XR for Business

Any good XR startup needs someone to

Alan: Welcome to The XR for

Teppei, welcome to the show, my friend.

Teppei: Oh yeah. Thank you for

Alan: It’s my absolute pleasure.

Teppei: Sure. Yeah, absolutely. So the GFR Fund is a seed stage fund that’s investing technology companies, disrupting the digital media and entertainment space, including VR and AR. We have about 40 million under management and we invest in primarily in North America, but also in Asia and Europe, too. And we are backed by ALEC Japanese… more like a strategic investor from Japan and Asia, including GREE, which is a publicly-traded company, a mobile gaming company out of Tokyo, and they also help us investing in companies and altogether. Before launching this fund back in 2016, I was working for a company called GREE. — that’s the same company that I was kind of explaining — and I was the head of the corporate development team based in Tokyo, and also here in San Francisco, so that I was kind of working together with them, just looking for lot of the venture companies in the gaming — and VR and AR — space, as well. So that’s how we got started, this GFR Fund, and that’s the relationship.

Alan: GREE is a fairly large

Teppei: It is. So they have

Alan: That’s awesome. I would

Teppei: Yeah. In a way. But the

Alan: Got it. I’m looking at your portfolio here under the GFR Fund. You’ve got VRChat, Spaces, the WaveVR, Littlstar, InsiteVR, Streem, Torch. Let’s go through these — if you don’t mind — and kind of talk about each one one at a time, and why you guys chose to invest it. But first I want to know: you talked about your fund being $40-million, when did that fund start?

Teppei: The first fund was

Alan: Great. And then, so you’ve got– that’s $40-million total under management?

Teppei: Yes. Yeah. Well, $20-million, the first one is still $20-million. And the second fund is also another $20-million.

Alan: So you’ve got 40 million to play with. You’ve made some early-stage bets, what are the check sizes that you invest in?

Teppei: Yeah, we typically do somewhere between $100k and a half million. But overseas, the body’s about $300k-100k. And we also keep one-third of the fund for the full loan, so that we can maybe continue to support the companies that we invested, up onto a series B or series C, so depending on the situation in the company.

Alan: I mean, something like

Teppei: Yeah, there is a $10-million series C lead by HTC, and also another fund called The Makers.

Alan: Now did you guys

Teppei: Yes we did. Yeah.

Alan: Okay. I’ll call out the

Teppei: Yeah. The VRChat, we are really excited about what they are doing in a team. I think we first met with them late 2015, when they’re still at the Rosenberg Ventures — a surrender program — and they were quite small back then, it’s only like a thousand users, but what was really fascinating about them was they have real active users. A small number, I don’t remember– maybe like a 100 people, a 120 people, but they’re spending like five or six hours per day in the VR. So we are quite excited about those. They have a passion and also the activeness of those plastic users to what they are. The concept of VR. So we see in looking back on the– there’s a shift from a PC to the mobile. We saw that there will be a huge shift from PC/mobile to a new platform like virtual reality. So we saw that the social and communication is a key concept, a key sector. That’s– it’s going to be a new format for communication, with new format of the social VR. And VRChat is really the one that we found out. So I think we are the first institutional VC invested in them and since then we’ve been really loved just working with the team and also how they run the user base.

Alan: The first time I was in VRChat I was on a show– I can’t remember what the show was called, it was– Oh! “Gunther’s Universe!” And what it was, this guy had made– and the great thing about VR chat is you can make your own environments, you can make a room however you want, you can have gravity, you can have no gravity, there’s all sorts of features about this. So we were in this like stadium-sized thing, with people everywhere. It was kind of like Ready Player One, where you’re talking to somebody who is a human avatar and then you turn around and somebody is a giant robot. It was really cool, because no matter what the shape that they took you could have a conversation with somebody, and it was really cool because as I went around the room there was people from all over the world in that room and they were super passionate, super excited. Just to your point where very very active users. And not only active in the fact that they’re going there and talking to people, but building. And I think that is really cool, that’s one thing about VRChat I loved. And we look at something like Altspace — which is a direct competitor to VRChat — and it doesn’t seem like it’s moved or changed since it was released in 2014, 2015. Nothing really been improved in my opinion. If anything, it’s gotten worse, because there’s more people in now and it’s lagging. What are these guys doing to keep their tech stack ahead of the curve when it comes to adoption, as more and more people come onto the platform? Obviously they need to scale their bandwidth. What are they doing there?

Teppei: Yes, they have a pretty sharp user growth for the last maybe 12 months, so they’ve been spending a lot of time just keeping up the servers, how the community grows and there’s no toxic behavior in the community too. So the last 12 months they spend so much time in just that, moderating the community and also making sure they can have fun. Specifically, the new users, once they are in, they have a comfortable experience just interacting with other people. I guess the main point for them to be successful is just to listen to users. So they have some sort of community advisory group and they actively talking to the actual users, what they feel like, what they want in the community, and they try to reflect– they take those feedback really seriously and implement as soon as they can. For the technical side, just make sure that they can support like a 100,000 people at the same time. And also the other parties, just to make sure that the communities doesn’t pull apart. Just what other big Sure Shot user. We did have like a really good time in there.

Alan: Imagine that: a company

Teppei: Yeah. It’s– I think

Alan: Let’s move to Spaces, which — again — in VR, but now this is more location-based entertainment and I know there’s, what, three locations now?

Teppei: They have about six

Alan: Amazing. So they’ve six

Teppei: Oh, really?

Alan: We spent a week in Dubai together. So I got to meet them there. But really amazing stuff. One of their title pieces, or one of their licensed IP titles is Terminator. So tell us about those guys, and why you think they were a great investment?

Teppei: Right. Kind of the same story, so I met Shiraz and Brad [Herman] — CTO and CEO of the company — maybe late 20,16 when they are still working for DreamWorks. So they’re like the– they are the lead team members of the [garbled] for the any XR type of the experiences, and they are just thinking to spinoff the team out of the parent company. So we talked a few times, they showed us what they are working on, and it’s like– it’s just a great team and combination: Shiraz is more like a business guy and Brad is like a really technical person. So we just loved what they’re working on, and also the team itself. They were originally trying to create some the content platform for VR. So they’re like really great I like creating content too. So when they’re talking to Chinese company Shin, which is one of the largest creator of a theme park in China. So they– sunshine actually invested in them, and also they had a big agreement for the contents of distribution in China. So it seems then they’re more focused on the content, to creating content for a theme park, like a location-based VR stuff. Right now they have about five or six locations, three in US and one in Japan line to buy. So that’s– they have Terminator IPs and it’s been great. It’s been really great working with them, as well.

Alan: VR Park is this crazy– it’s like a video arcade that got carried away. When you walk through the mall, all of a sudden the whole arcade facade, the front of the building is like wrapped around over top of you, and buildings are kind of coming down. It’s almost like, what’s that movie– Inception, where buildings are coming from the ceiling down on you, and it just an incredible facade. And then when you walk in the room– they’ve taken location-based entertainment to the next level. And one of the things that I think is really special about what they do, and is starting to trickle down with things like Spaces and these companies is that the experience before you get in the VR headset is as important as the experience while you’re in it.

Teppei: Yeah.

Alan: It’s really, really

Teppei: Location-based VR is like one of the categories that’s quite successful in monetization and also user attraction. And I think the– not only Spaces but other companies that got deployed, like Sandbox VR. So all companies have a slightly different approach. The Void is more like creating bigger attractions, like partnering with Disney. And Sandbox is creating like a snackable, easier to use kind of experience in the shopping center. So it’s just a little bit different, but I think for the location-based VR is like that’s what the people want, they just to go there to try something new. So it’s been– I think it’s been a great future for the VR industry as a whole.

Alan: I think it’s one of those things that people originally said “well why would I go to a location when I can just buy a VR headset at home?”. But what people don’t understand is that the experiences that companies like Spaces and The Void are doing are really bringing a different added layer of complexity, so they’re able to put you inside of a space where you can walk around you can touch things you can interact with things. And it really cannot be replicated in a vibe or an Oculus Rift or avoid I’m sure spaces is going to do this as well but using haptics and vibration plates and sent machines and spatial audio. All of these things together create an immersive experience that you cannot get at home and he won’t be able to get it home ever because as the home technology gets better and better of course the location-based entertainment is going to get better and better as well.

Teppei: Yeah.

Alan: Speaking of which, let’s

Teppei: Sure yeah. So yeah like you said, Littlstar’s the content distribution platform. Not only for VR, like 360 video, but also AR, and also other contents too. So they have a platform on their own app and Sony PlayStation’s, as well. And they’re distributing lots and lots of content to the end-users, to consumers. And recently they also deal off the interesting blockchain technology that’s called Ara, and they’re also trying to replace old existing content distribution platform with a unique to build their own technology built by like click the link to blockchain or so that they can do more decentralize the content management, after all. They’re out of New York, but the founding team recently moved to LA, to just get more closer to the content creators. That’s basically in LA. They are just doing fine. The PlayStation is like a relative measure of deal sales and user attraction for them. And Sony has been a great partner for the company. Sony has been helping them get more content and also deal more access to more users as well.

Alan: It’s interesting that

Teppei: Playstation has been

Alan: Amazing. I’m actually just

Teppei: Yeah. That’s the one.

Alan: That’s pretty cool that

Teppei: It’s a separate company.

Alan: Oh, great. So you’ve

Teppei: No, we didn’t. We

Alan: That makes total sense.

Teppei: I’m not sure.

Alan: I thought that was

Teppei: [chuckles]

Alan: But anyway, if that’s not

Teppei: Yeah. They changed the name to WaveXR, because they’re not really– not only in VR, but more like broader experiences. Yeah. WaveVR is like a social platform, more like for virtual concerts. So anybody want to play the DJ or some like instruments in the virtual space. Yeah, like you mentioned, they started as more a platform only for the VR, but they’re now expanding to cover any PC, or consumer, or any platform that’s being done in virtually. Recently, they’ve been working with more real DJs and most the other famous artists and creating a virtual concert. One concert, the last month, the concert got about 400,000 users interacting in real-time. So that’s really good, one of the biggest concerts, even bigger than a real physical concert. So it was the– kind of showed the potential in holding a virtual concert, because there’s no boundary for the people to just join the concert. They can just join the concerts whenever they can, from online, from PC, or from mobile, they can still watch on Twitch. So that’s quite a– opening up a new opportunity for the artist, as well.

Alan: Absolutely. This gives the

Teppei: Yeah, absolutely. And

Alan: That’s pretty awesome. Moving towards kind of the more enterprise side of things you’ve got InsiteVR, which is a VR meeting space for architecture, engineering, and construction.

Teppei: Sure, yeah.

Alan: Tell us about that.

Teppei: So InsiteVR is the– it’s more like a Skype using any 3D models inside. So they’re now targeting– they’re more focused on direct architects, like construction companies. And they’ve been doing great, especially the turning point for the company was the Oculus Go and Oculus Quest. Before that, the PC– any of the tethered VR headset, they have to ask the customers to buy the PC or console or any platform that the contents can be played on. But with the introduction of the Oculus Go and Oculus Quest, it’s like a standalone headset, so they can actually bundle the hardware with their software content. So that’s kind of accelerated their user, their content’s growth and they have now more than 100 customers, paying customers, and they are making quite decent revenue as well. Yeah, we are real excited about their future, too.

Alan: That’s pretty cool. I

Teppei: Right, yeah. That’s

Alan: Amazing technology and I

Teppei: Yeah, YBVR or first the streaming optimization technology for 360 video. So it can work with the content studio. Right now they’re focused on the sports, so they work with companies like streamers and any of the broadcasting companies. That’s one of the stream 360 video to users online. And they are currently working closely with some companies like Rakuten. Rakuten, they’re also a Japanese company, they own a few soccer team, they also like a big sponsor to the Golden State Warriors, and they also organize some tennis events, tennis matches. So they work with YBVR and YBVR can just to capture and export the games, and broadcast the 360 video to the users in real time. As long as I know, they’re the only company that does those optimization technologies in real-time. So yeah, they’re a really unique team, unique product and we are also really excited to recommend them, too.

Alan: It’s interesting. My one

Teppei: OK.

Alan: And the first interview

Teppei: Yeah, exactly.

Alan: Exciting stuff. it’s

Teppei: Yeah, we are really

Alan: So another one that I am

Teppei: Sure.

Alan: Talk to us about Streem.

Teppei: Streem, they have a technology — mobile AR-based technology — that’s helped the expert talk to the users over the phone and they combined just streaming the phone with the computer vision technology, so it can– they can detect all those details about devices or any furniture they are talking to. And that’s going to help the experts more accurately analyze data, what the problem is. The CEO is Ryan Fink. It’s kind of an interesting story, because I met him when still he was working for the previous company. I met him after CES — maybe three years ago — and he kind of indicated that he’s like leaving the company soon, to start his own business. And when I heard about his concept, I thought that this is going to be really huge. I know that home service space is a really huge market and there hasn’t been any solution like that before. So we just jumped on the opportunity and just now started working with him. And like the VRChat, I think we are the first money into their company.

Alan: It’s funny, you’ve made

Teppei: It’s a small world.

Alan: [laughs] It really is a small world. Another one is Torch, Paul’s [Reynolds] company, and Paul is actually one of our mentors. And Charlie Fink is one of our mentors at the XR Ignite accelerator, [too]. Yeah. So we’ve pulled together. Right now we’re at 67 of the top mentors in the world for the accelerator. We wanted to create an accelerator that would take companies like these whether they’re pre-investment or post-investment and really help them to do business with enterprise. And so we’re really a B2B SAS marketplace-type accelerator, but Torch’s Paul is one of our mentors for this. And Torch is an AR authoring tool that lets you create augmented reality experiences. It started off as more of a prototyping tool, but it looks like it’s really starting to become more than that. So, talk to us about Torch.

Teppei: Yeah. Paul and his team,

Alan: Yeah, they make fun demos. There is one of planets all lined up on a table and there’s a travel one. This is really cool, and you know what? A great group of people doing fantastic work, and I can’t support them enough. If you want to visit, it’s torch.app. What else have we got here that’s VR-related in your portfolio? Did I miss anything?

Teppei: We actually made about

Alan: Wow.

Teppei: Plus 10 more companies,

Alan: Do you just want to talk

Teppei: Sure. There’s a company

Alan: OK. What’s next? We got

Teppei: Yeah. Another company is apprentice.io. It’s a New York-based company and they are an AR/AI driven solution for pharmaceutical companies. They automate everything, every single process, of production and R&D development cycles at their pharmaceutical companies. Those like pharma need to record every single step.

Alan: This is like PTC’s Expert

Teppei: Right. You can set a

Alan: I have a customer for you guys. That’s great. We’ve got to talk quickly — I know it’s not to B2B — but Facemoji. How cool is that?

Teppei: Facemoji’s a really interesting company. So they have a kind of interesting video/photo app that anybody can like a broadcast or take a photo of yourself like a selfie with your favorite Avatar or some. So you can create any person any like animals any Avatar is this based on like what you need what you want you like and you can just like a livestream like whatever you want to say and capture it. The video showed a video of it and share with your friends and families. So that’s like a really interesting new way of self-expression for young teenagers and quite popular in the teens. So it’s like more like a Gen Z type of the other way users.

Alan: It’s really cool; it takes a photo or a video and turns you into an emoji almost like the one that Snapchat bot anyway. But it’s in three dimensions which is pretty cool. So I assume that the future will you’ll be able to drop yourself into AR and VR and all those sorts of things. So very cool. What else have you got, anything else? There’s I’m sure there’s a bunch you got, 10 more so.

Teppei: Yeah I guess. OK. So one

Alan: So basically, instead of putting your phone on your dashboard and you have it up high, it’s kind of on your screen and it’s overlaying the directions on top in realistic which that’ll probably be where we go with glasses anyway. So they’re kind of ahead of the curve. The only thing I have with these air navigation tools is that it’s so easy for Google to come along and just do that and I wonder about the long term longevity of these types of things anyway. My job is not to get into that but it’s definitely interesting technology.

Teppei: I’m sure Google is working on it, but Phiar’s team is like really nimble and fast. So I think they can get to the market for the first product on the market; that’s a good advantage for them. And Google has been creating the Google map. They also bought Waze too. So they can be both working on something but acquiring some other consumer programs.

Alan: Yes I think there’s gonna be lots and lots of acquisitions that it’s already starting last week there was Apple acquired Akonia. Verizon acquired Jaunt and Facebook or Control Labs. So the acquisitions are coming.

Teppei: It is. It is coming.

Alan: Which is fantastic. Well,

Teppei: That’s a great question. I’d just say, remote control like that. Maybe the concept that Streem is trying to solve, but you don’t have to be actually there but you can just see the things feel things and talk to other people but you can actually feel the presence. So that’s the like maybe the biggest program for VR or XR is solving and I’d love to see it out there that’s going to be happening in the future. The new future.

Alan: So what do you mean, touch

Teppei: Haptics; that you can

Alan: You know, it’s amazing.

Teppei: Yeah.

Alan: Connected to a giant box on the table. But once you put the gloves on you put the VR headset that you can’t see them anyway so it doesn’t matter when I put on the VR headset I reached out and there was somebody in front of me I could touch them and I could pick up things and feel like they were really in my hand. And one of the things I picked up I was that I was supposed to be a medic was medic training and I picked up a needle and they said take the lid off the needle and stick your finger on it. And when I did that it scared the crap out of me because it hurt like a needle and obviously didn’t hurt me but because I was looking at a needle and I put my finger on a needle and it buzzed. It stuck with me and it was that combination of tactile and visuals and sound that just I was fully immersed in I think I have to go for some PTSD treatment after that because it was a very graphic simulation.

Teppei: Wow.

Alan: But I think you’re

Teppei: Not that one yet but I

Alan: Nice. What’s the best ones

Teppei: Hmmmm…

Alan: You don’t have to say

Teppei: Right.

Alan: [laughs] Let’s just leave

Teppei: Yeah. That’s the biggest

Alan: There’s new ones that just were released today. They’re just in the research phase but they’re just like a little almost like a little skin that goes over your fingers. So we’ll see how that goes.

Teppei: Wow, that might be

We’ve had a lot of people from a lot

Alan: Thank you for joining the

Sandro, welcome to the show.

Sandro: Thank you very much,

Alan: It’s my absolute pleasure.

Sandro: Yeah, that’s great to

Alan: So tell us, what are you

Sandro: Well, I would say that probably a lot of the listeners, they know Nokia for the devices, right? From the cell phones in the past and the early stages of the smartphones. But Nokia has actual history that goes much beyond that. It’s a company that was founded 150 years ago. It started as a paper mill in the countryside of Finland. It has evolved through several different industries. And in the last decades, it has been focused on technology. So our two biggest businesses in the past were the handset business, so the devices, the cell phones as we know them, and then the networks that actually support these devices. So the networks that are provided to service providers, operators all over the world. Then after Nokia has divested these devices business few years ago, then we focused 100 percent on our networks business. And this is what we are doing now. We build basically all generations of telecommunications in the past, and now we are heavily focused on making 5G a reality. And that’s where basically what takes my time throughout most of the days, just talking to customers and discussing about the benefits that 5G will bring to the world, that just goes much beyond just providing broadband. And looking to the applications that can be built with 5G, quite a lot of them are actually going to be enabled by XR technologies. So you can think about a myriad of applications where XR, AR, and VR are going to be important and that are going to be leveraging 5G to actually get brought to the market and delivered to customers.

Alan: Obviously I’m a little biased, being the XR for Business Podcast. Let’s dive into some of those use cases. Let’s take a broad. I was told real millimeter-wave 5G in its perfect condition will be able to be 100 to 1000 times faster than what we’re using currently. And to put that in perspective, somebody said you’ll be able to download the entire Game of Thrones, not an episode, but all the seasons in a few minutes.

Sandro: That’s absolutely

Alan: 4G, we’re looking at,

Sandro: Yeah, if you’re talking

Alan: That’s a thousand times

Sandro: Yes.

Alan: Or, well, hundred to a

Sandro: A hundred to a thousand

Alan: Holy crap. So when is 6G coming? I heard Trump talking about 6G.

Sandro: [laughs] Well, that’s

Alan: It’s funny, I was totally

Sandro: I know, I know.

Alan: But you guys are already– If you look at the world we’re in, it’s very hard for most companies to look out[wards]. Most companies are in a quarter-to-quarter fight for quarterly earnings. Telcos are in a different position. Telcos and obviously infrastructure companies like Nokia, where you’re building the infrastructure, you have to have a 10- to 15-year roadmap in order to prepare for this. How long is 5G been in the works, then?

Sandro: Well, for quite a long,

Alan: Okay. So let’s dive into,

Sandro: Yeah.

Alan: That’s like, no problem.

Sandro: Absolutely. So I would

Alan: Listen, AR is going to be

Sandro: Absolutely.

Alan: If you have anything more than a five-millisecond delay, you’re going to a bunch of people with glasses vomiting in the streets.

Sandro: Exactly. Exactly. This

Alan: Funny you say that, I was on a webinar last week with Kay Stanney of Design Interactive talking about cybersickness and the causes and cures of cybersickness, and latency is one of them. You know what another one is? The inter-pupillary distance — the IPD adjustment — of the headsets. That’s why we see an increase in motion sickness in VR with women, it’s because the headsets are actually designed with too wide an IPD for women.

Sandro: That’s interesting. I

Alan: Yeah. Your eyes are

Sandro: Interesting.

Alan: We’ve got data speeds,

Sandro: Yeah.

Alan: Latency is 10 times

Sandro: Yeah, at least. Yeah. At least 10 times faster even. I mean of course you have — and we can even get a little bit deeper into that — but depending on the type of implementation that you use for 5G, you’re gonna get different levels of latency. But yeah, at most for applications that require that, we’re looking into this kind of single milliseconds, around a design target of one millisecond. And a third aspect that I would mention is around the concept of network slicing. That in placing to actually this point that I made about applications that require low latency, applications that require specific characteristics. So if you’re looking to a mobile network right now and basically all kinds of networks, you’re talking about resources that are being shared. Let’s say if you are under the coverage of a 4G site, you’re using a VR application in any capacity. Your neighbor is watching Netflix and your other neighbor is, I don’t know, playing online, gaming online. You’re all sharing the same resources. And basically, if there is congestion, everybody gets affected. With a concept of network slicing, you can actually create or dedicate parts of the network to a specific customer or to a specific service, meaning that for a service that requires ultra-low latency — let’s say a hypothetical VR streaming service — the network would dedicate resources to this service, to make sure that it works according to specifications, which means I need to be providing ultra-low latency, I need to be providing very high data rates. For example, for another application that is basically, well, let’s say basic broadband to check e-mails and so on. Well, you don’t need low latency. You don’t need that much speed. So I can dedicate specific resources for that. And most important, let’s say that you have a mission-critical VR application and someone else close to you decides to watch a Netflix video in 8K and starts stressing the network. You are not going to feel that because your network resources, they are reserved, they are dedicated to you. So the only people that are going to be affected by someone watching an 8K video, if that gets too congested network are the guys that are using the same network slice. So people may say, well, is this a VPN? No, it’s more than a VPN, because it actually works across the entire network and it works dynamically. And it is created based on the nature of the service, while–

Alan: Let me ask you a question.

Sandro: It can be a premium service. Actually it can be part of even a full service that a service provider or a partner of the service provider is offering. So let’s say this is going to have a lot of applications, for example, in enterprise cases. Let’s say that you’re talking about the training solution that utilizes VR or AR to train sales troops that are on the field, or even to train service or support troops that are on the field remotely. So the company that is providing this training is going to close a deal with the service provider, to dedicate a slice of the network for that service. And then they are going to be using that and making sure that these resources are available. Let’s say that while a hypothetical streaming service for VR content gets online and then you can buy a package for this VR service through your service provider, that includes that when you are using data application that your connection goes to this specific network slice. So you get like a guaranteed quality, guaranteed service that you need for that specific application. So, yes, it is a kind of a premium service and it can be part of, let’s say, a higher added value offer that a service provider can put together. So not only just serving connectivity, but actually providing a full service together with partners or even by themselves.

Alan: So we’ve got data speeds,

Sandro: Yeah.

Alan: You want to walk us

Sandro: Oh yeah, absolutely. So it goes pretty much together with the data speeds. So basically when you’re talking about 5G, one of the differences of approach compared to 4G is actually that we’re stepping into frequencies, transmission frequencies that we were not operating with before for the mobile service up to now. So if you get to the LTE networks that are deployed, so the 4G networks that are deployed, you go all the way to the range that we call centimeter wave, which can go up to 2.5, 3.5 gigahertz, which provides you quite a lot of spectrum for you to build your network and then transmit data fast. With 5G, we are moving further into the spectrum and we’re stepping to the domain that we call millimeter wave, which is frequencies that get to like 28 gigahertz, 35 gigahertz and so on. So very high on the spectrum, which means that as higher-end, the higher you get on the spectrum, the more bandwidth you have available for you to deploy your networks. And that allows us to provide better speeds. And also we have better data overall traffic capacity. That is one of the new things. Of course, it is a kind of a tradeoff. The higher you go on the spectrum, the shorter distance the signal can travel. So when you go to really millimeter wave deployments, which you can see — for example, in US — some of the deployments, you can say — for example, AT&T, Verizon — the operating millimeter wave, you get a lot of capacity, but you do not get that wide coverage that you’re used to seeing in LTE. There’s ways to fix that by deploying more base stations, by complementing your coverage with spectrum on centimeter wave and even low band. But the fact is that while operating on these millimeter-wave bands, you’ve got to be very mindful about how you’re going to build your coverage and how you’re going to make sure that your customers do get the performance that they need. But it is definitely a very important aspect that we are covering with these new 5G deployments.

Alan: Let’s talk more about the

Sandro: Absolutely. So when you

Another possibility is around, of

Alan: Was there a distinct

Sandro: Oh, absolutely,

Alan: That’s incredible. So

Sandro: Yes.

Alan: Gaming arena and maybe a

Sandro: As I mentioned, we’re in the very early stages of 5G deployments, which actually happen faster than initially thought by the industry. So back in 2017, we were saying 5G would be around by the end of 2020, beginning of 2021. And in reality we had the first networks getting commercial in the beginning of 2019. That said, we’re still really scratching the surface. So out of the four major operators here in the US, for example, they all launched 5G, but most of them are just taking a hotspot approach, because they’re operating in millimeter-wave. They’re still kind of deploying their network and building coverage and so on. So if you get a phone right now, you’re gonna have a great service, but not everywhere on 5G. In some areas you’re going to be in 4G, you’re still going to get great service, but that’s 4G. We do expect these to evolve pretty fast throughout the rest of this year and 2020 here in the US. So potentially by the end of 2020, you’re already going to have pretty wide coverage of 5G in the biggest cities of the country. In other parts of the world, you have countries, for example, like South Korea, where you are already reaching quite a lot of subscribers with 5G. So they reached the threshold of their first million subscribers just a few weeks after the initial launch. And now they’re already counting — if I’m not mistaken — more than 3 million subscribers on 5G in the country.

Alan: So does that mean they’ve

Sandro: Yes.

Alan: Wow.

Sandro: They had early access to

Alan: Sandro, do you have a 5G

Sandro: Not yet.

Alan: [laughs] We’ve got to get

Sandro: Yeah! Well, to be frank,

Alan: Oh, cool! Which one?

Sandro: I got a Xiaomi. And a Samsung. I actually got two, for testing purposes and so on. But like there are, for example, if you go here in the US, you have options also with LG, with OnePlus, that they’re also pretty good as well. So yeah, I’m in. Luckily, in my role, I get to test quite a lot of them. So I’ve used a few test phones, but then I got these two now to do some additional tests in the US and, well, another thing that is worth mentioning is that of course quite a lot of people in the market, they’re still waiting for the iPhone to support 5G and well, we’ll know when that happens. It was not with the 11 that just came out, but let’s see for the next iteration if you’re going to be supporting 5G as well.

Alan: It’s interesting that Apple is taking a longer approach to bring their 5G device to market. Do you know why that is, or is there a reason, rationale beyond that?

Sandro: It’s hard for me to

Alan: Yeah, but it’s coming for

Sandro: Oh yeah.

Alan: For sure.

Sandro: Yeah.

Alan: OK. So let’s move the

Sandro: Sure.

Alan: You mentioned being able

Sandro: Yeah.

Alan: And that’s working fine.

Sandro: Yeah.

Alan: Sometimes they glitch out

Sandro: Exactly, exactly. So of course, if you’re talking about especially like a local application and so on, in a controlled environment, Wi-Fi can do quite a lot. The thing is, when you really get to real-world implementations, where you’re going to have an environment that sometimes is not fully controlled and that also where you cannot really guarantee that everybody is going to be in the same network. So you can guarantee low latency and so on. That’s where really 5G is going to make a difference. And that’s not only for VR and AR. We have a myriad of applications, enterprise applications that– well, they somewhat work under Wi-Fi, they work better under 4G, but they do– where you do not have the full benefits until you really get to what 5G can bring to you. So one good example, going a little bit outside of AR/VR is for industrial automation.

So, for example, controlling robots in a factory. Most of the factories right now, they’re using fiber to connect these robots — or sometimes even copper — just because Wi-Fi is not reliable enough. But what they lose with that is the ability to quickly reconfigure a production line, which in the world of today happens way too often. So 4G already starts bringing some possibilities for that. But if you’re really talking about a fully autonomous factory, like in a fully automated factory, then 5G really plays a big role. And coming back to the VR and AR point, I think that this is a story about utilizing VR for connecting people remotely into content that can be– of course it can be entertainment and most importantly, business-related content is going to be extremely important. So let’s say if I take any company that has a support troop on the field. So let’s say even like a service provider, it has to have people that are visiting sites and so on. Someone, some other company that needs to train remotely sales or support troops, being able to utilize AR and VR to train and support the execution of activities on the field is extremely important. And then 5G is going to come really to guarantee that this connectivity is available wherever they are, that they do not have to rely on streamed content that is not real-time or to have to basically scramble to get the perfect Wi-Fi connection to be able to access the content, because not always that’s going to be available.

Alan: So let me ask you, if we wear glasses, let’s say Apple comes out with glasses in, — let’s call it five years, I don’t know — Magic Leap gets miniaturized, maybe North glasses expands their field of view, we’ve got access to glasses. And those glasses are relying on 5G and they’re giving us this three to five-millisecond latency. What happens, then, when we switch between 5G to 4G in our experiences?

Sandro: If you get to this point of switching from 5G to 4G, what you’re going to see is an increase in latency, which can become a problem depending on the application. And then a reduction on the throughput capacity, which for AR may not be that big of a problem, but for VR can become a problem. There are ways to kind of offset this problem though, or these challenges. When you’re looking to building the 5G network, one thing that is very important to actually enable all of these is that we further distribute the compute capacity of the network. So of course, like the 4G and the 5G infrastructure, they both rely quite a lot in cloud computing capabilities to be able to provide all of the processing power that is required. But if you take like what is done in 4G and what is done more traditionally in these networks, we have this capacity being very centralized, being deployed in a very centralized manner. Not as centralized as, for example, you would see on an Amazon or in a Google data center or anything like that, but still very centralized and probably focusing just a few points of an operator countrywide network. When you move to 5G, to be able to enable these low latencies that we were talking about, we need to distribute compute capacity further and then we deploy this concept that you probably have heard about, edge computing and edge cloud. Why am I talking about that? While we are deploying the edge cloud to support 5G, we’re also able to start deploying in these same locations capabilities related to the 4G network.

So you can have like, local breakout of traffic, you can have caching of your content being deployed in the edge of the network, which would then — even on a 4G environment — help you reduce a little bit the latency that you’re going to have while accessing this application. So you would, in brief, kind of utilize the architecture that is being viewed for 5G to also enable 4G services and to enable — and most importantly, to host — these applications to make sure that you minimize as much as possible the latency, even if you are on 4G. So you would minimize the impact of a potential drop from 5G to 4G.

Alan: Really exciting times. You

Sandro: Exactly right. And of course, like device compute is important, but we become much more efficient when we have, well, the cloud taking care of the processing of the applications. But to be able to do that on real-time applications, then edge capacity becomes key. Because you cannot rely– for an application that has a strict requirement of latency, you cannot rely on a data center that is anywhere in the world. I mean, you need to really make sure that you’re getting your content from a data center or even an edge compute site that is close to where you are. Otherwise, the application’s not going to work.

Alan: It’s really just amazing

Sandro: I cannot give like the

Alan: Yeah, it’s really an exciting time. Sandro, I really want to say thank you for taking the time to not only explain 5G and how it works and the benefits, but really to dive deep into why it’s important to the XR community. I don’t think a lot of people truly understand 5G and what it is, and this has been a great kind of precursor to that and fully understanding the technology and why 5G is going to enable and unlock the full potential of XR. I think it’s just– it’s early days, but like you said, it’s coming faster than anticipated. And I think if you look at glasses like the Nreal glasses, that are running off a phone device, super lightweight, low price, these things are coming and they’re coming faster than I had anticipated as well. So it’s funny, I took this 10-year approach, I was like, “OK, by 2025, these things will happen.” And we’re already seeing an enterprise. Well, it’s not 2025, it’s 2019, and things are being rolled out now at scale.

Sandro: Oh, exactly. Exactly. It

Alan: [laughs] Of course.

Sandro: All these and yeah, I’ve

Alan: I got to drop a bomb on

Sandro: Sure.

Alan: We haven’t announced

Sandro: You know, this is really

Alan: Exactly.

Sandro: Yeah. I mean, we all

Alan: I appreciate it. And I

Sandro: I mean, it may sound

Alan: Well, we’re going to make

Sandro: Absolutely.

Getting started in AR marketing and

Oh, and Alan gets a spaceship.

Alan: Thanks for joining the XR for Business Podcast with your host, Alan Smithson. Today’s guest is Jon Cheney from Seek XR. I’m really, really excited to have Jon on the show. We traveled all through China together, pitching to rooms full of Chinese investors. And it’s been an amazing experience. Jon is the CEO and founder of Seek. They’re a leading provider of web-based augmented reality for e-commerce brands. I just found this out about him: he’s a composer as well, for films. SeekView is his web-based product built for e-commerce brands. They’ve won several business competitions, including Pluralsight LIVE, where they won $50,000. They’ve announced some really big partnerships with Walmart and Lego and some other stuff. We’ll get to that. But if you want to learn more about John and the work they’re doing at Seek, it’s seekxr.com.

Jon, welcome to the show, my friend.

Jon: Thanks so much, Alan. Great

Alan: I’m so excited, man. It’s

Jon: Yeah, man, it’s been quite a journey. Where we are today is way far away from where we started. [chuckles] There’s a lot of people in the XR industry that could probably chime in with similar stories. With this industry that changes so fast, you got to be ready to move with it. But from the very beginning, we’ve had one overarching goal that actually hasn’t changed. We wanted to make augmented reality easier to find and access, and make this a technology that was more accessible. And where we’ve landed is in web-based AR. And there’s obviously hundreds of use cases for web-based AR, but where we really decided to focus is on the e-commerce realm of things. And you’re talking about Walmart, Lego, and those were a couple examples of some of our recent partners. But we’re really focusing on the e-commerce and the retail sector, because there’s just huge benefits when a customer, the end-user is able to use this technology to see a product that they’re considering purchasing. Whether it’s a little Sonos speaker, or a new couch, or a new shoe, or whatever that is, to be able to see it in your space, in your environment, and kind of have all those questions answered that you don’t really know until you get the product, typically. It’s just a huge benefit, and so because of that very obvious benefit, it’s taking off in a big way, and we’re fortunate to work with some of the big, big companies out there at this point.

Alan: So you created this web-based AR visualizer. Walk us through, like I’m on a website, I’m scrolling down, I see a product, I’m like, “Man, that’s really cool, but I don’t know if it’s gonna fit my living room.” — maybe it’s a coach, we’ll just use a couch as an example — I don’t know if it’s going to fit. You can press a button, using the camera on the phone, now it’ll project that couch into your space. Is that what I’m–?

Jon: That’s exactly right, yeah.

Alan: Without having to answer

Jon: Yeah, exactly. Without even

Alan: What are some of the

Jon: Yeah, sure. Again, we’ll

But where we started with them actually

On on mobile browser, you can try that out, or if you’re on your desktop and see it work in 3D. But then in-store, they just have QR codes right next to the products. It says, “Hey, here’s this new Star Wars set! Scan this QR code to see it come to life!” Boom! And so you click it and your camera opens and there’s a 3D Lego set in front of you with the AT-ATs walking around, AT-STs walking around and shooting things. And it’s pretty cool to have that come to life. So that’s a really interesting use case because it’s working, of course, on the website, but also in-store in retail. And so that’s a really cool crossover.

I think that AR can be used to enhance that in-store process, because while it’s cool for Legos, think about that from a furniture perspective. You’re going in and you say, “Hey, you know, I like this couch.” I sit on it. I like it. I’m at the furniture store. I just don’t know if it’s going to fit in my house. And so the sales rep says, “Hey, you know, don’t worry about it. Here’s a link. When you go home, make sure that it fits. And if it fits, just push this button and we’ll complete your order and send it to you.” That’s a really cool use case to combine this online and offline experience using a very, very easy to use simple technology. Nestlé is pretty interesting. They actually started working with us originally to help their sales reps. They sell Nescafé machines to convenience stores and grocery stores, and they have end caps. Where it’s like, “Hey, here’s this KitKat aisle end cap in a grocery store.” And so they have sales reps that go around tens of thousands of malls around the world, they go around and sell these things. And up to now, all they do is say, “Hey, here’s a picture of the latest thing.” But with Seek, they’re now able to say, “Hey, here is exactly what that new KitKat end cap is going to look like in your grocery store. How many of them do you want?” And they can leave a link with the store manager. And it just becomes a much more immersive process. And so they started out there and it went really, really well and started growing.

And now, due to some of the new partnerships that we have that we brought to the table with Google for them, we’re enabling some of their content through Google AR Search. Now they’re moving that to their consumer-facing websites, so that customers can see what a coffee machine looks like in their kitchen, before they buy it. So it’s fun to watch even progression within a company. And the different use cases they find about technology.

Alan: I’m watching a Lego

Jon: [laughs]

Alan: Then land on the desk, and

Jon: That like the Avengers one?

Alan: I have no idea, but it’s

Jon: Yeah, it’s a pretty– I

Alan: I love it. You point your

Jon: How easy was that?

Alan: You know, how easy was that: press the button and it worked. I don’t know.

Jon: Yeah, exactly.

Alan: Really?

Jon: Right? And compare that to

Alan: It’s so much fun. I’m

Jon: Yeah. Walmart is a very interesting one. Another one of our customers is Overstock and they’re very similar. And we’re much further along in the process with Overstock, we’re fully launched with tens of thousands of products with them. And ultimately, it really isn’t possible for one organization to say, “Hey, we’re going to tackle even 100,000 products.” That’s very expensive, prohibitively expensive for most people, and for Walmart to take on even a fraction of the 300 million products is crazy. For Amazon to take on– Walmart has 300 million products; Amazon has 300 million sellers.

Alan: Amazon’s got 1.4 billion

Jon: Yeah, it’s crazy. And how do you deal with that? And I know that you’ve done some work in this area, Alan. And the point is, I think in the long run, it’s gonna have to– I think that phone technology, scanning technology is going to get way better and you’re going to be able to do it just with the handheld devices in your pocket all the time.

Alan: Yeah, the new Samsung 10

Jon: Right. It does it, but it’s

Alan: It’s good, but it’s not

Jon: Exactly. It’s not to where

Alan: Yeah. I think honestly

Jon: Totally agree.

Alan: Yeah. Having studied this

Jon: Yep.

Alan: And now you got a 3D

Jon: Totally.

Alan: I mean, I’ve seen early

Jon: Yeah. A year, two years,

Alan: You have to create a

Jon: Exactly. Exactly. And so

Alan: What is the version that

Jon: So, yeah, there’s a few

Alan: Let me ask you a question,

Jon: Yes, sir.

Alan: Really?

Jon: It does.

Alan: How do you open the camera

Jon: You know what? If I were

Alan: Amazing.

Jon: So, yeah, that’s an

Alan: How many AR start-ups are

Jon: Exactly. [laughs] Exactly. They come out with their new ARKit 3.4, what are all the new features that are going to come out? And so, yeah, I mean, there’s really cool things happening there. But one of the things that they did, they actually changed the way that they handled textures in iOS 13 here. Anybody that doesn’t know and doesn’t hear this today — which they’re not going to — doesn’t know that that’s happened, every single model that they are hosting in USDZ file format will fail. They will all be broken and they’ll have to go through and fix every single one and adjust the textures and re-deploy all of their content. And so that’s another big problem that we’re solving for brands that work with us. Overstock can’t keep up with that. And they can’t say, “Oh my goodness, we have to reprocess and recreate 50,000 pieces of furniture and 3D objects related to it, knowing that it’s going to happen and knowing when it’s going to happen. Oh, my goodness. As soon as people upgrade to iOS 13, all their stuff breaks.” But for Seek, we just update our installation that’s on these websites. And we’re updating the backend system. Just like if YouTube all of a sudden supports some new device, you don’t have to re-upload your videos, right? YouTube just transcodes it again and sets it right, or fixes the player and makes sure that it works. And so we’ve done that. All of our customers, as iOS 13 comes out, they won’t notice any difference. They don’t even know what happened. They may even know that we saved their bacon. But we learned about this only about a week ago, actually.

Alan: Wow.

Jon: Wrangling with a couple of

Alan: I love the work that you

Jon: Yeah. Yeah, a little less

Alan: And this was on the

Jon: Correct, no. We launched

Alan: Amazing. So what are some of the actual numbers on ROI? How much does a 3D model cost to make? How much does the platform cost? What is the ROI on this? Is there an increase in sales? Let’s talk turkey here.

Jon: Yeah, definitely. In the end, that is why we chose the e-commerce field. That is where the most demonstrable ROI is. You could just run straight Google Analytics and say if they used AR, what was conversion? If they didn’t, what was the conversion rate? And the numbers are pretty astounding. So just to speak, we’ll start from the end, and then I’ll go backwards and talk about some of the costs and how you get there. And I can’t share specific brand names, but we’ll just say a large retailer.

Alan: “[Insert Large Retailer Here.]”

Jon: [laughs] “Insert large retailer here.” That’s right. So we work with quite a few, but one that we’ve done about $10-million of testing with. In terms of not $10-million for us, but $10-million of sales, measured through them is a 150 percent increase in sales conversion. A 150 percent increase! That means if they were going to sell $400,000, they actually sold a million dollars, because AR was used. If AR is used, sales conversion increases by 150 percent. On the flip side, on the back end of that sale, they’re measuring currently a 25 percent reduction in sales returns. So the savings on just both of those number, on each of them individually, are just absolutely immense. The ROI is very, very demonstrable. Seek charges based on tiers. So, maybe if you have a million views to your website a month, then 10,000 a month or something like that. Just depending on– those aren’t exact numbers. But that’s kind of how it is. It’s just a consistent SAS model based on different tiers, based on how big your website is and how many product page views you’re getting, and how many– how often the Seek service is being called, or the Seek view service is being called. And then on the front end, yeah, there’s the setup. And then you have to also have 3D models. If the company has 3D models, occasionally we need to have them pay us to process them. Maybe they’re in some crazy format or they’re CAD, files which are just ridiculous to deal with. I’m sure you’ve done that before.

Alan: Oh yeah.

Jon: But depending on that, lots

Alan: Oh my god, how big was

Jon: Four gigabytes, Man, it was

Alan: [laughs]

Jon: So we had one of our

Alan: That’s amazing. I think

Jon: Yeah, right.

Alan: If you sell, maybe you

Jon: Yeah. That’s so awesome. We

Alan: Wow. If you project out a

Jon: Yep.

Alan: And I still stand by that.

Jon: Any company today that is

Alan: Yeah. It’s not even

Jon: Definitely. And we’ve tried to avoid using the word AR in any consumer-facing content. So on Walmart, on Overstock, it’s “view in my room.” It’s “see in my environment.” “View in room” seems to be the best phrase. But again, using those terms that make it feel just really natural. I completely agree with that. You know, I think we’re just hitting the very, very beginning of this. It all comes down actually to tracking. Tracking is the technology that really Seek is working on and focusing on right now as the next step.

Alan: What do you mean?

Jon: Right now ARKit and ARCore

Alan: Me too. It’ll be a lot

Jon: Hand tracking for jewelry,

Alan: That’s the hardest one

Jon: Oh, it is. It’s so hard,

Alan: Yep.

Jon: And it’s horribly difficult

Alan: You know, I actually saw a

Jon: So awesome.

Alan: Oh, dude, it was amazing.

Jon: Yeah. Yeah. And so you have the ATV tracker. And that’s great. But there’s just thousands of products where this can happen. And there’s so much opportunity out there. For anybody that might be an entrepreneur listening to this, looking for an opportunity, figure out how to do that. Pick something you really care about where there’s a decent industry size.

Alan: Yeah. Mine’s learning,

Jon: Yeah, education is just– I

Alan: Yeah. It’s funny, because

Jon: Yep.

Alan: And so we were going down

Jon: We have to choose one. I mean, that’s something that both you and I have learned in this industry is, yeah, there’s a lot of AR agencies out there. As a company, you can go to them and say, “Hey, can you build this custom thing for me?” And they say, “Yep, sure.” Great for the company. They get a nice custom product. But the problem is, the company that built that custom product for them is going to fail probably, in the long term, because they’re not going to be able to stay in their business with project-based work. You have to build a sustainable business model and focus on one thing and do it better than everybody else. That is really the only way to build business, really, in any industry. But in this industry especially, you can’t say, “Yeah, we’ll build anything you want.” We have gotten really good lately at saying no.

Alan: But hold on. Let’s go back

Jon: Yep.

Alan: You guys were building

Jon: Totally, man. We had a

Alan: I learned something recently from another company in Toronto here. They’re an app development company. They do basically websites and really complicated apps for banks and stuff. And then they spun off this side project or the side company. It was totally separate. And they said, “OK, we’re gonna build our own products because we’re sick of building products for people, we’re gonna build our own.” So they siloed everybody off the development team. And what happened was they were starting to make products, they were making great progress. Some products failed, but it was like a– they were working on everything. The problem that they had was, as they got these big projects, a million-dollar project comes in and they’re like, “OK, we need all hands on deck.” And they pulled the people away from the products to work on the projects. And all the products just failed, because now you don’t have the team working on it. You just took the team away from what they’re working on, to work on someone else’s problem.

Jon: I know.

Alan: Yeah. And I learned in

Jon: You got it, man. It’s been

Alan: You guys are doing

Jon: The future is bright, I

Alan: Thank you, man.

Jon: Of course, your education

Alan: Well, I truly appreciate

Jon: Yep.

Alan: And it may be my

Jon: 120 million people.

Alan: In three years.

Jon: I read the same article,

Alan: I don’t know. I mean, I

Jon: I have some ideas, too. But

Alan: The problem isn’t so much

Jon: Yeah.

Alan: I don’t think so.

Jon: Mm-hm.

Alan: That’s why we’re raising

Jon: Mm-hm.

Alan: It’s nuts.

Jon: Well, thanks so much for

Alan: Oh, it’s my absolute

Jon: Oh yeah. Come down. Let’s

Alan: Ooohhh! Done, done! I’m a

Jon: That’s fine. We’ll to go to

Chemistry is a tough subject. You

Alan: Welcome to the XR for Business Podcast with your host, Alan Smithson. Today’s guest is Kai Liang. He is an amazing global world-trotter, travelling around the world promoting virtual and augmented reality for education. He’s a deep expert and practitioner of VR and AR education and industrial solutions in the global marketplace. He’s currently the acting director in a number of different companies, including world-class VR education content company MEL Science as their director of business development, leading VR education company Smart Stone Technologies, and the co-founder and VP of a leading Chinese VR education company, Growlib Technologies. He was recently appointed to the European Managing Director of Shadow Creator, a leading Chinese AR glasses and solution company based in Shanghai. Kai’s various businesses are responsible for successfully deploying VR education classroom solutions to thousands of schools in many countries all over the world. And soon, solutions in several countries directly with the ministries of education. You can visit melscience.com for more information.

Kai, welcome to the show.

Kai: Well, many thanks, Alan.

Alan: Oh, it’s my pleasure. I’m

Kai: Well, I think it’s really a part of the trend. I used to leave the marketing for glasses-free 3D technology. I was the VP for Dimenco. Glasses-free 3D — or otherwise called auto-stereoscopic 3D technology — has a lot of promise, has a lot of potential, but unfortunately, due to a number of factors, the business didn’t take off. The industry kind of slowly drifted, and a lot of my friends and partners actually moved into virtual reality. And I can’t help but notice that the difference from auto-stereoscopic 3D, VR was a technology and an ecosystem that is joined by a lot of leading global brands such as Facebook, Google, Microsoft, and Huawei, etc. etc. So business is growing stronger and stronger. And I can clearly see that it offer a stronger impact to user, as a media forum than auto-stereoscopic 3D. So yeah, that’s how I just naturally fit in, my credits from 3D to VR. And education is really the area that I initially settled on to. I find that lot of possibility and their missed potentials. I believe this can add a lot of value to what we do.

Alan: Well, I think you guys have already started to add an enormous amount of value to the education system. You sent me a license to your MEL Science VR application. The very first lesson was the difference between pencil lead or — carbon in a pencil lead — and carbon in a diamond. And I was able to — in VR — go in to at the molecular level, and see why carbon as a substrate like lead — or not lead, but graphite — is different fundamentally than how a diamond is. One is organized in sheets and the other one is organized in a structure that is much, much stronger. Obviously, diamonds are much stronger than graphite, but they’re the same materials. And unless I had gone into that VR experience and gone down to the molecular level, I would never, ever really fully understand how that works. This kind of virtual reality experiences to explain phenomenon that are really difficult to grasp from a two-dimensional level. This is really, really powerful. So how did MEL Science start to work on virtual reality education? Because MEL Science started off as a company that provides science kits to students. So you can go online, you order a science kit, and it comes in the mail. And then you can start to do experiments, chemical experiments, you can do physical experiments. How did it kind of morph from that into VR?

Kai: Sure, it’s good question. I would enjoy telling the story. And also, I’m really glad that you enjoyed the experience with MEL Chemistry VR as well. And I think you’ve described reasons to certainly my experience in demonstrating the solution to teachers, to students, to professionals, to colleagues from many countries around the world. So generally people like it, and people like good content. This is very fundamental. I mean, we are all– every day, we enjoy content. And by now when we watch movie, we enjoy the good content. With movies, really a lot of detail, well-constructed storyline. And so good content actually make a big difference for people’s lives, and for education as well. And it’s worth noticing that today, what people see from MEL Science is mostly chemistry. And there’s a good reason for that. The founder of MEL Science is a gentleman called Dr. Vassili Philippov. He’s a friend, and he’s also a physicist and an ex-director of Yandex from Russia, that’s a leading Internet search engine. So Vassili is a great businessman and he’s also a scientist. And Vassili likes to improve the way science is taught and he wants to make things interesting, which is why you notice that MEL Science originally started off designing and manufacturing and provide a really beautiful, interesting, and innovative chemistry experimental kit of very good quality for 22 countries around the world. So in a way, if we go back to our K-12 school days, chemistry is actually the most difficult subject, because mathematics is very reasonable. And physics you can feel and touch. Chemistry, on the other hand — things magically happen on a microscopic level or atomic level, that you just cannot actually see at all. So you have to imagine it. And also, you have to try to take interest from what is happening on a macro level for chemistry experiments when metal changes color, when one state changes to a different state, and one material changes to different material, we make these crystals. You cannot see that and you try to imagine what’s happening on the micro level. So that actually made chemistry really hard to grasp for a lot of people. But yet, it’s such a fundamental subject for everyday life. Our entire biological phenomenon is driven by chemistry. Petrol chemical industry is the backbone of society. Chemistry. And cosmetic? Chemistry. So that is why Vassili and his peers, they really want to do something to improve — to help the society — by improving the way chemistry is taught, so that the difficulty of trying to understand what’s happening in a chemical reaction is not going to be so difficult. So it’s not going to put off so many people. So that is why the experimental kit was designed to make it very interesting — great fun — that is more fun than the experiments you get from standard textbooks. And in addition, virtual reality technology is utilized with really good graphics, with more accurate scientific description, and with a unique journey to actually make the theory easier to absorb, make it immersive. Students can also construct that molecule together using different atoms. So there’s a lot of interaction with it. So I think that, in a way, is what a good virtual reality education program can give you. It’s that unique immersive experience to actually realize, to practice things that is normally impossible on a microscopic level. It can also do things on a macroscopic level, such as playing with concepts on the planets at a solar system scale. But for chemistry, this help, this method is delivered at a microscopic level. And you don’t see a lot of companies from the world actually doing things so focused as MEL Science. And as a name, MEL Science is a suggestion, chemistry is not what we’ll stop, of course. The team has already done a large number of physics content, also on the same level of quality. So there’s a great storyline, beautiful graphics, scientific and accurate, and with the right pace, and with good immersive support, and with a lot of interaction. So all these elements follow through on MEL Science’s philosophy of offering not a lot, but really high quality focused science engaging content.

Alan: It’s interesting that you

Kai: Yes, indeed. We– every content MEL Science makes, we want to achieve a really strong wow factor. And normally if you go to trade show, where you try to promote virtual reality education solutions to company. Every company seems to have a list of star content. They would demo the star content in order to push their entire portfolio of VR, the kitchen counter. Now, MEL Science is unique that they really want to make sure that every piece of content have this wow factor. In other words, a consistent high standard. So I think this is very unique. And another thing interesting about MEL Science, I will talk about other VR education company as well. But another interesting thing about MEL Science is it’s a combination of reality and virtual reality. I think that’s also quite important. Already for chemistry, we know that MEL Science makes *real* chemistry experimental kits. That is fun. And you can go to Facebook, our company community page on Facebook. You see more than 1.3 active subscribers on Facebook community page there, because the video was generated and the picture being produced from the chemistry experimental kit, which is beautiful. So the combination of real experimental kits, plus the VR element give you a combined educational and messaging power. And much has recently been made out of the setup for that, called MEL Kit. So this is to teach science to really young children — possibly between five to ten years old — and it’s not constrained to chemistry. It will include physics, mathematics, light, temperature, energy, all these subjects. But this is — again — young children would construct a functional scientific toy, not too difficult. And they will be able to read a storyline from a book. They will be able to construct a bit of a treasure hunt, with a storyline as well. And in addition, they enjoy an augmented reality teaching experience. So again, you’ll see this element of reality. The things you can teach, you can read, you can feel, plus the employment of AR and VR technology. I think that’s actually quite important. You’re having the market two schools of thought. One is to really use the best of VR and AR, but try to leave the traditional education approach. But that’s probably not the best way to go about it. It is important to combine the value of VR and AR, together with well-designed, well-authored education material on paper and physically. And also you can see and touch, and there’s that social element with it as well. So I think that’s actually quite unique, and I hope that is something that can be noticed, can be enjoyed by the user community and teaching community,y so that truly we have VR that is working in partnership with other means of technology, to give that extra bit of user experience.

Alan: Yeah, I think that’s really key in learning. A lot of people when they started to talk about virtual reality is that oh, this is going to replace teachers, and I really don’t feel that. And I think you guys have taken a really pragmatic approach. Virtual reality serves a purpose. It can show students things that were not possible: going down to the molecular level. But you still need that hands-on approach. You still need the experiments, you still need the written word. And I think it’s really not something that’s going to completely replace teaching in the way we know it. It’s just going to enhance it. It’s like when tablets came into a school. Tablets didn’t replace teachers. Computers didn’t replace professors. People need to wrap their heads around the fact that VR and AR are just another tool in the toolbox to provide excellence in learning.

Kai: I agree. And I think that

Alan: You guys are working on

Kai: Yeah, I know the Labster team quite well and they have excellent products. As you already mentioned, Labster’s product and concept focus around college-level or university-level. At the moment, MEL Science focuses on young science education, as well as K-12 level. So in a way, I think these are quite complementary. It’s also difficult for us to work directly with each other, because we address different markets. We have a lot of mutual respect to each other. Labster is great, and also supported by Google. While MEL Science… the market we address is very different. Another thing that’s different about MEL Science is that MEL Science wants to be really platform-independent. We support the Google platform. We support the Oculus ecosystem. We’re working with — this trip, that I have in China — is to talk with other VR platforms in China, including HTC, PPVR, Pico, and we support the iOS platform. We want to be much more universal, so that this is a reflection of education at K-12 and younger levels, because you have a huge variety of different hardware platforms that people use, while — at the university level — they can perhaps be more fixed, and more focused around Google platforms. Hopefully in the future, we can collaborate more.

Alan: Absolutely. I think you

Kai: That’s a really good question. Especially, we envision the improvement of test scores. You typically see that in eastern countries such as China, Korea, and Japan, it’s very important that whatever education technology you utilize in school, they have the result in a positive effect on the exam scores. And while in the West there has been independent research, both in Russia and the United Kingdom and the USA, to try to measure the difference between utilizing what’s around education technologies such as MEL Science, and the control group that you don’t. In all this different research, there is really strong evidence to support that virtual reality technology give you enhancements for people understanding of the education knowledge point. And notice I’m talking about “knowledge points,” because each VR education application is addressing the delivery of certain knowledge pieces, and all these knowledge pieces actually within the standard K-12 curriculum of different countries. The interesting thing with K-12 is that the education curriculum at K-12 level in all the different cultures in the world, they don’t differ that much from each other. What is useful for one culture — for UK system — would work very well for US system, and will work in China as well, in Japan, etc. etc.. Not only that, the student, after the experience in VR, the youth that uses VR to expand their knowledge, and they get a better feel for it. They get better focus. If you tend to notice that you might have certain naughty students, or there’s a student in the classroom that their patience can easily drift away; once they put on a VR headset — or AR headset, for that matter — this enriched multimedia experience instantly changes their nature. They’re focused on learning for a change. This is a very powerful tool to actually really deliver the kind of baseline knowledge that you want everybody to have in the classroom. So, once people have better confidence with knowledge points, they actually get through the entirety of the education message. I mean, by definition, we know that you should have a positive effect on the exam score. If you truly want to be scientific above exam scores, it’s essential for you to really observe the students who conduct experiments, or start doing research, for a prolonged period of time; at least for one year, or possibly two years. Now, I don’t know of any structured education project as such in the world yet, but of course, we are open to actually work with anybody — for any research institutions — we will facilitate that research, because that can be done. It can be very useful for education communities from around the world.

But having said that, I do want to mention a couple other VR education products, that are written by my friends and partner. For example, there is this company based in Cyprus — loved the island of Cyprus — called Luden.io. And this company, the CEO is called Oleg. Oleg’s team used to develop an education technology game, or edu-tainment games, such as InCell and InMind. I mean, there was a different version of InCell. They also developed a really innovative edu-tainment project such as “while True: learn()”. So it’s artificial intelligence, a machine learning application. Oleg’s team is working with autism institutions in Russia and the US, and I’m putting them in touch with Australian Autism Recovery Centre in Australia, and also in Beijing and the UK. So, by working together with the research institutions to help children suffering from autism — to learn better, to socialize better — they purposely develop the application together as research. This type of product — their product set is called Rewire.Education. They are actually a combined result of scientific research together with virtual reality education. So their product, I think, is certain to deliver positive value in education for autistic children. I mean, it’s different; it’s a very niche market sector. But I think that’s actually a good example; hopefully we can begin to see more and more collaboration between the good VR content teams and top research institutions. They would focus on how to utilize the XR technology to improve education. But, in that way, without waiting for one or two years for research, we know that we’re going to deliver things that deliver a better result, because we involve research and we know teachers, and we know students, from day one. So I hope initiatives like this can happen more and more in the world.

Alan: I agree. I think it’s it’s

Kai: Good question. As I said, I started in the world of VR by working in the area of virtual reality education. And I remember my first job in this area was that I became the sales director for — at the time, back in the days of 2016 and 2017 — the leading Chinese Virtual Reality Education company called VR School. I was a sales director, so my job is to deliver positive revenue for the company in a very competitive market space against all the kind of a traditional resistance of the technology, and also against the fact at that time, the experience of VR is not all that great. So I have to push. But very quickly, I noticed that the good companies really deliver the message and deliver the benefits. It’s obvious, but there are not so many good companies back in 2016 and 2017, certainly in the market in China, and also internationally. You have all this content isolation. One company will have certain content — and don’t forget, writing virtual reality content at that time is a lot more expensive compared with these days. You have much less professionals who are able to generate VR content, including VR education content. So you have one company, and perhaps you have five to 10 pieces content. Another company, perhaps has 20 pieces of content. When you put them all together, it’s still not going to come anywhere near enough for VR education to be adopted or even trialed in the education community. So from 2017, while I was working for VR School, I already formed the habit of trying to get known people and companies around the world who actually are working on VR conferences. Normally I would ask people, “do you also do something in the education? Why not?” And I think that therefore, we’ve done this consistently for three years ago. It gave me the benefit that I start to actually get to know a lot of good people from different worlds, from different countries with different styles. They all have different content from me. And MEL Science is actually one of the companies I came across in this search, being probably one of the best. And together with Labster, as you rightly pointed out, and Luden.io, and CoSpaces, and VictoryXR, Sterling Pixels. I can then weave our long list of really, really good people, good teams who actually created good VR education content, and by working with these people, you also can see all the reasons why they can create good content.

Sometimes I even try my best to offer

Alan: It’s amazing. The whole

Kai: So we are making a trial

Alan: I know you’re also on the

Kai: Yes, we are.

Alan: And are you on steam as

Kai: We’re not currently on

Alan: I love it. I don’t know

Kai: I can be reached by my

Alan: Yes. Yes, you can message.

Kai: Everybody would know

Alan: Yeah. I am a connector of

Kai: You’re wonderful.

Alan: I really want to say thank you for taking the time to be on this podcast. And I really look forward to trying more of the MEL Science and getting my kids really excited about science, because I think what you guys are on to is inspiring, and it educates, and it checks all the boxes that I feel are necessary as we move into a really fast-paced world of exponential growth. So thank you, Kai.

Kai: Thank you very much. And

If you want to master something, teach it.” That’s the old adage, and at Circuit Stream, the thinking is teaching XR helps you develop better solutions, too. Founder and CEO Lou Pushelberg created Circuit Stream courses to give companies the power to educate and empower themselves, and just make the whole XR ecosystem stronger.

Alan: You’re listening to the XR for Business Podcast with your host, Alan Smithson. Today’s guest is Lou Pushelberg, founder and CEO of Circuit Stream. Circuit Stream’s story began in 2015 with Lou traveling around North America, connecting with developers, designers, and creators, pushing the boundaries of immersive experiences. Rather than try to build the next big application like everyone else, Lou saw a bigger need for education and training that could help propel the industry forward. From this journey, Circuit Stream’s 10-week online course emerged. Their education platform has reached over 25,000 students. They’re a Unity authorized training partner and their team of 20 people is giving professionals the skills they need to build value-driven XR experiences. They have three business divisions: education, software development, and their platform. To learn more about the great work that Lew and his team is doing, you can visit circuitstream.com.

Lou, welcome to the show, my friend.

Lou: Alan, thanks so much for

Alan: It’s my absolute honor.

Lou: Well, I was working for another VR startup early in 2015. They were based out of Seattle. This was kind of the DK2 era — so early in VR’s history — and personally was inspired by a lot of the early pioneers, who were building some of the flagship VR content and titles that were coming out on the first wave of consumer hardware — so the Vive and the original Rift — and was basically looking for an opportunity and a need, where I could create value for the ecosystem and help accelerate the adoption of VR and ultimately of XR technology, and found that kind of service and value that I could provide to the ecosystem in education.

Alan: So how did you begin?

Lou: [chuckles] Yeah, that’s a good question. So we began with a kind of a core philosophy that was, the only way to learn anything really in it — and especially this technology — was to get hands-on and just start building things. There wasn’t a playbook for VR and AR, there wasn’t a series of best practices at the time. They were kind of just beginning to emerge. So we really wanted to focus a lot of what we were doing around getting people into Unity and some of the other major engines, and just helping them start blazing their own trails by just building stuff and sharing it with people. That’s kind of been our MO and what we try to facilitate with all of the professionals, companies that we work with. So in kind of architecting the course in the beginning, we would go straight to the source. So you mentioned travelling across North America. I had basically booked a trip through what were the four biggest hubs down the West Coast. So starting in Vancouver and then heading south through into Seattle, San Francisco, and LA and in each XR hub, I would interview developers, sometimes from startups who were kind of pushing XR forward, and other times from some of the major players — like the Valves, Oculus, Unity, Google — developers who were in VR building and creating and kind of the aggregated knowledge from the people actually building, the developers and designers. That’s what was used to kind of as the kernel for a curriculum that Circuit Stream started with.

Alan: Where’s it gone from there? Was it mainly game enthusiasts that people just wanted to make an AR game or VR game? Like who are the typical students? You’ve trained 25,000 students; is this people sending their company employees? Is this just enthusiasts wanting to learn?

Lou: What we found was kind of

Alan: It’s funny because we

Lou: What we find is that

Alan: I’m looking at your

Lou: Yeah. We see people building across platforms and across devices. In terms of the content itself, we’ve seen a focus around training and operations. I want to create value here, and not give you the generic answer. So maybe what I’ll do is tell you a story of one example, one of our partners and customers that we’re working with from a training capacity, because I think this story is enlightening. So this company — it’s a company called Vantage Airport Group — has been a really early partner for us, someone who is very taking the training and taking our courses early on in Circuit Stream’s life. And we’ve evolved with him to help him begin to deploy and scale VR training throughout his organization. And what their company does, is they manage the operations of airports. So airports, which are sometimes owned by the city, will subcontract them out to actually manage the training, the staffing, the operations so that the airport can continue to run smoothly. So they’ve got dozens of airports that they’re basically responsible for managing around the world.

In some of their smaller airports, they

Alan: You’re steering in the

Lou: –and vice versa. Exactly.

VR training is one of the best uses.

Alan: Have they rolled this out

Lou: They’re in the process of

Alan: What are some of the

Lou: We are, yeah. So I’ll share

So in terms of scaling, those are some of the problems that we’re trying to solve and trying to remove some of the friction so that if you have a VR or an AR application that’s effective and you validated, that you don’t go to the IT group and say, “Hey, we’ve got this application that we’re working on it, it’s actually really beneficial at solving a business problem.” and then IT says, “Well, that’s great, but we have 10, 20, 200 devices. And every time the developers update the application, we don’t want to go back and actually update that content on our 200 devices.” So we’re building a platform to basically manage that content distribution, as well as all the versioning and updates. And that’s what we can contribute for some of these market-leading companies, like Vantage, who are scaling and trying to realize and measure some of the benefits of XR. And we’re trying to help them solve that problem and really be a partner in rolling out at scale.

Alan: How are you guys managing

Lou: Device management is an

Alan: That’s awesome. The

Lou: Interesting. So we have

Alan: The problem is that if

Lou: Right. Right.

Alan: And that’s– I mean,

Lou: Yeah, 100 percent. Coming

Alan: That’s gonna be essential, is keeping the content current, but also being able to use industry-leading techniques. And the thing is, you’re like, “Hey, well, let’s look to industry to give us what we need to teach.” But the thing is, we are the industry, so we’ve got to make it up as we go. It’s one of those things. And when I was first getting into VR, I listened to one of the podcasts on Voices of VR podcast. And one of the guys was saying that VR and AR is so early now that if you’re a Hollywood producer or you’re somebody making something in your basement, the playing field is completely leveled. Nobody knows what we’re doing. And it kind of struck home with me, that there are obviously now — fast forward 3 years or 4 years — companies and people that have more experience than others. But it feels like we’re still at that early phase, where anybody can be a Beat Saber or a Superhot or create a training module. It seems like we have only scratched the surface of what’s possible.

Last week I was in Orlando at the Simulation Summit in Florida, and I had the opportunity to try the haptics gloves, where you put on these giant gloves, but they simulate touch and picking up things. You were able to reach down, grab a virtual object physically and interact with it. And it feels like when you pick up something, it feels like it’s there. And it was– it was that combination of the touch mixed with the VR and the sounds and spatial audio. Everything together made this experience, that I was just literally blown away. And then when I– it was was a military simulator, so it was a bit graphic. But when I took off the headset, it took me a few minutes to kind of re-acclimatize to being in the real world. And I think that’s the power of this technology to really hijack all your senses, to give you that sense of doing it. And to your point about if you want to learn something, teach it. I think that VR lends itself amazing to kind of that, see it or watch it, do it, teach it. There’s something visceral about it. There’s something that that just locks in your memory. It just, it is there forever. And there’s another group teaching VR productions stuff, called Axon Park. Are you familiar with it?

Lou: No, I’m not.

Alan: What they’re doing is

Lou: That is very meta, indeed.

Alan: OK, so let’s move on to

Lou: So my killer use case is

Alan: Let’s be honest, it didn’t

Lou: Right, I totally agree. I

Alan: It’s nuts. [laughs]

Lou: Yeah, it’s totally

Alan: Yep.

Lou: Yes. I totally, totally

Alan: Can you imagine what we’ve come through in the last three years and imagine what’s going to be the next three years from now? It’s going to be these crazy, exponential improvements on everything. When you look at Facebook or Oculus’s announcement of their varifocal lenses: basically, they’re creating lenses inside a headset that will allow you to focus on multiplane. So if you look at something far out, it’ll be in focus. But if you look at something close up, it’ll also be in focus. And I mean, that’s just– somebody had to sit down and think of how do we focus on multiplanes using a fixed screen? It’s nuts.

Lou: Right. So, I mean, what

Alan: I mean, to put it in perspective, just to put a final point in that: four years ago we started doing 360 video for companies, and it was about $10,000 a minute. And you had to stitch it, you had to basically 3D print a rig, and put a bunch of GoPros, and then hand-stitch all the different seams together. Then we started seeing these consumer-grade 360 cameras that did almost the exact same work we were doing. It’d sacrifice a little bit of the resolution, but it stitched on your phone instantly. You kind of had this a-ha moment, where it’s like, “OK, this $10,000 per minute thing is no longer valid, when I can buy the camera for 500 bucks and it’ll do everything for me.” And then fast forward to now, you’ve got 11K cameras, stereoscopic stitching in the cloud, and that camera is less than 10– it’s less than one minute of what we were doing 10 years ago. And you can make as much as you want. I digress.

Lou: [laughs] No, I mean, it’s a

Alan: I got to say something.

Lou: Sure.

Alan: We have a crazy idea.

Lou: [laughs] I love it.

Alan: Think about it. But that’s

Lou: Hey. I mean, I agree. And

Alan: The business challenge;

Lou: Exactly. So coming back to

If your company is willing to make that investment and say, we know that this might not be a hard ROI that’s going to hit the PNL next quarter. But what we’re essentially doing is virtualizing away some of our training or saving time for the training manager, which lets him or her go work on other higher-value tasks — which may not hit the PNL this quarter, but it may hit the PNL in a year or two from now — and either help the company create more revenue, reduce its costs, etc. and essentially make the company more effective and more efficient. So that’s one way that we’ve been kind of looking at, you know, dialing back into today. And how do you make the case? How do you tell the story? This kind of model around soft ROI and increasing productivity through XR is quite powerful for someone who is open to that kind of thinking around value creation.

Alan: You know, there’s two other things that have come up on this podcast recently. One being it portrays your company as an advanced company, as a forward-thinking company. So companies that are using VR and AR training now, their employees are more likely to stay with them. And actually there was– can’t remember who was this morning. I was doing a podcast this morning, and they were saying that they’re seeing an increase just by using– oh, it was James and Justin from Immerse. They were saying there’s an increase in retention rates, not of the knowledge, but of the actual employees. Because they’re staying longer, because they’re getting better trained, they feel more comfortable at work, and they also have this kind of feeling that their company is doing the right things. And I think that’s a soft AR way that you can’t really measure. It’s very hard to measure. But the other one around soft ROI is that people when they go into virtual experiences, they have a very visceral, hands-on experience within virtual and augmented reality. But that translates directly into on the job skills training and management and people that are more comfortable at their work perform better, they come to work enthused. And I think we’re only scratching the surface with this. But at the same time, it’s important for companies to realize the real value is in all of those things combined. And one thing I always highlight when I’m speaking to a customer is like when you’re in VR, you cannot be on your phone. So you’re literally hijacking people’s entire focus. And it’s very rare when you have hijacked someone’s entire focus — even for a small amount of time, for 10 minutes while they do the training — they cannot be doing anything else. It doesn’t work.

Lou: Yeah, I agree. And people

Alan: You can. Oh, and another

Lou: Yeah. 100 percent.

Alan: It’s OK. Nobody’s seeing

Lou: Data is another huge piece of this, capturing all that learning data as well as– just if I think of AR like other processes in terms of system checks, that are traditionally done with paper, part and component checks, audits, all of these certain things that if you can serve up contextual information at the right time and place, that you can take these from multi-step processes or multi-steps of gathering and reporting on data, down to maybe one or two.

Alan: I had dinner with Shelly

Lou: Yeah, that’s amazing. I

They’re equipping their field service and installation teams with Hololenses, and what was a four-month process has basically been reduced down to two weeks. Because on the first site visit, the technician will go through with a Hololens and they’ve written software that’s able to take a fairly accurate measurement of all of those steps and it basically just scans the steps as he walks up them with the Hololens. That data is immediately streamed back to the designers and engineers who are going to tweak the manufacturing and installation process for the elevator equipment that’s being built in their home. And this from four months down to two weeks and hope those– I believe those are the accurate numbers. He was literally saying this is a piece of our business where we’re fundamentally changing our business model. And to me, that stuff is just fascinating. And it’s amazing that giving people computing in the form of XR that maybe traditionally haven’t had computing or have had it in a different form, is able to literally change a business model, that’s an amazing, amazing story of success.

Alan: It’s absolutely

Lou: Hmm. This may be a strange

Alan: That’s a beautiful thing.

Lou: I totally agree.