May 3, 2019, 2:15 PM ETProduct Demonstration, Fireside Chat

The a16z Pitch Room: Sandbox VR

Andreessen Horowitz (A16Z) invested in Sandbox VR, a "holodeck company" aiming to solve the low adoption and high churn (73%) rates of current consumer VR.
General Partner Andrew Chen led the investment, shifting from initial skepticism regarding the "VR winter" market conditions to conviction based on the company's unique retail model.
The team chose to anchor their pitch by explicitly acknowledging the failures of current VR (tethered hardware, social isolation, motion sickness) rather than hyping the technology, a bold decision designed to establish credibility.
A16Z viewed the company not merely as a VR hardware retailer but as a future publisher, betting on a platform where external developers can build content for hundreds of scalable rooms.

Current VR market stats cited: 120 million console units globally vs. only 5 million VR headset units, with low engagement and high churn.
Sandbox VR differentiates by offering untethered, wireless VR in large, physical "Sandbox" locations where users can roam freely rather than sit in a chair.
The technology utilizes movie-quality motion capture with minimal sensors to enable natural interactions, such as high-fiving a friend in VR, while eliminating motion sickness.
Unlike home VR, Sandbox VR is designed to be "fun to watch," generating shareable video content (trailers and selfies) that drives organic social media acquisition.
Guest satisfaction data shows near-unanimous 5/5 ratings on TripAdvisor, Google, and Facebook, ranking the experience as the #1 activity in Hong Kong and Singapore and #7 in Hong Kong (under Disneyland).

Revenue chart for the first 12 months initially appeared flat or declining but represented 100% occupancy for six consecutive months.
The second store in Hong Kong (opened March of last year) was 2.5x the size of the first, resulting in higher revenue per square foot.
San Mateo location data showed 18% of guests booking two or more sessions within the first few weeks despite having only one experience available.
Unit economics differ from traditional retail; since the company "sells time," it has no Cost of Goods Sold (COGS), contributing to high EBITDA margins.
The company has expanded from a single pop-up in June 2017 to 14 rooms, with a target of exceeding 50 rooms by the end of the year.
Strong demand allows for aggressive growth, which in turn enables the acquisition of exclusive content and the eventual creation of a scalable content ecosystem.

Sandbox VR positions itself against three competitor categories: "Attractions" (passive, hard to scale), "Arenas" (massive go-kart style spaces with poor unit economics), and standard "Arcades" (using low-fidelity home hardware).
The company's strategy relies on a standardizable, scalable format (approx. 1,000 sq. ft. per room) that allows for frequent content swaps and rapid expansion into new cities.
A "flywheel" effect is anticipated: strong demand drives economics, which enables aggressive growth, which funds exclusive content, further driving demand.
The long-term vision is to operate "Holoplexes" (20,000–40,000 sq. ft.) as ubiquitous as movie theaters, serving as a platform for third-party developers and IP holders.
The team plans to transition from building in-house games to operating as a publisher, creating a network effect where top developers build content for their platform.

Co-founders Steve Zhao (CEO) and Siki Chen (CPO) bring combined experience in casual and AAA game development, with Zhao having previously bootstrapped Blue Tea Games.
Michael Hampton joined as Head of Studio, bringing experience from Sony VR where he created Blood and Truth, the most anticipated VR title at the time.
A16Z validated the team's ability to execute in the US market by verifying that the San Mateo location could succeed outside of the Asian market context.
The investment team noted the strategic value of Siki Chen's background in hyperlocal growth at Postmates for scaling a complex retail operation.
A16Z identified a gap in IP licensing capabilities within the founding team and offered to leverage their network with media companies and IP holders to neutralize competitor advantages.

The company bets against the success of in-home VR and retail mall foot traffic, instead positioning itself as an attractive "experience" solution for malls seeking to secure competitive tenants.
Revenue growth is projected to be driven by the ability to scale content across hundreds of rooms, eventually allowing the company to act as a distributor for external developers.
The team acknowledges the risk that high repeat rates could be a "novelty effect," countering this by focusing on content rotation (adding new "films" to the platform) to drive repeat visits.
Future scalability depends on the continued improvement of off-the-shelf hardware (wireless VR, better haptics, lower costs) rather than proprietary hardware development.
The business model assumes the "experience economy" trend will continue, with Millennials driving spending toward social, shareable events rather than physical goods.