May 4, 2019 · 39m · a16z
Founding Stories: Sandbox VR
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
This episode of Andreessen Horowitz's Founding Stories features Sandbox VR co-founders Steve Zhao and Siki Chen alongside a16z General Partner Andrew Chen as they discuss building a location-based virtual reality company. They explore the company's early funding struggles, full-stack business model, technological innovations, and long-term vision for interactive VR entertainment.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
The host as informed peer 3.7 Guest teaching 3.1 Guest disagreement 1.3 The host pushing back 1.1
speaking balance: gold is the host, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 18:25 Siki calls Steve's pitch the dumbest idea
Siki lightheartedly but bluntly recalls telling founder Steve that pitching VR escape rooms was the dumbest pitch he had ever heard.
Hardest push from the host ▶ 2:12 Andrew corrects Siki's Nickelodeon referenceAndrew quickly cuts in to ensure Siki isn't confusing 100-year-old Nickelodeons with the modern TV network.
Biggest teaching moment ▶ 36:26 Siki reframes the Spaghetti Western analogy to silent filmsSiki corrects Andrew's comparison to Spaghetti Westerns by arguing VR is actually in its silent film era, explaining how game agency transforms the storytelling paradigm.
The host holds their own ▶ 26:10 Andrew lays out his core thesis on game DNA versus film DNAAndrew demonstrates his subject matter expertise by comparing competitors in Vegas and explaining why interactive game mechanics offer superior frequency over passive cinema.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Legal Disclosures | 4 | 3 | 1 | 2 | Andrew demonstrates familiarity with film industry analogies and interrupts briefly to clarify Siki's reference to historical Nickelodeons rather than the cable channel. Siki provides historical context on Hollywood's vertical integration, which Andrew connects to early VR distribution. | |
| Initial Fundraising Challenges and Investor Skepticism | 3 | 3 | 1 | 1 | Steve and Siki describe the tactile physical experience of location-based VR compared to home VR. Andrew validates their points by drawing comparisons to famous movie scenes like the gun rack in The Matrix. | |
| Title Card: Raising the Seed | 2 | 4 | 1 | 0 | Steve recounts the intense financial strain of losing 90 percent on their first consumer VR title and pitching investors with one month of runway. Andrew asks structured questions to clarify team size and timeline details while Steve educates him on the survival struggle. | |
| Virality, the Green Room Effect, and Winning Over Investors | 4 | 3 | 2 | 2 | Andrew reveals his own historical blunder in passing on Sandbox VR's seed round while working at Uber because he couldn't test the hardware in person. Siki humorously pokes fun at Steve's early pitches while acknowledging why early investors were skeptical. | |
| Title Card: Raising the Series A | 5 | 2 | 1 | 1 | Andrew presents a strong investment thesis based on testing competitor products in Las Vegas, arguing that interactive game DNA creates far better retention than passive film experiences. Siki outlines their systematic database-driven approach to fundraising. | |
| Title Card: Getting from MVP to The Holodeck | 4 | 3 | 1 | 1 | Siki explains how deep learning and non-verbal capture will replace heavy physical hardware to render facial expressions in VR. Andrew contributes technical context around computer vision advancements required to achieve that fidelity. | |
| The Future of VR Content, Genres, and Storytelling | 4 | 4 | 2 | 1 | When Andrew compares current VR content to early Spaghetti Westerns, Siki reframes the timeline further back to the silent film era. Siki emphasizes that combining agency from video games with cinematic storytelling forms an entirely unprecedented medium. |
Statements from this episode (12)
Siki Chen: Sandbox VR built full-stack because no VR ecosystem existed
“There's no technology, so we have to build technology. There's no stores to place this technology, so you have to build a store. And there's no content, so you have to build the content. But over time as you get scale, all of that changes.”
Andrew Chen: The VR industry rushed to consumer homes too early
“As an industry what we sort of seem to want to do with VR was basically invent the technology and then immediately bring it home. Right. Into homes. Right. And that's certainly not what happened in the, in, in, in the, you know in the film industry because the…”
Siki Chen: Sandbox VR prioritizes full-body embodiment over environmental immersion
“If you think about content and home VR, the focus is around where you get to be, and sort of the story, and this world around you, but because of the limitations of the hardware and experience, not enough of it was about who you get to be. And I think that, mo…”
Steve Zhao: Sandbox VR lost 90% on a top-selling Steam game
“Based on Steam data, we were at the top 20% selling game, but we lost over 90% on that title.”
Steve Zhao: Sandbox VR's early team took consecutive 50% salary cuts
“They came into the company where they reduced the salary by half, and then half, and they still stuck on.”
Andrew Chen passed on Sandbox VR's seed round as an angel
“And so I passed on the, you know, on, on, on, on the seed round, which is a really interesting, you know, place to start, start the whole conversation.”
Siki Chen: Sandbox VR tracked over 400 potential Series A investors
“We have a CODA database of I think, it ended up being over 400 investors, and we went through everyone who has ever invested in any kind of game, or VR or entertainment, or media.”
Siki Chen: Founders must minimize investor supply and concentrate demand
“I believe fundraising is about supply and demand, and you wanna Minimize your supply and concentrate your demand in time and space.”
Andrew Chen: Location-based entertainment requires interactive gaming mechanics for replayability
“I'll bet on something interactive, ah, any day, because that's how you get the frequency, that's how you get, you know, in, in terms of all of our, you know, interest in everything from, you know, e-sports and streaming and so on, that you sort of need to actu…”
Andrew Chen: Sandbox VR's gaming DNA drove a16z's investment thesis
“The fact that both of you guys have you know, games DNA as opposed to Hollywood DNA was actually a really part, key part of the investment thesis.”
Siki Chen: Deep learning will enable non-verbal communication in VR
“There is a deep learning component that will make that happen. And those are the areas that we want to invest in, so that when you're in that experience with your friends, You can actually communicate both verbally from the audio cues, but non-verbally as well…”
Siki Chen: Video games are a better framework for VR than movies
“Because the analogy to use to create a content is enormously important, right? So if your analogy is movies, then it's going to be about movies plus plus. Immersion, story, passive, and you know, we care about all those things, but because of the nature of the…”