Technology That Delivers Experience: VR Event Platform cluster. (Part 2)
Naoto Kato, CEO and founder of cluster.
The secret behind one VR startup’s success in raising total funds of ¥260 million ($2.6 million).
2016 was called the first year of Virtual Reality (VR). It was the year head-mounted displays such as Oculus Rift, HTC VIVE, PlayStation VR hit the market successively. The core characteristic of VR is in its intense immersion, widely used in games and entertainment, and it is now even spreading to the architecture and medical field.
Cluster, Inc. is gaining attention world-wide for creating a VR social app “cluster.” with its revolutionary concept, “Stay Perfect Inside”. Cluster, Inc. has succeeded in raising ¥260 million ($2.6 million) in funds from top Japanese companies, Avex Ventures Inc., United, DeNA, Skyland Ventures, and individual investors.
We interviewed Naoto Kato, CEO and founder of cluster., to hear about his startup story, and his focus on VR’s “experience value”. In part 2 we talk about how he overcame obstacles he faced along the way, and the difference between VR and AR and its range of application.
In part one of this interview we discussed how you succeeded in raising funds, and the causes for it. Contrary to that, did you face any challenges?
The six months period prior to February 2016, the first launch of the alpha version of our cluster. app, was a difficult time. I founded cluster. with one of my juniors and back then the company was just four people in total: the two of us and an engineer and a designer. We created products, presented it to people, broke it apart… and repeated that process over and over again.Back then we did not have a clear vision of the services besides it being an online game type experience that used VR. The funds we raised from the first fundraiser only lasted us about six months to one year, and when we did our calculations we could approximate when the funds would run out. We constantly felt the pressure to create a service that’s worthwhile before the funds run out. With barely any rest, I was constantly working on developing the product. It was extremely exhausting.
How were you able to overcome such hard times?
Before our current cluster. app’s concept, we were working on an idea for an escape room game app where several users can play together at the same time. We had the opportunity to present our idea at a VR event. At the event, we had a constant stream of people play the game and give us feedback… this continued all day long. We were all burnt out so we took an entire day off the next day. During that break, what I truly wanted to do dawned on me—to fix the frustration I experienced in my “hermit days” and this is how the current cluster’s concept came about.
With the escape room game route, we would have to continuously create content for the escape room on our own. This had us asking questions of self-reflection: “do we want to be content creators?” We worked extremely hard to start a service but we also allowed ourselves the time to take a break and let our minds be empty. I think the succession of these events is what lead to my breakthrough in creating a service inspired by my own personal experience.
About three weeks after that we created an alpha version and released it. The number of people that showed interest surpassed our expectations. The technical basics for the app were long before built so once we solidified our theme for the service, we were ready.
Now with services like Augmented Reality (AR) on the rise, what do you think about the differences in future application trends between VR and AR?
The fundamental difference between VR and AR and the difference in their technical aspect is such that VR offers a 100% new reality to the user, whereas AR affects 1~99% of the reality. The two are actually close cousins. So what determines the difference between 100% and under 99%? Well in VR, users cover their entire view with the displayed reality to experience the content. Therefore, in VR, you are “going into” an experience whereas in AR, the experience “comes to you”.
From the user’s view, it’s easier to understand VR and AR if we explain it using this traditional Japanese phrase: “hare to ke”. “Hare” literally means “sunny” and traditionally we refer to holidays and special events as “hare” and any ordinary days as “ke”. VR is compatible with content that are more out of the ordinary or special, such as concerts and live events. It also works well for large-scale projects or costly projects such as astronaut training.
AR, by contrast, is what we consider “ke”—it is suited for making ordinary tasks and life more convenient and enriched. An example of this is Microsoft’s “HoloLens”. Content that would normally require a computer or a smartphone screen are displayed through holographic images controlled by voice command and gestures. Imagine having a screen next to your desk that displays your Facebook feed, the news, and other information. You will no longer need to pick up your phone to look it up because the information is right in front of you. This is how AR will change daily tasks and office experiences.
It really seems as though the growth in AR technology will not only spark changes in how we work but also how a businessperson will come up with new ideas.
AR’s essence is “personalizing your space”. One can set up a screen that displays recipes next to the refrigerator, or bringing up nearby grocery store deals and information, or show the amount of ingredients left in the refrigerator. It responds to the user’s needs by assessing the space and providing necessary information based on it. For example, when using Airbnb and staying at a place for the first time, won’t it be convenient if the moment you enter the house a screen pops up to show you how you can adjust the air conditioning with an arrow directing you to where it exactly is? In such ways AR easily merges into daily lives, where potential market size is large as well.
However, as a creator, I plan to work on the “hare”(out of the ordinary), such as concerts and live events and the infrastructure of the entertainment field.
Please tell us about your vision for the future of Cluster, Inc.
What I want to achieve through Cluster, Inc. is to create an infrastructure for virtual communication. Foreseeing a future in an evaluation-based economy, where trust and reliability will be valued more than the simple exchange of money itself, we hope to grow cluster. with a focus on the communication field.
We see a future where value exchanges will be happening naturally in the virtual world. For example, if people find value in a certain information or experience they can provide some sort of support to the creator. I hope to create such an infrastructure for the necessary communication and settlement to take place for that value exchange. Aside from engineering, I have been putting my efforts into recruiting to gain more team members who can develop cluster.’s world view together.