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Meet the Genius Behind Oculus Rift

The young man did not set out to alter the world. He simply wanted to step deeply into the land of video games.

“My goal was purely selfish,” he says. “I wanted to create something for myself.”

A home-schooled teenager, Palmer Luckey was used to walling himself inside the garage to immerse himself in technical challenges. He learned at age 5 that you can generate fire by touching a 9-volt battery to steel wool. At 11, he was playing with electricity, building Tesla coil guns to unleash jagged bolts of power. After that, he toyed with lasers fashioned from parts stripped out of his family’s VCR.

But as he soon discovered, virtual reality was a thornier test. In the 1990s, Hasbro and Nintendo had invested huge sums in the technology with very limited success. The Pentagon had been pursuing the technology for decades, envisioning heart-pounding training exercises for soldiers and pilots. Surgeons and medical schools had longed for in-the-moment simulations, too. The concept had been heralded in movies such as The Matrix and The Lawnmower Man, not to mention on TV’s Star Trek and in countless science fiction novels. But the tantalizing promise of escaping through a computer screen into what looks and feels like a digital wonderland had failed to materialize.

Scouring eBay, government auctions and hospital liquidation sales, Luckey assembled a vast collection of artifacts that documented the disappointments. He once spent $87 for a device that had cost $97,000 when first manufactured.

A hacker at heart, he tore the gadgets down and studied the parts before cobbling them together in a series of crude prototypes. He did not have money for advanced R&D, so he made do with his earnings from odd jobs. “When you’re working in your garage on your own, you have a very different budget than if you’re a real company,” he says.

In the end, he discovered the long-awaited solution to virtual reality—or VR.

It was right under his nose.

By mere chance, Luckey had taken to raising funds for his gadget collection by repairing iPhones. “All of those parts were in front of me all the time,” he says. “I started thinking the key to making an affordable VR headset isn’t going to be making custom displays, custom lenses, custom motion trackers. It’s going to be leveraging technologies that already exist.” And cellphones were an ideal place to find such things. Over the last decade, Apple, Motorola and Samsung have invested billions to refine their miniature screens, tiny sensors and speedy software. Once Luckey began incorporating those advances in his designs, he was off and running.

He invented lightweight goggles with the processing power to track the movements of your head and adjust the picture right before your eyes. The results are astounding: A sweeping 110-degree field of view allows you to fully immerse yourself in the VR experience. You’re sitting in the cockpit of a fighter plane and can look down and see your legs in a flight suit. You’re riding a roller coaster and can look backward to observe the track trailing away behind you. The effect is so convincing that videos showing users’ startled reactions to Luckey’s wizardry have logged millions of hits on YouTube.

The headset—dubbed Oculus Rift—has yet to reach stores, but 75,000 early adopters have scooped up Luckey’s $300 kits, which digital-savvy developers have used to begin exploring the possibilities. The entire tech world has been buzzing about his creation for months.

“It’s going to redefine the way we communicate with each other, the way we learn,” Luckey says. “We won’t just see things the way they exist today, but how they may exist in the future and how they existed in the past.”

Imagine touring the pyramids of Egypt, the Parthenon, even the moon without leaving the comfort of an easy chair. Imagine entering the human body or flashing back in time to witness Martin Luther King Jr.’s “I Have a Dream” speech or standing onstage while members of the New York City Ballet perform The Nutcracker. With Luckey’s headset, that may all be possible.

The applications already stretch far beyond living room entertainment for gamers. A Wisconsin architect is using one to tour the structures he is designing before the drawings are even completed. Special education teachers in Australia are employing them to create safe adventures for children with autism and other disabilities. Doctors and medical students are utilizing the Rift to diagnose illnesses by studying 3-D body scans. Emergency responders and members are looking for ways to use the headsets for simulation training. A USC psychologist known for his pioneering work with Virtual Reality Exposure Therapy owns a Rift headset, too. By re-creating haunting scenarios and putting the patient in control of the environment, he is helping veterans suffering from Post-Traumatic Stress Disorder to defeat their demons. One research study showed that four out of five service members who received the treatment reported a meaningful reduction in symptoms.

This is not the first time these groups have experimented with VR. But it’s the first time the technology has been so effective and so inexpensive.

Creating the Oculus Rift at any price would have been a stunning achievement for a self-taught 19-year-old engineer from Long Beach, Calif. No less impressive is the fact that two years later Luckey finds himself the public face of a company valued at $2 billion by Facebook’s Mark Zuckerberg. “Oculus has a chance to create the most social platform ever, and change the way we work, play and communicate,” the CEO wrote in March when announcing his decision to buy Oculus VR.

Without digital media and marketing tools, Luckey might still be tinkering away in his garage and studying journalism at Long Beach State. Instead he met John Carmack—the designer of legendary computer games Doom and Quake—in an online forum for 3-D enthusiasts. The two exchanged notes, and when Carmack heard about Luckey’s invention, he asked to have a look. He was so impressed he took the device with him to the 2012 Electronic Entertainment Expo in Los Angeles and used it to demonstrate the latest Doom sequel. The word was out.

Luckey had planned to launch a Kickstarter campaign soon thereafter to raise funds for his developer kits. He was hoping to share the kits with fellow hobbyists and maybe start a small community of VR gamers. Then at a dinner party hosted by a friend, he met Brendan Iribe, who had launched a video game software company in 2004. That company, Scaleform, was purchased seven years later for $36 million. Iribe had since worked on a second startup, the gaming company Gaikai, which Sony scooped up for $380 million. After talking with Luckey, Iribe offered to take the Rift out for a spin.

On the Fourth of July, Iribe got in the car with two longtime Gaikai colleagues—Nate Mitchell and Michael Antonov—and drove from Irvine to a hotel near Luckey’s childhood home in Long Beach, where they had rented a meeting room. The 19-year-old wunderkind came straight from a family cookout wearing a pair of American flag swim trunks and a T-shirt. He had the prototype at his side.

It looked more like a high school science project than an actual product, says Iribe. There were dangling cables and exposed circuit boards, lots of duct tape and hot glue. “Mike, at one point, picked it up and goes, ‘Well, it’s certainly a startup,’ ” Iribe says. “We all laughed.” The early Rift did not even have a head strap—you had to hold it up to your face like a Viewfinder.

Luckey turned out the lights. “We looked through the lenses,” Iribe says, “and right away we all saw this experience we’d been dreaming about for so long.”

The device was by no means flawless. There was a slight delay in the processor’s response to head movements, for example. And it failed to recognize shifts in the torso or legs. If you crouched down or leaned around a corner, you got the same view as if you were standing erect. But the breakthrough moment was close at hand—closer than anyone had imagined.

What followed for Luckey was a crash course in business. Days earlier, to satisfy Kickstarter’s requirements, he had used Legal Zoom to file the paperwork for a limited liability company. Iribe convinced him to instead register Oculus VR as a C Corp so the enterprise could take on investors. The older entrepreneur then offered to pay for a professional production team to reshoot Luckey’s modest Kickstarter video. The five-minute pitch eventually included on-screen endorsements from Carmack and other heavy hitters in the gaming industry.

By the time the campaign got underway, diehard gamers were brimming with anticipation for the Rift. “Palmer was sitting on a few pretty compelling offers from big companies,” Iribe says. “Big offers for a 19-year-old.” Luckey wasn’t sure yet whether to accept one of those offers or go it alone.

What happened next resolved that indecision.

The team had planned to ask for $500,000 in funding from Kickstarter’s backers. At the last moment, Luckey got cold feet and lowered the figure to $250,000. He needn’t have worried. Within 24 hours, the Rift had exceeded its goal. In the days ahead, pledges kept on coming. That’s when Iribe realized he wasn’t going back to Gaikai. Neither was Antonov. Or Mitchell. “We didn’t expect to leave our day jobs,” Iribe says. “We thought we’d just invest, help put together the pieces, the investors and advisers, and be on the board.” Instead they seized on the Rift’s momentum to start courting angel investors.

On Sept. 1, 2012, the Kickstarter campaign ended with $2.4 million in support. Iribe—now the CEO of Oculus VR—closed a first round of venture capital funding worth $16 million nine months later. The company hired Jack McCauley, the lead engineer of Guitar Hero, to oversee the Rift’s manufacturing process. In a career that spanned more than 25 years, McCauley had worked with many of gaming’s giants at companies such as Microsoft and Electronic Arts. Next the startup brought on an expert in motion sensor technology—Nirav Patel left Apple for the opportunity, literally, to sleep in the young firm’s Irvine office while he toiled away on the Rift’s bugs.

Iribe likes to cite three Holy Grail moments—the kind where the hair stands up on the back of your neck—in the two years since he met Luckey. There was the time when he first looked through the Rift’s lenses. The second was when the CEO took the device’s latest incarnation—in essence, the consumer version—for a test drive.

Until that point, the ultimate hurdle in VR (and indeed through early prototypes of the Rift) was latency—when a player turned his head, there would be a slight delay before the VR processor caught up and shifted its field of view, which tended to cause nausea. When Iribe saw how well the new Rift performed, his spirits soared. “That’s it,” he thought. “We’re there.

The third Holy Grail moment arrived on the day Carmack agreed to join the Oculus effort full time as chief technology officer, leaving behind the software company he had founded.

Luckey knows he has done well to surround himself with such knowledgeable colleagues—especially after all those years of solitude in the family garage.

“You can’t solve problems by putting warm bodies in seats,” he says. “They need to be really smart bodies.” Luckey believes in hiring top-notch talent and he has always embraced the wisdom of the community. That’s why he spent much of his youth chatting with fellow nerds in online forums. “No matter how smart you think you are,” he explains, “the people out there combined are probably smarter.”

These days, it seems, Luckey’s biggest challenge is managing expectations. The public has been eagerly eyeing Oculus VR’s progress from the moment the company was founded. For thousands of gamers, the Rift’s consumer model can’t come fast enough. “We’ve had to work at a breakneck pace,” Luckey says. “And we’ve got to continue that pace. We’ve got to try to get something really great out the door so we can keep our fans happy.”

As for Iribe, his thoughts have moved well beyond the hardware. A  former software engineer, he’s also thinking about the games and other elements that will go into a satisfying customer experience. What good is the technology if there isn’t enough content to make it shine? But he can’t help marveling at the strides the headset has made since that afternoon at the hotel in Long Beach. “We are at the very bleeding edge of technology,” he says, “using parts and putting this together in a way that’s only possible today.”

Chris Dixon, a partner at the VC firm Andreessen Horowitz, which led the $75 million second round of investment in Oculus, compares the Rift headset to the Apple II, the Netscape Browser, Google and the iPhone. “It’s going to change the way people interact with computers for the next couple of decades,” Dixon says. It’s a brand-new medium, he explains, on the order of radio or TV. “Do you remember the reaction the first time people saw films? Like the train was coming at them? It’s sort of like that. When you try it, you really feel like you’re in this place, this virtual world. There’s probably going to be this whole new set of artistic practices that go with it.”

The Facebook deal not only ensures that Oculus will have the resources it needs to bring the Rift to market—at a price close to $300—but it also gives Luckey the freedom to think big. “Facebook is making a long-term bet on VR, not a short-term run on profit,” he wrote in a comment on Reddit. “We have more freedom to do what we want now that our investment partners are out of the picture.”

Indeed, Zuckerberg has already conceded that it will take years for Oculus’s technology to mature into the communication platform he envisions—just as it did with the Internet, computers and cellphones.

Luckey agrees. “What we have right now is very primitive compared to what I want to be  making,” he says

But their shared hope is that virtual reality will one day allow us to connect in ways we could never imagine in real life.

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