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I recently had the privilege of hosting a panel discussion at the UCLA Anderson School of Management on the topics of augmented reality (AR), virtual reality (VR), mixed reality (XR).

My amazing panelists were Steve Redmond, former CEO of 8i, Dan Burton, CEO of DroneBase, and Derek Belch, CEO of Strivr Labs who have a wealth of learning and experience in these areas.

Here’s the video recording and transcript of our discussion. The top takeaways you can expect to learn from this session include:

  • The definition of augmented reality (AR), virtual reality (VR), and mixed reality (XR)
  • B2B and B2C use cases for AR/VR
  • AR/VR workforce training use cases, both now and in the future
  • Security, privacy and regulation
  • Next steps in investing in AR/VR technology
  • And more!

Topics Covered

00:00 – Panel Introductions
  • Laura Fay – VP of XaaS Product Management Research, TSIA
  • Steve Redmond – CEO of 8i
  • Dan Burton – CEO of DroneBase
  • Derek Belch – CEO of Strivr Labs
07:09 – Augmented reality (AR) and virtual reality (VR) and mixed reality (XR) defined
08:26 – Elusive consumer business models for AR and VR
11:16 – The business viability of the B2B use case for AR/VR and sister technologies
13:27 – B2B workforce use cases for AR/VR
15:45 – The use of AR and VR for education and training
19:08 – Security and privacy in emerging AR/VR technologies
23:46 – The impact of global government regulation
30:00 – The present and future VR training experience
38:11 – The future of content and advertising in AR/VR
42:36 – Biggest sources of investment in AR/VR

Full Transcript

Introduction: (00:00)

Our next panel's moderator is Laura Fay. Laura Fay currently leads the technology as-a-service product management research and advisory practice for TSIA. Laura is a technology industry veteran with over 30 years’ experience driving growth from leadership roles in product management, general management, and engineering. She has contributed to the growth of large well-established enterprises and a number of early stage high-growth startups, including Good Technology, Sendia, ShareData, cc:Mail, and Retix. Laura holds a bachelor's degree in computer science from Trinity College, Dublin, Ireland and an MBA from Santa Clara University, California. Please welcome Laura Fay.

Laura Fay: (00:56)

Good afternoon, I am delighted to be here at UCLA Anderson and I'm delighted to be hosting this panel session with some great leaders. We've got Steve Redmond of former CEO of 8i, Dan Burton, who is the founder and CEO of DroneBase and Derek Belch, founder and CEO of Strivr Labs. So, let's kinda just start off, I've mentioned your names. They are obviously on the screen here and maybe you could just start off by introducing yourself, your company, and the technology that your company has brought to the marketplace. And then we're gonna talk a little bit about the hard work of actually connecting that and looking at the trends and actually try to make that a reality through a company.

Steve Redmond: (01:46)

Yes. Hi. Hi everybody. I'm Steve Raymond. I'm a former Anderson MBA student class of ‘00, we were the class where everybody had jobs in May and everybody got fired by September.

Steve Redmond: (02:02)

People had eight or nine offers from, from Wall Street. And then, you know, we're on the beach, by, by September. So I came here kind of the classic engineer who wants to, you know, do something different for the next stage of their career. When I graduated, I went basically into digital media and I've been doing it in southern California ever since, so I've seen a radical transformation of the Los Angeles tech scene from sort of an outpost of Yahoo and Google and companies like that, or you're in the new media, you know, new media dungeon of a major studio to big companies raising lots of money. You've been talking to some of them today and there was some, you know, sitting here as well. My passion is starting companies. I've started a couple, I've worked at five, I've been sold four times. I’ve kind of seen it all. Most recently, 8i is a company that is pioneering a technology called volumetric video, which is basically holograms for augmented reality and virtual reality, and so I've learned a lot about those, cutting edge ecosystems.

Laura Fay: (03:12)

Great. Thanks Steve.

Dan Burton: (03:14)

My name is Dan Burton. I'm founder and CEO of DroneBase. I was, my background was in the military, so was an infantry officer in the Marine Corps., was kind of, got early access, early user of drone technologies, deployed on a ship that went to the Middle East and then deployed subsequently Iraq, and Afghanistan. Really watched this technology computerized and miniaturize to where small units with very little training could get access to air, get data and intelligence and, and make decisions based on that data. And just, it felt like we were living 30 years in the future. So it was very much committed to this is a technology and this as an industry, left the military, went to business school, worked briefly in finance and then left to start this company.

Laura Fay: (04:10)

Alright, thanks Dan. Derek?

Derek Belch: (04:12)

Hey everyone, my name is Derek. I personally grew up in San Diego. Went to Stanford as an Undergrad. I worked in consulting for a couple of years at Booz Allen. I went to business school after that. Applied to UCLA, did not get in, so I went to USC, my safety school I guess, and , ended up, while I was in business school. And I see, I actually put football at Stanford as an Undergrad. So I had this crazy thought that if I didn't see coaching before I turned 30, I'd regret it forever. So I went back to Stanford, finished my MBA early, went back to Stanford, enrolled in another master's program, and I was also a graduate assistant coach for the football team. And while I was coaching, I had to do a master's thesis and my thesis was to come up with a way to train football players using virtual reality.

Derek Belch: (04:56)

Full disclosure, I am not technical. I got a C minus in a CS105 and considered that a win, so I was really bringing, I was really bringing like the, how would this actually work in a football office on a football field, you know, day in and day out angle. And I partnered with some Grad students and a professor to bring more of the VR, you know, technical side. It was so successful as an academic project that the head coach of Stanford, David Shaw, for those of you who know him, literally sat me down at the end of my two years and like fired me. He was like, you got to get out of here and go start a company because this is, this is legit. So, I decided to do that. We're about four years old as of a week ago.

Derek Belch: (05:33)

We were founded in January of 2015 and after I left coaching and for the first year and a half we were exclusively working with sports, NFL and college football teams, and a few other sports here and there. I'm sure we'll get into what VR is good and not good for it. And it's really not good for anything outside of football at least today, and then, and the business went, went really well. We actually didn't raise any money and we did about a 7 million in revenue, between our first, in our first 20 months, organically funded. And then in the summer of 2016, about a year and a half in, I got a pretty random phone call from somebody at Walmart and they wanted to meet to talk about how VR could be used to train employees. And I went down to Bentonville with, you know, a little more than a quarterback play on loop and kind of waved my arms in the air and said, hey, here's what we would maybe do here and you're, the cool thing was is the more I talked to them and to ask questions and understand like, all right, what are your pain points as it relates to training and employee development and all this, it was almost identical to what we were doing in sports.

Derek Belch: (06:31)

The only difference was a football play and headset versus like boring produce aisle. Right. But everything else, the formula w was almost the same. And they'll admit it's boring to, that's okay, so that said, strive on a much different path, and as of today, you know, just over two years later, we're 120 employees, we've raised about $20 million, we've got 25 customers in the Fortune 500 in addition to sports. And I'm sure, you know, we hit a lot of things upcoming. So yeah.

Steve Redmond: (07:00)

In your staff meetings did you grab people by the helmets and scream at them?

Derek Belch: (07:03)

No, I do not. I got all that out.

Laura Fay: (07:09)

I got a little sense of the AR/VR use cases. We'll, we'll talk about that, as we go forward.
Immersive technology, right, and 3D modeling, what are the typical use cases that, that 8i kind of looked at and went after initially. And is the technology developed enough to, to you know, to really expand widely or would you say?

Steve Redmond: (07:32)

Yeah, no, I mean I think, no it isn't, it isn't ready to be a consumer private first for everybody. Sure, yeah, Immersive Computing, either VR or AR basically means there's, there's a, a GPU that's rendering a 3D world and you are instead of just interfacing with the technology through a screen, you're able to walk around with six degrees of freedom, and so probably most people have tried that. There's tons of inside baseball about whether what you call XR and VR , like all of those things, but generally, computers haven't become powerful enough to, to render in 3D and understand positionally where the, the user is. And so that unlocks a lot of power. Now the, the initial hype cycle was that this would become very quickly a consumer play. And there were a lot of reasons for that.

Steve Redmond: (08:26)

One was like 360 video is something that could be deployed very cheaply. It's not really VR and AR and so it was kind of I think a red herring that got people excited about adoption, but, the main thing is, is that the, the use cases that are possible don't really line up with the, the expense and, and uncomfortableness of actually dawning all of all of the equipment. And so what you're seeing, are companies like a Strivr, the, the real, you know, kind of smart play right now is to, is to identify a use case where those barriers don't present a problem to a business and to growth. As entrepreneurs, we're always chasing product market fit and finding product market fit is the elusive problem right now. And it is going to be a continuum.

Steve Redmond: (09:22)

And so you're going to see a lot of companies that get, or you did see a lot of companies on the premise that when their technology was developed, there would be millions or tens of millions or hundreds of millions of people owning, immersive computing devices and that hasn't materialized. So people are really now trying to get what we call pivot into applications, where you're using the technology to do something that was already being done, but in a more powerful or a more effective or cheaper way, and so, storytelling, it was, was one of the things that, you know, that we thought was going to be a lot bigger and that you'd be recording a lot of actors and actresses and performances, and people would be consuming those in their couch in VR and that just hasn't materialized.

Steve Redmond: (10:12)

So now you have to go into things like, like training and human interface communication, things that where you can have a much smaller target audience that will pay a lot more for it. So, train training and gaming are really the two that I think have crossed over the Rubicon of you can have real businesses, with them and the rest of the use case. And then of course there's like, mobile AR like Pokémon Go as a business, but the rest of them need the devices to be better and cheaper.

Laura Fay: (10:51)

So it sounds like Strivr and 8i are really focused on that B2B employee training space, would you say?

Steve Redmond: (10:58)

One of our major revenue categories was doing that kind of thing, yeah.

Laura Fay: (11:04)

Yeah. Okay. Dan, do you want to talk about drones and show us what your target use cases are there?

Dan Burton: (11:16)

Sure. I mean, I'd say I'd say that there after just SAS or software, there are sort some brother, sister technologies, AR VR, drones, cryptocurrency. We're all sort of in that, what's coming after just a phone stage. So I mean, I think for all of us on the stage, and Derek sounds like you've done a great job of it. I mean, I think that getting money from people having revenue, that's a great indication you're solving someone's pain point, saving them time or saving them money, and then just not spend, you know, and I think being as frugal as possible to keep the lights on, run as lean and mean as possible and just have the core infrastructure of your technology that's ready to scale when your market starts in flight. We've seen that somewhat in the drone space. So very quickly, you know, our company DroneBase, probably the leading provider of commercial drone services completed hundreds of thousands of commercial drone missions in all 50 US states, 70 different countries.

Dan Burton: (12:12)

We just have an API for enterprises. They build into it, send us coordinates or addresses, we return drone data. Hopefully it's sort of magical speed, affordability, reliability, so that's broadly what we do. So really, unless we're saving a customer time, saving them money, reducing their cost, you know, we're not sleeping that well at night. Just a question of pressing that as hard as we can do to stay in the game. So you know, when, when the market really starts to in flight, you know, we're here. I mean, it sounds like Derek has done a great job of you've bootstrapping where we were. We've been, we went to Y Combinator, I've been, you know, I've taken venture capital investment. I think that's best if possible, put towards obviously software engineering technology development. You'd like the business side is going to stand on its own two feet as fast as humanly possible.

Laura Fay: (13:05)

Yeah, absolutely. So, before shifting to the, to the, you know, the business growth, and keep them with a little bit of the title of Workplace of the Future, how do you see, how did each of you kind of see the technologies that the company is producing and the, and the problems are solving for your B2B payers? You know, changing their workforces?

Dan Burton: (13:27)

I mean, just, from our perspective at DroneBase, but just because we've, the way that we operate is by having built the world's largest network of commercial drone pilots. So our view is that being a drone pilot is a new class of skilled labor, you know, technical should be decently compensated labor. That's a rare thing. We really need more sort of skilled labor positions, we really do believe in that. So, we have been changing the way that enterprise is going to have a workforce. And you know, in many cases they were using W2 employees sort of as boots on the ground to go out and do inspections. I'll just say it, the insurance industry for example, right? So typically you'd have an insurance adjuster, they were well trained in spotting certain types of damage, but huge amounts of their time are spent driving from house to house, interacting with the home owner, filling out a checklist, so what we're helping large insurance carriers to do is we work much better, faster, cheaper in the field, and we'll get that same insurance adjuster instead of, 5 claims a day, they'll be able to process a 100, 200, because they're just sitting at a desk processing our image and data sets, so I think just that they have a wonderful knowledge. I think we try to be humble about what we don't know about. We're not insurance adjusters, but let that top 5 percent of Insurance adjusters really leveraged their skillset and let us focus on that data collection that, you know, drone technology's better out.

Derek Belch: (14:52)

Yeah, I mean as it relates to virtual reality, augmented reality, et cetera, you know, what we'll call immersive technology, I think Steve hit on a lot of the building blocks of the problem the industry has been facing, which is too high expectations too soon, and I, I have probably spoken on a hundred panels in the last four years and I usually play the villain and I have been telling everybody too high of expectations too soon. Right? Let’s have cautious optimism and low and behold, here's where we are. As it relates to the workplace though, like I know this is about the Workplace of the Future and I can opine on where I think it's going, but as it relates to what we're doing, I mean, it's the workplace of the present right now, two years ago, a year ago, six months ago is the future.

Derek Belch: (15:45)

But I, if I had to guess, I'd say, I don't know, a quarter to half the fortune 500 is doing something with, with VR and AR right now. We've got over 25 and growing every day, and, and those are what we call like qualified customers, customers that are going to do it right and that are actually putting this across the entire breadth of their organization versus just some fun little tests. So it's happening right now, what we're seeing in virtual reality at least is, as it relates to training, unequivocally the data says it works. Scientifically you retain more information through virtual reality than you do through a PowerPoint, a video, me talking to you right now, et cetera. Right? And when you couple that science with, all right, now it's actually like a preview of my job or it's a simulation of my job, then I'm going to have to do it just takes the learning and the hyperdrive.

Derek Belch: (16:40)

It's like a flight simulator, you know, it's a visualization on steroids. So it's happening right now. And what we're seeing as we're seeing all of these organizations that historically have done one or two things, they either have had terrible crappy training for their employees and this is now a new, more effective tool to put into their arsenal. Especially as it relates to a frontline worker, a blue-collar employee, you know, non-skilled Labor. Historically they have brought them in, train them up and as fast as they can put them on the floor and usually they churn out in two weeks, right? That's just the reality. So now we're seeing these tools be able to provide a more effective learning experience or in cases where they weren't doing anything altogether, now they actually have something that, that that is actually gonna work for that type of employee.

Derek Belch: (17:26)

The other thing we're seeing is all of the ways they're training people just don't work and they spend a ton of time and a ton of money. And the reality is that you will retain in a 10-minute VR experience just as much or more information as you will in a two-hour lecture on insurance claim adjusting. I mean we've, that's actually, that's one that we've done actually. It's so boring, right? It's super boring. And you know what is boring in VR too, but you were retain more than sitting through a lecture from the world's leading expert in water mitigation. Like we actually did this test in a pilot with a customer, a major insurance company. So, so therefore we're seeing time down, retention neutral to positive and then hopefully productivity up. So now this is a business decision.

Derek Belch: (18:14)

This is not even a training decision anymore or an employee development decision, it is a business ROI decision. What are the problems my business is facing and how can this technology aim to solve it? And then when augmented reality is ready and you know, AI is not making the hardware for AR but they're making a lot of the inputs that will go into AR then imagine I'm a factory worker on an assembly line and I got trained a lot more effectively using virtual reality and now I wear a pair of glasses or goggles or something. And as the pieces go by on the assembly line, AR is basically ensuring that I don't make a mistake. So the Workplace of the Future is actually potentially a mistake free work environment. And that's not to say that we should never make mistakes and we shouldn't innovate and all that, but like on the mundane operational things, I mean those problems are going to be few and far between and 10 years. That's, that's my honest opinion and I'm usually like the sober in one and when it comes to this stuff.

Laura Fay: (19:08)

Okay, good, interesting, fascinating time. Security. Talk about security. What are the things that either your customers are concerned about that you're concerned about? You know, a lot of people say, well, you know, you've got to spend money on security, and most early stage companies don't think about that because they're solving for the core business case. So how has that been that you feel comfortable sharing? And has your, have your initial prospects and customers, you know, been concerned about that in doing business with an early stage company because of that, would you say?

Dan Burton: (19:50)

Yeah, I mean, I think it's probably something, you know, we've learned a lot doing this work. I'd say one thing for like the workplace of the future as it pertains to starting a company, I think the future will always look like two things - you're either an engineer or you're selling. So if you're a business school, you know, when I took my grade there was no class on sales at the business school I went to. It's ridiculous. It's ridiculous, like when you show, when you start a company and you have software engineers, they're expecting you know how to stand up an enterprise sales force.

Laura Fay: (20:21)

What about Product Management and Marketing?

Dan Burton: (20:24)

Sure. But I mean primarily sell like it is a sales process at the very early stage. So I'd say that, you know, it's selling is vitally important and part of this is selling, right? So I think that we're probably all died in the wool, a fervent, zealous about our technologies, right? So we go into large customers and we're just, it's all about the incredible value propositions this will bring. It’s all about the, you know, the amazing game changing, save you time, save you money. And that's all great, right? But I think that what we've found is if we don't immediately address risk mitigation data security, you don't even get into the value prop conversation, right? Because in our case, we're taking like a flying robot that they probably associated with killing people, to your work site, your mine, your claim holder, right?

Dan Burton: (21:14)

Pulling down sensitive data, being stored on our server. Then we're passing it via API to you. So if there's not like a chain of custody on that data and there's not a tight loop around the security of that data, you don't even get to a value prop conversation. And you know, working with new technologies and new companies is fun for all these corporate jobs, but it's always a question of what's going to get me fired and I guarantee you data breach data leak, we'll get, we'll get you fired, so, you know, you even when you’re dealing with the most sort of, optimistic and helpful corporate buyer or a corporate investor or a corporate customer, I think that that's something you need to really be tight on and understand how to a do it and take the steps to do that. Go get SOC 2 certified, you know, move to the higher levels of AWS or you know, government cloud if you can, but also be willing to communicate that up front. Even if you're not getting too the incredible value proposition, you're bringing them right away.

Derek Belch: (22:12)

So this has been a major issue for us, you know, we in VR, for those of you who don't know, there's a lot of things we know about what you're doing, who's in the headset for how long were you looked up, right, left down, you know, when we ask people to answer questions and stuff, like there's just a lot of, it's a treasure trove of information that can be super valuable as it pertains to predictive analytics and simulations and stuff. In the first year and a half, two years, nobody really understood that on the customer side. We had it in our, our contract about that we owned data in certain things and they were like, okay, and then, you know, what's that? Educate us. Right? And then we told them and they said, okay, and they signed it.

Derek Belch: (22:55)

And then now as we've worked with more sophisticated organizations that have all of these layers and layers and layers of requirements, we have actually consciously over invested in what we call being enterprise ready, so doing SOC 2 and having the product do certain things to protect data and delete certain stuff and collect things. And you know, luckily for us we do own a lot of we collect and that that will make us more valuable cause we were able to develop certain predictive algorithms and whatnot, but it's a major issue. And I think, you know, one super interesting thing is all of the stuff that Facebook's been going through with data, you know, basically like all of corporate America is disgruntled with them right now and doesn't trust them. And Facebook makes Oculus, which is the main VR headset right now. So like we're in these meetings and they say, well, you use Oculus, so tell me how you're gonna protect my data. And it has nothing do with each other. But, it certainly is something that's top of mind and we're very mindful of it.

Laura Fay: (23:46)

Okay. Interesting. So I'm to start Steve with you on the next one. Regulatory Environment. So any issues there. And I've got some special ones for the FAA. Just had some good ones recently on drones, but as it relates to VR, AR and, and, you know, the Holograph, products at 8i, has the regulatory environment been one that you'd had to worry about?

Steve Redmond: (24:17)

No, not so much, you know, one of the things that strikes me, these types of issues, regulatory and safety, the interesting thing from a startup standpoint is, is you have like kind of prescale phase and then sort of scale phase when you have customers and some things, you know, kind of go some things you don't worry about until you get to a point where you have customers or otherwise you're over-engineering, so, that's just the one thing. But yeah, there, there isn't really much regulation, you there, there definitely is a, an issue around, age limits and, and young children. There are questions about, brain development in VR and AR, rightly so. And so, mostly what, what the industry has done is just not developed for them and said, don't put your kids in and people do anyway. But, you know, that's kind of the thing, but it isn't really regulated. Most of the regulation in terms of like content where I'm playing is sort of drafting on internet rules, so the same rules that would apply to a video game or, or a website applied to immersive computing.

Derek Belch: (25:27)

Steve, I'd add to that, I'm sure you would agree, like they're still figuring this out. Like they're trying to figure out what it is, what, what's happening.

Steve Redmond: (25:34)

Yeah. Well I mean they need to regulate into Facebook and not us because we're still, you know, the harm level isn't there yet.

Laura Fay: (25:43)

Yes, it’s the classic case of the, you know, the technology is advancing faster than the regulatory environment to catch up many cases. But I think FAA just made some interesting proposals this last week or so I was reading about. Can you share?

Dan Burton: (26:03)

I mean, I bet that, and similar to the data security point, you do anything in the offline world, it's not pure software. You're going to bump up against regulators, right? If you put anything up in the air, you could also rent it to heavily regulated area, probably as it should be. You know, aerospace should be decently regulated, it makes sense, right? So the FAA is our regulator, the FAA’s mandate is safety. Their mandate is not that we have the most robust commercial aviation industry of any country in the world. Their mandate is not that we would win the next five iterations of aviation technology. They're mandate is safety. So from their perspective, a drone technology is pure risk, right?

Laura Fay: (26:44)

Did I not read that there they have sort of preapproved or proposing to pre-approve any kind of flights with under 55 pounds?

Dan Burton: (26:52)

No, look, I think that initially, they initially they have very conservative approach in like 2013 or just like this is all legal. Yeah. Any commercial activities illegal, you have to apply for an exemption to the law. We'll grant those on a one-off basis. I will give the, I actually give the FAA credit, they, they have, they're getting much more right than wrong. So the past couple of years, each year's kind of had a landmark rule, two years ago that was them putting out a commercial drone operators test and license called Part 107. You take a onetime written test and you get a commercial drone operator's license. Prior to that you had to go get a full-on pilots license that costs like 4 or 5, $6,000, took months to get, you know, a little burdensome to put up small DJI drone up into the air.

Dan Burton: (27:43)

Lastsj year they did a great tech forward solution. They actually have an API, they put out a system called the LAANC system, they rethought aerospace from a drone perspective and kind of last year we probably said no to 30% at least of all requests because they just were in restricted airspace. There's a lot of restricted airspaces because that was not done with this technology in mind. And I'm happy to say that now in 2018, we were able to say yes to because of were areas where LAANC was enabled. It's now enabled across the US , we're able to say yes 99% plus of the time. And then you hit their API, you're built into the system, you get an instant authorization with a kind of a unique identifier for that flight for a certain date and time. And then as you point out, they did just start to start to issue a rule around overflight of people, and night flight as well.

Dan Burton: (28:37)

You can get a night waiver now it's not profoundly hard, but flying over people is an important aspect to just having a more robust, environment. So they're just, they're generally getting a lot right these days. And actually, we'll give them a lot of credit because Amazon and Google both have lobbyists basically trying to buy airspace. Like Amazon wants to own 200 to 400 feet of airspace and just kind of have that be their corporate branded airspace, and the FAA has been a good job of saying no, the rule, let's put out a rule. It applies to all whether you're a small individual drone pilot or the largest, they've done a good job. So, so the biggest corporations in these new areas, right. I think for, for, I'm sure for Derek as well, I think like in these undefined categories, I think if you don't shy away from data security and regulations, if you kind of embrace that and step into that, you can have a really outsized voice in helping craft that. From a selfish business perspective, you can always have that as a barrier to entry yourself just because you're fluent on how to speak about that in a very new industry. There's a pre-scale point where you just trying to find product market fit, but I would certainly not shy away from embracing the regulators or data security, you know, they say in terms of a regulator, if you're not at the table, you're on the table, which is very true.

Steve Redmond: (30:02)

Yeah. We, we have a mutual friend who runs, a company that, that has recently been, you know, they basically rely on apps that collect data for their business. And he had gotten out in front of that issue. And so when the inevitable tech crunch in the New York Times kind of take down pieces came, you know, he was ready and he actually came out looking good because he had thought I had and said, this is, you know, that there is going to be a backlash and there is sort of a level of responsibility that we need to have as a platform, to be ready for it. So I think, you know, the other way to do it as the Zuckerberg way, which is to continually overstep and then apologize and hope people forget and which has been working for him, it seems to be running out of time. Okay.

Laura Fay: (30:50)

Interesting. Interesting. Yeah. And somewhat of a potential speed bump on the growth path, but I'm sure a, it sounds like certainly in this case it's moving in your favor, it would feel like?

Dan Burton: (31:01)

Yeah. Look, I mean, I wish, I mean, my view is that like, the US taxpayer invested heavily in developing drone technology like 15 years ago. The, our military was like 50 years ahead of everybody else, I, I go to China at least twice a year to see one of our really important partners there, in Shenzhen and the mayor of Shenzhen has flown in a personal transport drone that flew autonomously from one area of town to another. He just gets in a thing, hits a button and it flies him. There are infinity rules in China, therefore, there are no rules, they, but I mean, they're extremely formidable, they are pushing, In many ways the future of aviation is happening there in a somewhat scary way. I do like our approach.

Dan Burton: (31:51)

We have a rules based, kind of fair and equal approach, but it's been interesting. I mean a hundred years ago, right when the Wright brothers started flying on like the fifth flight, you know, a military officer died and one of the Wright brothers almost killed. Right. If that happened with a hundred years later, we're just a little more risk averse society. We're not as into let's go win the next five industries. I get it. But there are definitely other countries that are stepping in to this with both barrels. So this like drone technology may or may not to be developed in the United States. We, we want it to be.

Laura Fay: (32:24)

Yeah. Well it's interesting. It makes it look like for those of you who heard Eric's timeline on AI and what's possible, it just adds another data point here that maybe many of us might not have been aware of. I wasn't. So that was interesting, I'd like to give the audience some time, ask some questions. These guys have a phenomenal experience to tap. I think we've got some questions over here.

Audience Member: (32:52)

Thank you so much for being here. My name is Deborah. I am a second-year full time MBA student. My question is for Derek, I'm particularly interested in human capital management. So when it comes to a VR training session, can you walk us through what that experience is actually like currently and also where you would like to see it go five years from now?

Derek Belch: (33:05)

Great question, there's like a hundred different things I could talk about use cases. I'll just pick one, so you know, one of the early things that we did, actually no, I'm gonna not go early days, I'm going to go today. So one of the things that we do with Walmart is, in their constant competition with Amazon, they have these towers that they're installing and all of their stores, these pickup towers where I ordered something online, I walk in, punch a code and pick it up and walk out, don't have to worry about anything at the store, so they have to physically install all these pickup towers across the United States and all of their stores. And you know, historically they would have a launch coach, like a human, go and teach people how to do the install and it would take days to a week and then the launch coach would move onto the next site, right.

Derek Belch: (33:53)

So that individual or that group of launch coaches is not necessarily scalable across the 4,700 Walmart stores in the United States. So when somebody puts on the, the tower training experience, they literally in 18 minutes, get everything that a launch coach would teach them over the course of a day or a couple of days, and the retention is like I alluded to before, you know, almost the same if not better, cause they are learning. You know, instead of looking at a PowerPoint, a video hearing, a coach who's there one minute gone the next and then you got to kind of figure it out on your own. Like they can literally mentally stand right where they would be as if they were right there and they're learning everything about the tower. And then if they don't remember it, when they go actually go to use the tower and install the tower, they can just pop it on again and do it again.

Derek Belch: (34:39)

Right. So it's actually it, it is eliminating the coach in that the human is not necessarily there as often or at all, but they have now reallocated the coaches time to other things where a human is more important and we've taken all of the subject matter expertise to the coaches and put them into the VR experience. So that's just one example. Another really cool thing that we're doing is with Verizon, store robbery training. So emotional preparedness and decision making for what it will be like if your store gets robbed as a store manager. And that was just on CBS news a few weeks ago, so I'm allowed to talk about it, and it's, it's awesome. It is. Hands down the best thing we've ever done, no smoke, no music, no Hollywood stuff. 9:00 AM in the morning, you're opening your store, somebody comes up behind you and sticks a gun in your back and says, open that door.

Derek Belch: (35:28)

And, and it's really, really real and it's really visceral and it's coaching you to deal with the emotions you're gonna go through and teaching you how to look at the perpetrator for what color or their shoes, what are they wearing their face while also attending to the people that you're responsible for as a manager. And it's awesome. So those are just two examples. And, and where do we want to see it go? , right now it's, it's not passive, it's active, in that you're making selections and you're answering questions and you're looking around. But in the future I want it to be like actually like a flight simulator, where if you don't do the right thing right there in real time, it kicks you back and it says do it again. Or you go through the experience once it says, nice job, you got nine out of 10, let's do it again. And you get a totally different set of stimuli. So almost like a video game, right? But we use real video to make our experiences so it's really hard to gamify real video. It's a lot more authentic and engaging, but it has its downsides too. So that's what I want to see down the road.

Steve Redmond: (36:30)

And I would add onto that in terms of what we've seen there is, is that, you know, holographic technology is interesting when you do want to insert the human into that. Instead of having to take the goggles off and interact with the human, the human can come in, right? And so you can live stream yourself as a hologram in there. And what he's saying about like retention and stuff, a lot of that has to do with you're not, you remember things differently when you experience them as they would happen in real life because that's how all your neural pathways are aligned and the human face and the human voice and human emotion has a lot of that going back to, you know, sitting around the campfire and tribal times. And so taking, you know, taking these technologies and putting best practices that you might have done 20 or 30 years ago and just really supercharging them because it's scalable, it's repeatable, it's trackable, all of those things are just gonna make it a lot more fun.

Derek Belch: (37:32)

Well, in fact, and we're super excited about stuff that companies like 8i is working on. And specifically, I don't know if we're month, you know, weeks to months to years away from when it will be more relevant to plug into what we do or it will be more ubiquitous, cheaper, lighter, faster. But you know, we are, we are going to get to the point where we can almost recreate real life and, and that's, you know, it's scary and why in one sense, but it's super exciting as it relates to our mission.

Laura Fay: (38:06)

Okay, great. Thank you. I think there was a question here. I'll take this gentleman and then I'll take you.

Audience Member: (38:11)

Thank you very much for great info. My name is Jay Nanda from the class of 2020, my question probably would be anywhere between Derek and Steve, whoever feels compelled to answer, with the AR and VR technology. How do you see the future of content delivery? And second of all, as you mentioned that, , people can retain information very highly in that environment. How do you see the advertising landscape turn up given that ads might be at a premium now that people can remember those things at a pretty high rate?

Derek Belch: (38:48)

So I have a feeling you may be more positive than me, so I'll start so we can, we can end on an up note, we'll see. Yeah, so I'm actually pretty bearish on consumer VR. I think it's, I don't think we're replacing TVs anytime soon, if ever, I think it's going to be a complimentary technology. There's a place for it for sure. But you know, Steve alluded to entertainment as something they focused on early in storytelling. And, number one, a lot of people like to just sit and stare at a screen and be told where to look. And having to sit here with a headset on and turn over my shoulder at kind of socks. Not gonna lie, it's not a fun user experience. It's way too active, right? I want to be more passive when I'm watching a movie.

Derek Belch: (39:34)

Number two, like it's really expensive and different to create content like that. So it remains to be seen what companies can actually make money to be around long enough to actually sustain themselves. So, you know, TBD. The industry has been hoping for the last three years that ads in VR and shows in VR, movies in VR would be the next thing. And I think we will get there and in a decade, but not anytime soon. And then not, I'm not saying that to be negative, I just think it's reality. And I think what we're doing, not just Strivr, but corporate training, people will use these devices in the workplace and it'll trickle down to the real world, and the day to day consumer world. And we've seen that with a lot of technology. I don't think it's gonna be any different.

Steve Redmond: (40:16)

Yeah. I mean, I don't disagree, but I do think when you're talking about strategy or sort of trying to predict the future, time and eras matter. And so 10 years isn't that far right? Like it's not that far away, and so you can start to think about it. And I think, usually what happens is what we want to happen. And so, you know, as users do the things that we want to happen to me are the things that are in Sci-Fi movies already, like the Jedi Council or, or being able or being able to walk around. Like, we want to be able to just put on like a really lightweight pair of glasses or even just have contact lenses or some other projection technology and computer generated stuff appears and we can interact with it and it's got, and it's AI powered and all of these things.

Steve Redmond: (41:05)

And so you know that is all technologically possible. W where we are right now is you can't build a business doing it because right now it's not really light beer glasses. It's really honking big things that costs $1,000 and you've got to operate (Microsoft) Windows in your living room. Who wants to do that? So there's all of these problems to it. And so the question is, is how long does it take? I think the way you're starting to see location based entertainment at least get a foothold. So you go to a very specific place and for a very limited amount of time, you engage with it with a designed VR experience that's multi player that is really cool. You probably aren't gonna buy that for your house cause you only want to do it once a month.

Steve Redmond: (41:55)

I tend to think of AR as has specific spaces that start to become programmed like there's a section of Disneyland and you walk in there and you put on some glasses that are kind of custom made and you have an AR addition to that magic experience. And it's just for a short period of time. You don't have to own the equipment. Things like that mitigate the obvious downsides that were headwinds that we've been running into. And so with cloud computing, 5Gg and all of these things, there is no reason that you can't have basically unlimited 3D content everywhere, it's just how do we get there?

Derek Belch: (42:36)

Just one very quick add. The good news, which is counter to everything I just said, is, it's not startups that are mainly driving VR/AR hardware right now. It's Microsoft, Facebook, Google, right? I mean it's the big boys and, and that is baffle it. That will, we'll see. But yes, that's good news for the industry is as the big players are putting billions into this, and that should at a minimum, get us to a certain threshold. And I'm gonna see where we go from there.

Laura Fay: (43:16)

We could talk for hours about this. Fascinating topics. Thank you.

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Laura Fay

About Author Laura Fay

Laura Fay is the vice president and managing director of offers research and advisory for TSIA. She also serves as TSIA’s vice president of XaaS product management research. Laura is a technology industry veteran with over 30 years' experience driving business growth in the enterprise technology industry via leadership roles in product management, general management, product development, and customer success.