In Sandbox VR founder Steve Zhao's thinking, his company goes against all the major trends in technology and investing.
But Sandbox VR is also a lot of fun
when you experience it — which has helped the virtual-reality startup
raise $68 million from top-tier investors, led by the Sand Hill Road
stalwart Andreessen Horowitz.
The round was joined by
Mike Maples from Floodgate, Stanford University, TriplePoint Capital,
CRCM, and Alibaba. It's an interesting investment for those firms, as interest in early-stage virtual-reality investments has cooled
lately. But Sandbox VR is a peculiar VR company — instead of making
hardware and software you can use at home, it creates experiences in
malls and other public locations that you have to travel to and that
aren't available elsewhere.
Sandbox VR was started in Hong Kong, where it quickly found an audience.
"When we first opened in Hong Kong in 2017, when we opened the
location, for the next 60 days we were sold out from morning until
night," Zhao said.
At the time, Zhao was running the
Sandbox VR system on the cheap — it uses a lot of pricey VR hardware,
and Zhao had to create the software to stitch it together as well as the
content that people experience. The company was close to running out of
funds at one point. Now the company has 45 employees, seven locations
in the US, Canada, and Asia, and a war chest to expand.
Sandbox VR provides a virtual-reality experience —
you and your friends gear up, donning some of the latest VR headsets
and high-tech computer backpacks, and are dropped into a virtual world,
whether it's a pirate ship, a zombie invasion, or a vision of what Hong
Kong could look like in 2088. It costs about $40 per person for an
hourlong experience, which you book online.
Sandbox VR plans to use its Series A to expand to new locations and
create different experiences — games — for people to play at Sandbox
locations.
"We have locations planned for LA, Austin, New York, and Chicago, and
we've inked multiple deals with Westfield malls across the country,"
Zhao said.
Though investing in new retail locations and
content can be expensive, the Sandbox VR team believes it can keep the
new locations booked up with enough new groups to make the investment
worth it.
Kanye West and Marc Andreessen are fans
Sandbox VR expected a difficult fundraising process but was helped by a
couple of factors, including that its experiences are basically
designed to go viral on social media.
"We are in three sectors that just aren't hot right now: There's VR,
which is in nuclear winter, there's content, which is never hot, and
there's retail, which basically nobody invests in — and we're a company
that's in all three of them at the same time," Zhao said.
Part of how Sandbox VR markets itself is through social media.
Participants get video of themselves all rigged up and can share clips
of themselves as the characters inside the game.
"Seeing it on Instagram is going to be one of the really killer secrets
of this business," said Andrew Chen, an Andreessen Horowitz partner.
"When you are having such a good time, and it creates a video of you and
all your friends screaming and ducking and like all this happening, and
it's so fun, that's this leap that so many people share."
He added: "They've cracked the code on getting new customers in to try the experience, and I think that's really special."
Lots of Silicon Valley insiders have tried the game at Sandbox's
location in San Mateo, California — but so have some celebrities, like the rapper Kanye West, who posted about it on Twitter.
"He was cool as a cucumber inside the experience, and we were worried:
'Is he having fun?'" Sandbox VR's chief product officer, Siqi Chen, told
Business Insider. "But he came out of there super, super excited. He's
tried a bunch of VR, just like me, and when he tried Sandbox it was just
different.
"It was pretty surreal to walk through the
mall, Kanye and Ben were there — it was insane that day," he continued,
referring to Ben Horowitz, the Andreessen Horowitz general partner.
Another group of players who loved the experience were the partners of Andreessen Horowitz,
which eventually led the startup's Series A. Sandbox VR's founders said
Andreessen made an "offer you can't refuse," though the company isn't
disclosing its valuation.
The overall vision for the company is to create a "Star Trek"-like holodeck, a concept that's alluring to technical and nerdy Valley venture capitalists.
"The next day after trying Sandbox, some Andreessen partners flew to
Vegas to try out other VR experiences," Zhao said. "That same night,
they flew back and called us up to meet at In-N-Out, and after three
hours, at 1 a.m. in the morning, we hammered out a deal on a napkin."
Andreessen "told us he believed in the holodeck," Zhao said, "then he asked how much would it cost to have one in his house."
That might not be possible, but soon there's likely to be a location in a mall near him.
Source: Business Insider, January 2019
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