In this episode, I interviewed Dam Mulhem, co-founder of XXII—a french startup that designs solutions based on Virtual Reality (VR), Augmented Reality (AR), Mixed Reality (MR) and Artificial Intelligence (AI). Dam brings to the conversation important elements that have helped XXII to get in the traction stage as: economies of scope, B2B vs. B2C, culture evolution and new platforms. On the other hand, there were significant challenges in the way too, as: finding the great use of VR and focusing team’s efforts on XXII’s priorities.
Tell me a little bit about yourself and what kind of products and services does XXII offer at the present moment?
I’m Damien Mulhem, I’m French. I’m a creative and in my last experience I was creative for Apple. I was training new and actual employees about new strategies and how to talk with other people, especially for retail. With William, my co-founder, I found XXII. We decided to create XXII and to create not what haven’t been done before, but all we can, using technology, today. To bring new things on new ways, to use them, tomorrow. We are talking about VR, AR, MR, XR, in any way you want to talk about this, especially for training. Also, we have products on artificial intelligence using computer vision to detect people for security and even—and we are doing this at this time in France—autonomous retail, like Amazon Go.
How did everything start?
That’s a good question. We created XXII when we were 15 years old. It was a music band. All we wanted, at this time, was to make music. Create new things using a synthesizer. So, we melted digital and analog systems. We were really interested in connecting things. We were making electronic music live, using MIDI synchronization, different hardware and we did a lot of electronic. We were doing stuff with the amplifier and many things. Then, when we were 18 years old, William goes to create his own first company. I was only making music in a studio, for different artists. It took maybe 10 years when we wanted to make something with XXII. For 10 years, we didn’t know what to do. It’s only in 2014, when we saw the first Oculus Rift DK, we said: “Okay. We have to create something with this, because this technology, available for consumer today, can make the difference.” VR had been existed for 30 years already, but it was only for research and not for consumer. Not for a company to use it easily. So, we decided to make XXII first, thanks to virtual reality. That was the main thing.
So, everything started with virtual reality, then you had to start developing other technologies as AR, MR and artificial intelligence too…
ECONOMIES OF SCOPE
Yes. And why we chose this? Because we love this technology. All this hardware. At the beginning, we really wanted to understand all the ecosystem about VR. So, we went to Berkeley, to many universities. We read a lot about IPD, stereoscopy, monoscopy, 3D real-time, CGI. We really wanted to cover and understand all what we could do with VR. And, when we really understood—in 2014 and 2015—what was possible, we directly went to AR also, because it’s the same technology. We don’t use the same algorithm to make it possible—there, the hardware is different. But, we create things the same way. We then said: “Okay, we can make AR, we can use VR, we can say it’s MR, XR because we are using haptic, we are using other sensors.” It’s still about AI or computer vision because, for augmented reality, we use SLAM—Simultaneous Localization and Mapping. It’s a way to use computer vision. The same way to VR, we use other sensors with computer vision. And, because we love tomorrow and what we can create with the humanity, we have to focus also on artificial intelligence.
In the first six months of the company, we directly found projects and “directly” because we saw in 2014 at CES, first consumer VR headset with nothing inside. But, we saw that many companies, many consumers had interest in this. So, when we went to companies, we said: “We can create things for you.” and they said: “Okay, we have to make it.” So, we found clients in the first months of the company. We hired new people, every month, in the last three years. And every Euro we earned with the company, we directly put it back in our research and development department because we really wanted to truly understand all of this technology works. We wanted to go further. I have PhDs, engineers and we look for things that we can create to not just use technology, but how can we make it stronger, how can we really go further with this and how will be tomorrow with those technologies.
B2B vs. B2C
For digital solutions—VR and AR mainly—in the first months we had a project. I think we had only one project per month. In the first six months, we were 10 people in the company. Directly we had a business, so the traction was here. In the second year, we were 35 people and the traction was “wow!”
From the day our people saw VR headset for consumers to the day consumers could buy our products, it only took one to two years. In 2016, I think there were less than 1 million devices around the world. But, it was enough to build projects because it was not the consumer who bought those products, it was the company – for marketing, for communication, for training, even for developers. [Companies bought devices] to say to the consumer: “Okay. You can touch it, you can see what we can do tomorrow. First, come test the technology and then, you will buy it. The technology is here.” It was only last year—I think it was Samsung with Oculus Gear VR—that was like 7 or 6 million products they directly sell or give to their customers. There were Oculus Rift, HTC Vive, OSVR and many—close to, I think, 8 million devices. So, the traction was really different.
In the second year, we were 35 people and the traction was “wow!”
At this time, we wanted to test the market and create our own game because we saw that gaming was the first environment for consumer to buy the product—when we talked about the product. But, the traction was not here. We really wanted to test and we saw that there was not enough consumers to buy products in VR for consumer—not for companies. I think we only sold like 5.000 of our game and we took maybe one year, with five or six people working on the game. So, the return on investment was not there. But, when we took the same people working with Saffron, L’Oréal, Bouygues… then we had projects. So, the traction for companies was here and is still here.
But for consumers, I think it will only begin this year, in 2018. Thanks to Oculus Go, thanks to VIVE Focus, with Xiaomi—in China because the price of the product is attractive. Now, for 2,200 dollars, you can have your own headsets and thanks to movies like Ready Player One, it’s in the front face of everybody to say: “Okay, VR is here and it could be great at home.” I always make the analogy with this movie from Zemeckis, Back to the Future. It was in the 80s. At this this time, they were talking about autonomous vehicles, face recognition, microwaves, VR. When everybody’s eating, at lunch, they all have VR or AR headsets.
Sometimes, they were scared about this, in the 80s. But, now we have the technology, we have the smartphone, we really understand. TV is normal today, we have like thousands of channels. I remember, when I was a kid, there were only five channels. I say to my kids: “when I was a child, I was not calling my friends. I was walking on the streets, maybe 10 minutes and just ringing at their doors to say: ‘do you want to play with me?’” Today, my kids only talk through snapshots. When they want to play, they say: “Can I play with the VR headset at home?” and do not play other games. It’s normal, now. We are not scared of the near future.
It’s normal, now. We are not scared of the near future.
But it’s mainly the product, the price and the cost to make it available because three years ago, it was really expensive to create a real-time 3D content and a great application. Now, with GPU, CPU and a great performance of new smartphones, it’s really easier for us to develop. And thanks to Google, Apple and many others that create new SDK that let us create new things. Because we can have time in our research and development, we also make and try to make it better and better and let people have easy access to this. The best example I can have today for augmented reality, it’s native on Safari Kit to have augmented reality objects. You don’t need an application now, thanks to Apple. So, I think it’s been changed the way we use and we will use augmented reality from the coming September with the new IOS 12, for example.
How about the challenges you faced in this early stage?
THE GREAT USE OF VR
I think the challenges we had, are about finding the great use of VR. For example, clients sometimes say: “Okay, VR is here, we have to make it!” and they try to reproduce what already exists in the real life and it doesn’t work. Sometimes, they just want to use the technology, but they use the same things they already made 10 years ago. They think that we create content as we create a movie or our websites. So, the most challenging things were to say: “we build things differently with those technologies.” Because most people never tried VR and all you can move in a room, they say: “we can only have like 360º moves.” But, it’s not VR. Virtual reality is about experiencing something. It’s about moving, exploring, learning or even teaching or sharing. And 360º moves exist since many, many years ago. I think it’s not the great or the best way to use VR, today. So, it was great to help our clients to find the best application. Sometimes, we say: “do not use VR. You have to make a simple application to do what you want and not use VR as just the best way to attract people.”
In that period, what was the most difficult decision you had to make?
FOCUSING AND ADAPTING
Even if we wanted to make many things in VR and not to only focus on training, at that time, we needed to find clients in industry or in broadcasts. You cannot only say: “I want to do everything.” So, we had to say to all people working on games in the company: “we are really sorry, but I think the coming months or coming year will be focused on industry and not on gaming.” We had to say to our employees and all colleagues we had, every day, that even if they’d came to the company to work on gaming, we needed to evolve and keep everything, every skill we earned and every skill we had, to make it and to create better training. I think the most challenging thing is just to keep everybody with us and move with everybody at the same time.
I think the most challenging thing is just to keep everybody with us and move with everybody at the same time.
I think most of the companies are focusing on only one thing. For example, they’re working on an app to bring like Uber to deliver something. Only this. In VR, you have companies saying: “we will only make documentary, only gaming and only shooting.” But, we never wanted to be focused on only one thing in XXII. Our mindset is: “we can create whatever we want and we can help ourselves because we really understand technology, how we can make things better and how we can change things.” In the last three years—and in all coming years—we really didn’t want to change this. If virtual reality changes tomorrow or if we have to make a new decision and stop [focusing on] industry and go in broadcast only, we will do this.
What piece of advice would you give startup entrepreneurs that want to generate traction in businesses related to these emerging technologies?
STUDY YOUR ECOSYSTEM THOROUGHLY
Before putting 1 dollar in the company, we have to understand and learn from the market and we have to really, really understand what we are using the technology for. I think you are wrong if you just have an idea, create the company and then say: “my idea is good, I have to put all my money, involve 10 people and go straight, now.” I think you really have to understand the technology you will use and, from 1 to 10 years, what it will be in these coming years because, if you just go straight, you have a wall. And if you don’t understand the markets, the people working with you, and the people working on the same ecosystem, you will be outside, totally. For example, when we created the company, six years before, we travelled in the US and China. We saw many companies working with this. We went to Facebook to meet Oculus, to meet HTC Vive, everybody… to say: “what we can be? What’s our roadmap? How we can work together?” Or, if I have a client, I can talk to you to have 10 products. You really have to make your network. My advice is to first understand the things you have in your hands, before trying to make a company.
Before putting 1 dollar in the company, we have to understand and learn from the market and we have to really, really understand what we are using the technology for.
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FROM IDEA TO TRACTION…
- TIME: 3-6 months (Digital Solutions). 2 years (AI).
- Number of PIVOTS: 1 pivot for the first AI solution we launched (we targeted an emotional recognition solution at first, but then pivoted to a security solution – bigger market and less issues regarding data privacy).
- Initial team background/composition: 2 founders, 2 other associates (business & CTO), 1 maker, 1 3D artist and 1 developer.
- Team composition when found traction: 3 Unity developers, 2 Web developers, 3 business developers, 3 3D artists, 2 video artists, 15 AI PhDs & engineers, 6 project managers & 2 marketing managers
- METHODOLOGIES/FRAMEWORKS used: Design thinking and agile model.
- Relevant PARTNERS: Nvidia, Samsung, Oracle, HIK Vision, HTC Vive
- Relevant SERVICES/TOOLS used: Jira, Pipedrive, Slack, Docker, Unity.
- Relevant PRACTICES: Weekly exec meetings, weekly team meetings, weekly Q&As, semestrial KPIs revisions, semestrial individual reviews with each employee.
- FUNDING to Traction: Entirely bootstrapped.
MORE ABOUT THE FOUNDERS
WILLIAM ELDIN (LinkedIn): Serial entrepreneur, William is mostly a leader and visionary. He knows how to connect people with passion, and how to mix talent and skills to build big things. After a first experience as a radio host, William put his energy and communication skills to benefit. He built his first company at 19 by opening his first store dedicated to anti-radar detectors. He then joined Fabien Pierlot, as a partner, at Coyote System, one of the top 10 companies in the 2000s. His creativity, his vision and passion for technologies as well as his wish to keep moving forward, brought him to build XXII in 2015.
DAMIEN MULHEM (LinkedIn): Very much into music, art and new technologies, and after graduating from the Institut Supérieur des Techniques du son, Damien Mulhem started his career as a songwriter in the music and video industry. After that, he worked for 3 years at Apple as a creative and training facilitator. Then, after being in charge of the innovation in Coyote Sytems’ stores where he brought virtual reality to the masses, he decided to co-found XXII with his longtime friend William Eldin.
MORE ABOUT XXII GROUP
(Website; LinkedIn; Facebook) Founded in 2015 by William Eldin (Coyote Systems ex-partner) and Damien Mulhem (ex- Apple), XXII is a start-up specializing in deep technologies, focusing on 2 activities:
> XXII DIGITAL SOLUTIONS – An innovative, interactive and immersive content, apps and software creation studio, mastering VR, AR and MR
> XXII AI – An intelligence provider through a marketplace of artificial intelligence solutions for security, retail, smart cities and industries.
With 40+ talented and passionate PhDs, engineers, developers and creatives working in France, China and the US, XXII’s mission is to build tomorrow’s tools to augment Humans and their senses.