His success was unforeseeable.

2014 saw Facebook's $2.3 billion purchase of Oculus VR.

19-year-old Palmer Luckey founded Oculus. He quit journalism school. His parents worried about his college dropout.

Facebook bought Oculus VR in less than 2 years.

Palmer Luckey started Anduril Industries. Palmer has raised $385 million with Anduril.

The Oculus journey began in a trailer

Palmer Luckey, 19, owned the trailer.

Luckey had his trailer customized. The trailer had all six of Luckey's screens. In the trailer's remaining area, Luckey conducted hardware tests.

At 16, he became obsessed with virtual reality. Virtual reality was rare at the time.

Luckey didn't know about VR when he started.

Previously, he liked "portabilizing" mods. Hacking ancient game consoles into handhelds.

In his city, fewer portabilizers actively traded.

Luckey started "ModRetro" for other portabilizers. Luckey was exposed to VR headsets online.

Luckey:

“Man, ModRetro days were the best.”

Palmer Luckey used VR headsets for three years. His design had 50 prototypes.

Luckey used to work at the Long Beach Sailing Center for minimum salary, servicing diesel engines and cleaning boats.

Luckey worked in a USC Institute for Creative Technologies mixed reality lab in July 2011. (ICT).

Luckey cleaned the lab, did reports, and helped other students with VR projects.

Luckey's lab job was dull.

Luckey chose to work in the lab because he wanted to engage with like-minded folks.

By 2012, Luckey had a prototype he hoped to share globally. He made cheaper headsets than others.

Luckey wanted to sell an easy-to-assemble virtual reality kit on Kickstarter.

He realized he needed a corporation to do these sales legally. He started looking for names. "Virtuality," "virtual," and "VR" are all taken.

Hence, Oculus.

If Luckey sold a hundred prototypes, he would be thrilled since it would boost his future possibilities.

John Carmack, legendary game designer

Carmack has liked sci-fi and fantasy since infancy.

Carmack loved imagining intricate gaming worlds.

His interest in programming and computer science grew with age.

He liked graphics. He liked how mismatching 0 and 1 might create new colors and visuals.

Carmack played computer games as a teen. He created Shadowforge in high school.

He founded Id software in 1991. When Carmack created id software, console games were the best-sellers.

Old computer games have weak graphics. John Carmack and id software developed "adaptive tile refresh."

This technique smoothed PC game scrolling. id software launched 3-D, Quake, and Doom using "adaptive tile refresh."

These games made John Carmack a gaming star. Later, he sold Id software to ZeniMax Media.

How Palmer Luckey met Carmack

In 2011, Carmack was thinking a lot about 3-D space and virtual reality.

He was underwhelmed by the greatest HMD on the market. Because of their flimsiness and latency.

His disappointment was partly due to the view (FOV). Best HMD had 40-degree field of view.

Poor. The best VR headset is useless with a 40-degree FOV.

Carmack intended to show the press Doom 3 in VR. He explored VR headsets and internet groups for this reason.

Carmack identified a VR enthusiast in the comments section of "LEEP on the Cheap." "PalmerTech" was the name.

Carmack approached PalmerTech about his prototype. He told Luckey about his VR demos, so he wanted to see his prototype.

Carmack got a Rift prototype. Here's his May 17 tweet.

John Carmack tweeted an evaluation of the Luckey prototype.

Dan Newell, a Valve engineer, and Mick Hocking, a Sony senior director, pre-ordered Oculus Rift prototypes with Carmack's help.

Everyone praised Luckey after Carmack demoed Rift.

Palmer Luckey received a job offer from Sony.

• It was a full-time position at Sony Computer Europe.

• He would run Sony’s R&D lab.

• The salary would be $70k.

Who is Brendan Iribe?

Brendan Iribe started early with Startups. In 2004, he and Mike Antonov founded Scaleform.

Scaleform created high-performance middleware. This package allows 3D Flash games.

In 2011, Iribe sold Scaleform to Autodesk for $36 million.

How Brendan Iribe discovered Palmer Luckey.

Brendan Iribe's friend Laurent Scallie.

Laurent told Iribe about a potential opportunity.

Laurent promised Iribe VR will work this time. Laurent introduced Iribe to Luckey.

Iribe was doubtful after hearing Laurent's statements. He doubted Laurent's VR claims.

But since Laurent took the name John Carmack, Iribe thought he should look at Luckey Innovation. Iribe was hooked on virtual reality after reading Palmer Luckey stories.

He asked Scallie about Palmer Luckey.

Iribe convinced Luckey to start Oculus with him

First meeting between Palmer Luckey and Iribe.

The Iribe team wanted Luckey to feel comfortable.

Iribe sought to convince Luckey that launching a company was easy. Iribe told Luckey anyone could start a business.

Luckey told Iribe's staff he was homeschooled from childhood. Luckey took self-study courses.

Luckey had planned to launch a Kickstarter campaign and sell kits for his prototype. Many companies offered him jobs, nevertheless.

He's considering Sony's offer.

Iribe advised Luckey to stay independent and not join a firm. Iribe asked Luckey how he could raise his child better. No one sees your baby like you do?

Iribe's team pushed Luckey to stay independent and establish a software ecosystem around his device.

After conversing with Iribe, Luckey rejected every job offer and merger option.

Iribe convinced Luckey to provide an SDK for Oculus developers.

After a few months. Brendan Iribe co-founded Oculus with Palmer Luckey. Luckey trusted Iribe and his crew, so he started a corporation with him.

Crowdfunding

Brendan Iribe and Palmer Luckey launched a Kickstarter.

Gabe Newell endorsed Palmer's Kickstarter video.

Gabe Newell wants folks to trust Palmer Luckey since he's doing something fascinating and answering tough questions.

Mark Bolas and David Helgason backed Palmer Luckey's VR Kickstarter video.

Luckey introduced Oculus Rift during the Kickstarter campaign. He introduced virtual reality during press conferences.

Oculus' Kickstarter effort was a success. Palmer Luckey felt he could raise $250,000.

Oculus raised $2.4 million through Kickstarter. Palmer Luckey's virtual reality vision was well-received.

Mark Zuckerberg's Oculus discovery

Brendan Iribe and Palmer Luckey hired the right personnel after a successful Kickstarter campaign.

Oculus needs a lot of money for engineers and hardware. They needed investors' money.

Series A raised $16M.

Next, Andreessen Horowitz partner Brain Cho approached Iribe.

Cho told Iribe that Andreessen Horowitz could invest in Oculus Series B if the company solved motion sickness.

Mark Andreessen was Iribe's dream client.

Marc Andreessen and his partners gave Oculus $75 million.

Andreessen introduced Iribe to Zukerberg. Iribe and Zukerberg discussed the future of games and virtual reality by phone.

Facebook's Oculus demo

Iribe showed Zuckerberg Oculus.

Mark was hooked after using Oculus. The headset impressed him.

The whole Facebook crew who saw the demo said only one thing.

“Holy Crap!”

This surprised them all.

Mark Zuckerberg was impressed by the team's response. Mark Zuckerberg met the Oculus team five days after the demo.

First meeting Palmer Luckey.

Palmer Luckey is one of Mark's biggest supporters and loves Facebook.

Oculus Acquisition

Zuckerberg wanted Oculus.

Brendan Iribe had requested for $4 billion, but Mark wasn't interested.

Facebook bought Oculus for $2.3 billion after months of drama.

After selling his company, how does Palmer view money?

Palmer loves the freedom money gives him. Money frees him from small worries.

Money has allowed him to pursue things he wouldn't have otherwise.

“If I didn’t have money I wouldn’t have a collection of vintage military vehicles…You can have nice hobbies that keep you relaxed when you have money.”

He didn't start Oculus to generate money. His virtual reality passion spanned years.

He didn't have to lie about how virtual reality will transform everything until he needed funding.

The company's success was an unexpected bonus. He was merely passionate about a good cause.

After Oculus' $2.3 billion exit, what changed?

Palmer didn't mind being rich. He did similar things.

After Facebook bought Oculus, he moved to Silicon Valley and lived in a 12-person shared house due to high rents.

Palmer might have afforded a big mansion, but he prefers stability and doing things because he wants to, not because he has to.

“Taco Bell is never tasted so good as when you know you could afford to never eat taco bell again.”

Palmer's leadership shifted.

Palmer changed his leadership after selling Oculus.

When he launched his second company, he couldn't work on his passions.

“When you start a tech company you do it because you want to work on a technology, that is why you are interested in that space in the first place. As the company has grown, he has realized that if he is still doing optical design in the company it’s because he is being negligent about the hiring process.”

Once his startup grows, the founder's responsibilities shift. He must recruit better firm managers.

Recruiting talented people becomes the top priority. The founder must convince others of their influence.

A book that helped me write this:

The History of the Future: Oculus, Facebook, and the Revolution That Swept Virtual Reality — Blake Harris

*This post is a summary. Read the full article here.

I've written a lot about Y Combinator's success, but as any startup founder or investor knows, many startups fail.

Rebel Fund invests in the top 5-10% of new Y Combinator startups each year, so we focus on identifying and supporting the most promising technology startups in our ecosystem. Given the power law dynamic and asymmetric risk/return profile of venture capital, we worry more about our successes than our failures. Since the latter still counts, this essay will focus on the proportion of YC startups that fail.

Since YC's launch in 2005, the figure below shows the percentage of active, inactive, and public/acquired YC startups by batch.

As more startups finish, the blue bars (active) decrease significantly. By 12 years, 88% of startups have closed or exited. Only 7% of startups reach resolution each year.

YC startups by status after 12 years:

Half the startups have failed, over one-third have exited, and the rest are still operating.

In venture investing, it's said that failed investments show up before successful ones. This is true for YC startups, but only in their early years.

Below, we only present resolved companies from the first chart. Some companies fail soon after establishment, but after a few years, the inactive vs. public/acquired ratio stabilizes around 55:45. After a few years, a YC firm is roughly as likely to quit as fail, which is better than I imagined.

I prepared this post because Rebel investors regularly question me about YC startup failure rates and how long it takes for them to exit or shut down.

Early-stage venture investors can overlook it because 100x investments matter more than 0x investments.

YC founders can ignore it because it shouldn't matter if many of their peers succeed or fail ;)

Everyone wants a scalable startup.

Innovation helps launch a startup. The secret to a scalable business is growth trials (from 1 to 100).

Growth marketing combines marketing and product development for long-term growth.

Today, I'll explain growth hacking strategies popular startups used to scale.

1/ A Facebook user's social value is proportional to their friends.

Facebook built its user base using content marketing and paid ads. Mark and his investors feared in 2007 when Facebook's growth stalled at 90 million users.

Chamath Palihapitiya was brought in by Mark.

The team tested SEO keywords and MAU chasing. The growth team introduced “people you may know”

This feature reunited long-lost friends and family. Casual users became power users as the retention curve flattened.

Growth Hack Insights: With social network effect the value of your product or platform increases exponentially if you have users you know or can relate with.

2/ Airbnb - Focus on your value propositions

Airbnb nearly failed in 2009. The company's weekly revenue was $200 and they had less than 2 months of runway.

Enter Paul Graham. The team noticed a pattern in 40 listings. Their website's property photos sucked.

Why?

Because these photos were taken with regular smartphones. Users didn't like the first impression.

Graham suggested traveling to New York to rent a camera, meet with property owners, and replace amateur photos with high-resolution ones.

A week later, the team's weekly revenue doubled to $400, indicating they were on track.

Growth Hack Insights: When selling an “online experience” ensure that your value proposition is aesthetic enough for users to enjoy being associated with them.

3/ Zomato - A company's smartphone push ensured growth.

Zomato delivers food. User retention was a challenge for the founders. Indian food customers are notorious for switching brands at the drop of a hat.

Zomato wanted users to order food online and repeat orders throughout the week.

Zomato created an attractive website with “near me” keywords for SEO indexing.

Zomato gambled to increase repeat orders. They only allowed mobile app food orders.

Zomato thought mobile apps were stickier. Product innovations in search/discovery/ordering or marketing campaigns like discounts/in-app notifications/nudges can improve user experience.

Zomato went public in 2021 after users kept ordering food online.

Growth Hack Insights: To improve user retention try to build platforms that build user stickiness. Your product and marketing team will do the rest for them.

4/ Hotmail - Signaling helps build premium users.

Ever sent or received an email or tweet with a sign — sent from iPhone?

Hotmail did it first! One investor suggested Hotmail add a signature to every email.

Overnight, thousands joined the company. Six months later, the company had 1 million users.

When serving an existing customer, improve their social standing. Signaling keeps the top 1%.

5/ Dropbox - Respect loyal customers

Dropbox is a company that puts people over profits. The company prioritized existing users.

Dropbox rewarded loyal users by offering 250 MB of free storage to anyone who referred a friend. The referral hack helped Dropbox get millions of downloads in its first few months.

Growth Hack Insights: Think of ways to improve the social positioning of your end-user when you are serving an existing customer. Signaling goes a long way in attracting the top 1% to stay.

These experiments weren’t hacks. Hundreds of failed experiments and user research drove these experiments. Scaling up experiments is difficult.

Contact me if you want to grow your startup's user base.

OpenAI's ChatGPT is an amazing AI-powered chatbot. It can write poetry, fiction, and marketing ideas. I was impressed how well ChatGPT followed the interview, albeit there were a few classics “I’m afraid I can’t do that”.

Full interview below.

Me: I'm your interviewer. We'll discuss crypto. Thanks for being interviewed. What do you think about cryptocurrency?

CGPT: Cryptocurrency is an innovative technology that could transform money and financial activities. It might boost the efficiency and security of financial institutions and let consumers deal directly without banks. Cryptocurrency is still a new and untested technology with many unknowns and hurdles before it can be broadly accepted.

Me: Over 22,000 cryptocurrencies exist, and many have little use. We need how much cryptocurrencies?

CGPT: The appropriate quantity will rely on a multitude of factors, including each cryptocurrency's use cases, adoption rate, and market rivalry. Only a few cryptocurrencies will likely receive widespread adoption and be successful. Many existing cryptocurrencies may not survive since they can't deliver new or valued solutions or compete with more established cryptocurrencies.

Me: Will cryptocurrencies grow? What's next for worldwide adoption?

CGPT: It's hard to forecast the future of cryptocurrencies because the acceptance of new technologies is unpredictable. I believe cryptocurrencies will expand and acquire popularity in the future years. Regulatory ambiguity, security concerns, and scalability issues must be overcome for this to happen. Cryptocurrency companies and organizations must engage together with governments and authorities to address these obstacles and establish a growth-friendly climate. Continued innovation and improvement of the technology, including public education and awareness, will drive acceptance.

Me: Do bear markets affect bitcoin adoption?

CGPT: On the one hand, a bear market might induce uncertainty and hesitation among potential consumers. Bear markets can present opportunities for long-term investors who can acquire cryptocurrencies at cheaper prices and are more likely to hang onto their assets. A bear market can also test the tenacity and power of the underlying technology and community, which can boost long-term confidence and adoption. A bear market might have profound and nuanced effects on bitcoin adoption.

Me: What are some likely outcomes if Bitcoin reaches $100,000 by next year?

CGPT: If Bitcoin saw rapid growth, it would undoubtedly have repercussions for the cryptocurrency market and economy. Possible scenarios include increased public interest and awareness of cryptocurrency, a surge in demand for Bitcoin and other cryptocurrencies, and a growth in the cryptocurrency industry's market value. By shifting their focus and cash to the cryptocurrency market, investors and traders may also affect other asset classes, such as traditional equities and commodities. Governments and financial organizations may focus more on the cryptocurrency sector as they try to grasp Bitcoin's rapid rise.

Me: Will other countries accept crypto as currency?

CGPT: It's hard to say if additional governments will adopt cryptocurrencies as legal tender. Some countries have recognized the promise of bitcoin and are exploring its use, while others are cautious. Adoption of bitcoin as legal cash may vary by country, based on financial infrastructure, rules, and political atmosphere. As cryptocurrency technology evolves and becomes more accepted, more governments may embrace it as legal tender.

Me: Final question: will the recent cryptocurrency hacks affect long term adoption?

CGPT: Hacks might tarnish cryptocurrency's reputation and public faith in its security, the technology underpinning it is continually improving. Many cryptocurrency projects have developed strong security mechanisms to prevent hacks and other dangers, and these safeguards will undoubtedly improve over time. The decentralized nature of cryptocurrency makes it more resistant to attacks. Hacks and other security breaches are a concern, but they may not affect cryptocurrency adoption.

Microsoft co-founder Bill Gates assesses digital assets while the bull is caged.

Bill Gates is well-respected.

Reasonably. He co-founded and led Microsoft during its 1980s and 1990s revolution.

After leaving Microsoft, Bill Gates pursued other interests. He and his wife founded one of the world's largest philanthropic organizations, Bill & Melinda Gates Foundation. He also supports immunizations, population control, and other global health programs.

When Gates criticized Bitcoin, cryptocurrencies, and NFTs, it made news.

Bill Gates said at the 58th Munich Security Conference...

“You have an asset class that’s 100% based on some sort of greater fool theory that somebody’s going to pay more for it than I do.”

Gates means digital assets. Like many bitcoin critics, he says digital coins and tokens are speculative.

And he's not alone. Financial experts have dubbed Bitcoin and other digital assets a "bubble" for a decade.

Gates also made fun of Bored Ape Yacht Club and NFTs, saying, "Obviously pricey digital photographs of monkeys will help the world."

Why does Bill Gates dislike digital assets?

According to Gates' latest comments, Bitcoin, cryptos, and NFTs aren't good ways to hold value.

Bill Gates is a better investor than Elon Musk.

“I’m used to asset classes, like a farm where they have output, or like a company where they make products,” Gates said.

The Guardian claimed in April 2021 that Bill and Melinda Gates owned the most U.S. farms. Over 242,000 acres of farmland.

The Gates couple has enough farmland to cover Hong Kong.

Bill Gates is a classic investor. He wants companies with an excellent track record, strong fundamentals, and good management. Or tangible assets like land and property.

Gates prefers the "old economy" over the "new economy"

Gates' criticism of Bitcoin and cryptocurrency ventures isn't surprising. These digital assets lack all of Gates's investing criteria.

Volatile digital assets include Bitcoin. Their costs might change dramatically in a day. Volatility scares risk-averse investors like Gates.

Gates has a stake in the old financial system. As Microsoft's co-founder, Gates helped develop a dominant tech company.

Because of his business, he's one of the world's richest men.

Bill Gates is invested in protecting the current paradigm.

He won't invest in anything that could destroy the global economy.

When Gates criticizes Bitcoin, cryptocurrencies, and NFTs, he's suggesting they're a hoax. These soapbox speeches are one way he protects his interests.

Digital assets aren't a bad investment, though. Many think they're the future.

Changpeng Zhao and Brian Armstrong are two digital asset billionaires. Two crypto exchange CEOs. Binance/Coinbase.

Digital asset revolution won't end soon.

If you disagree with Bill Gates and plan to invest in Bitcoin, cryptocurrencies, or NFTs, do your own research and understand the risks.

But don’t take Bill Gates’ word for it.

He’s just an old rich guy with a lot of farmland.

He has a lot to lose if Bitcoin and other digital assets gain global popularity.

This post is a summary. Read the full article here.

They depend heavily on open source..

Discord users send billions of messages daily. Users wish to search these messages. How do we index these to search by message keywords?

Let’s find out.

1. Discord utilizes Elasticsearch. Elasticsearch is a free, open search engine for textual, numerical, geographical, structured, and unstructured data. Apache Lucene powers Elasticsearch.
   

2. How does elastic search store data? It stores it as numerous key-value pairs in JSON documents.
   

3. How does elastic search index? Elastic search's index is inverted. An inverted index lists every unique word in every page and where it appears.

4. Elasticsearch indexes documents and generates an inverted index to make data searchable in near real-time. The index API adds or updates JSON documents in a given index.

1. Let's examine how discord uses Elastic Search. Elasticsearch prefers bulk indexing. Discord couldn't index real-time messages. You can't search posted messages. You want outdated messages.

6. Let's check what bulk indexing requires.
1. A temporary queue for incoming communications.
2. Indexer workers that index messages into elastic search.

1. Discord's queue is Celery. The queue is open-source. Elastic search won't run on a single server. It's clustered. Where should a message go? Where?

8. A shard allocator decides where to put the message. Nevertheless. Shattered? A shard combines elastic search and index on. So, these two form a shard which is used as a unit by discord. The elastic search itself has some shards. But this is different, so don’t get confused.

1. Now, the final part is service discovery — to discover the elastic search clusters and the hosts within that cluster. This, they do with the help of etcd another open source tool.
   

A great thing to notice here is that discord relies heavily on open source systems and their base implementations which is very different from a lot of other products.