VRChat is Laying Off 30% of Team
ask.vrchat.com
ask.vrchat.com
I worry that VRChat has worked its way into a local optimum that may be hard to get out of. They've appealed very strongly to niches - people with alternative lifestyles who enjoy the freedom to express themselves in unique and interesting ways. I think it's wonderful but it actively inhibits me from wanting to use VRChat because I don't identify with that. So how do they grow to 10x their current user base without alienating their existing loyal users? This is going to be a classic business dilemma for them I think.
So AI competes with VR both for users (The type willing to pay for cutting edge consumer tech experiences) and investment (AI is the big thing, VR is so 2022), and labour (How many researchers want to work in VR over AI?)
Fittingly, the equivalent projects started by the companies currently trying to stuff generative AI into everything fell completely flat.
People don't care about having AI generate exactly the world they want. People want the "wild"-ness and spontaneity that VRChat offers (finding a cool world someone made, running into real, interesting, people and hanging out with them). The issue being that as VRC grows/grew, they had to start taming that wildness (because it also allows for a lot of things not really compatible with monetization), but that slowly brings them closer to the over-sanitization problem that killed all the competitors.
I bet chatting with Replika or Character AI is satisfying the same needs as VRChat for many of the people that either appeals to. I think that's what they were getting at.
AI doesn't have the sort of cutting edge consumer tech experience of even a basic FPS it's a non-stater here.
AI isn’t going to let you hang out with your friend who is presenting as a nine foot tall naked dragon lady made of gummy candy, and experience getting pulled into one of her orifices and digested. It’s not going to let you pretend to be turned into her horny parts, either. With or without the experience being enhanced by various Bluetooth-connected toys. And AI’s not going to hang out with you in the flesh at a convention later on based on the good times you had in VR and make a lifelong connection, either.
Once it comes time to flip on the monetization switch, you have find a way to bring the users along for the financial security ride (ala Roblox). The alternative is user base revolt and then rejection.
Am curious what your involvement is? (if you are up for disclosing here)
Now I work as a producer for a creative agency where we make Roblox games for brand clients, including Roblox.
I remember years ago thinking "Man someone needs to make some sponsored / actually branded content on here. There's so much room for fun, whimsy, and etc."
Next think I know my son is playing a game and him telling me "No dad, this is official. <X> company made this."
Years ago John Carmack complaining about not being able to present in front of large VR crowds, and discussions about avatar quality:
https://arstechnica.com/gaming/2022/10/carmack-wants-a-250-v...
I love tech and the idea of VR and I was struck by how … NONE of those things interest me.
I wonder how much existing VR just caters to the existing audience, less so others.
I recall a story that ages ago the NHL realized their core fanbase was men, and a lot of them boozing it up. They wanted to appeal to families and more fans and realized and knew it would upset their core fans if they started cleaning up the game … and fans, but they chose to do so.
Any attempt at broadening the appeal of the game is met with revulsion by the angry traditionalists.
I remember the really old NHL, late 1970s / 1980s. Everyone drinking it up in parking lots before the game, in game fights and hits could be nasty. Different atmosphere. The idea that you might discard your entire existing audience for a hopefully larger one must seem like a mountain to climb. Still, it seemed to work for the NHL. It's a completely different vibe now.
Absolutely 100% would buy again. I can't believe the amount of technology packed into the small box strapped to my face.
The novelty will wear off after a while, and the games that are purely based on that are not as exciting. But exercise is definitely one of the enduring uses of it that lasts beyond the novelty wear-off phase. I wouldn't exercise any other way now.
..for a certain demographic.
VR and video game based exercise isn't a scratch on real world training. Most people either drop off the bandwagon once the novelty wears off or they move onto more effective stuff (resistance training for anaerobic, cardio for aerobic).
This hasn't stopped any media company I'm aware of
As long as they successfully capture a larger audience than the original diehard users that cared about it, then the original users can go pound sand
Of course this generally winds up being "we captured a 3x larger audience for a while and have steadily dwindled since then" while the original 1x sized audience would likely have remained relatively consistent forever
Edit: Deleted the Twitch VR Chat part cause seems like they reverted the policy changes https://x.com/twitchsupport/status/1799589284367696213
1, companies are not our friends
2, they ruined gaming foerever with lootboxes pioneered by TF2 and enabled the whole illegal digital gambling system with CSGO which is going for more than a decade now. They could shut it down but they don’t because they also benefit from it and the ship has now sailed. And it’s a billion dollar unregulated black market.
3, they ruined gaming forever with the whole battlepass system pioneered by Dota 2
They also have the goodwill for helping make gaming on linux practical enough that there can be a handheld gaming console that runs linux (plus, of course, popularizing that entire new market segment).
They also don't constantly change large parts of Steam. Point is, people like that Valve is relatively stable, and that's why they insist on sticking to it. The industry is otherwise such a shitshow. The stability is an especially important value for a platform that holds, in many cases, thousands of dollars worth of games for people.
In most other sectors the bar is higher. They've earned their near-monopoly fair and square (unlike Apple, they don't do anything to block competing marketplaces - they're not even preinstalled) by being head and shoulders above their competitors in terms of quality - the fact that that's due to those competitors all sawing their own legs off doesn't change that.
When you've tried the others and then been denied playing your game because of their crappiness... it gets old quick.
Their model of cosmetic-only lootboxes is also far less obnoxious than the P2W form that has taken over mobile gaming. Many mobile games today are designed to be as obnoxious as possible in the hopes that the player will crack open their wallet for a shortcut.
My first thought was that lootboxes were a natural development of Japanese gacha toys, and Wikipedia's article does cite them as a precedent for lootboxes.
Not that it was a pay-real-money-to-spin situation, but Legend of Zelda: Minish Cap had a gacha-based minigame mechanic in the game, and that came out several years before TF2, let alone TF2's shift towards free-to-play mechanics.
The recent #SaveTF2 fan campaign shows how little they care about that game, except for releasing new skins to sell every couple of months. https://www.save.tf/
I don't even expect a Steam Deck 2 now that every other manufacturer is making x86 handhelds. At release their main competitor was the Switch, which didn't run Steam. What's the point of making a new one when all the competitor devices will have Steam installed anyways? They haven't even released a generic SteamOS 3 install
This is all speculation, but I get the sense that Valve understands better than anyone that 1) the VR market is a long game, 2) there are a number of minimum requirements for a VR system which are not ready to be commercialized yet (120hz, 10+ million pixels, eye tracking, etc) so no one is going to “win” in this round, 3) the developer platform and general developer relations matters just as much as the hardware.
It’s not so much “build it and they will come” it’s “build it, and the market, and the developer community, and land them all at once and they will keep coming”.
Valve has the luxury of having absolutely no one to answer to for their cost structure, so they really don’t have to show any particular traction metrics, nor do they have to put on any annual developer conferences to impress their shareholders. They can just focus on goals that won’t bear fruit for 10 or 20 years and they’ll be totally fine.
Valve is the definition of skate to where the puck is going not where it currently is.
I'm not saying they're wrong. I am saying I've never once seen a situation where adding more managers would improve velocity. I can imagine that such a thing exists and I have nothing whatsoever against the notion of leveling up their leadership. I just haven't personally seen it.
> Some different roles and expertise are needed for the next part of our journey.
Yes, starting from the CEO. He was the one who built a company structure that wasn't equipped to meet its needs. It's clear their senior leadership isn't as good at their jobs as all those newly unemployed ICs were at theirs.
Not everything is about velocity, you also need focus in the right areas.
Regarding when you chop upper leadership... if a company is run by sitting around waiting to fire someone the instant they do something that causes a loss/underperformance instead of comparing the relative long term expected performance of their options for the role then you're going to fire a lot of amazing employees (of any type) and hire a lot of employees focused on lowering their short term risk instead of maximizing the business's long term growth. A company I work at had to lay off 10% one year despite having the best CEO I've ever run across - things just didn't line up, things fell through, and for the first year we had -10% revenue growth instead of 30+% revenue growth. If they had started with laying off the CEO because of that not only do I think the company would have had a hell of a time in the next 2 years instead of restabilizing its growth I also think myself and a few others would have straight up left as a result. It would have been clear the company had no clue how to properly gauge and set its long term direction by taking such an action in response to the first growth impacting mistakes made by the guy.
Now I don't know VRChat as a company and I certainly don't know anything about Graham. Perhaps he's complete shit at the role and really does need to be fired for more than what's covered in this email. What I do know is I strongly disagree with that kind of generalizing logic about how management must need to go the instant employees are let go the same way as I disagree when upper management gets protected long term from or golden parachuted out of solid reasons to get fired. Upper management isn't a magical layer where you must find people that never fail the same as it isn't a magical layer that should be protected from any negative repercussions. It's just another layer of the business where you need to see how you want to place your best bets for the long term performance of the company.
The main thing from this email that rubs me a bit in the wrong way from is all of the recent over-hires only get 3 months of severance. This could make everyone finding new things a bit tough given the current VR market and need to branch out into other areas. At the same time, I'd much rather someone hire me for 2 years and then find out they need to get rid of me with some semi decent severance and health coverage than someone be afraid to hire me in the first place because some risk model said something like it's a 50/50 what will happen. By taking a job I'm not expecting you are betting your position on me still being there 2-3 years later, just don't be a dick and fire me a few months after hiring me because you wanted to keep the layoffs a secret or some other poor reasoning.
In a flat company, the CEO must be willing to shoulder the responsibility for making those decisions (or not making them). If they’re not, they’re missing a fundamental job requirement.
It's one thing to empathize with someone that gets let go for no fault of their performance, even if it's because data entry clerks were replaced by electronic records technology rather than an erroneous business strategy bet pinned to a single person, but it's another to actually have an answer which provides a better outcome to the situation and health of the business vs saying there is a best candidate for fall guy which meets some definition of "sounds nicest" and leaving it at that.
Outside severe outside happenings, layoffs are ultimately failures of leadership. I don’t know how many times we let those leaders make the same life-affecting mistakes.
Whether leaders make life affecting mistakes is a red herring. As immediately appealing as it sounds to say "we only ever let management that haven't had to do a layoff before run the company!" it really makes no sense when you think deeply about it. Even the greatest CEOs may have to do a layoff in their careers so you're not preventing layoffs at your company by perfect selection. Even decent CEOs that just play it safe can cause more life-affecting impact by not hiring people out of an overabundance of caution (impact not only in those not hired but those at the company who missed out on a lot of growth/the business falling behind competition willing to take reasonable amounts of growth risk). Even some of the crappiest CEOs may not need to do a layoff multiple years in to stagnating the business and letting employees naturally attrition so you're not guaranteeing this selects and rewards only good management options. When you look at upper management and whether they should be replaced the only real consideration is "do I think someone else can deliver more to the business in the next x years". If you've had to lay off people 3 times in the last 10 years but you don't think there is anyone else that could handle that goal better then you let those leaders make the mistakes 3 times because it's the best option for everyone. If you've never had to lay anyone off you still might think it's worth replacing the leader anyways, again because it's the best option for everyone.
Nowhere does a connection with firing leadership because it sounds like the most self caused reason to get rid of someone with a layoff actually help employees. Well, with current proposed reasonings at least. It's perfectly possible there are other reasons not listed that I haven't considered yet.
When funding was plenty, people didn’t need to worry about it too much. In todays market, the situation has changed and they need to make themselves “palatable” to investors. Thus management.
Management is absolutely terrible at improving velocity. While they might occasionally provide leadership, Ive seen a lot more cases where decisions are made for egotistical reasons rather than technical ones. Not that ICs are angels, but most decent ICs will recognize good work and promote it whereas with management who don’t actually build anything its a lot more abstract.
I can't imagine a company that's been flat for 10 years is going to welcome management with open arms. While they've given themselves more runway, hard to see them not get sold off or close up in the future.
An expert in a specific niche builds something, and against all odds, it takes off!
But now they need to jump into the pit of commerce and figure out how to be a business person; a much different skill.
Sometimes they can make the leap, most of the time they don't.
The most self-aware bring in an outside ceo before the growth curve plateaus
But they do reference “product” alongside “management”…
If you just have a bunch of engineering a design ICs “doing stuff” and no one is doing any form of project management (making sure you’re building things you can afford that customers will pay for) or product management (making sure they team is building what they said they would), that is, in fact, a recipe for disaster.
And saying “we hired some product people and project managers and we think that will correct our course” is not a bad hypothesis IMO.
Instead the whole thing seems to have gone in the direction of lofi social stuff - which only the relentlessly computer bound will ever desire. I don't get the argument at all that this is THE mainstream path to mass adoption. Who thinks that if they really succeed in siphoning off a significant portion of REAL world interaction into this simulated lofi hell that this is going to be a great way to live? I mean really.
There is only one VR experience that really blew me away. It was a free demo of Deckard's apartment in blade runner. You could go out on the balcony and see the city with a flying cop car going past on a loop. Vangelis playing in the background... It was breathtaking. I setup my area so I could sit on my couch, on this balcony, with a glass of whiskey in reach, watching that cop car fly past for ages.
Rights holders made the demo maker take it down.
If they are, huge bonus points. If they aren’t, ask them more about how they run their business and how they plan to fund it over time.
If one is looking to work only at profitable companies, the pool of employer shrinks significantly. You can almost kiss goodbye to the vast majority of VC funded companies. It's not as bad nowadays but in ZIRP times, it's not the norm for growing tech companies to be profitable.
VRChat is literally just a Unity game. They'll be fine
Close walled platforms will always wither sooner or later. They had massive potential back in 2021, when VRChat felt like the start of a new internet. Instead of letting the communities flourish, they were tempted by VCs and their unsustainable business model.
There are just so, so many cases where this hasn't happened, and where walled gardens have thrived. And also many examples to the contrary, in which open platforms have failed.
Tech is way out of reach for regular consumers. It’s clunky. UX for games and applications is difficult to use.
The locked in ecosystems with various devices doesn’t help as well (Apple vs Facebook/Occulus).
"Out of reach" isn't true though, if we're talking about developed nations. An Oculus Quest is similarly priced to a game console.
1) marketing vr for games and productivity is a waste. in those roles its just a novelty, and the limitations irritate enough to make use short-lived. the focus should be on social and media. it's a bigger market and the value proposition is more obvious. there's a few video players, but other than vrchat i can't think of anyone pushing the boundaries on social use.
2) the desired hardware isn't really here yet, and too few want to invest in that eventual payoff
Most of the headsets have the same old strap mechanism, lens limitations, and almost no integration of body tracking past your hands and head.
Tue quest pro is expensive, but its form factor and tracking integration is novel and convenient. I hope to see more such innovation.
3) tracking and movement convenience and time-to-content needs improvement
Carmack has said it all before. You can't get VR to the masses if it requires too much voodoo to operate. A quest 2 isnt hard to use, but it isn't the desired hardware either. Full body tracking is currently limited to just nerds because they're the only ones who will put up with the requirements and limitations, yet, you need that for good social interaction. Hand tracking needs to be better. You need to be able to walk around freely. And omni-directional treadmills will never get adoption if they even ever get properly made.
It's also a wild place to see the most obscure hardware of vr in use such as face tracking and haptic suits. And some people even have adult peripheral integration.
For me it's my motivation to learn 3d art. Don't think I'd continue if I didn't have a place to share it.
I don't want the inevitable enshitification, but there's no way it will be a free ride forever. EAC was already a blow to the community. I just hope it retains some charm when it reaches some stable state of monetization.
And I hope it inspires more VR-as-a-social-tool programs, since I think games are far more of a novelty in VR than being able to meet people at events without leaving my house. It seems like a natural evolution of meeting people over chatrooms.