The Evolution Of Virtual Reality – I’ve Seen The Future by Evergreen Gavekal

Virtual reality was once the dream of science fiction. But the internet was also once a dream, and so were computers and smartphones. The future is coming.” — Mark Zuckerberg, Facebook post, March 25, 2014


The Evolution Of Virtual Reality – I’ve Seen The Future

By Tyler Hay, Chief Executive Officer

Recently, a client of ours, who works at Bellevue-based Valve Corporation, invited me to experience something that’s likely to have a revolutionary impact on the human race. Valve is the coolest company that you’ve never heard of, partially because it’s privately held and partly because they enjoy the anonymity. Valuing the company remains elusive, but in 2012, Forbes estimated it had surpassed Electronic Arts (EA) in net worth. At the time, EA was considered the leader in software game development. Today, EA has a market cap of $19 billion, leaving it to anyone’s best guess how much Valve is worth. My suspicion is it’s more than EA by a wide margin.

Valve’s culture is intentionally Darwinian. You won’t find bosses, standard corporate hierarchy, monthly performance updates, or a dress code. Employees work on projects that interest them and are reviewed annually by a team of their peers. In a self-adjusting way, employees must work on projects where they add value. Therefore, ineffective employees, or ones who misallocate themselves to projects where help isn’t needed, receive poor scores. In talking with employees, you get the sense that this process is both appreciated and efficient. The collection of Ivy League geniuses and computer prodigies that work at Valve don’t seem to view what they do as a job; instead it’s more like they are a part of a movement toward the greater good.

In its infancy, Valve was a game developer. During my youth, I was one of their early adopters playing a game called Counter-Strike, sometimes in unhealthy doses. Whenever, I tell a Valve employee that I grew up on their games, I expect them to judge me (after all, “serious investment people” should have had their heads continuously buried in some financial textbook, right?). Their reaction, however, is exactly the opposite: They seem to like that I’m different than most of the financial people they have met, and they also revel in the fact that they, too, are different.

Today, their roots are still in games; however, a few years ago they decided to pursue a momentous undertaking. Valve chose to build their own console dubbed Steam to compete with Microsoft’s Xbox and Sony’s PlayStation. Even more recently, they’ve tackled an extremely ambitious challenge: virtual reality (VR). In partnership with HTC, they’ve developed a new VR platform, called Vive.

They are not alone. Sony’s PlayStation 4 and Facebook’s Oculus Rift are also attempting to crack the virtual reality space. However, Vive is unique because it’s the only VR experience that allows users to physically move around, while the others are a stationary experience. In addition, Vive allows players to use specially designed controllers that help users perform a number of functions in the virtual world from controlling player movement to engaging objects. None of the systems are without drawbacks. Vive and Oculus require the user to wear a headset that’s tethered back to a PC. Trying to avoid stepping on this cord as you alternate between different realities can be annoying. I admit that I have not tried the other competitors but the goal of this piece isn’t to compare and contrast VR experiences by manufacturer. Instead, it’s to announce the emergence of VR into realm of mainstream technology and explore the positive creative disruption it’s likely to trigger.

Virtual reality as a concept is not new. It was originally called Sensorama, which I personally think is a bit catchier! It’s a classic case of life imitating art as science-fiction has long been forecasting its arrival. The term “virtual reality” was coined in the 1982 novel by Damien Broderick, The Judas Mandala. Despite being imagined for decades, it wasn’t technologically feasible until recently. Breakthroughs in both display quality and computer processing power have now made it a viable mainstream technology, enabling the creation of these new digital realities. Interestingly, it isn’t big software companies lining up to develop the first ways in which users will experience this rich new medium. The reason is simple economics; the installed base of VR systems will initially be too small to warrant a sizeable investment. Therefore, it will be left to small garage companies that will really pioneer the direction of development. The big boys will sit back and wait to see which types of VR uses take off, then break out the checkbook to make some unshaven millennial a billionaire. Given what I saw at Valve it won’t take these small developers long to catch the attention of the bigger players.

It was during my VR experience that I started imagining the vast diversity of its application. While I can only speak from my experience at Valve, I truly felt as though I was in another place. It was a collision of realties. In one reality, I knew what was happening. I was in a 15×15 room six floors up in a downtown Bellevue office building wearing goggles with cords attached to a PC that was creating a digital world for me to experience. At the same time, my mind left that building and suspended what I knew to be reality. During one of the simulations, the clash of realities occurred as one of the demos took me to a dangerously high platform inside a warehouse. The floor around me began to crumble and I found myself moving off the collapsing portions to the area of the floor section that remained stable. Why?! I should have known that the floor beneath me was the office environment I had witnessed before putting on the goggles. The experience they’ve been able to create is more than enough to get the brain confused as to which reality to follow. I felt truly a sense of presence in that virtual world.

In another example, I was asked to pull open a compartment of a machine that needed to be fixed. Out of the machine’s engine slid a section that expanded like a kitchen drawer. Next, I was told to move to the other side of the machine. How did I move to the other side of the drawer? As our brains have been trained to do, I walked AROUND this virtual drawer. The audience at Valve laughed at me. To those not in the virtual world, they saw me carefully maneuvering myself around empty space, but inside the goggles, I saw a drawer that I needed to negotiate around. In the real world, we have to walk around things. In a virtual world, I could have simply walked through it!

It’s important to realize just how early this technology is in its development. In fact, many of the challenges developers are facing were truly unforeseen consequences. For example, imagine being on a virtual treadmill bouncing up and down as you stride, a slight jolt occurring at every impact of your foot. Your mind and thinks you’re running but instead you’re standing in

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