• A 19-Year-Old Programmer Built a $2,300,000,000 Company in 2 Years

    No One Could Have Predicted His Success

    Photo from CNBC Television Youtube

    Facebook acquired Oculus VR for $2.3 billion in 2014.

    Palmer Luckey founded Oculus when he was 19 years old. He had dropped out of college where he was studying journalism. His parents were concerned about his decision to drop out of college.

    In less than 2 years his company Oculus VR was acquired by Facebook.

    Palmer Luckey is now the founder of Anduril Industries. Palmer has raised more than $385 million in funding with Anduril from various investors.

    The Oculus journey began in a trailer

    The trailer belonged to a nineteen-year-old boy named Palmer Luckey.

    Luckey had modified the trailer to suit his every need. Luckey had installed all six of his screens in the trailer. Luckey used to conduct hardware experiments in the remaining space of the trailer.

    His obsession with virtual reality began when he was sixteen years old. During that time, only a handful of people were interested in virtual reality.

    Initially, when Luckey started, he had no idea about virtual reality.

    Previously, he was interested in a subset of modding called “portabilizing”. It involves hacking old game consoles into playable handheld devices.

    In his city, the number of portabilizers actively involved in the trade was much smaller.

    That’s why Luckey started an online community called “ModRetro” for other portabilizers. People in this online community introduced Luckey to virtual reality headsets.

    According to Palmer Luckey: “Man, ModRetro days were the best.”

    For the next three years, Palmer Luckey continued to play around with VR headsets. He assembled more than 50 prototypes of his design.

    To finance all of his experimentation, Luckey used to work at the Long Beach Sailing Center, repairing diesel engines, cleaning boats, and doing other jobs for minimum wage.

    In July 2011, Luckey had the opportunity to work as a lab technician in a mixed reality lab at the USC Institute for Creative Technologies (ICT).

    In that role, Luckey had to clean the lab, do all the reports, and help other students with their VR projects.

    Luckey’s role in that lab was not glamorous.

    Still, Luckey chose to work in that lab because the only thing that mattered to him was the ability to interact with people present who were also interested in the same niche.

    By 2012, Luckey was able to build a prototype that he thought could be shared with the world. The headsets he built were much cheaper compared to other available options.

    Luckey planned to use Kickstarter, a crowdfunding website, to create a campaign and sell an easy-to-assemble virtual reality kit.

    He knew that to make all these sales as a legitimate service he had to establish a company. To do this, he began to search for names. All the obvious names like “virtuality”, “virtual” and “VR” were already taken.

    That’s why he settled for a name called Oculus.

    Luckey wondered if he could make a hundred sales of the prototype, he would still be very happy because those sales would help improve his future prospects.

    Legendary game designer John Carmack

    Since his childhood, Carmack loved reading science fiction novels and fantasy books.

    Carmack had this weird passion for inventing complex worlds for different games using his imagination.

    As he got a little older, his interest in programming and computer science increased.

    One of his main interests was graphics. He was interested in graphics because he loved how a simple mismatch of 0 and 1 helped create different colours and images.

    During his teenage years, Carmack started playing computer games. In high school, he was able to build his own game called Shadowforge.

    In the year 1991, he founded his game studio called Id software. When Carmack founded id software at the time, all the best-selling games were made exclusively for consoles.

    Computer games of that time were not good due to underpowered graphics. John Carmack, along with his team at id software, was able to develop a technique called “adaptive tile refresh.”

    This technique allowed personal computer games to have smooth scrolling. Using the “adaptive tile refresh” technique, id software was able to launch games like 3-D, Quake, and Doom.

    These games became huge hits and made John Carmack a celebrity within the gaming community. He subsequently sold his company Id software to ZeniMax Media in 2009.

    How Carmack was introduced to Palmer Luckey

    In the year 2011, Carmack was thinking a lot about three-dimensional space like 3-D televisions and so he thought about virtual reality.

    When he checked out the best head-mounted display (HMD) available on the market, he was disappointed. It was because those headsets were flimsy and had high latency.

    One of the main reasons for his disappointment was the field of view (FOV). The field of view for the best HMD was 40 degrees.

    It was terrible. Only with a 40-degree FOV nothing interesting could happen with the best VR headset.

    Carmack wanted to present one of his Doom 3 games in virtual reality to the press. That’s why he kept exploring different VR headsets and kept interacting with online communities.

    In the comments section of an article titled “LEEP on the Cheap.” Carmack found a person who was doing interesting work with VR. The person’s name was “PalmerTech”.

    Carmack wrote to the person named PalmerTech and asked him about his prototype. He told Luckey about his private VR demos, so he was interested in seeing Luckey’s VR headset prototype.

    Carmack received the Oculus Rift prototype. Here is the tweet he posted on May 17, 2012.

    Along with the tweet, John Carmack posted an extensive review of the Luckey prototype.

    With Carmack’s help, some of the industry veterans like Dan Newell, who was an engineer at Valve along with Mick Hocking, a senior director at Sony, pre-ordered some Oculus Rift prototypes.

    Once Carmack demoed the Rift prototype, everyone started praising Luckey.

    Palmer Luckey received a job offer from Sony.

    It was a full-time position at Sony Computer Europe.
    He would run Sony’s R&D lab.
    The salary would be $70k.

    Who is Brendan Iribe?

    Brendan Iribe had been involved with Startups from a very young age. In 2004, he and one of his childhood friends, Mike Antonov, started their first startup Scaleform.

    The entire Scaleform team created a high-performance middleware package. With the help of this package, an open-source project called Flash could be played in 3D games.

    Iribe sold his first startup Scaleform for $36 million in 2011 to Autodesk.

    How did Brendan Iribe find out about Palmer Luckey?

    Laurent Scallie is one of Brendan Iribe’s close friends.

    Laurent called Iribe and told him about a business opportunity he might be interested in.

    Laurent told Iribe that this time virtual reality is going to work. Laurent asked Iribe to meet Palmer Luckey.

    At first, after listening to Laurent’s words, Iribe was a bit skeptical. He doubted Laurent’s words regarding virtual reality.

    But since Laurent took the name of John Carmack, Iribe thought he should at least take a look at Luckey Innovation. Iribe started reading stories about Palmer Luckey, and after reading those stories, he was hooked on virtual reality.

    He asked Scallie to introduce him to the boy named Palmer Luckey.

    Iribe convinced Luckey to start Oculus with him

    When Palmer Luckey and Iribe team meet for the first time.

    The goal of the entire Iribe team was to make Luckey feel comfortable with them.

    At the first meeting, Iribe wanted to convince Luckey that starting a company was no big deal. Iribe wanted Luckey to believe that anyone could easily start a business.

    When Luckey met with Iribe’s team, he told them how he had been homeschooled since childhood. Luckey mentioned that he used to do self-learning courses on his own.

    Luckey told Iribe that previously his plan with his prototype was to launch a Kickstarter campaign and sell kits. But now he had been receiving offers from many companies to join them.

    He is seriously thinking about the job offer he received from Sony.

    Iribe told Luckey not to join any company and asked him to remain independent. Iribe asked Luckey how someone else can raise his child better than him. Anyone else can’t see how you see your own baby?

    Talking to Iribe’s team, Luckey became convinced that he should stay independent and focus more on building a software ecosystem around his hardware.

    After speaking with Iribe, Luckey was ready to reject every job offer he received and any possibility of a merger.

    Iribe was able to convince Luckey that he needed to create an SDK that would allow other developers to create games and content for the Oculus.

    A couple of months after their first meeting. Brendan Iribe convinced Palmer Luckey to start Oculus with him. Luckey was happy to start a company with him because he trusted both Iribe and his team.

    Kickstarter campaign

    Palmer Luckey and Brendan Iribe agreed to a Kickstarter launch.

    For the launch video on the Kickstarter platform, Palmer was endorsed by Valve CEO Gabe Newell.

    In the video, Gabe Newell asks others to trust Palmer Luckey because he’s doing something interesting and answering some tough questions.

    Other famous people in the gaming industry like Mark Bolas and David Helgason endorsed what Palmer Luckey was doing with VR in the Kickstarter video.

    During the Kickstarter campaign, Luckey introduced Oculus Rift to all game lovers and VR believers. He spoke at various press meetings and introduced the world to this new world of virtual reality.

    The Kickstarter campaign was a huge success for the entire Oculus team. Palmer Luckey previously thought that he could raise a maximum amount of $250,000.

    When the Kickstarter campaign ended, Oculus was able to raise a total of $2.4 million. People really believed in Palmer Luckey’s vision and passion for virtual reality.

    How Mark Zuckerberg found out about Oculus

    After a successful Kickstarter campaign, Brendan Iribe and Palmer Luckey focused on building a strong team and hiring the right people.

    To hire a team of talented engineers and for all the hardware costs, the Oculus team needed a large sum of money. This forced them to raise money from investors.

    In series A they raised a total amount of $16Million.

    For the next round, Brain Cho, who was one of Andreessen Horowitz’s partners, approached Iribe.

    Cho told Iribe that if the Oculus team has been able to solve the motion sickness issue, then Andreessen Horowitz could play a role in the Oculus Series B.

    Iribe always wanted to do business with Mark Andreessen.

    Ultimately, Oculus was able to raise a total of $75 million from Marc Andreessen and his partners.

    Marc Andreessen was the man who introduced Brendan Iribe to Mark Zukerberg. Iribe and Zukerberg through a phone call talked about the future of games and a little about virtual reality.

    Oculus demo for the Facebook team

    Iribe gave the Oculus demo to Mark Zuckerberg.

    Once Mark took the Oculus demo, he was hooked on the product. He found the headset quite impressive.

    Only one phrase came out of the mouth of the entire Facebook team who took the demo:

    Holy Crap!

    Every one of them was shocked by such an experience.

    After such a great reaction from the entire Facebook team, Mark Zuckerberg was thrilled. Five days after the demo, Mark Zuckerberg came to meet with the entire Oculus team in Irvine.

    There he meets Palmer Luckey for the first time.

    Palmer Luckey told Mark that he was one of his biggest fans and that he loved what Mark had accomplished with Facebook.

    Oculus Acquisition

    Mark Zuckerberg wanted to acquire Oculus.

    Previously, Brendan Iribe asked for $4 billion, but Mark wasn’t ready to acquire Oculus at such a high valuation.

    After a few months of negotiation and drama, Facebook acquired Oculus for $2.3 billion.

    How does Palmer assess his relationship with money after selling his company?

    Palmer cares a lot about money because he likes the freedom that money has given him. He doesn’t have to worry about little things because of money.

    The money has given him the option to pursue things that he otherwise would never have pursued.

    Palmer Luckey

    If I didn’t have money I wouldn’t have a collection of vintage military vehicles…You can have nice hobbies that keep you relaxed when you have money.

    When Oculus started it wasn’t because he thought it would eventually make money. He had been working with virtual reality for years at that time as just a hobby.

    He didn’t have to make up a story about how virtual reality was going to change everything until he had to convince investors to give him money to run his company.

    The fact that the company ended up making so much money was kind of a happy coincidence. He was simply passionate about something that was in the right place at the right time.

    What changed after the $2.3 billion Oculus exit?

    When Palmer made a lot of money, it wasn’t a big change for him. He kept doing most things about the same.

    He moved to Silicon Valley after Facebook acquired Oculus, where he lived in a shared house with 12 other people because rents were expensive in the Bay Area.

    He could have afforded to live in a big giant house, but for Palmer, there’s no better feeling than having a lot of money along with security and knowing you’re doing things because you want to, not because you have to.

    Palmer Luckey

    Taco Bell is never tasted so good as when you know you could afford to never eat taco bell again.

    How has Palmer changed as a leader?

    After Palmer sold his first company, Oculus, he changed a lot of things in his leadership.

    When he started his second company, he has to come to terms with the fact that he won’t be able to work on the things he was most passionate about.

    Palmer Luckey

    When you start a tech company you do it because you want to work on a technology, that is why you are interested in that space in the first place. As the company has grown, he has realized that if he is still doing optical design in the company it’s because he is being negligent about the hiring process.

    The responsibility of the founder of the company begins to change once his startup begins to grow. He has to find people better than him to run his company.

    Convincing good people that they should join your company becomes the most important goal. Convincing others that they are going to have a big impact becomes the founder’s job.

    Reference

    • The History of the Future: Oculus, Facebook, and the Revolution That Swept Virtual Reality by Blake J. Harris
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