Why VR Leaders are Laser-Focused on the Enterprise and Industrial Manufacturing

Jake Rubin
Founder & CEO of HaptX
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Joe Toste (00:15):

You're listening to the TechTables podcast, a weekly Q&A podcast dedicated to interviewing industry leaders from across the world, ranging from startups to Fortune 500 companies, mixing it up each week with topics ranging from design and product innovation to IoT and industry 4.0. Let's do this.

Joe Toste (00:34):

Hey, guys. Welcome back to another week in the world of TechTables, mixing the best in design and tech innovation with me, your host, Joe Toste. I'd love to connect with you behind the scenes on LinkedIn, Twitter, or Instagram. There, you can even message me questions for future guests coming on the show, but today's show I'm really, really excited. We focus on series-A startup, HaptX, as we welcome Jake Rubin, co-founder and CEO of one of the world's coolest companies that helps VR users to develop simulations with realistic touch feedback and natural interactions.

Joe Toste (01:04):

With over 12 million in their latest round, including Mason Avenue Investments and NetEase, who are their more recent investors. This is episode four, Why VR Leaders are Laser Focused on the Enterprise and Industrial Manufacturing Markets: A CES Chat With Jake Rubin. As for Jake and the team, they are laser-focused on the enterprise right now with its first commercialized product, the HaptX gloves. Huge thank you to Jake for taking time out during the madness of CES, but that's quite enough from me. Without further ado, I'm thrilled to welcome Jake Rubin, founder and CEO at HaptX.

Joe Toste (01:39):

Alright, I do want to touch upon your comment in one of Charlie Fink's latest Forbes articles about being laser focused on the enterprise. I think it's a great focus and insight, especially since each Fortune 500 company has a number of different groups and each group had their own budget and that just leaves a ton of runway for HaptX. What does that mean? Just tending to 2020 right now.

Jake Rubin (01:59):

Yeah, so, you know, I think the industry as a whole has really refocused on enterprise and across the last couple of years, some companies have been quicker to give to the enterprise than others, consumer VR had huge amount of momentum and buzz, around 2013, 2014 with the Oculus acquisition and the aftermath of that. And I think everyone needs to obviously remain super excited about consumer VR. There's obviously still a lot of activity in that space, but just the economics of the consumer space and the realities of it make it very difficult for a startup, particularly one doing a hardware peripheral to compete and enter that space, you got to have very low cost, massive hardware, sorry, massive software ecosystem, lots of hardware compatibility.

Jake Rubin (02:38):

It's just really not feasible. Even some of the VR like Magic Leap who have raised billions of dollars, which most startups would kill for are having trouble, really getting broad adoption soon in the consumer space. So we saw them recently announced a pivot enterprise. And I think for the next several years, at least enterprise is just going to be the driving force of the VR market in terms of technology innovation. Companies like Facebook and HTC are doing great work in the consumer space, but I think you've got to have a Facebook like budget to compete in that space right now and be willing to lose a lot of money and God bless them because they're paving the way for the rest of us.

Jake Rubin (03:11):

And I do think that all these startups that are making their mark in the enterprise space, including us, will eventually bring that technology as it gets refined and miniaturized and cost reduced to the enterprise space. But you know, it really is the only place where you can build a business right now. And beyond that, we do really, truly love the enterprise space. It's not just a necessity, it's somewhere where we're excited to be working with customers every day and applications where we are literally potentially saving lives. People do their job better. Making meaningful impacts on the economy. We work with a lot of medical, military industrial defense applications. And as much as I had love the Ready Player One vision of being able to jump into a virtual world and hanging out with all your friends and do all kinds of amazing things. I think the greater impact on humanity itself has to be had, not just economics, but the impact piece used to be had in the enterprise space right now as well. So from both those perspectives, it's kind of a no brainer for us.

Joe Toste (04:00):

Oh, I love it. I love that transition when it comes to the industrial manufacturing, whether it's product design, like you did with Nissan that brought touch to the auto makers, virtual vehicle prototypes, logistics, manufacturing, maintenance, and car repair. What do you see big time opportunities and you kind of hinted on it, but what do you see some big time opportunities in the enterprise space?

Jake Rubin (04:19):

Yeah. So I think it's really all going to be, for us at least at HaptX space, training and design. And for most people in the enterprise space, those are two of the biggest markets driving adoption. For us, we really focus on applications where motor skills are critical. There is some set of VR applications where, headset and controllers is enough and they don't need HaptX immediately, but we find, we talked to most enterprise customers that they're severely limited in their rollout and the impact of VR and AR training and design and other initiatives by that lack of haptic feedback. If you think about our customers in medical, industrial, military defense, oil and gas, really anywhere where motor skills are critical, you can learn about something with a headset and controllers. It's nice to be immersed. It's kind of like a 360 video, you get an overview of something, but you can't really learn to do something particularly when that something involves motor skills.

Jake Rubin (05:09):

And that's where haptics become critically important because the vast majority of the cost and time to train a task comes from building those motor skills, not from learning about the background. And that's something that you can do almost as well on book as you can in VR. So I think for VR training to really make its mark, it's got to be able to do the whole package, not just learn about something, but learn to do something and have those skills translate directly to the real world. That's impossible without haptics and good haptics, haptics that are good enough, that you're building the right muscle memory that translates seamlessly to the real world. And that's a high bar. Doesn't have to be perfect, but it has to be good enough that if you learn to do something and you don't have to then relearn that in the real world, that's what we call negative training in the industry. And our customers are terrified about that. That makes technology literally worse than useless.

Joe Toste (05:53):

Yeah, I think the haptics piece is game-changer, it just really brings that experience to life. You just don't typically get with just playing VR headset. So that's really fun. What's your vision? I mean, obviously you had a vision five years ago or 10 years ago about this at some point, what's your vision for the next five years?

Jake Rubin (06:15):

Yeah, the vision really hasn't changed since the beginning. You can look back at some of our early websites, our early press releases, talking about full body, full immersive vision. I think people took that and assumed that that was either here today or it was going to be there immediately. We tried to kind of play that down. We were talking about it, but that vision hasn't changed. It's just taking time to become reality, like any other technology development. We're starting with the gloves because for two reasons, one, it's the best single individual product, the hands are the most valuable part of the body to be able to have realistic touch and two, the one that people don't think about as often, it's actually the most sensitive and most dynamic part of the body as well.

Jake Rubin (06:48):

And that means it's a perfect engineering test bed to validate all these technologists, every single piece for our platform, the skin, the exoskeleton, the motion tracking, everything, it's all designed with the full body in mind. And in fact, it's much easier for us, even today, to build a full body suit than it is to build gloves, primarily because of the sensitivity of the skin. If you look at the torso, the arms, the legs, the feet, they're all on the order of about a hundred times to even a thousand times less sensitive than the skin of the palm and the fingertips. And that is something again we can do today, if we wanted to, there's just not a whole lot of demand for that full body versus VR experience until you get the hands right, you get the headset right, you have a relatively robust [inaudible 00:07:28] ecosystem.

Jake Rubin (07:28):

There's a few boxes you have to check first. As far as what I see is immediate next steps. Obviously, right now, we're taking our gloves, we're very happy with the quality we've been able to achieve. We think it's already kind of past the point of diminishing terms, in terms of improving quality and our customers more importantly are quite happy with it. So our primary focus in the immediate term is to increase volume, decrease price, improve form factor, all those things that go into making a product successful at scale. And once we get there, then we'll refocus on adding more parts of the body and continuing to increase the fidelity going from standard definition TV to 4k, for example, getting more points of feedback, higher quality, et cetera. But for now it's really all about just making it a better product, better for economics, smaller, more cost-effective and most of all, larger production volumes.

Jake Rubin (08:19):

We've recently closed on an AskMe funding round and we've closed a really foundational manufacturing partnership with a company called Advanced Input Systems, that has four decades of experience building human machine interface devices and designing them. And we tried to bring this to market ourselves and we found it was extremely difficult with all... We're able to produce these technologies in-house, reliably, at small scales, but going from that to large scale mass manufacturing, startup is challenging. And unfortunately for us, a lot of the technologies are... that we're working with are highly novel and very complex. And so we can't just to a a Foxconn or something and say, "Here, make this." It took us about a year to build this partnership with AIS, and get comfortable with each other to the point where we knew we could count on them and they knew they could count on us.

Jake Rubin (09:06):

And now that we've signed that, we've got the funding in the bank, we already hit the ground running. We're going to have a lot of exciting product news in the next year. I can't talk too much about it today, but you'll see a lot from us soon. And we're going to be going out there in a much larger scale with significantly improved products.

Joe Toste (09:20):

No, I love that, latest funding round and AIS, that support. And that's a game changer. HaptX's mission is to enhance human machine interaction. My brother-in-law is a spinal surgeon in Seattle. And the use case in the medical field of where you've partnered with Fundamental Surgery and integrated the haptics gloves into their VR medical training platform. Can you dive a little bit deeper on the use cases in the medical field that you're seeing today?

Jake Rubin (09:44):

Sure. So medical is one of the primary areas of opportunity that we see initially. It's also challenging because it's got a very, very high level of regulation around it and a very high level of complexity. And so our... the way we've approached that field is as with the way we've approached most customer applications is, that we are the haptics experts. That's what we do so well, is we build the hardware, we built software, we understand everything about how the human body interacts with environment and how that produces the sense of touch. We're not domain experts in for example, surgical simulation. So that's why we've build this partnership with Fundamental, they've spent years and years capturing every detail about these specialized surgical and medical procedures in a very realistic manner. And so that's kind of where we pass off responsibility to them.

Jake Rubin (10:27):

We make sure that our hardware and software platform has the capabilities they need and on top of that, they build these highly specialized applications. So that's an area that I think has a lot of promise. It's early still because again, of the complexity and the regulation, but I think that we will see companies like Fundamental VR supported by technologies like ours have a huge impact in the next five to 10 years, completely changing how we train doctors and surgeons. It's simply way cheaper, way better, allows for way more repetitions. And the ultimate goal is to allow doctors and surgeons to practice a highly specific procedure based on real patient data, as many times as they want before they actually go and cut you open. That's the dream. And we're not that far away from that.

Joe Toste (11:08):

Yeah, no, that's really, really good. My brother-in-law showed me some photos and it comes down to a millimeter or less, and you can paralyze the person's eye. This is game changer. What makes VR so fascinating to you versus some of the other reality technologies out there on the market?

Jake Rubin (11:22):

It's all about immersion in VR. So if you look at the spectrum of XR technologies from VR through to AR, VR is the ultimate nourish. You are completely replacing the outside environment. In fact, the person's perception of their own body with a virtual environment. And that gives you complete freedom. You can create anything you can imagine completely unbounded unlimited by reality, by economics, by anything. That's always fascinating to be able to truly create experiences that we could only dream of before. I think AR too has a very valuable place in our world. We can certainly do some magical things as well, but fundamentally AR will never have that level of immersion where we truly feel like you are in another world and you forget that your here. AR is about overlaying and bringing the virtual objects with the real world. And as with any, most of the people in the industry, I see, it's not one or the other, they're not at war. It's the same spectrum, and they're going to work together.

Jake Rubin (12:17):

In the future, people are going to have their eyeglasses or whatever they decide to call them and they're their VR headsets, maybe they'll go to a location based setting, like an arcade or a theme park to get the really, truly high immersion, Ready Player One style experience. But you'll have these distributed virtual worlds that live in the cloud, that everybody can access from a variety of devices, even potentially just a phone or a computer. And as you improve your hardware, you will have more immersion and greater fidelity, just like you buying a gaming computer versus playing a game on your phone, much more so.

Jake Rubin (12:50):

But I think this vision of a central worlds that both leak into the real world, they have overlays in the real world through AR and that you can jump into and kind of visit that world yourself through VR. That's where it's going. It's a spectrum. There's no clear dividing line. And in fact, one day, I doubt it's going to happen any time soon because of the technical challenges involved in AR and VR, both are optimized for very different applications. One day they may be the same device. You may have your AR contact with lenses and you might have your gloves that just look like regular fabric gloves, and then maybe you don't need separate devices, but that's quite a ways out.

Joe Toste (13:22):

That's great. As far as scaling the engineering team, what's been the biggest challenge so far?

Jake Rubin (13:28):

I think the biggest challenge for us has been, as I talked about a little bit earlier in scaling manufacturing. So we spent years building an organization that was very, very good in R&D. We built all kinds of, fundamentally new haptics technologies, obtained a bunch of foundational patents, all with relatively little capital and leveraging the wonderful infrastructure at Cal Poly as well to do that. But that's just so different than the skill sets you need and capital you need, and the scale you need to manufacture this. So when we started getting some really great responses to our first club product in 2017, we went out and we were able to raise more capital, we were able to start scaling the team and we grew enormously and we really focused on skillsets that would help us bring product to market. What we found is we kind of hit a wall because that was not our expertise. [inaudible 00:14:12] of money, we were kind of having problems. A typical story that often results in hardware startups going up in flames.

Jake Rubin (14:17):

So we really decided to pivot and bring on a partner to take on a lot of those tasks as well, and essentially divest ourselves of a lot of the direct product development and manufacturing tasks, because even all the money in the world, as some startups found out the hard way is not a substitute for tons of experience and the infrastructure and the massive scale it requires to do that. So that's kind of where our partnership with the ideas came from. We realized that if we were going to survive and thrive and be able to meet all the customer demand we identified them and have happy investors and shareholders. We were going to have to find somebody else to help us with that.

Jake Rubin (14:49):

And that wasn't easy. As I said, if it had been as easy as getting a standard outsource manufacturer to make a consumer electronics device, of course we would have done that from day one, but we were, we didn't know if there was someone out there that could do everything that we needed to have done to build the specialist product. We were very lucky to find the amazing team at AIS and they do what they do so much better than we ever could. Even if we went out and raised a billion dollars, we still wouldn't catch up to their 40 years of experience, their eight sites around the world and their hundreds and hundreds of employees.

Jake Rubin (15:16):

So in some way, I mean, that would be a piece of advice from me to hardware startups, and again for some it's much easier than others. Some have no choice, but to do it themselves, if there aren't manufacturers out there with that expertise, but it is very, very challenging to both do the R&D and create a new product and a new IP and take that to market yourself. It's almost impossible in some cases, particularly when you have a brand new technology in a brand new industry.

Joe Toste (15:41):

And lastly, before we hit the, what I call the 60 seconds seeking breakthroughs segment, what's the number one problem you're seeking to solve on the engineering side today?

Jake Rubin (15:50):

I would say right now, saying that we are scaling up significantly on the product side, and we release a lot of new products soon. So it's all pretty mundane right now. It's not breakthroughs, it's not high risk items. It's just a bunch of checking this box, checking this box, checking this box, but coordinating those all and making sure they happen on time, the customers get their product when they've ordered it and it goes out the volumes we want, there's not cost overruns. It's all pretty pedestrian, but very, very important. We've luckily... What's partnership, the other nice side effect of that is we've been able to refocus on what we do best, which is the R&D side. We had to kind of pause on that a little bit while we were trying to scale the gloves, and now we're going full force, double what we were before into our neon next generation devices.

Jake Rubin (16:31):

Of course, I can't talk too much about our R&D roadmap, but I hinted at it earlier, getting to this full body vision as quickly as we can expand into more parts of the body, enhancing fidelity, increasing product offerings. And with this nice division between us and AIS, we're able to create new technologies and hand them off to those guys to commercialize and manufacturer. And that allows us to be as quick and efficient and agile as possible, and make sure that we can bring this vision to life quicker than I think we'd ever really dreamed of.

Joe Toste (16:56):

Oh, I love it. Okay. 60 seconds, seeking breakthroughs, question number one. What do you know now that you wish you had known at the beginning?

Jake Rubin (17:03):

Manufacturing. I think for anyone starting a hardware startup, manufacturing is harder at scale. It's harder than you will ever think it is. Don't do it yourself. Unless you have to. Find a partner to do it. It's worth giving up some of your upside to make sure that you don't have to raise tens of millions of dollars and then likely crash and burn when you miss your deliverables and piss off your investors and our customers. Don't do that.

Joe Toste (17:19):

Okay. Number two, what are your three most important roles as a CEO?

Jake Rubin (17:27):

So for me, I think number one is probably just on the product side, R&D side. I've been highly involved since the beginning. I was able to run venture and the original founder of the technology. So I think I'm more product involved, more direct involved with product and research than most CEOs. Two is fundraising, constantly, all the time. It never ends. We just announced around, but you better believe we'll be fundraising again soon. So it's just, it just never ends.

Jake Rubin (17:48):

You got to keep the money in to keep the company growing. It's not the most fun job in the world, but as a CEO, you've got to get good at it. You got to get comfortable with it. You got to build good relationships with both your existing investors and new ones. That's critical. And then number three, I would say is just operations. It's easy to lose sight with fundraising craziness, the product craziness of HR, ops, finance, all these important things. It helps if you have a good COO or VP of ops, if you don't, you better keep tabs on that, or your going to have unhappy employees and a company that's kind of crumbling around you while you go out and raise lunch money and build product. So don't forget about the not so exciting things, but the things that still are credible.

Joe Toste (18:23):

That's great. And then the last one. What keeps you up at night, Jake?

Jake Rubin (18:25):

I think for the most part for the last couple years, it's been funding. It's hardware is a hungry beast when it comes to money. So I feel like most, a lot of my job has just been keeping the... shoveling the money in the hole, in the furnace to keep the train on track. That's starting to shift as we now start to scale up and hopefully soon we'll have a different set of problems. I think for this year, it really is just execution. We have demand lined up. We have customers lined up. We've got a great product, but it's not easy to deliver on that. We've got a clear path forward, but we just got to buckle down and get it done.

Joe Toste (18:56):

Love it. Thank you.

Joe Toste (18:59):

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Joe Toste
Joe Toste
Host of TechTables Podcast

Host of TechTables 🎙- Conversations with Top Technology Leaders