draw conclusions from this success. For example “Beat Saber has made millions with a VR game, so I can become rich making VR games” or “The VOID is doing great with LBVR, so I should do LBVR as well”. It doesn’t work this way: for one successful hit like Beat Saber, there are at least 100 games that have failed, earning almost no money. Don’t forget that.

Reading stories of successes is inspiring, but just take them as a source of inspiration. Don’t try to simply emulate them: success can arrive through so many different paths, that you have to consider the one that fits you the most.

There is no path to success

There is no such thing like a path to success. Success arrives in a confused way, usually after lots of time of hard work. One popular sentence on the web is that you need a lot of years of hard work to be able to obtain an overnight success.

Usually, you need to try different things, you have to go through various failures, you have to work hard for months without seeing any result… and only after that, you will succeed. It is a mess.

Talking about my blog, that is probably the most successful thing that I’ve made, things have been exactly confused this way. I got a lot of growth in the first months, then I have gone with a self-hosted domain and I lost a lot of traffic, then I had growth again, then I stalled, etc… Some weeks I have published amazing articles, others I have published not-so-great ones. For some articles, I got lots of compliments, for others only insults. In short, it has been a mess.

The only thing you can do to succeed is pushing constantly, continuously thriving. I see every article I write like a lottery ticket. I buy this lottery ticket with my time and I play it by publishing the article. If the post gets traction, or if it gets read by some important people, I have won the lottery, otherwise, I have lost it.

The chances of “winning the lottery” with only one single post are very little, like 5%. But this means that if I publish 20 articles, at least one of them will obtain a positive effect. And these effects are cumulative: maybe with those articles, I have attracted an influencer that sharing my posts in the future will let me reach other more influential people. This is how I got to be connected to famous journalists like Charlie Fink, Robert Scoble, Benjamin Lang, etc… It’s not been luck, it’s been because I have been consistent over the last three years.

Don’t be afraid to experiment

This is a point where I have to still learn a lot myself: don’t be afraid to experiment new things. I’m used to think a lot before doing anything and changing anything (and my partner Max hates that), but as I’ve showed you before, VR is a complicated environment, so experimentation is necessary to reach success.

Talking about my blog, I was very afraid of trying monetization models like Amazon Affiliate or sponsored posts because I was afraid of what the reaction of my readers could have been. I was afraid of experimenting with newsletter pop-ups for the same reason. The problem is that with all those worries, my website was never changing anything.

One day, I decided to risk and started experimenting with newsletter popups, one of the things that I hate the most on websites. With much surprise, I discovered that my readers didn’t kill me for that (yes, someone wrote me an e-mail saying that I should put a cactus in my ass… but I considered it as a kind invite on experimenting on even more extreme things :D). In the end, I removed them because they were horrible and were not converting THAT more than the Hello Bar… but at least now I have real metrics on which I’m basing my decision. My readers haven’t even got angry for the first sponsored post that I published.

I am now experimenting with various monetization possibilities, and now I have a real understanding of if they work or not, not just based on my hypothesis.

So, don’t be afraid to experiment. Usually, your worries are bigger than the possible real drawbacks, and the benefits of doing new things are bigger. For instance, after I opened my Patreon, I got a surprise generous donation by Ivan, that made me feel my blogging work really important and valuable. If I hadn’t experienced that, I would have never had this possibility.

Don’t be afraid to ask

For a techie like me, all the “outreach” activities are “annoying other people”. Proposing my VR consultancies, talking about what I’m doing, asking tech companies to give free hardware to review, asking journalists to be published, and so on. Why should I annoy people just to have my own advantage? I could just sit here and wait for someone to propose something to me.

The answer is: because if you don’t ask, you lose lots of opportunities. There will be people proposing you something, but if at the same time you propose yourself, you can have bigger possibilities. Do you want some examples from my recent experience? Some of the best opportunities that I had this year were because of me (or we as a team) proposing them. I have been featured in the amazing book Convergence by Charlie Fink because I asked him if I could help him for an article. We are developing the game HitMotion because I asked HTC to try the 6DOF controllers devkit for the Focus. I have been quoted on Road To VR and VentureBeat because I notified the journalists about the news tagging them on Twitter.

If you ask things politely, people won’t get annoyed by you. If you propose them an opportunity of collaboration that can be beneficial for both, this is actually great and they will be happy about that. And in most of the cases, if they are not interested, they just won’t answer or will answer “no, thank you”, so there is little to worry about. Proposing my consultancy services may sound annoying to me, but it can actually help companies in implementing virtual reality in their businesses the right way, and so they spare money thanks to me. This actually can help them.

So, don’t spam people, don’t be pushy and don’t contact strangers with automated messages… but go out and talk about your business. Contact people proposing things that can be beneficial for both. You will discover that this will open you many doors.

Don’t forget to help

You will have to ask, but you also have to give. Your priority should be to make your company succeed, but during the process, you will meet other people with your same purpose. Help them, if you can.

Don’t over-prioritize helping others… otherwise, you spend all your day helping out. But give a share of your time to be helpful. Sometimes you will just need to help someone in getting a connection, or giving him visibility, or fixing a little problem… things like that. It will be easy.

Do this for the karma: help others and the good karma will make other people help you. This will also give you the positive effect of having good connections: the more people you will help, the more “friends” you will have in your industry… and these friends will help you in succeeding. But don’t expect anything in change… because usually, it won’t happen. It will be the cumulative effect of having helped many people over a long time that will boost you.

As an example of helping, I usually help people in connecting with other companies or people that I know. It just costs me an e-mail and maybe can help the other startup really a lot. I answer people on Quora. I write at least a tweet for every company that asks me to give them visibility through my blog. I write this kind of posts to help startuppers. I have given feedbacks to lots of other companies.

Very successful people usually help a lot of other people. When I had the opportunity to talk with important people, they usually asked me as one of the first things “How can I help you?”.

But as a final warning: iron out people that just take. There are people that come up when they need help and then they vanish away. These ones are not good connections and are just a waste of your time.

---

And that’s it for the first part of this long post! I hope you are enjoying it and that it is being useful for you. If it is, please share it on your social media channels to help also your friends that want to become VR entrepreneurs.

Tomorrow I will publish the second part, with another long list of pieces of advice. Subscribe to my newsletter to not miss it!

If you want to connect with me to talk about possible collaborations in the VR field, feel free to contact me! I would be happy to talk with you 😉

UPDATE: The second part has been published! You can find it here.