People still view virtual reality as a glorified entertainment platform. But it’s more than just games: enterprise VR is a quietly successful segment of this emerging industry that doesn’t get the attention it deserves. Building a successful enterprise VR venture is a complex undertaking with unique challenges that are often unexpected and counterintuitive. This article features the founders of successful enterprise VR companies and their tips on identifying opportunities and building products in this space.
Identifying enterprise VR opportunities
Despite positive growth in 2017, the VR industry has been plagued by a miniscule addressable market. This is due to the highly fragmented nature of its hardware and software offerings, as well as the exorbitant price of the gaming computers required to power high-end immersive experiences. Since the total cost of this setup can potentially exceed $2,000, it remains a tough sell for the average consumer. In contrast, if enterprise VR startups can prove to business customers that their solutions can save money and time, investing in a VR setup can be a shrewd investment.
Russell Varriale is the COO and cofounder of InsiteVR, a VR meeting platform for architects. He expands on this point, “founders need to be brutally honest with themselves while seeking product-market fit. Is what you’re building ten times better than what currently exists? In its current state, VR is inconvenient to set up in meetings and requires a large up-front investment of time, learning, and capital. Thus, the value that an enterprise VR solution provides has to be dramatically better than existing non-VR solutions that address the same problems.”
“It can be argued that VR’s most valuable innovation is collaborative experiences in a 3D spatial medium,” Varriale said. “Thus, to identify enterprise VR opportunities in a particular industry, founders can ask themselves how companies in their space can gain tangible benefits from a shared virtual 3D workspace. It’ll be unclear from the start what specific value you can add to your industry, so it’s critical to speak with and demo to as many potential clients as possible, as soon as possible.”
Building an enterprise VR team
The startup ecosystem believes that the ideal founding team consists of a “hipster, a hacker, and a hustler.” These roles are broadly defined as a product design visionary, a full stack engineer, and a business developer. While this trifecta may be sufficient for most founding teams, it may be less effective for enterprise VR teams, who require a more complex set of skills.
Christoph Fleischmann is the CEO and founder of Arthur, a VR platform for collaborative team meetings. He elaborates on what it takes to build a winning enterprise VR team, “recruiting a top VR team is a complex undertaking because creating VR products requires expertise from the world of 3D game development, while enterprise startups require industry-specific experience and knowledge. Combining these people into a unified culture and workflow can be challenging.”
“Your team should ideally be comprised of three types of people: entrepreneurs with experience working in cross-functional teams and a strong understanding of the underlying problem, developers who are skilled at creating multiplayer 3D games, and industry experts with domain expertise and enterprise software experience,” he said. “Founders have to strike a balance between finding the most talented individuals for specific roles and making sure that they are a culture fit with the current team. Ultimately, it’s better to hire a fast learner who is an obvious culture fit and shares the vision, even if that person has relatively limited domain expertise.”
Be a 3D company, not a VR company
The VR market is largely defined by a small addressable market of users who use a wide range of devices from Google Cardboard to the HTC Vive. This high level of fragmentation in hardware and software requirements makes it difficult for VR startups to commit to a particular platform without alienating a significant portion of the market. How do VR startups make themselves adaptable in these conditions of extreme uncertainty and change?
Paul Reynolds is the CEO and cofounder of Torch 3D, a mixed reality prototyping tool for professionals. He explains that “VR startups should think of themselves as 3D companies and not as VR companies. The shift that’s occurring with the rise of VR and AR is the ability for teams to be more effective in dealing with problems, workflows, and situations that require the use of 3D tools and interactions. At the moment it’s unclear which devices and platforms will dominate in the long run. Thus, to be adaptable and iterate toward long term success, founders should focus on areas where 3D computing will add the most value to their clients’ internal processes, workflows, and product lines.”
Reynolds continues, “before investing in building a product, it’s crucial to invest in customer development. Is your potential client already working in 3D? What tools and processes are they using? In each step of their workflow, where are they interacting with 3D and what is painful about those steps? After discussing these issues in depth with dozens of potential clients, you’ll gain an understanding of the pain points that are causing inefficiencies and wasted time and money. Focus on addressing real problems and you’ll be able to build sustainable growth from your product.”
Bootstrapping as a viable path to success
With the massive amounts of venture capital raised by companies like Magic Leap, it’s understandable to think that VR companies, by default, require funding to get off the ground. However, with some creativity and persistence, it’s entirely possible to bootstrap an enterprise VR venture.
James Levy is the CEO and Founder of WeLens, a bootstrapped platform that helps organizations manage immersive experiences. He provides advice for aspiring bootstrapped enterprise VR founders, “many VR companies have been shut down in the past few years, during the early rise of the space. This is largely a result of founders believing their own wildly optimistic projections for success and then burning through capital at an unsustainable rate.”
Levy continues, “VR startup founders who want to control their own destiny should limit burn rate to match current revenue. This may require your team to hire more slowly and find ways to fund the company with a combination of turnkey hardware and software products and services. While this may slow growth, it will put your venture in a position to survive uncertain times. Moreover, your team will basically be paid to do customer development, which will enable you to take your time in reaching product-market fit and identifying opportunities that competitors may overlook, in their haste to reach hyper growth.”
Michael Park is the CEO and founder of PostAR, a platform that lets you build, explore, and share augmented realities.