Creator of a Virtual Reality Sensation

Creator of a Virtual Reality Sensation


MARCH 26, 2014

Palmer Luckey, a baby-faced 21-year-old college dropout, figured out how to build a virtual reality headset so exciting that it became a sensation on Kickstarter, the crowdfunding site, raising a staggering $2.4 million in 30 days.

But when Mr. Luckey wanted to set up his company in July 2012, he had difficulty figuring out how to complete the online paperwork and how to get tax IDs for his employees.

That did not matter — he hired experienced entrepreneurs and business executives to take care of those kinds of details. And now, Facebookhas cast a $2 billion vote of confidence in the company, in a deal announced on Tuesday, saying it sees virtual reality as an essential platform for the future.

How Facebook intends to incorporate the headset into its business is still unclear. But the acquisition has brought attention to virtual reality technologies, which offer the illusion of being physically present in a digital world, and to Mr. Luckey, and the vibrancy of the Southern California tech scene where his company took root.

Mr. Luckey, who declined requests for an interview for this article but who was interviewed by The New York Times last year, grew up in Long Beach, Calif., where he was home-schooled by his parents. As a teenager, he developed a passion for virtual reality headsets and gaming consoles, scouring eBay for older models and amassing a large collection.

He also started a forum, ModRetro, dedicated to vintage hardware fans like himself, who took to modifying devices to refurbish them or reconfigure their abilities.

While he was fascinated with the concept of virtual reality, the actual experience delivered by all of the headsets in his collection fell far short of the totally immersive ideal promised by science fiction. So he began tinkering with his own designs for a virtual reality headset.

“If there had been a perfect headset, I wouldn’t have gotten into virtual reality,” he said in the interview.

Mr. Luckey subsidized his habits by repairing broken iPhones and Nintendo DS game devices in his parents’ garage and selling them online for a profit. At the age of 16, he had a crude but working prototype of what would become the Oculus Rift, which he developed in his spare time while taking journalism classes at California State University, Long Beach.

An important break for him came in the summer of 2011, when he talked his way into a job at a virtual reality research lab at the University of Southern California, where he worked on research and projects around heads-up displays.

Another big break came in 2012, when John Carmack, the developer of a game called Doom, reached out to him through the ModRetro forums and asked to purchase a version of the machine.

Mr. Luckey sent him a version at no cost, held together with duct tape, which Mr. Carmack used to show off a game at a demonstration in Los Angeles at E3, the largest gaming convention in the world. The audience loved it, and a mutual friend introduced Mr. Luckey to Brendan Iribe, an industry veteran who had also dropped out of college as a teenager to start a gaming company.

Mr. Iribe, and others, helped Mr. Luckey begin the Kickstarter campaign that provided the seed money to establish Oculus VR, in Irvine, Calif., a wealthy suburb of Los Angeles.

There, the company joined a small but growing constellation of prominent companies that have emerged in the last few years in Los Angeles and its sprawling suburbs.

Unlike the teeming and densely concentrated cluster of start-ups competing for office space and venture dollars in San Francisco and the surrounding Bay Area, the start-ups in Southern California are spread out over a handful of neighborhoods, like the sunny beaches of Venice and Santa Monica, Hollywood or downtown Los Angeles.

Entrepreneurs at these companies say they like the culture of Southern California because it is more relaxed and freer from distractions than the bustling tech epicenter of San Francisco. They make only the occasional trek north to the Bay Area to visit their investors and other founder friends.

In addition to Oculus, the Los Angeles-area start-ups include Snapchat, Whisper, Tinder, Ether, SpaceX and Factual. Los Angeles area start-ups attracted more than $1 billion in venture financing in 2013, up from $774 million in 2009, according to data from the National Venture Capital Association.

In recent years, big-name technology companies, including Google, Twitter and Tumblr, have also opened offices in the area.

The Oculus acquisition “shows a lot of strength,” said James Jerlecki, who founded an anonymous messaging company, Rumr, which is based in Venice Beach, Calif. “That kind of momentum is helping establish L.A.”

Virtual reality experiences have long been dreamed about on screen and on the page, in science fiction books and films, but have been a hard sell for the real world. Over the last several decades, headsets that have promised to transport people into three-dimensional gaming and entertainment worlds have not lived up to their claims.

The Oculus Rift is seen by many gaming and virtual reality aficionados as having the potential to finally cross over into the mainstream. But the company has yet to ship a consumer version of the product, which it says will be delivered this year or next. It has produced a version for developers.

Other companies, including Sony, have announced plans for their own versions of virtual gaming headsets. Still, since the demonstration at the E3 convention, Mr. Luckey and his Oculus Rift have been an indie darling among developers, earning accolades and awards at gaming conventions.

And though investors were initially skeptical, they quickly whipped out their checkbooks once they got a taste of the hardware.

Santo Politi, a partner at the investment firm Spark Capital, for example, recalled the first time he tried the machinery last March.

“It was absolutely mind-blowing,” Mr. Politi said in an interview. “I was speechless for the 10 minutes as I was going throughout the demo. You have to see and experience it or you don’t get how amazing it is.”

Mr. Politi invited Mr. Iribe to visit his firm. “Before he left, our investors gave him a term sheet to invest in his company,” Mr. Politi said. In June, Spark Capital led a $16 million investment in Oculus.

Michael Solana, the director of community at Founders Fund, a venture firm that also eventually invested in Oculus, said that he spent time with Mr. Luckey at a entrepreneurs’ summit in Wyoming last June. He described Mr. Luckey as “brilliant,” saying “his curiosity is almost without end.”

Mr. Solana also said something that many who have met Mr. Luckey like to repeat: “He also walks around barefoot at the office.”


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (, the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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