Kickstarter, Oculus Rift, and internet rabble rousing

The internet is mad that Facebook bought the VR company Oculus Rift. We shouldn’t be surprised that someone bought this company, it was going to have an IPO or be bought. There’s no doubt about that. The problem isn’t that it was bought, but the company that bought it.

Oculus Rift was a startup. Startups need money so they launched a Kickstarter Campaign and raised $2.4 million. Startup money typically comes from three groups of people in early stages (3Fs) – Family, Friends, and Fools. The Kickstarter campaign clearly is the fools. Not because they didn’t think the company would succeed, but that they thought they’d have a say in the end result. Kickstart has had other scams, such as the feminist blogger that was going to buy a bunch of games and show how awful they were (but didn’t). Kickstarter has always said that you are donating and has no control if you ever get anything out of it.

If a startup is successful with the money provided by the 3Fs (and this is a huge IF as this is typically called the Valley of Death in startup parlance), these companies try to get Venture Capital Funding. The VCs are the people that have a boatload of money and try to make even more by getting companies to “exit.” There are three options for “Exiting” a startup – IPO, Purchase by another company, or failure. VCs prefer your startup being purchased by another company – it has the least risk (you never can tell what your stock price will be – see Facebook’s IPO. To get this money you typically have to give up control of your company. This comes in two forms ownership and members on a board of directors. In some cases the VC will take less ownership for more members on the board. Apparently one of those people that owned a large portion of Oculus Rift was Mark Zuckerberg – he reportedly made $337 Million on the Facebook purchase of Oculus Rift. That means he owned roughly 1/6 or 16% of the company ($2 Billion sale and all). Supposedly 2 other VCs made roughly the same amount of money on the deal. Which means that the founder likely owned less than 50% of the company and could have been forced into the deal.

Effectively, the moment Mark Zuckerberg invested in Oculus Rift, the company was going to be sold to Facebook – as long as it was shown to be successful. What this means to me is that if you read or see Zuckerberg personally investing in something, expect Facebook to eventually buy it. Additionally, with Zuckerberg owning that large of a percentage of the company, there’s no way it could have been sold to any other company. It was IPO, Facebook, or bust.

With this broader context, I cannot be mad at either Luckey or the other leaders of Oculus Rift. They knew the game when they got into VC – even if you aren’t into making a lot of money when you start, your VC will push for a positive exit for themselves.

One of the angriest people about this whole thing was Notch, the Minecraft guy. He finds Facebook creepy and is upset that his $10,000 facilitated that sale. Even if he had gotten stock for his investment, he would have only had 0.42% ownership share over the company (assuming Luckey sold all his stocks through the Kickstarter which is unlikely). Unfortunately, it’s likely his stocks would have been diluted and the VCs would have controlled enough of the board and stock to force the sale to Facebook despite all the people that could have owned stock if the money had been raised through a Kickstarter alternative like Fundable.

When investing in a Kickstarter, you can’t get emotionally attached, you need to look at it as if you’re gambling. You might never get anything from it, but at least you helped someone else’s dream come a step closer to reality. I’m happy for the folks at Oculus Rift because they got lucky in a very unfair game. I don’t like Facebook either – but it was unlikely for any other outcome unfortunately.

Ethics and Values; Military and Espionage

We didn’t get to have a national conversation about government espionage until Snowden released all those documents and now we’re having a pretty vocal one in 2/3 branches of our government (well all three since Obama seems to contradict himself fairly often). Today on Vice’s Motherboard I read an article claiming the military is going cyberpunk. As the article notes, the military has used flight simulators for years, because crashing in one of those is a lot cheaper than crashing a real plane. The Stealth Bombers cost close to 2 Billion each, so learning how to fly one of those is best done in a simulator than in a real plane, plus it reduces the risk of death in the event of a crash.

How will this trend continue? Apparently the military is investing in virtual reality battle grounds. This will help train soldiers in different combat situations without having to build extremely expensive facilities, use blank rounds, damage guns, and any other types of explosive that would be used in those situations. Never mind the logistics to get the equipment there and all that.

It’s likely that these battle grounds will incorporate things like the Oculus Rift¬†and omnidirectional treadmills. This will allow soldiers to move crouch and actually feel like they are in direct combat. For people at home, it’s not going to be as useful, but it could work well in this type of situation. If they add in the ability to make the environment cold or hot and wet or dry they could simulate a great deal of the virtual environment to build skills of soldiers.

The military is also working on robotics as a way to reduce the number of men we have on a battle field. This of course could be extendable beyond simply having robots like the Boston Dynamics Dog, but we could eventually mix the VR environment with a “robot” to have a remote soldier that is bullet proof, never tires (as you could replace the driver), and moves around like a person. This opens up an entirely new type of warfare. It takes the idea of drone combat and moves it to the next level – foot soldier drones that truly make the battle field imbalanced. Of course the final step would be fully autonomous robotic soldiers – but I think most people wouldn’t accept those.

In any of these cases we need to have a serious national conversation about the application of these technologies. Looking from an ethical standpoint there are conflicting views. First, it’s ethical to protect our soldiers as much as possible when we’re in a justifiable defensible conflict. Second, it’s unethical to enter combat as an aggressor where your military cannot be stopped from the position of the defender. Furthermore, if we’re talking about completely robotic military force it’s even less defensible to be using these forces as we don’t have any human control in the case of a software failure – or a hack and remote theft of the system.

As a society we need to have a conversation about if we think we should allow our military to do this. As it is we already routinely have operations that the citizens aren’t really aware of in countries like Yemen and god knows where else. These put our men and women at risk which no one wants for arguable benefit in taking out terrorists – it’s unclear if it’s working or we’re just making more enemies. If we are able to replace real live Seals with a team robotic bodies controlled by a Seal team remotely, how many more of these missions could we run? How much more of this sort of activity would we believe is an acceptable level?

I believe that this goes back to what we value as a society. If we value privacy, safety, freedom, and true constitutional control over the military then we need to make sure that we control this before the military just morphs without really any thought. The NSA morphed into a data sponge pulling in everything that moves on the internet. As a society, based on the outrage, we do value our privacy and we’re trying to pull back control from the NSA – some people disagree with that, which is fine that’s why we need a conversation.

I believe that having robotic avatar’s will lead to a higher likelihood of abuse – similar to what we’ve seen with the NSA. I think this is what’s happened with the Drone Program, where Obama has a kill list that they are proud of having. Having more humanoid drones that can shoot sniper rifles will reduce the amount of collateral damage, but will be abused. It’s also very debatable if the kill list is even constitutional.

I think that the innovation for reducing our military expenditure is a good thing. However, I think we need to have a conversation around what the end goal of these programs.