VirZOOM on Wefunder 2021
Regular exercise may be beneficial, but it can also require motivation. Most Americans have just about an hour and a half of free time a day. After a long day at work, the prospect of lifting weights or taking a jog can easily feel like a chore.
By combining virtual reality (VR) and miles of Google Street View scenery, VirZOOM makes at-home workouts something to look forward to. Oculus Quest users only need to download the VZfit app and hop onto any stationary cycling machine, and they can speed across the virtual world alone or with friends. We reached out to co-founder and CEO Eric Janszen to hear more about the origins of the company and its goals for the future.
Note: This interview was conducted over phone and email. It has been lightly edited for clarity and length.
In your own words, how would you describe your company?
The Evening Standard described VirZOOM as, “Like an immersive, next-gen version of Peloton.” I’ll key off of that because a comparison between VirZOOM and Peloton simplifies a description of VirZOOM.
Like Peloton Interactive, VirZOOM delivers a varied and exciting interactive in-home exercise user experience that is highly motivating. Peloton delivers its content in the form of spin classes, produced live in high-end studios with celebrity trainers. A large, customized touch-screen tablet attached to the bike displays each streamed class and the user’s speed is detected and displayed in real time. The user at home becomes part of a live studio experience. Production values, including proprietary licensed music, are high and classes are frequent. They need to be to justify the $2,500 bike prices and $40 per month membership. Altogether, fixed costs are quite high. The 2020 annual report stated that most of the $48 million in additional expenses that year over the previous year went toward studio expansion costs.
As exciting as that Peloton experience is, you’re still sitting in your living room viewing the action through a window, the tablet screen. Put on a virtual reality (VR) headset, and suddenly you are transported into a virtual world that replaces the real world. You react to the virtual world, and it reacts to you, much like in the real world. You are, as they say, immersed.
In our VR exercise apps, you can be riding a bike alone or with others on any of 10 million miles of roads mapped by Google Street View. Seated on a stationary bike, wearing a VR headset, the faster you pedal in the real world, the faster you move in the virtual world. You steer by leaning. Our patented VR motion controls allow us to create activities that let you move freely through virtual worlds – aka the metaverse – with six degrees of freedom (6DoF). Not only can you turn while riding on the ground, you can take off into the air and fly under your own power as well. Virtual reality frees our designers from the confines of the real world. We’ve created entirely fictitious worlds and activities that aren’t possible in the real world. You can pedal a tank in a multiplayer battle, fly a winged horse hundreds of feet through a bright Southwestern canyon, or pedal a kayak on a lake, among a few examples of many activities we offer.
The immediacy and interactivity required to engage customers in a subscription-based service is a feature of VR itself. This makes VR the ideal medium for in-home exercise. Not only is VR a superior medium for in-home interactive exercise, but the fixed cost of producing exciting and varied VR exercise activities is a fraction of the cost of producing high production value live studio classes. The maximum cost of a full development and operations team is around $4 million annually.
Another advantage that VirZOOM has over Peloton is that VirZOOM’s apps run on the popular Oculus Quest 2 headset. We don’t have to produce a special headset for our content. We don’t have to manufacture a bike, either. You can use any stationary bike, including the one you may already have gathering dust in your basement, as many of our more than 6,500 active monthly users do. And yes, some of them use a Peloton bike and refer to adding VirZOOM to it as “an upgrade.”
To summarize, VirZOOM, like Peloton, offers an interactive, in-home exercise solution, but unlike Peloton’s 10-year-old tablet technology, VirZOOM employs the new technology of VR, the ideal medium for in-home exercise. VirZOOM is positioned to ride the wave of VR adoption with a defensible leadership position, to scale compelling unit economics to build a wildly profitable business, and to help solve a major health problem for millions.
What inspired you to take the leap and start this company?
I’m a lifelong cyclist and owe a lifetime of good health to my love of cycling. I had the idea in the 1980s to someday use VR to bring the joy and health benefits of outdoor cycling indoors. I thought this could benefit cyclists, like myself, who are stuck indoors half the year when the weather is bad. Thirty years later, I partnered with my friend Eric Malafeew to make it real.
After our first prototype tests in 2015, it became immediately apparent to us that VR was in fact the ideal medium for fitness motivation. We also knew that the unique problem of moving freely through the metaverse without inducing locomotion discomfort was the key to delivering the best VR exercise user experience possible and that it was a solvable problem.
VirZOOM employs every skill I have developed over a lifetime – from helping my father with new speaker designs, to my time in system software development roles, to product management and sales roles, to CEO of venture-backed companies. It combines that with my passion for cycling and desire to see others enjoy the benefits of that but in a new way made possible by a new technology – virtual reality.
Who is on your team and how did you come together?
We are a team of senior, high-achieving technology and game industry veterans. My father, Arthur A. Janszen, invented the electrostatic loudspeaker. I started helping him with new designs and patents in his lab attached to our home at age 13. In college, I created my own major through a program called BDSI that included studies in economics, journalism, physics, chemistry, and literature. I started my working career in software engineering; moved into product management, sales, and various executive management positions; and then into CEO roles of two venture capitalist-backed startups. As managing director of seed-stage venture capitalist firm Osborn Capital, I oversaw 21 investments, resulting in nine exits, including to Nortel, Microsoft, EMC, and two to Cisco, one of which produced a 220x return. I’m a published author, writing for publications like Harvard Business Review and Harper’s Magazine, and authored a book published by Portfolio (Penguin) in 2010. I authored an audio technology patent granted in 2017.
My co-founder, Eric Malafeew, received his undergraduate engineering degree from Virginia Tech and graduate degree from MIT. After college, he led teams that developed robotics and flight simulation solutions for the defense industry. He then led engineering at HMX as chief architect for major titles, including “Guitar Hero” ($5 billion in sales) and “Dance Central” ($250 million in sales).
The VirZOOM team is composed of senior engineers, programmers, designers, artists, producers, and operations managers with more than 200 years of collective experience.
How is VirZOOM transforming the fitness industry?
Peloton Interactive transformed the in-home fitness industry by bringing the excitement of the live spin class experience into the home. The concept took advantage of two developments in 2012, when Peloton first launched. By 2010, most US households had enough WiFi and internet access speed to support streaming class content and the advent of tablet computers by Apple in 2010. The next generation of interactive in-home fitness will be based on VR. The immersive, interactive quality of the medium makes it ideal for exercise. As VR headsets continue to get smaller, lighter, and more attractive, VR will reach an inflection point, and mass adoption will occur. At that point, VR will replace all flat-screen-based in-home, interactive exercise products.
What is in your product roadmap and who is in your customer pipeline?
We will continue to expand our library of VR exercise apps. Once we reach around 1 million installations, we plan to license our VirZOOM software development toolkit (SDK) to third parties. Our SDK embodies our patented VR motion controls. VR developers will be able to create VirZOOM-ready apps with exciting 6DoF action, distribute them through VR app stores, and pay VirZOOM a royalty.
Our customers are 70% male and 30% female and primarily in the 25-to-45 age range. Around 75% already have a VR headset and another 25% buy one to use VirZOOM. As the installed base of VR grows, we expect to continue to address the middle-income cohort, where demand for a fun and affordable new in-home exercise solution is highest.
What does the competitive landscape look like, and how do you differentiate?
Today, all VR fitness apps have you standing in place and reacting to objects coming at you. You can teleport from one location to another, but you cannot move continuously and freely through the virtual world. Only our VR exercise apps let you move through the metaverse with 6DoF. The stationary bike makes it easy to move yourself forward and backward through the metaverse. Our patented motion controls make it possible to turn freely as well. This makes our exercise games uniquely immersive, empowering, and varied, and it nearly eliminates locomotion discomfort. Our patent has effectively protected us from competitors (NordicTrack and Holodia), and we expect it will continue to do so going forward.
How do you intend to use the money you raise this round to scale the business?
We will employ funds to improve and expand our content, beef up QA, and grow our market presence with additional promotional spending.
What do you want potential investors to know about you and/or your company?
We started the company in 2015, but I’ve been thinking about it and keeping an eye on the VR industry since 1983 and was discussing the idea in detail with friends in 2013. I did not expect going into it that VirZOOM was going to be an overnight success. Our unique 6DoF moving through the exercise in the metaverse concept is a big idea. Big ideas like this always take longer to reach fruition than smaller ideas, like standing-in-place VR fitness apps. The world is resistant to change. In the specific case of VR, the Oculus Quest Store does not support the listing of VR apps that use third-party hardware – in our case, stationary bikes. Only apps that use the Quest headset and controllers alone are supported on the store. This is why you only see VR fitness apps in the store that are limited to standing floor exercises inside the VR guardian area, no moving through the metaverse possible. That means VirZOOM has to market a VR fitness standing-mode version of our 6DoF biking apps and bury the 6DoF VR motion magic. It’s a bit like breeding a thoroughbred horse for racing and being told it can only be used to tow a wagon because saddles are not allowed.
After six years, we can finally see the world moving in our direction. First, Oculus told us in 2015 that consumers were not going to exercise wearing a headset. In June 2021, Mark Zuckerburg declared that “VR is the future of fitness” and acquired Within. Next, Oculus has to come to realize that the full promise of exercise in the metaverse cannot be fulfilled without allowing users to move freely through the metaverse. It’s only a matter of time before VirZOOM can market its exercise-in-the-metaverse apps in the Oculus Store and our original vision for the best possible application of VR for exercise is fulfilled.
After five years in the venture capital industry and another decade as an angel investor in a dozen companies, my number one takeaway is this: persistence is everything. The win goes to those who stick with it. I’m the largest single investor in VirZOOM with over $1.5 million in cash and deferred salary into the company. I’m in it for the long haul.
As you think about the business 5-10 years down the road, what do you see exit opportunities looking like? Have you set any future goals for the company?
I see both short-term and long-term exit opportunities. Meta (Facebook) recently acquired Within, the VR fitness app company behind the popular VR fitness app SuperNatural. Within joins a list of five VR developers acquired by Meta’s Oculus Studios since the launch of the Oculus Quest in 2019, including Beat Games November 2019, Sanzaru Games February 2020, Ready at Dawn June 2020, Downpour Interactive April 2021, and BigBox VR June 2021.
All of the VR content curated by the Oculus Store, including our VZfit and VZfit Play apps, will be portable to a future Apple VR platform. With no technical barrier to prevent Apple from picking up any and all third-party Oculus Quest content, acquisition is Meta’s best logical defense against future competition from Apple; by picking off the most capable VR developers, Meta can maintain a qualitative advantage over Apple, at least with respect to third-party VR apps. In addition, Meta’s CEO, Mark Zuckerberg, has stated that Meta intends to acquire the metaverse, not build it.
LA-based Within was founded in 2014 and reportedly raised a total of $52.6 million. Within explored a number of VR product areas, including 360 movies, before pivoting to VR fitness in 2017 and launching SuperNatural in 2019. Assuming Meta paid at least as much for Within as investors put into it, that would set a good price point for companies in the industry like VirZOOM. VirZOOM, since founding in 2015, has raised less than one quarter as much as Within ($12 million) and I’d argue produced more inherent value.
Extensibility and intellectual property protection gives VirZOOM a major long-term advantage. Long-term exit opportunities will multiply as the metaverse becomes pervasive. Augmented reality and VR computing platforms will be the primary platforms for all future mobile applications, in much the same way that smartphones came to dominate over mobile phones starting in 2010. We’re already seeing interest from unexpected areas. For example, a $6 billion annual revenue sports betting company approached us for “potential investment or acquisition.” It views VR as the future of online betting and sees potential in VirZOOM for “cybersports” offerings that customers both compete in and bet on. Another recent approach came from an Asian telecommunications company. I give these two examples among many to give a sense of the range of types of companies from different industries that are already making moves into metaverse solutions.
In five to 10 years, as the metaverse grows and evolves, the range of possibilities is hard to predict. Consider the applications that developed for the smartphone five to 10 years after the smartphone was introduced and the whole new industries that were created. The smartphone sold at scale made Uber and Airbnb possible. Did anyone predict that the smartphone was going to change the taxi and hotel industries? Likewise is the metaverse. The range of companies that will be in the market for ways to exercise in the metaverse will be extensive. Exit opportunities will multiply.
We look forward to seeing where Eric and his team take the company. VirZOOM is currently raising on Wefunder.