The AR Show: Jeri Ellsworth (Tilt Five) on Perseverance and the Pursuit of Passion (Part 1)

5:26AM May 30, 2023

Speakers:

Jason McDowall

Jeri Ellsworth

Keywords:

games

ar

work

people

valve

prototypes

company

started

roller derby

build

give

product

jeri

team

hardware

pinball machines

fun

skating

good

cool

Welcome to the AR show where I dive deep into augmented reality with a focus on the technology, the use cases and the people behind them. I'm your host Jason McDowall. Today's conversation is with Jeri Ellsworth. Jerry is the co founder and CEO of Tilt Five company that has created AR glasses that bring tabletop multiplayer games to life. Prior to Tilt Five, Jeri was the founder of cast AR, which was also making an augmented reality hardware and software platform, and one that had raised $15 million in venture funding before shutting down in 2017. Previously, Jeri was a racecar driver, computer shop owner and toy industry veteran. She was also recruited to Valve to lead the hardware R&D team with a mandate to research novel user interactions and bring the entire family together in the living room. She contributed to the early development for Valve VR, which became the HTC Vive, the Steam Box and the Steam Controller. It's also where the story of Tilt Five originates. I last chatted with Jeri as she was wrapping up a Kickstarter campaign for tilt five, just prior to COVID. And this conversation, the first of two parts, we rewind the story back to its origins at Valve and the early decisions about what to do with their technical innovations.

And we went through all of the different vertical markets and we're like, we're gamers, we like games, we've worked in game companies, let's just do games. And so we settled on the idea of you know, what if video games were more like board games, and what a board games were more like video games, board games are great because you can sit across the table from each other and have that connection with each other. But they have downsides, right? You have to set them up. There's complicated rules like wouldn't that be nice? If a board game was like a video game where tutor you through you hit save? When you want to save the game, you know if it had spectacular video game graphics? And then it's like, Okay, what if? What if video games were more like board games? Like why? Why don't more people play games together in the living room. This is exactly the vowel thing we were going after. It's like, it's really hard to have multiplayer games on one screen. There's only a small subset of games that can work on a on a screen. That's That's what our system solves brilliantly. And so that's what we focused on.

We continue the story through the trials and tribulations of an underfunded hardware company fighting to survive. And Jeri brings us to the present day sharing many insights along the way. As a reminder, you can find the show notes for this and other episodes at our website, the AR show.com. And please support the podcast@patreon.com slash V AR show. Let's dive in.

Jeri, welcome back to the show. It's been about three years since our last conversation, and I'm excited to learn how it's been going for you in the team. But first, I'm curious to learn more about one of your recently acquired hobbies: Roller Derby. How'd you get into roller derby?

Oh, wow, what a great question. Thanks for having me back on, by the way. So roller derby actually haven't done much roller derby in recent years. But quite a few years ago, I decided that I needed to get fit. And I've always liked roller skating as a kid. I'm like, Hey, I'm adults. You know, it's not too silly to go roller skating, right? So I went to the roller skating rink on some kind of open session night and skating out there with all the nine year olds, which was a little awkward. But then, towards the end of the night, I'm taking the rental skates off. You know, all these ladies start pouring in big buff tattooed up ladies and they start practicing out on the rink, you know, knocking each other down and skating really fast. I'm like, What in the world is this? So I sat there and watched for a while. And I'm like, this is really cool. And then went up and start talking to them. Like, what the heck are you guys doing? They're like, well, we're part of the Rose City Rollers, which is the Portland roller derby league that it's just started. And like that is really cool. So I started going to the roller skating rink on days that I knew that they were going to be there and I do my skating ahead of time with all the children and then and then afterwards, I'd watch a little bit of their roller derby and I kept asking them questions like well, how do you get into it sit there were tryouts definitely was not in shape to do that. So at the time, I was working in Silicon Valley, and I was staying like five or six miles away from work. So I got to set up roller skates on my own and I started skating to work and practicing. And I'm like, I'm going to try out for roller derby. And I must look crazy skating thrilly Silicon Valley neighborhoods because I was like practicing skating backwards skating fast jumping curbs, and I thought I had to be really, really good to try out for roller derby. So I practiced for like three or four months, got myself in shape and then try out day came and I went and I was in a different league compared to the other ladies that were trying out for roller derby. Like I didn't realize that they were accepting people that didn't even hardly know how to skate that they would actually teach them how to skate and do all this stuff. So I immediately raised a lot of eyebrows because I was knocking people down and I was jumping over things and skating backwards and going really fast. And so they immediately brought me on to one of their teams. Normally there's, they call you fresh meat for the first month or so. That's where they kind of train you. And once you're good enough, then they will assign you to a team that they're like, well, she's just so good. We're gonna sticker right on a team. So, app like the week after I joined, they stuck me right on a team and threw me in a match, which was pretty fun.

What comprises a roller derby match what's really going on there.

So when I was a kid, I saw something that was reminiscent of roller derby in the 80s called roller games. But it was very weird. It was very, almost like a soap opera or professional wrestling. And actual roller derby that's played these days is not scripted, like professional wrestling is actually there. It's an athletic sport, there's rules. There's the way that people have to skate around and engage with each other when they hit each other. For instance, there is two teams. There is a group that's called blockers. So it's about four blockers for each team. And then there's jammers. These are the people that score points. And the way they score points is busting through the pack of blockers and each person they pass they get a point, of course, your blockers are trying to protect you and knock the other jammer down. And meanwhile, the opposing teams blockers are trying to give you a lot of grief and knock you down. So yeah, you get a lot of bruises. It's a lot of fun. It's really, really fun. I used to drive quarter mile dirt track cars, it was my first career. And there were a lot of similarities to playing roller derby and professional racecar driving. But one of the things that was kind of funny, is one of my mentors in racecars taught me like if it's not on the rules, then it's legal. And so before I even joined roller derby, I was reading over the rules like, you know, what are all the loopholes? What can I do? What can I do? And so the first night that I went out skating, and played a game, I'd read through the rules. And every game that I'd seen, I'd been attending their games and watching, I only saw the blockers hitting people. I never saw the jammers hitting each other. So I went to the referees and I said in the rules, I don't see that anywhere where jammers can't hit each other. And they're like, Yeah, I guess you can hit each other. So my first night out first jam that I did, they blew the whistle, I took two or three strides and then skated over and knocked the other player down. At the other jammer down, which no one had ever seen in that league before. And the entire audience and this was in front of a big audience. There were a couple 1000 People at the arena there in Portland watching us and it flattened this other girl, it was really amazing. But then after that, you know, you make some enemies. So they made my life misery the rest of the night really hit me hard and neutralize the

threat. You had to pay for that creativity.

Yeah, it's super fun. I wish I could get back into it. But with startup life, there's no time to go out and practice we were eventually ended up on the traveling team and traveled all over the United States playing with the Rose City Rollers that that was the dedication of like four or five nights a week of practice plus travel on weekends to go to these big tournaments.

It sounds amazing and super fun, but maybe not so compatible with building an amazing tech type company at the same time.

No, no, not compatible.

So these last few years, not enough time for roller derby. But what have you been focused on? And maybe even before we jump into the kind of the recent focus, maybe you can just rewind and remind listeners, what is tilde five? What is it your grading?

Yeah, so till five is about five years old. Now, maybe a little bit more. It's kind of amazing to think that we've been going that long. But this is the concept of what we wanted to do. When we started the company. We wanted to make AR glasses and input devices that you could sit around the table and play games together very social type experience. And the technology that we're using our system is something they invented years ago at Valve Software, which allows us to have this really immersive white field of view, high quality AR experience for a really low cost. So our system per hetson wand is about $300, which is a fraction of what other systems are out there. And so when we started the company, we had goals of hitting a particular price point. And most of this time has just been developing first prototypes, and then some pre production prototypes. And then gobs and gobs of software working with third party developers to get the software onto our system and then launching the device and so that's the phase that we're in we're shipping product now which is really exciting. And so I think last time we talked, I'm sure last time we talked, maybe there were one or two devices in real people's hands out there. But it was very prototyping.

Yeah, I think at that time, there were just a handful, maybe had a headquarters and a couple of very friendly evaluators had had hands on it. So it's amazing now to be at this point where you're able to ship, ship product, maybe rewind a little bit just in share a little bit how the connection to Valve Software existed. So valve is is an incredible company with tremendous reach across the gaming industry. And you were hired based on your special talents to build something truly unique there. And then saw an opportunity that was related but different. Can you recount some of the part of the story?

Oh, sure. The story of our software is pretty amazing. And in respect to my background, so as I mentioned, as professional racecar driver, that was my first career but then after that it opened a chain of retail computer stores that I had always done engineering just as a side thing up to that point. Around 2000, I started brute forcing my way into startups here in Silicon Valley and started working with a quite a few startups on various commercial consumer products, non consumer products, chip designs did a lot of different things. Eventually, cut my teeth on doing toy design shipped millions of toys for various companies, which was really fun. And that was an interesting experience where I really started to learn how to create products that target a particular audience and cater to their needs and provide value for them. Sometimes it might be a 12 year old, it might sometimes it might be an adult that acts like a 12 year old and you understand your audience and then crafting the product. During this time was as working with all these various startups. I also started a YouTube channel YouTube was brand new, I was working with a company at the time was doing video streaming gear was called New Tech, vintage computer people remember the Video Toaster they made wanted to make a PC version of that. So I helped them on that. But streaming out to the internet, or even to YouTube was super new in the 2007. Era somewhere around there. So I started a YouTube channel, I've decided like, well, you know, I should do kind of an online mentoring thing. Because I've had so many mentors over the years that helped me get to the point where I am people in the toy industry mentored me and the chip industry, how to run a business when a computer stores and all the way back to race car. So I couldn't do it alone. So I was like, Well, this is my chance to show people how to do complicated electronics and science and chemistry. And I just started making YouTube videos. And so that went on for quite a few years. And I still do it still make some YouTube videos here and there. But Gabe Newell, the founder of Valve Software, somehow stumbled across these crazy things that I was doing on YouTube. Sometimes it was user interfaces, or gaming devices or chemistry, just a wide variety of stuff. And he's like, this is the right person to bring in to run our brand new hardware lab. And so they started stalking me it was kind of interesting. So Gabe sent people to all these different events that I was going to. And for about six months everywhere I would go a Valve Software person would be there. So I go to Maker Faire. And the couple people would wander up and they're like, you're Jerry, aren't you? Like yeah, hey, I'm so and so from Valve Software. We we'd love to get to know you more and invite you up just to our office and like, Oh, that's interesting, but I'm not really interested in working with a software company was kind of my stance. And so this went on pinball shows I clicked pinball machines, they'd show up at pinball shows and I'd be playing pinball and so did walk up to the pinball machine next to me and like, Hey, you're Jerry, right? I'm so and so from software. And, like, Oh, these valve people always like pestering me in a good way. So then Facebook or some social media, I got an email from Gabe Newell, I didn't realize what a big shot he was like, this game guy writes out to me, and he's like, I want to come. I was living in Portland at the time and just commuting to Silicon Valley. He's like, I want to fly down and have lunch with you. I'm like, okay. So Gabe flew down. And we had lunch. And he kind of explained, you know, how Valve really wanted to get into the hardware space. And there's good reasons that they need to get into the hardware space, and that I should take the time to come up to Bellevue, Washington and meet the Valve team. And I'm like, Okay, I'll come up. I'll come up for an afternoon. It's not an interview, right? And he's like, no, no, not an interview, which was pretty bogus, because once I got there, they just dropped me into a panel interview, which was a whole lot of fun, actually. Sorry, I'm drunk making the story very long. That's fine. All right. So they dropped me in this room. There was five to seven people in the room and they were just shotgunning questions at me like we want to make a game controller how Would you go about and be like, well, I'd hire these people, like probably use this contract manufacturer and we do this stages of development. And they're like, We want to make a game console. How would you do it? And so it was it was pretty fun having them pepper me with these questions. And I don't know if Gabe was in the room and he did probably a no signal or tugged on his ear or something. And then like, everyone got up and left and he's like, come with me, Jerry and very dramatic took me down to the fourth floor of the building. They are in there in the skyscraper in Bellevue. And they're like, this whole fourth floor will be yours. You know, you'll have an unlimited budget, you can hire anyone you want your you know, here's the mission. This is what I want you to do. We want to bring the entire family together to play games. He says right now, gamers are in different silos, you have hardcore gamers, you have casual gamers, you have arcade, you know, you know, people like arcade classics. And then you have non gamers or maybe people that played games and never, you know, back in the 80s, but never really picked it up later on in life. It's like, I think video games are like movies, they're entertainment, the whole family should be involved. So put a team together, figure out how to bring the whole family together. And so kind of a funny thing about that discussion is like, Okay, I'll think about it. And he's like, You should stay the night. And of course, I just flew up for the afternoon, I had no toiletries, or change of clothes or anything. I'm like, Well, my flights tonight, I don't have any clothes, I don't have any place to stay. And he's like, we'll take care of everything for you. Don't worry about it. And so he passed me off to somebody who took me to their swag closet. And they're like, you know, what's, what size shirt do you wear and they're giving me like, your portal shirts, and, you know, Val shirts and left for dead shirts and stuff and took me out someplace to get, you know, toiletries and underwear.

So weird. So weird. And then they put me up in like a super fancy place to wine and dine me and took me out to dinner. And I came back the next day to the office. And they have a really unique culture there where there's very little management oversight. It's just flat organization. So I show up and I go to the front desk, and I'm like, am Jerry gape told me to come back today? They're like, Oh, yeah, we heard you. And they just keep me in the door. And then I was just inside the building wandering around for most of the day, like looking for gape. I occasionally go back to the front desk, he's like, gave in yet and they're like, no, no, just make yourself at home. So I spent half the day just walking into what they call QA balls. So all the desks are on wheels. And their theory is that, you know, people should cluster together to work on projects, a programmer sitting next to artists next to story writers, you know, and, and the whole company is constantly in flux, but they just gave me free rein just to walk through and I'm fairly sociable. So I just walk into a cabal and like, what, what are you guys doing? Like, oh, you're doing left for dead too? That's pretty cool. Yeah, me too. Out. Dota Oh, that's cool. What are you working on? Say, give me a just latitude to explore. And then she finally gave showed up and did the hard sell. And it was, you know, it's kind of a hard thing to deny or deny that kind of opportunity. The kind of funny thing was I had a contract with another company that was like three or so months until it ended. And I'm like, Well, I've got this other thing going in Silicon Valley, I gotta wrap it up first, and then I can come help you guys out. And they're like, We want you now. And like, um, yeah, I can maybe contract part time and help you out. You know, they're not this other company's not consuming all my time. They're like, well, maybe we can just buy you out from them. Can we just give them cash to? Like, no, no, I can't do that. I can't just drop that project and, and not complete it. So that's how I got my start at Valve. So I was there contracting the first couple months. And actually, it was a whole lot of fun, like assembling the team and starting to come up with like the theory of how we would start to research and figure out how to bring the whole family together. And it started with a lot of recruiting. And so I had this theory of I wanted 1/3 researchers. So try to find people that were really, you know, hard science, people that are into research. And then I wanted 1/3, like the rapid prototype or maker types that, you know, if someone came up with an idea, they could build something really fast. And then 1/3 product people, I kind of find myself straddling the line between kind of the rapid prototyping and the product person. And so, we started hiring this team, we started doing a ton of fundamental research around games, like how do you make games more fun? And it's funny, I actually just bought a big box of prototypes of stuff that I when I did the purchase from Valve, which I'll get into and it was Just bringing back memories today looking through these prototypes of these crazy things that we were prototyping. Yeah, we were hooking electrodes to people to read their skin resistance reading their heart rate, their blood oxygen, we had electrodes hooked to their heads. And we're feeding this back into games and having that control the director of the game to see if we could heighten the game experience by measuring people's emotional states. We got eye tracking monitors to just see if there's ways that we could improve people's eye motion, how to describe it, just how much they move their eyes when they play games, can we optimize games so that they're more efficient? We tried different controllers. Like what if we rethought controllers completely, one of the guys actually made just total wacky controller, one that you stuck in your mouth, because he saw some article about giving deaf people hearing through sensory through their tongue, maybe it was vision through their tongue or something just really wacky stuff. We did all this research, VR and AR looked like a really interesting direction for us to go. So we put a lot of work into that spent millions and millions of dollars of games money buying, like the most expensive highest fidelity military grade VR equipment out there. And tracking systems that were used for doctors that are in operating theaters to measure where the scalpels all are at high speed and hooking them all together to to prototype AR and VR. And that's, that's where I got the bug. For augmented reality, because the AR lab was always swarmed with people just squatting on the machines playing the simplest of games, it could be just a simple like ping pong type game, you start adding two or three people around the table, they'd sit there for hours, just chatting, knocking the ball back and forth, or running, you know, their characters through a maze griefing each other. And so that's, that's where I was sold AR is really how you bring the whole family together, especially when we started doing motion controllers. You know, now, folks that are familiar with VR are very familiar with six degrees of freedom controllers. But you know, back in those early days, it wasn't clear to us that that was the way that you would interact in VR and AR and I was in charge of building a lot of those early headsets in those early input devices. And real magic came when you, you had six degrees of freedom, and you could like manipulate 3d objects directly with these devices. I still, I wish I had the prototype. I don't know why I didn't get this in the purchase. But I had this beautiful wand controller. So imagine the antenna on an old am radio, the telescoping antenna that you pull out of the or the telescoping ones, yeah, the ones that collapse down and then you can extend them out like three or four feet. I put a tracking system on the end of one of those than I hooked it to it was actually I recycled a electric toothbrush handle because it had the ergonomics I wanted. So I ripped the motors out of it. And then I put a joystick and a trigger on it. And that was our first motion controller. I still love that experience today. Because you could be like doing stuff up close and the antenna would be like retracted. And then if you needed to reach across the table to tap on something or even tap your opponent, you could pull it out and they could tap on the table across the way from you. It was pretty neat. And that's that's where I got sold on like, yeah, you gotta have input devices like magic wands. Sorry, this is really long winded, but the breakthrough that ultimately turned into my first startup and then ultimately tilt five was a total accident inside valve. So there's a problem in AR VR says systems is called vergence accommodation. So we quickly stumbled onto that in the early days at Valve. It's where you wear a VR headset. And because they have a fixed focus where the virtual image is focused, which is very far away from you, which they have to put it far away from you. When real world I mean when the virtual objects come close to you, you have to force your eyes to focus really far away but converge at an angle that's uncomfortable and so it causes fatigue and some people get headaches and other side effects. So I had an optics bench setup with all this optical these optical components and image generators sending this image down through lenses and mirrors and stuff. And one day I flipped a beam splitter that is normally where am I would go the wrong way. So instead of the light going into my eye it was projecting out into the room. And one of my colleagues had a piece of retro reflector. This is special material hanging on the wall that he was using to do laser balanced experiments for tracking. So he thought that he could bounce lasers off the special material and track headsets and wands and things like that. What I saw retro reflecting and what retro reflecting means. That means the light that hits it comes directly back from the source. Looking through the system, I saw this beautiful image like 3040 feet away from a clear across the lab. I'm like, wow, that's really bright. That's really cool, huh, weird. And then I flipped the beam splitter around the opposite direction back where it should be. And kept working on trying to solve vergence accommodation. And in this, these other optical problems, and so went on for months, I just kept trying to solve near eye displays, making Vera focal systems making, you know, kind of quasi light field displays, and none of them really delivered on what we needed wide field of view, you know, enough light field properties to them to resolve vergence accommodation, small enough that you could fit on your your head, that was one of the biggest problems. And just one day I was sitting at home, it was almost one of the stories that you hear like you're in the shower or sitting on the toilet, and all of a sudden, it's like, oh, that's how we do it. I say

I was just sitting there thinking like, if I just had more space to do this, like, you can make amazing headsets, but they'd be the size of a refrigerator. And we've all heard the stories of Magic Leap of the beast and the refrigerator size things like yeah, you can make really incredible stuff. If size is no factor in your consideration. But as soon as you start to squeeze things down, it stops working. And the observation I made was like, what if I just spread out the optical system, I use some of this retro reflectors, roll it out on the table. And now we just emit a light field, which is easy to generate within that space, and then it retro flat flex back to each user. And that was a eureka moment. And we started making simple prototypes. The interesting thing about valve and their culture, though, is once people start to settle in on their different projects, you know, there's a lot of demand for resources inside the company. And you can make enemies actually by stealing resources from other teams. So there's no manager to say like resource, ABC, you should go work on this other project over there. So it's encouraged for you to go around the company and promote your product. So I was like, I discovered this really cool AR technique, which everyone had started to write off AR as a viable option, because there were just so many limitations. And I'm like, I've solved it come work with me. And so resources started coming over to work on the AR project. Other groups were getting upset, and then you know, just the way valve works. It's almost like high school politics, they can rally leadership to purge people that don't aren't cultural fit. And so a whole group of us but 30 of us got purged in one shot as like not cultural fit.

And they wiped out the whole team out of jealousy.

My perspective. It it's kind of fun. I had gave out a few a year and a half ago or two years ago or something. He got to actually see what we built and he was like, oh my god, Jerry, this is what you were talking about all those years ago. I'm like, yeah, yeah, if you ever want it back, you'll have to buy it more than I paid. Anyway, I mean, Gabe and I are still friends. But you know, it's it was a little rough there for a while but interesting situation that happens. So we got noticed that we're all getting laid off. So the entire AR effort was getting shut down. And that we were not a cultural fit was kind of the typical reason why. And, again, bounce a weird place like in layoffs. You know, normally they just show up your keycard doesn't work one day, right? So I show up there. And I hit the elevators and one of the mechanical engineers from the team is like storming out of the elevator. He's like, Did you hear what they did to so and so? And I'm like, no, what happened? Or like they fired him today. I'm like, Wait, that's my mechanical engineer. Like, what's going on? Like, why would they do this? And so I go storming upstairs and I get into the hardware lab and it's like, someone dropped a grenade in the middle of the room, like, you know, a good third of the hardware team is getting fired. And we're all sitting there knowing we're getting fired. And, you know, there you go. We sat around all day we went out had really nice drinks at lunch my time to come talk to Gabe. Actually, this is a really cool rule, which I think is neat. If you hire someone you have to fire them inside out. So Gabe hired me so you had to fire me. So anyway, I on my calendar was the time I had to go talk to Gabe and so I had like pump myself up and I was talking to my buddies at lunch like I'm gonna just Give him like peace in my mind when I go up there. And so I go up to his office and I go on the door and I say something like, half hearted, aggressive and then immediately, like started breaking down in tears. Like, I can't believe you're destroying this pot, you're gonna kill this project. It's so good. It's so good. Like, anyway, we went back and forth, I went through all the ranges of emotion in that, that time he was very nice about it. And he's like, I'll always be a fan, Jerry. But I did one thing that was very fortunate, as I turned around and left, I was leaving, I just turned to gave him like, you should just sell me that technology. And he's like, okay, like, really? So I hightailed it down to the hardware lab. And at is what was so funny at this point is there was still a quite a few of the teams still there. And it was like well, Fulcher, like people were coming, taking things off of our desks like Silla scopes. And they're just like, so busy as if

there was a dead carcass there. And anybody could come and take whatever they wanted. There go in scavenging, whatever. Yeah,

it was bizarre. So I grab a couple of folks. I'm like, Gabe agreed to sell me the technology. Like, do you want to do this? And a group of us are like, Yeah, let's buy it and do this. And so we quickly took all the prototypes, and we stuck them in boxes really fast, so it wouldn't get like, scavenged. And we found a hallway closet and just stuck it in the closet and hid it away. It was kind of funny that we did that. But it literally people were taking screwdrivers and oscilloscope and just everything off your desk. I'm like, so weird. And something else interesting happened. And I'll try to keep it brief. But I brought in part of my pinball collection, which was very popular with the employees at Valve. So scattered through the hallways on the fourth floor were all these pinball machines, and there was like this giant row of pinball machines. One of the pinball machines was a little controversial when I brought it in, it was a on the fourth floor was also the gym. So I thought it was very appropriate. It was like a bodybuilding pinball machine called Hard body. And it had like a female bodybuilder on it. And I put it right next to the gym. Some people were a little bent out of shape, like, Oh, that's so tacky. Like why would you bring that. But I saw people sitting there playing my pinball machines wearing my pinball machines out. I'm like, screw these guys. You know, they just fire me. I'm not letting them just wear out my pinball machines. So I kicked everyone off the machines and I folded the head boxes down so they couldn't be played except hard body.

So just as a reminder, every time they walk to the gym,

yeah. And so I took a picture of the row of pinball machines, which was kind of notorious people that would come take tours of valve, the hardware floor was really interesting. We decorated it really cool with arcades and pin balls and weird robots, lasers. And it was always a destination for press and people. And VIPs coming. And so I just, I made a tweet, I'm like, got fired today. And of course, you know, the verge. And all these big press outlets had gotten heard rumors of, of the valve layoffs, and they started reaching out to me. And there's another important piece to this, too, is the exit package that they were offering various people, you know, which part of the exit package is a cash payment, in exchange for not talking about your time at Valve Software? And so of course, we're all hanging out in the hardware lab all day like, Well, what did you get for your severance package? And people are like, saying XYZ dollars. And so after I talked to Gabe, yeah, I'm kind of elated that, you know, I get to buy the technology. But also, I saw my severance package, which was a fraction of people that had been there and contributed, you know, equally to me, like, why is my severance package so small? And they're like, Well, you know, you don't have a family and you didn't relocate as far you just moved from Portland. And I'm like, What do you know about my family? You know, and, you know, what do you know about my relocation that mine was easier than anybody else's? Like, well, that's it, you know, this is what we're offering Take it or leave it and I'm refused to sign it. And they're like, it's just free cash. Just sign it? I'm like, No, not unless you bring it up to par with everyone else. And I'm like, Well, you can take it or leave it. I'm like, Okay, I'll leave it anyway, do this tweets and Yep, got fired today. And so press started reaching out to me. And so, do you want to tell us what it's like inside a valve? And I'm like, okay, so I just laid it on the line. What it was like inside valve. The good and bad with It was very interesting. You know, the HR folks were like writing me like, What are you doing? Like, stop talking Stop, stop, just take our severance package. And

if you'd offered a better deal, I would keep my mouth shut.

Yeah, so that's the deal. And you know, it's interesting, I still managed to buy the technology from Valve, they kept their word even though I dragged him through the mud, exposing the good and bad of valve. And still really good friends with leadership over there today. Like they're a very weird company. I guess they don't hold grudges. But it was definitely tense there for a while. And in fact, you know, large shareholders at Valve are invested in my current company, so Well, good. Oh, good. Anyway, that that technology, and a group of us started a company called cast AR, which was really interesting. It was right when Oculus Oculus had been through our lab dozens and dozens of times, we actually gave them a lot of their technology that helped them get going. And they had just done a Kickstarter that just blew up and it was big, and they'd raised a bunch of money. And so I just left now, we had this cool piece of technology, we built prototypes, and we ended up doing a quite large Kickstarter also. And then we raised $15 million, just like that, just like almost snapping our fingers, which was, I learned a valuable lesson. Starting a company without spending enough time really honing, what you're going to do is not a good idea. So lesson number one, starting my first venture backed startup, you can raise too much money too fast. And you can also not be prepared for what's going to happen next. Second lesson I learned was I was too scared to be the CEO of the company. So instead of being the CEO of the company, I hired an external CEO. So I brought in this guy, he was a kind of a scrappy startup CEO. And he did quite well helped us raise our money and Kickstarter and all this fun stuff. So things were on a good trajectory. At that point, he was actually refining, where we're going helping us figure out who our target audience was in markets. But we found ourselves in a situation where we had an investor that wanted us to scale extremely fast, like I gave you $15 million, you need to be moving really fast, you're not spending the money fast enough. And so we started, they started putting a lot of pressure on our poor CEO who's still trying to figure out our business model, what we were going to actually do, how many units we could build. And he was getting pressured to come up with a plan to ship a million units, the first year, a million units. Yeah, million units first year, it cost me half a billion dollars to like, put any kind of plan together to do that. And like million units first year, it was like really unreasonable demands on this poor CEO. So of course, he leaves. And then this is another lesson I learned about running startups, I ended up in a situation on the board where I was, you know, the minority on the board. So didn't matter what I did at the board meetings, or said at the board meetings, I was always vetoed. And basically, the investors were running the company at the time. So they started bringing in a string of these high profile CEOs from Disney and Sony, and Zynga to run the company who started spending the money really fast. They started acquiring game studios, hiring their buddies, and boom, next, I know, like, multiple CEOs have come and gone and all of our money is gone in like record time. While you raise the $15 million, we could have ran like three or three or four years on the money, kind of the rate, we were going in like six months, like they burned through all the money.

Mission accomplished. Must have been very happy because they spent all the money it was not the objective.

Yeah, yeah. And meanwhile, I just had to sit to the side and watch it. It was very heartbreaking. A lot of funny study stories around that. But I feel like I've been going on this backstory too long. But I think that the really important part, though, was like a day or two after we had to close the company get down and put it into liquidation. I'm sitting by myself, none of the CEO or executives are there. I have to I'm the one to figure out how to dispense of like, 90 people's worth of, you know, hardware and how to sell off the patents and the technology. And I get a phone call out of the blue. So I answer my phone. And it's like, hey, Jerry. It's Nolan. And like, Nolan, Nolan Bush now. Oh, Nolan, founder of Atari. Like I didn't even realize he knew me from anybody. We had like crossed paths, I guess at an event years ago, and he's like, I got a chance to see one of your prototypes at an event. And it blew my mind. It's amazing. You're going to change the world. Like this is what everyone's been waiting for. I've been following you for a while now. And I could see that your company was going to tank, you know, he's like, said something along the lines, like, I've messed up lots of startups, I could see it coming, like you were making the classic mistakes. He's like, I just want to leave you with a piece of advice. He's like, there's always a way, you know, just, this needs to be out there in the world, it needs to be given a fair shake. Just go figure it out. And like, wow, that was exactly the motivation that I needed at that time. And so throughout my life, I've had mentors around me and people guiding me. And so I started reaching out to my mentors and talking to them. I'm like, I just had this extremely embarrassing failure. Like, I feel like, feel like I'm done in Silicon Valley making this mistake. And of course, I get the pep talks. They're like no, no, think about, and they start rattling off people, these people who failed five times in a row and blew far more than $15 million. And then they had their success on the sixth time around. And if anything, it's a benefit that you've learned all of these valuable lessons, just embrace what you learned and don't make those same mistakes again, and then go out. And I make, can I actually buy my own IP back? They're like, Yeah, I mean, of course you can. So I called up the best people from the cast AR team, and like, hey, guys want to do this thing. They're like, Yeah, this is too good to let it go. And so we pooled our money, we bought the technology. This time, though, instead of just charging ahead blindly into the night, we took some time to think about what we wanted to do. So first of all, my co founder, he's like, You need to lead the company, you've always had the vision of like, how you actually bring the family together and the general direction we should go, let the rest of us kind of fine tune that direction. But just charge forward and lead. And then I'll join. And so yeah, we did that. It's like, okay, now, let's think about what we want to go after. Like, our device can work in so many industries, it could be education, data, visualization, architecture, video games, board games, like, let's just figure out like, one thing we can do really well. And focus on that for our first product launch. And so we put a lot of thinking into, it's like, yeah, you know, for me, education's kind of a passion thing for me, but I know nothing about it. So as we talked about, like, maybe education, we're like, Well, I've heard, I don't know. But sales cycles are extremely long, it could take years to just sell your first unit into a school. Doesn't sound like a great place to go, especially if we don't know much about it. And we went through all of the different vertical markets, and we're like, we're gamers, we like games, we've worked in game companies, let's just do games. And so we settled on the idea of, you know, what if video games were more like board games, and what a board games were more like video games, board games are great, because you can sit across the table from each other and have that connection with each other. But they have downsides, right? You have to set them up. There's complicated rules. Like wouldn't that be nice? If a board game was like a video game where it could tutor you through you could hit save, when you want to save the game? You know, if it had spectacular video game graphics? And then it's like, Okay, what if? What if video games were more like board games? Like why? Why don't more people play games together in the living room, this is exactly the vowel thing we were going after. It's like, it's really hard to have multiplayer games on one screen, there's only a small subset of games that can work on a on a screen. And that's, that's what our system solves brilliantly. And so that's what we focused on. When we started the, the process, again, raise money, hit a milestone, like make a prototype or a piece of software, raise more money, hit another milestone. And these early like two or three years of up to five, we were we had quite a few near death moments in the company, like a matter of days or weeks before we ran out of money. And so I took the approach of extreme transparency with the team. And I still do today. If you ask the team, what's going on, and kind of the leadership or the business level, I would say almost anyone in the company could tell you, you know, and even back in the first few months of the company, like you'd ask someone in the company, like when you had the money, maybe like three weeks or whatever. And but we always pulled through, I was always able to raise money. We had a great team there was in some of these situations where we're out of money. The whole team took furloughs for a week or two or a month and we were able to like, get that next round of money and that allowed us to get to the point where We're on the edge of production COVID hit, which was, I was a surprise, totally changed how we operated, we had to rethink everything. So COVID hit, we were just scheduling our trips to go to China and set up our first production run. And now we were barred from going to China, it actually took us a full year to come up with a different way of manufacturing. So we actually had to build these robotic fixtures. And so Amy, one of our prototype engineers built these on her living room floor because we couldn't get together. Yeah, so software team would drive to her house and hand her like, you know, a computer preloaded with some software, and then she would build the robot, and then I would drive over with like, you know, handbuilt, you know, glasses prototype, and she'd slip it in. And, you know, we figured out how to build these things completely remotely, and be able to monitor the manufacturing process, which, as painful as it was, is really amazing. Now, we can actually watch every single pair of glasses that go through the factory, we know, their performance, if they have a defect, you know, if if there's like four or five defects in glasses in a row that are all the same, we can like obsess over the dashboard and like stop the production line and ask them to look at what they're doing. And

it's kind of amazing, really modernization of the manufacturing flow itself.

Yeah, yeah, was pretty cool. And I raised money during COVID. Two, which was really, really challenging. Like, we're a product that you really need to see, but I couldn't get it in front of people very well. And it was in prototype state, which is, you know, in the early prototype state of like, bringing up AR glasses, a lot of times, like our development was on Linux first. So it's like, okay, enter these 20 Linux commands, to just turn the glasses on, you know, downloading bits and pieces of code into the right areas of the glasses, and then go somewhere else, and then launch a game. And then pray that you didn't miss a step along the way. So yeah, we had to raise money, where I was like, blindly sending like Linux laptops to investors all around the world, and like walking them through this extremely painful process of turning on the glasses, and then trying to, through a video call, like, okay, hold the one. Hold the one like a magic, hold it like a barbecue. Like, no, you're holding upside down, you know? No, no, put it in your ear. Oh.

No tech support at its finest. Nightmare nightmarish. So you managed through through that. So these prototypes, despite the the friction of getting them to, you know, initially be launched and experienced, but compelling enough already. They were able to survive that COVID That COVID era.

Yeah, if we could get people into the headset. In particular, if we could get multiple people around the table, trying it, that's where the real magic starts. You know, it's it's magic, you just have these holograms popping out of the table. And you can use our magic wand, it's got this little tracker on the end of it looks like a barbecue and it's a little stick. You poke things, you can pick things up, you can twirl them around, it's got joysticks, you can run game characters around these giant maps that are scrolling past you on the table. And most importantly, you can sit across the table from each other and look each other in the eye. Like when you get a good hit on the other player or something. It's like, Hey, I got you. And that really elevates the gameplay and makes it special. Yeah, and non gaming two's been taking off for us too. We had this theory, like we focus on gaming, we make all the trade offs for gaming, there's going to be a certain segment of professional users that can just take our glasses and use them as is. And that's what we're seeing. Probably 20% of our systems that are sold today that we can identify are going to like developer type people are going into the non gaming space. So there's like really cool CAD viewers and collaboration and data visualizations, all these all these different vertical markets that we considered in the early days are now starting to take off because it really does provide a solution to solve what they need. We finally got to the point where we could build enough of these in a month we could start shipping last September. That was pretty exciting. Oh, and I forgot to mention we did a Kickstarter to along the way. We were the largest ever AR project on Kickstarter, right before COVID worst time like we promise people like yeah, in a year in a day or whatever, you'll get your glasses and then of course it's two years late but but you deliver a year. We delivered we did it. We're not on a kick scammer video. So success success. I mean, I tell you, I've done two, two Kickstarters and I've lucked out on both of them. So at CAST AR we did the Kickstarter, we raised a bit over a million dollars. And so we raised all that money, it's like great, we're gonna be able to deliver. So as soon as we took this money, our investors is like that, that product is rubbish. Like you're not doing that product. And they steered us away from doing what we promised Kickstarter. So they're like, just give the million dollars back. You know, we're doing a different product they had a different vision for for the system. And of course, here, I'm just sitting on the sidelines, like, okay, so I was very lucky because they gave all the money back to the Kickstarter backers, and then they burned through all the money, we would have never delivered anything. And it was my face on the Kickstarter saying, like, trust me, we're going to do this thing. So that was very, very lucky that, you know, the pivot and what we were doing, we've made it right to the Kickstarter backers, the till five Kickstarter, I feel very fortunate that we managed to scrape and figure out how to survive through COVID, which was extremely difficult. And, you know, to keep myself motivated, I would go on to YouTube and watch kick scammer videos. So there's a whole class of videos out there, they're fun to watch. It's like, these guys just shred these poor, Kickstarter craters, they like bit off more than they can chew and didn't deliver. And so kept me perpetually scared. So

that was the extra motivation, fear based motivation cannot end up on this video.

I don't know, we had like, 3500 customers or something on Kickstarter. And it's like, I always described it to folks is like, I have 3500 people with Shopkins pointed at my head, like, we're delivering this Kickstarter. The funny thing is, on our second Kickstarter, we basically shipped what we promised on our first Kickstarter, and what we promised on our second Kickstarter, and people like it, so we weren't completely off base with what we promised on the first Kickstarter.

Right. So as investors who thought the pivot was absolutely necessary, and the original vision was rubbish, clearly had no idea.

I mean, we could be having a totally different conversation. Now, if it would have worked out. You know, I could be sitting here like, oh, yeah, genius investors directed us in the correct way. And now, I'm on top of a multi billion dollar company, I would have been okay with that. It just didn't work out that way.

Didn't work out that way. And so now, as of this past September, you are manufacturing and shipping and volume. Anybody can go to the website today, it's awesome. And put down an order and have it by the weekend.

Yeah, that's been a big step. For us. We were perpetually backwards, we kept ramping production. And in the last month and a half or so we got to the point where we can kind of predict enough that, you know, we keep enough inventory, you know, floating across and container ships from China to hit the 3/3 party logistics warehouses, we ship to 30 countries. So it's it's very tricky to, to kind of navigate all of that, and not overextend ourselves financially, like, you know, units floating in a ship can't be sold. That's just money tied up. And we're profitable on units that we sell to that was one of our goals. That's pretty rare in a startup actually, having worked in dozens of startups usually don't start off profitable, that kudos to my team for really keeping focused on like, it needs to be profitable, we have to be a viable business. And I'm, I'm thankful for that right now that AR space is a little depressed, VR space is depressed right now. So you know, having positive cash flow coming in is really helpful while we go through the ebbs and flows of people adopting VR and AR.

Yeah, absolutely. It's incredible. So there was just a constant focus on how can we solve these problems while maintaining low cost? At the same time?

Yeah, yeah. And there's trade offs too. I mean, there's non ideal things in our product, like, we would have been nice to throw a few more pennies here and there to like, do this or that in a nicer way. But it's it always came down to like, we have a goal we have to the goal. And like, if we add this sensor, feature, texture, whatever it is the product like Will the end user notice it? And we had always, like, almost read everything is like how much value? Is it going to provide the end user? If the answer is like, it's unlikely they'll notice it. Or it's unlikely we'll get to like writing code to use that sensor. It's like, it's out. Its out. We're not putting it in. It's not not going to directly impact the user experience. Certainly in v1, we ended up in a really great place the the system is super robust. So it's all made out of this really tough nylon that you know, you can your kids can slam it in the ground. All the lenses are plastic, you know, coming from the toy industry. That's the piece of the puzzle I brought in. It's just like, you know, a A lot of AR and VR systems are this thing that you have to cover it and, you know, you smash your controller into the wall, it breaks the ring off. And like we didn't want that. It's just like, alright, let's, let's make this thing as indestructible as possible. And I think we achieved that it's, it's something that the whole family can use without, you know, having to have like, fears of destroying the really expensive thing.

The other half of the coin that you were juggling is it's one thing to produce a product, the hardware side of the product that has enough capability at a reasonable cost, you can sell it at a profit, but the other side is that people have to want to buy it, there has to be something there for them to do when they finally get that thing shipped to their house. So how have you managed the content side of this? How have you kind of built that library and established those titles listed those reasons why people go in and start to play with it?

Yeah, that's always the trade off, right. And we've seen for years, if we just have a little bit of reflection on, you know, what the AR VR spaces look like, over the last 30 or 40 years, like, for years and years, there's been video viewer glasses out there since the 90s. You know, that's kind of like the simplest thing you can do in the AR VR space is just play videos, no interactions, you know, not very compelling. It's why I don't think we've ever seen any, like mass adoption of, of like video players. So that's the extreme, you can just like cheap out all the way on all of the sensors. Or you can go to the other extreme, you got the Magic Leap and the HoloLens. Now you've got the $4,000 headset that's got like, super exotic waveguide, you could walk down the street with it, it could be mapping the whole world and you know, doing all kinds of amazing things. But it's like $4,000, it's heavy, it's big. You know, it's a thing that, you know, you probably wouldn't take out of your home. So we had to make some of those trade offs of like, okay, we're in the home or the office, we're not going outside. So okay, that makes things easy. Let's add the sensors make gameplay really fun. And then once we added like the sensors, we thought were good. Then we started looking at all the games that we could potentially make to the system. We started bucketing them like okay, puzzle games, racing games, board games, shooter games, RTS is like, do we have the right features in the product that we can accommodate that? You know, do we have enough buttons on the controller to do it in the right interactions? You know, we can turn our little magic wand sideways to use like a video game controller. And that even in that case, there were compromises like, you know, there was feverish discussions about like, should the thing have eight buttons, or four buttons or one button? It's hard to know. But anyway, then we kind of like got our theory of like, how can we cover the most content and the features are in the system, hardware team goes off and starts working on that. And then it's, our dev rel team goes out and starts talking to third party developers and selling them on this big lift of like, we promised you someday there will be a big marketplace for your game. Let's give you a little bit of cash and help you bring your games over. So you can pay for engineering time, let's get it onto the system. And that's not an easy lift when you haven't shipped even a single product yet. But our team did a really good job of convincing the true believers out there. I'd say that a lot of our early content were like folks that are like, Yeah, I believe in it. And it helps that you have a little bit of cash you can give us to pay for the engineering time, it's not going to be a profit center for them right away. So they got racing games and puzzle games and RTS is and you know, a wide variety. They went after a couple platforms that give you a lot of things to do like figma, and XR, which is this really cool art tool, which is multiplayer collaborative, where you can do art, you can bring in 3d models, you can even make simple games in it. So that one's super compelling and has a lot of interesting gameplay mechanics in it. Table topia has, I think it's 140 or 150 Board Games. So like people that have the itch for board games, you can go get that and play lots of board games are folks that want to do like d&d type things. We got some platforms like battle map studio, where you can create these beautiful procedurally generated maps and put dungeons and monsters and stuff in there. So that was the strategy to try to. We call it slinging slinging mud a little bit. We got to like sling a little mud, someone's going to stick to the wall. And some of these things are really going to resonate. Well, some aren't we're going to learn from it. And then we're going to start to focus on like, getting more of the stuff that's working or identifying why certain things didn't work. We just released talking NoCo that's our first game that we published ourself. So that was really fun. So talking now CO is a very popular Japanese board game. So you move your panda around you have to eat bamboo, you have a farmer which helps grow bamboo, and it can you play for players locally or for players over the internet together, so you can log in together and play. super chill, very zen like board game. So that was we're testing our waters, like, instead of assuming like at my previous startup that we could just become a game studio, a hardware studio, a distribution platform, all in one go. We've been kind of doing it in stages. So it's been good to see that the response has been very positive on on Takenoko, we're getting close to releasing Settlers of Catan, which is really a popular, you know, game, a lot of people know that one. So that one's in production now. And that's, we're doing that one. And then later in the year, we have more on the video game side games coming from us.

Oh, produced in house over. This is in addition to the studios, the external studios are building, importing their stuff to us.

We're working with external studio. So that's again, that baby stepping like a previous startup, we just started acquiring game studios, like Yeah, of course, we're going to be great at making video games. And we could just go acquire a failing gaming companies and turn them around. Like that was pretty silly. So in our case, we're like, okay, some of these companies we work with have already done a couple things on our platform. And they were really good. So we know they can do good work. So let's hire them. And then we'll give the creative direction. And so that's worked out great is just working with like a really skilled, external team, kind of work for hire. And then we go out, license the franchise, bring it over, you know, we know our system very well, like what we think will play well on it. And we can do this external guidance. And it's exciting. We've reached this point. Now it used to, we had to seed a lot of money out to developers to get them to pay for their engineering time. But now we're starting to see like, now we're getting some traction out there. We're seeing like people like, Hey, I made, I built a game over the weekend. It's really simple. Or I have a game and I just, your SDK is super simple. I just integrate it. And now you have another game, can you put it on your website, and that's really cool to see that hate to use all these trade business terms, but getting the flywheel going. But it is it is happening, which is cool. And that's kind of the stuff you want to see on a platform.

That's an amazing milestone on its own. Yeah, but there's enough traction, there's enough interest that you don't have to actively seek out everybody. But there's some now coming to you.

Yeah, we actually, we ran into an interesting situation. And we we adapted to it. So yeah, we had whatever 40 or 50 games or stuff on our website somewhere, like very small, you know, and some were very amateur. And we were just kind of lumping them all together. And we were looking at our analytics, like, you know, what are people like playing first, and it's like, oh, they're going for all the free stuff. Yeah, and they're kind of passing up on the real gems out there. So we actually like split out our two sides of our, our webpage for getting content, we have what's called the lab where you get the really experimental stuff, you know, the, you know, the person that built something in the weekend, it's probably not going to be something you play for like hours and hours, a lot of fun stuff over there. And then there's like the other side, this is primarily paid content are super like produced free, high, high production, value free stuff that you can get. So you can kind of the user knows what they're getting into

love to explore a couple of things from here. One of them is going back to this fundraising journey that you've been on, you've noted that the team is so committed to the vision that even during the rough patches over the last, you know, the first few years of the company, they stuck together, and you found a way to kind of keep going every time you hit one of those little rough patches. But now you're shipping. You know, now you're profitable. Now you have developers content students coming to you saying hey, can you please can you please, you know, distribute my product on your platform? What does this fundraising conversation sound like look like today? Is it getting easier?

No, hell no never is.

The story continues in the next episode, Jerry talks about our fundraising journey and share some practical advice. She also gives an honest look at early feedback about the product and experience and talks about one of her deepest passions, mentorship, who enjoyed the first hour I think you'll really enjoy the second hour of our conversation. Please consider contributing to this podcast@patreon.com slash the AR show and thanks for listening