AltspaceVR Part 1 | Eric Romo

OK, so just really quickly on what we do, and I won't spend too much time on us, but we think about ourselves as a communications company. So the thing we think that we get from VR is that it's a new medium. So it has an ability to make us feel like we're in a different place, and more importantly, feel as if we're in the same place together. So while it's great that we record these things, and then we have them available for people to watch presentations like this, You would never argue that watching this presentation is the same as sitting in the audience right now, right? There's no substitute for that. You never argue that watching a YouTube of a TED Talk is the same thing as being at a TED Talk. And the difference is this, right? Is that we feel like we're in the same space together. We know that we're connected. We know that we're talking to each other. It's nonverbal communication. And the fact that you're not necessarily talking to the people around you while we're doing this presentation, but you know that they're there, and there's an energy and an enthusiasm that comes from sitting around them and being near those people That you don't get when you watch a livestream on YouTube by yourself. OK? So what we do is we put people in these same virtual spaces, and we make them feel more like they're in the same room together than they're watching a livestream together. And what that does is it gives us a wide variety of potential use cases. You know, so everything from, we're going to sit in a room together, and we're going to watch a movie together. We're going to sit down with somebody who's 5,000 miles away and play a card game with them. We're going to go to a comedy show with comedians from LA, even though we live in Wisconsin. We have lots of different things that we're trying. We're experimenting around to try and figure out what do people want to do when they gather together in these shared virtual spaces? What do they want to communicate about? Because we think really this gives us a new medium for communication, and that's what we're most excited about. I don't want to talk too much about what we do, but I just wanted to give you a quick view on how we see the VR landscape. So I'm going to transition now to talk about the fundraising process and some of the things that we've learned in fundraising. In particular, again, in VR, but also in spending a lot of years raising money for a solar technology company. I think some of this I want to point out how things have maybe changed since I started fundraising and what our sense of the market is right now. And it's a topic I'm happy to dive deeper into as we go. So, OK. I've kind of structured this. I don't know if you guys do this in your process here, but there's a— kind of standard pitch format that people are always trying to get you to do that I've never adhered to, except for in this presentation. But so I've sort of mirrored that a little bit. I know we're always supposed to talk about the problem first, right? So what I think I encounter a lot of, definitely in the VR space, also in other spaces, is people kind of get enamored with some subsegment du jour, right? Something that's hot. Oh, AI's hot, drones are hot, deep learning's hot. That's the thing I want to be in. I'm going to start a drones company. The reality is you're not starting a drones company. You're not starting an AI company. You're not starting a VR company. You're starting a company that solves some problem, that solves some pain that people have right now. The thing for you to focus on when you talk about your company, when you think about what is important about your company, is not what hot subsegment you're in. Sure, venture capitalists all need to have their play in those different spaces, and so that's an important thing for you to talk about. But what you really have to focus on, what you have to be sure is right about your company, is that problem, that pain that you're trying to solve. So focusing on that problem, as you talk about, you think about who are you as a company? We as a company are a communications company. We are a VR company. We use VR to solve that communications problem, to solve the pain of not being able to feel like we're in the same place. But fundamentally, we're a communications company at the end of the day. So as we think about that pain that we're trying to attack and the customers that feel that pain, That's what we think about is communications. And so I would remind you, I guess, to not think about yourselves and get so focused on that segment that you're in, but instead think about what is the problem that you're really solving. So it's interesting. I think there's a lot of times when you have sort of a product thesis, and that's how you can start a company, and you can raise funding from that. I think we're at a point in a lot of markets and a lot of segments that the bar is substantially higher than it used to be as far as what do you need to show when you're out there raising money to start a company. So, you know, I think a lot of mobile app companies, for example, companies who have apps they can launch, you know, are showing some kind of traction or showing some kind of adoption before they even walk in the room to talk about their first funding. In VR, you better have just a blowaway amazing demo that people are just screaming about how awesome it is. You know, so you really need some ability to demonstrate that you can execute on the idea that you have, and that's gonna be— Your app that you launch is going to be the demo that you have. It's going to be something that you can walk in the room with. And this is a challenge often. It is the sort of thing that I hear from people all the time is, well, I'm not an engineer. I don't have a CS degree. So how am I going to make that happen? The reality is that in the network that you're forming here, and the people that are in Silicon Valley, and the contractors and consultants and people who are trying to get involved in startups, there are people out there that can help you with this stuff. And so you have to show the ability as a founder, as a CEO, to hustle hard enough to find that person that can help you build it, to find a way for for you to build something that looks and smells like the product that you're trying to build. And so it's not acceptable for you to not have that first thing to show people. It's a very critical thing. It's more critical in certain markets, like in VR, it's table stakes. Don't walk in the room and even talk about a company unless you have something to show in a headset. And I think it's the same in a lot of mobile subsegments as well. Drones may be different, I don't know. But I think having that thing that really captures the imagination of the investor or the person you're trying to attract is super, super important. I think the other thing that I'm saying but not saying here is you're going to have a lot of friends and family who are going to be really emotionally invested in what you're doing, going to be super excited about what you're doing. They're all going to lie to you about how good your demo is. Nobody is going to be— they can't give you a straight answer. They can't tell you— you show your mom your product, of course your mom's going to say, oh, that's awesome. Right. But you've got to find those people who really you can believe the feedback that they're giving you. And that may be the classmate that you met that's hypercritical of everything or whatever. But you need to find that person who's going to give you the straight response. And that person needs to be convinced of this, not your buddy who thinks that everything you do is amazing. Because there are a lot of people around there like that for you, I'm sure. And the other thing, I guess, that's related to that is, don't think that you're done with whatever that MVP or demo is too early. This is something we see in VR all the time. We're in the lucky position that people are trying to get us to use their VR product that they're building. And so a lot of people come in to kind of show us what they're working on. And I can't tell you how many times I've put on somebody's demo or whatever, and it's just made me so sick. And it's just so really not ready to be showing anybody. Yeah. Their mom said it was great, and so they brought it in, and it made me want to puke. And so it's a really rough thing if you're not ready to show this stuff off. So don't start trying to show it off too early. I mean, this is the sort of thing that sometimes there's a demo day, or there's a— got to go to CES, or whatever. And so there's some really big forcing function on time. But you never get a second chance to make a first impression, right? So you really want to wait until you're ready. So then the thing that comes from this is, if you're showing this demo app, or you're showing a demo in VR, or whatever, your drone demo, whatever that is, then the question becomes, OK, well, so what am I doing in the presentation? Because I'm probably going to stand in front of that investor and show them some slides and something cooler than PowerPoint. And what is that presentation about? Well, the presentation is really there because What you need to do in the next phase after you get some investors is you need to get people to join you on this crazy journey that you're on. It's about can you convince other people that what you're doing is interesting enough that they should come follow you. It's about can you be compelling when it's time to raise your Series A or Series B and go out to more investors. It's actually just a dry run of figuring out how convincing can you be about your thesis, about the market, about where your vision is headed, about what you're doing. Is less about the slides and exactly what they say and more about can you capture that person's imagination and attention. So in this market, showing people things is really important, and then convincing them that you can convince other people that your vision is good is how the presentation goes. Okay, I have a love-hate relationship with the market slide. This is my— everybody always puts this crazy hockey stick chart on all these graphs. Here's the thing about the market. Nobody cares about your opinion of the market. Nobody cares about my opinion of the market. There's markets where there's data, and there's markets where there's not data. And putting together some back-of-the-napkin analysis and basing a big part of your presentation, a whole slide of your presentation, on that is really just a waste of everybody's time. So either show real, actual data about the market, or don't show data about the market. If you're in a market that exists already, if you're trying to sell into some service segment, if you're trying to sell into games, if you're trying to sell into communications like we are, there are markets that exist. The investors that you're going to talk to probably already have a thesis on that market. If they're investing in your space, they probably already know what they know about the market. Usually there's not a lot you can do to convince them otherwise of their market thesis. I'm sure you could find some good data maybe that would change their mind, but your opinion of that is not. It's just literally going to be a waste of their time, and they're going to say, okay, next slide. Where I always come out on this is if you don't have something absolutely new to bring to the table, some way to change their mind that they would never have seen before, don't fight the battle. You have limited time in these conversations, so don't try to change their thesis in the Unless you have new data that's new and fresh and they absolutely can't positively have seen before. The difference, though, is if you're in one of these kind of pre-markets. So we're in a market that doesn't exist yet. Our TAM is zero right now in VR. And so the thing you have to talk about when you talk about a pre-market like we're in is how are you going to stay alive until that market gets there? Literally, there's probably like 100,000 people in the world who could use our product right now. We can monetize at the best rate that any app has ever monetized at, and the revenue is— who cares? So when we talk to investors, it's about, OK, well, why do you believe that you're going to be around in 2017, 2018, 2019— 2019, wow, that's a long time from now. But why do you believe that you're going to be around in that time so then when the market arrives, you're going to capture it? And this is about perseverance, how you're going to budget your capital, how you're going to spend your time, what are the milestones that you're going to achieve which are going to allow you to raise the next round of funding. So it's a different story. It's related to the market, but it's not about the size of the market. It's about when is the market going to arrive, and how are you still going to be there and be relevant when it does? Please don't ever say that. I've seen this so many times. And everybody— it's like the VC thing of, OK, yeah, I'm not going to invest in you now. If we only get 1% of the market, then therefore it's $1 trillion, and so we'll be a big company. That's not a market analysis. That's not a way to present yourself to a big company. It is just an absolute red flag signal that you're going to send to investors. So don't put that in your slides. Thank you.