A day after news broke that Envelop VR was shutting its doors, the CEO of the Bellevue-based virtual reality startup appeared at the 45th annual Economic Forecast Conference in Seattle.
Bob Berry didn’t mention the closure during the panel discussion. But GeekWire caught up with the technology executive following the session to hear what went wrong at a company which counted deep-pocketed investors such as Madrona Venture Group and Alphabet’s venture capital arm GV as backers.
“We were three years in, and there’s still not much of a VR market out there, no appreciable market,” said Berry, whose company made VR business applications. “We just recognized that our strategy, and timing and all of that were probably two or three years away to be able to execute our big strategy. With these venture-backed type of companies, you have to be in the right place at the right time. I think we were way early.”
Berry said they were attacking the virtual reality market in an aggressive way, but it ended up being a case of “wrong place, wrong time.” The company decided to pull the plug rather than go out and raise another round of capital, which would have been used to produce and buy content. “That was going to be very capital intensive, and I think justifying that amount of raise with current market conditions wasn’t there.”
Berry said they could have raised money “to limp along” for a couple years until the market emerged, but he felt that was “not very attractive.”
Berry said he’s still actively involved in virtual reality through his gaming company, Uber Entertainment. And while he’s still very much “bullish” on the technology, Berry said Envelop VR simply got caught with the wrong product at the wrong time.
“I just think where we positioned Envelop, I think we might have put ourselves at a dead-end, because I don’t think desktop Windows VR is really going anywhere,” he said. “That’s a dead-end for somebody like us that is trying to get to the mobile mixed reality future. We needed to be in mobile, and not tied to a desktop PC, which is what we were.”
Berry said the desktop environment proved to be the right place to incubate the initial concept, but the company ended up spending too much time in that arena. “We needed to jump into mobile a long time ago,” he said. “I think had we made that jump when we wanted to like a year ago, I think we would be in a really different place right now. But, you know, you live and you learn.”
Berry said he’s actively talking to potential acquirers of the technology, and that he’s going to take some time off before deciding what’s next for him. Envelop VR raised about $7.5 million, one of a number of venture-backed startups that tried to take a bite out f virtual reality market that some estimate could top $150 billion in the next five years.
Not everyone is a believer. Erik Benson, one of Envelop VR’s early backers, said at a conference in Seattle last month that “there are no VC opportunities in AR/VR in the near term.”
“Today, I see no billion-dollar companies in VR,” said Benson, adding that there is basically no consumer market for people buying VR products outside of gaming. He said it will be at least 10 years for that to change.
Berry thinks there is room for startups to make inroads in VR if they are doing a “picks and shovel play” or “content for VR video.” He said VR won’t got mainstream until there is an ergonomically comfortable headset and a content distribution system that can deliver VR video “where I can be sitting at Hamilton in the front row seat, and really feel like I am in the theater watching it live.”
“That’s a game changer, and we are just a few years away from that,” said Berry.
During his remarks at the conference, Berry said that you can’t really think of virtual reality from the vantage point of “our generation.”
“It is for our kids and our grandkids,” he said. “They interact with humans and data and computers way different way than we do.”
He noted that you can walk into a room of 10 kids, and they will all be immersed in their phones talking to one another without looking at each other. For older adults that may seem weird, but it is how the younger generation is growing up.
“That’s going to translate into how they interact and socialize with other people,” he said. “We shouldn’t just disparage that necessarily, we just need to accept the fact that they are going to grow up differently than we did, and they are going to interact with humans differently. And that may seem bizarre to us, but we should not be afraid of that.”