Investing in Virtual Reality

Published on 03/12/19 | Saurav Sen | 5,704 Words

The BuyGist:

  • Virtual Reality is a natural progression from The Buylyst worldview on AI, Cloud, IoT and 5G. 
  • It's possible that these supporting technologies have finally caught up to do justice to VR.
  • There are a few big VR players - the "Merchants of Virtuality", 3 of whom have taken the lead in the consumer space.
  • Ultimately, VR is about escapism. But, so far, the escapes are not compelling enough for mass adoption. 
  • There are software and hardware constraints holding it back. 
  • However, AR may reach the tipping point faster than VR, simply because it's less demanding from a hardware or software standpoint.
  • There are some "call-option" like investment ideas - which is what we want. If VR takes off, we'd like to participate. If it fizzles like it did in the 1990s, we shouldn't lose much.

Virtual Reality: Natural Progression

The Buylyst is heavily invested in Artificial Intelligence, Big Data, 5G and IoT. To us, they’re more than just buzzwords. They are the very foundation upon which a better world can be built.  We’re at the beginning stages of this civilizational transformation. Virtual Reality is just a natural progression of this worldview. To make Virtual Reality a, well, reality, it requires all those buzzwords – AI, Big Data, 5G, IoT – to work in concert.

I’m usually skeptical of new technology. The first question I always ask is: Why do we need this? Or “is this really valuable to the world?”, “is it a transformational technology or is it just an incremental change?” For example, in my view, Social Media is not transformational, it’s just a “nice-to-have” online forum. Anything entertainment-related, to me, is just an incremental change to society. But the ability of computers to self-program – the very point of Artificial Intelligence – is transformational because it can permeate into all facets of our lives. That’s an exciting and scary thought at the same time.

But then again, incremental things – like social media – can be massive money-makers because 1) people like to use them and 2) they can evolve into something more substantial. When Steve Jobs and Steve Wozniak invented the Personal Computer, they didn’t know how far it would evolve in just four decades. It started off as a “nice-to-have-but-not-necessary” machine. Today, it’s a necessity in the modern world, capable of doing things the Steve & Steve couldn’t have imagined back then. Virtual Reality (VR) is one such technology, I believe. Today, it straddles both these categories – incremental and transformational – but heavily skewed towards incremental. If it gains popularity over the next couple of years, it’s impact on our lives will be about a bit more escapism, a bit more fun, something cool to take the edge off. But over time, it has the potential of becoming a transformational technology with benefits to our health, safety and building better products. Can I be sure of that? No. I’m not going to delve too much on what it can become in a decade, because that would be a pointless article filled with rumination. The simple answer is I don’t know how transformational it can become. I’m not sure anybody does. But I have a hunch.  And so, as an investor, my ideal scenario is to buy a “call-option” on this technology – so, if it takes off like I suspect it will, I can participate in the upside. If it doesn’t, then I shouldn’t lose much.

Sadly, no Wall Street firm has invented a Call Option on VR. So, we’ll need to find other ways to participate in the upside.

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