Siqi Chen: “China Way Ahead On Retail Experience Because Of LBE”

Justine:                      We’re about to go again with a great interview coming up. I’m Justine Harcourt de Tourville and I am sitting with Siqi Chen who is the president and chief product officer of Sandbox VR. Welcome.

Siqi:                            Thanks Justine. It’s great to be on a show and it’s great to meet you.

Justine:                      It’s nice to meet you. Listen, sandbox VR has been in the news and some pretty amazing headlines. You want to tell us what recently happened for you guys?

Siqi:                            So the most recent major announcement we had is we announced a fairly major round from Andreesen Horowitz.

Justine:                      That’s just not a, nobody name. Those are pretty big, strong credentials.

Siqi:                            They’re okay investors, they’re fine. we’re real, very, very fortunate to have them involved. Andreesen is on board Mark Andreessen himself as an observer. We announced $16 million which is I think the largest amount of fundraising that’s been into VR since the original oculus company.

Justine:                      Congratulations it’s exciting for us all.

Siqi:                            Yes.

Justine:                      Yeah. That does something for the space. Now, for those of us who don’t know what sandbox does, would you like to share what sandbox VR is making or what brought you to this medium?

Siqi:                            So the mission of our company is to bring the Holodeck to every neighborhood in the world. And the way we do that is we combine motion capture technology in real time with multiple users in the same space with virtual reality technology. And as a result when you walk in one of our retail locations you transform completely into a different character from head to toe and you and that of your friends. So you can high five each other, shake each other’s hand, run, walk, crouch in a virtual environment with virtual bodies and it works completely seamlessly. today we build our own content. We are three experiences live. we have four in four countries with 12 different locations and we’re building a lot more this year in the US and a lot more content as well.

Justine:                      So you have four coming up in construction right now. Where are they in the United States?

Siqi:                            So we are going to be in Chicago, Austin, New York, LA actually two in LA. Orlando as well. San Francisco, another one in the bay area. So quite a few places. So it’s about a dozen this year.

Justine:                      Well that’s a good start, that’s going to get people into it. And basically from what I gather, you’re kind of creating this sci-fi experience. How did the, like replicating what we grew up with in TV and you’re bringing in that to real life in 2019 2020. Can you tell us a little bit about what happened there?

Siqi:                            Yeah. well, so you know, our founder and CEO, Steve, when he started a company, he tried all of the other VR experiences that you could get at home. And you know, I, I personally was a big VR super fan and so he actually went to my house and tried the very first development kit for the rift and I was like so impressed by it. It was so fun and it just wasn’t what he was expecting. You know when people, before the rift came out, when people imagine virtual reality to image of your head and your head was the star Trek Holodeck, right? You walk into a room, you can become anyone. You’re in this completely different environment. It’s free roam. And the way we like to describe VR as we know it today at home is you’re a disembodied head holding two floating controllers tethered to a computer, sitting in a chair by herself at home alone.

Justine:                      That is just not a good look.

Siqi:                      No. And so, there’s a lot of angst, me included around like why has VR not penetrated? And as a VR super fan myself, I’ve owned every piece of hardware since the dk one. Well, it’s all fun for a few days, but it’s just not quite good enough. It’s not what we were promised,

Justine:                      But it’s getting there and sandbox VR is helping make that happen. So how, what, how are you doing other than the motion capture? What is the first pain point that you’re, you’re fixing right now?

Siqi:                            Yeah. Well, the biggest thing is it has to be free roam. It has to be social. but the number one differentiator is really about embodiment. Having a virtual body, right? So there are limitations that we can do at home results in this, this floating head and two floating controllers because that’s all you can really track at home. That’s a state of art and technology today. And over the long run you still need a decent amount of space for a few hundred square feet to really have a decent free room experience. Otherwise you’re limited to basically seated experiences. and so those are two constraints. One is we have our own store so you have an open space, but two is by combining motion capture technology, we make our experiences and more about who you get to be rather than just environment around you.

Justine:                      Okay. And, and, and your more complete I would say. Yes, yes,

Siqi:                            Yes. You looked down from head to toe. You have a body, legs, feet, arms that you can identify with. But even more importantly, your friends are also in the space and you can see them. And so you can walk up to them when they’re strange your body and you can actually physically interact with them. And that, it’s hard to describe how big of a difference that makes unless you go to one of the experiences and try it. But it’s enormous. It’s, it’s the difference between a, a video game and the holodeck and we think that experience is basically version 0.1 of the future Holodeck.

Justine:                      Well, and this kind of new lbe environment which is advancing you know, consumer adoption, what’s happening for you guys with story and narrative.

Siqi:                            Yeah. So, our first experience had extremely minimal story, right? it’s called deadwood mansion. It is a 30 minute long Zombie wave shooter.

Justine:                      I think. Did you hit all of the notes of successful like games in the past, shooters, zombies, what else is there a car chase perhaps?

Siqi:                            We might be doing that, but you know, like the reason why we did that is because the company had absolutely no money. Right? And so with less than a million dollars. And most of it is from our founder. He and his team launched the very first sandbox location in Hong Kong and all the technology, all of the content and the were in retail store was done by a team of six. and so when I went to Hong Kong, I was not expecting much as an investor. and I tried it and it wasn’t just good. I didn’t, it was so good. I didn’t even know as technologically even possible to have an experience like that.

Justine:                      Say you were blown away.

Siqi:                            I was, I mean, I was working for Postmates at a time, which was like a delivery company in US you know, they announced we’re going to IPO, we were going to IPO and I quit my job the same day and I said to Steve, I want to move to Hong Kong and work for you. And that’s actually the first time in my career where a company didn’t have to acquire one of my companies to give you their join. I was just blown away. yeah. So, going back to your question about narrative, I think, with a budget of $30,000, which is with his first experiences, it’s really, really difficult to get a lot of high production values and great narrative in and the team did like the best they could. But you know, the way where we are with content of VR today is they’re the early 20th century when the first black and white films came out, there wasn’t a silent, silent black and white silent films, right? And there was the, there wasn’t a whole lot of narrative complexity compared to the pride and prejudice, right? But the, the, the the interestingness was in a novelty of the format. But as the medium has developed and as the number of screens that exist in the world proliferates, the increase in investment in technology and in content and our narrative quality goes up. And that’s how we see it evolving even within just our own little company, right? Like our investment in the next few pieces of content is dramatically different from the $30,000 we spend our first piece of content. We’re ready, not ready announced yet, but we’re actually working with one of the largest, most recommends franchises in the world on the big free room. He’s the content and it’s going to be the first free room experience for that franchise. And we’re really excited about it. It’s coming out this year.

Justine:                      Okay. Are we there or are we talking after summer or after summer? This fall. Okay. I look forward to it. I love it when things are, dangling wig.

Siqi:                            Yeah. It should be happening in the next month.

Justine:                      Shiny, shiny things to be thinking about. Okay, so next month we should hear some pretty exciting things. Definitely. What’s your experience like? What have you learned or what have you heard that’s either excited you or you’re worried about or learned?

Siqi:                            I mean there is so much passion in the medium. I think that’s my big, just have so many great creators in one space. who know it’s early, who know there isn’t necessarily a business today, but still want to pour their life and their time into this medium is enormous exciting. Yeah. Because we’re just like that.

Justine:                      it is. I have to say our booth has been like across the hall and so I can see in a stonesthrow Antoine Cayrol from Atlas5 and it’s just like, wow, they’re so close. You know, you can literally touch them. So it’s a different reality.

Siqi:                            It’s a room of true believers. It’s, it’s really inspiring.

Justine:                      It is. And what else is on the agenda behind the opening some stores? Have you seen anything new and different trend wise as you’re doing these rollouts? How’s it been like working with them? I’m, I’m guessing you’re going to be in some retail locations. Yeah. What’s it been liking working with the real estate or the facilities or whoever you’re negotiating with?

Siqi:                            It’s actually been really positive. and so, w when we look at our data, we know that 90% of our guests pre-book ahead of time. Okay. And we ask gas like, when was the last time you’ve been to a particular shopping center? Right. Which is we have one in the US that we at Kirby on today and about 80% have never been to the shopping center in like the last five years and about half have never been there. And so when we show data like that to our retail partners, like we actually in our, for example in our California location, we are actually paying no rent.

Justine:                      Well the you must be like you’re a gift.

Siqi:                            Well it’s a, if you look, if you go to on retail in China, if you go to any shopping center in China, that is what the future of retail looks is going to look like everywhere. Especially in United States. I don’t think retail is dead as everyone thinks it is. But it’s evolving the way. And China has sort of skipped a generation. So you know, shopping malls in China looks like entertainment centers. They have like one floor of retail on a first floor and if it’s a six story mall, all the other stories are purely services, entertainment. So you have daycare, you have a skating ring, you have a fencing thing, you have a place where your kids can go and bake a cake, you have like multiple arcades. and you have a ton of restaurants. That’s like what 80% of retail in China is.

Justine:                      Real destinations like there.

Siqi:                            It’s a theme park.

Justine:                      I was gonna say sounds like Disney. Yeah.

Siqi:                            Yes. Wow. It is. And that’s what drives traffic to the retail locations and that’s going to meet a future. I see that. And in the US we’re just a little behind because you know, like the, the advantage of a country like China that has been behind for so long is that you skip entire generations of platforms or technologies, right? Like the desktop generation was entirely skipped in China and everyone’s on mobile and China’s far ahead of everyone else in mobile now. And it’s the same thing as retail trying to, didn’t have malls before. And so now they have, they know they can build it. What the, in what the next generation that was always supposed to be.

Justine:                      That’s true. I mean, I can understand, I mean, their malls are so important than 1980s. Yes. And so critical to the, the youth culture. And I can imagine as people grow up, they don’t want to give it up, but it sounds like, yeah. You know, the next generation, the millennials, God bless them, but they really chose for the Amazon world.

Siqi:                            Yeah. And the retail landlord is, they all, I mean, they’re all smart people. They all know this. Yes. and so, yeah. So it’s really great timing for the things that we were trying to do.

Justine:                      Good. And, free rent so you can develop and continue to grow. The VR audience is very good for you. But we’re getting some close to freer. Good deals are good. Yeah. The closest, the closer we get to free, the better. Well, I think we could all say that as creators and makers, the closer to free that it becomes to make stuff. What are some things you’re you’re seeing with narrative makers that are coming up to you? Do you talk to them? Are you talking about platform opportunities or what’s the conversation like between creators and sandbox? VR?

Siqi:                            Yeah. I mean, a lot of it is just about distribution. Right?

Justine:                      Okay.

Siqi:                            You know, people are investing their time and in some cases a good amount of money into this content. Like how do we make a living right? And you know, we don’t have an answer to that today. Oil have an answer, but it’s not a, we don’t have the capability today. Right. It’s like, again, going back a hundred years, if there’s like a few screens out in the world, nobody is going to be making money. Right. And so, if we have a platform and a product and a business that inherently has strong demand, then we’re able to open more screens. Aggressive. Yeah.

Justine:                      So you’re kind of like an, an architect helping to design the infrastructure for people to come behind.

Siqi:                            yeah. I mean, it’s a Kia scale. Right? And so, when we do the math on our platform, our model is selling tickets today and we have other bit revenue streams coming in. But fundamentally that’s what it is today. And so if we had a hundred rooms out in the world, then as developer with our standard revenue share, you could legitimately make more money than if you had a number one best selling game on Steam. And so it’s not that many writers, there’s like a 40,000 movies screens around the world, each holding, hundreds of people, a hundred screens with six people. It’s actually not that many over the course of a year. That’s, that’s how the numbers pan out. And so, as our mission opened, thousands of these, right. And so at scale you know, at that crossing point where someone can actually make a reasonable living off of a, any platform, that’s what we’re, what we’re trying to get to as soon as we can. And that involves opening a lot of locations.

Justine:                      Well, this is really exciting. So is there anything you want to tell? I mean, any, any advice that you have to other people that are fanatics like you are or VR lovers and,

Siqi:                            I mean, this is a long game. Okay. Right. Stay in it. Stay it. I mean, like you, you talk to people in the early days of movies in 1905 it feels weird. No one really believes in it. People don’t know as if it’s a thing. And you know, in the 10 to 20 year horizon, it’s the golden age of Hollywood and I think that’s going to happen.

Justine:                      Oh, that’s a perfect place to end on. Again, congratulations on your big investment and what you’re doing to move the industry forward, and we look forward to seeing great things.

Siqi:                            Thank you.