Seattle Companies Seek Opportunities in Virtual Reality

Virtual reality offers a different way to see the world. Seattle companies are jumping on board—and believe it will change the way we live
In the not-too-distant future, virtual reality may immerse kids in educational experiences and help them explore the universe in a whole new way

Behind an inconspicuous steel door, hidden amid the restaurants and retail of Seattle’s South Lake Union tech nexus, a small company called 8ninths is trying to harness the next big thing. Wires cover the floor of the studio offices, connected to a half dozen headsets of varying clunkiness. 

The headsets—with names such as Oculus Rift, Samsung Gear VR and Microsoft HoloLens—are defined broadly as virtual reality (VR) technology. To believe VR evangelists, this is a new medium like television or computer screens, capable of changing how we live. It will remake education, as students learn history through immersive virtual simulations; allow a surgeon in London to operate on a man in Singapore; and enable engineers to collaborate on projects across continents. It will change how homes are bought as people tour any available property in town from the comfort of their couch, and will influence world politics as VR allows people to more deeply understand issues and conflicts occurring a continent away. And much, much more.  

In only a few years, the Puget Sound region has become a hotbed for companies building this new future. An encapsulation of that local excitement can be found at 8ninths, where company founders Adam Sheppard and William Lai sense opportunity. 

Until recently, their 8-year-old company was in the online marketing business. But 20 months ago, the entrepreneurial Microsoft alums got their hands on the Oculus Rift, from the virtual reality company that launched the current craze. Now 8ninths is fully invested in VR and its related cousin, augmented reality (AR). 

“We recognized that VR and AR is as big a wave as Web and mobile,” Sheppard says with a missionary-like earnestness, insisting it “has applicability to almost every single [area of life] you can imagine.” For example, they believe bankers will eventually use VR to essentially surround themselves with spreadsheets and data, like traders on the floor of a virtual New York Stock Exchange, moving billions of dollars around the globe. Citibank commissioned them to create a prototype of this financial future.


VR’s exact definition is still debated, but it generally refers to the use of screens and sensors to simulate three-dimensional imagery, usually via a headset. The fact that the founders of 8ninths are new to the technology is hardly an impediment. Nearly everyone in the VR industry was working in a different tech-related field a year or two ago. 

Image by: United Nations SDG Action Campaign
Seeing the VR movie, Clouds Over Sidra, convinced Jennifer Butte-Dahl that the technology can be transformative 

One of the exceptions is Bob Berry, CEO of Bellevue-based Envelop VR, which is creating virtual 3-D environments in which co-workers can collaborate visually, even when the workers are on different continents. Every new technology has its early adapters, and Berry is perhaps one of the region’s earliest, having followed VR technology since the ’90s. As recently as four year ago, he notes, almost no one was talking about it. VR was an idea that had been around for decades but never took off, for the simple reason that the existing headgear often gave people motion sickness within minutes.

That changed in 2012, when then 17-year-old Californian Palmer Luckey used smartphone parts to create a series of headsets, each time improving the technology, slowly proving that VR wasn’t a recipe for nausea. 

Since that critical refinement, billions of dollars have poured into the industry, igniting a feeding frenzy that’s brought big fish and little fish to Puget Sound waters: Luckey’s California-based Oculus, acquired by Facebook for $2 billion in 2014, has offices in Redmond and Seattle; Redmond-based Microsoft has the HoloLens headset, which utilizes “augmented” or “mixed” reality—essentially digital elements visually overlaid in the real world, similar to how Pokémon Go uses smartphone cameras to superimpose animated monsters over city streets.

And then there are small companies like 8ninths and Envelop VR, chasing the boom to come.

Another local startup on the software side is Pluto VR, which is making a whiteboard app for business, as well as games. While startups in “Silicon Beach,” the name given to a hive of tech activity in Los Angeles, focus on the medium’s cinematic potential, many Seattle-area startups are focused on business uses and gaming. 

Each of these companies represents a gamble on VR’s potential, given that there are no best-selling VR headsets on the market yet. At the moment, it’s an industry built on wishful thinking.

But to hear VR proponents talk about this technology, all you need to do is put on a good headset that’s running the right software and you’ll understand what the buzz is about. You’ll walk on the floor of the ocean, soar above a city or dodge bullets in slow motion. 

Jennifer Butte-Dahl is an early believer in the transformative possibilities of VR. A faculty member of the University of Washington’s international studies program, in 2015 she spent time working in a Syrian refugee transit camp in Greece. When she returned to the U.S., she was frustrated that most people didn’t seem to understand the seriousness of what was happening, and that the issue seemed to exist only in the abstract for news consumers.

Then a friend showed her a short virtual-reality film titled Clouds Over Sidra, which focuses on a 12-year-old Syrian refugee in Jordan. “She leads you by the hand through her life,” Butte-Dahl says. “You’re in her tent, you’re in her classroom, you’re on the soccer field with her, you feel like you engage with the people around her. And I took that headset off, tears streaming down my face, and said, ‘This is how we get people to care.’…It allows for empathy and compassion in a way I’ve never experienced before. It’s gotten me really thinking about what’s possible in international affairs using virtual reality technology.”

That may be one reason The New York Times has been pouring resources into VR nonfiction storytelling and real-world immersion. Clouds Over Sidra was created in collaboration with the United Nations. This year, the Seattle International Film Festival highlighted films like it in a special subsection of the festival dedicated to VR moviemaking. 

But for VR’s world-changing potential to be realized, the industry must overcome a single hurdle: It needs to catch on with consumers. 

Major companies seem confident that will happen, and are rolling out VR headsets at a rapid pace. In March, Oculus released its first consumer headset (The Rift). Shortly thereafter, HTC and the Bellevue-based Valve Corporation partnered to release the HTC Vive. Microsoft has been testing its HoloLens on the International Space Station in preparation for a consumer launch in the near future. It prefers to call it “holographic computing,” not VR or “augmented reality,” and plays up the business applications, such as virtual whiteboards, virtual retail showrooms and collaboration between teams far away from each other. Sony, on the other end of the spectrum, embraces the VR label and its gaming applications, and will release the PlayStation VR in time for the holidays.

Image courtesy of 8ninths
Seattle firm 8ninths created this prototype for Citibank that combines augmented reality and virtual reality. The goal: to surround bankers with information, like traders on the floor of a virtual New York Stock Exchange, so they can quickly see where the action is in the market

Another hurdle is the price tags for these headsets and the equipment needed to use them. The Oculus headset, which retails for approximately $600, requires a souped-up PC with memory and graphical processing ability far exceeding the standard computer. Its success is widely seen as relying on hardcore gamers, who are the original advocates of the VR vision and the most willing to shell out money to try it out.

And therein lies a tricky business proposition for nearly every virtual reality company. While Microsoft is aiming its HoloLens at wider audiences right off the bat, gamers are just about the only people buying the headsets right now. Sheppard says games are “the lion’s share of current VR usage, and definitely driving the consumer wave that we’re seeing today.”

Virtual reality has always been very close to the gaming industry. In fact, all development for 8ninths’ new virtual products is done using the same platforms as popular first-person shooter games, a genre best known for titles such as Call of Duty or Halo. The Oculus Rift, in its original Kickstarter campaign, was originally branded as strictly a “gaming device.” 

Ultimately, this fact may have helped the non-gaming VR industry to take root in Seattle. Because of the multiple gaming companies located in the Puget Sound area—Microsoft’s Xbox and PC gaming division, Nintendo of America’s headquarters and Valve, to name a few—this region is full of the tech talent needed to create VR programs. 

Yet it’s a mistake to think of VR and AR as strictly an entertainment technology. There is disagreement about whether gamers are really needed for it to launch. Berry believes VR is up there with smartphones or PCs, and notes those innovations didn’t need popular games to penetrate mainstream culture. 

As those who have tried the technology attest, there is something undeniably compelling about the immersion VR provides. Luckey speaks of using his Oculus Rift to simply watch movies as if in a big-screen theater. Oculus’ biggest booster, Facebook CEO Mark Zuckerberg, imagines people watching basketball games as if they’re courtside, or using the headsets for communication as well as entertainment. 

“The benefit of this tech in so many different facets of our life is so obvious when you experience it,” says Berry. “This is a fundamentally new computing platform.” 

As compelling as VR sounds, there’s not yet a clear answer to the question of whether it will start changing our lives in the way smartphones have. Back in the offices of 8ninths, amid the hive of smart people figuring things out as they go, it feels possible. 

The name 8ninths derives from Ernest Hemingway’s old adage about great stories. They’re like icebergs, the saying goes, which are almost entirely hidden beneath the surface of the water. Only one-ninth or so is visible. The metaphor and the company are a perfect crystallization of virtual reality in 2016. There is a small glimpse of the full potential, extremely enticing to many, with a full shape yet to be revealed.

Bellevue's University Bookstore to Close, but the East Side Keeps Its Edge

Bellevue's University Bookstore to Close, but the East Side Keeps Its Edge

Bellevue is in many ways more “urban” than Seattle now—certainly, it’s racially more diverse, which is complete flip from the white-bread suburbs of the ‘60s and ‘70s
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Berger supervising a photo shoot of Bill Gates and Brian "The Boz" Bosworth in 1988

The news that the University Bookstore is closing its downtown Bellevue location next month is hardly big news. Bookstores have had to close, move and adjust to changes in the book biz. Elliott Bay relocated from Pioneer Square and now thrives on Capitol Hill. Amazon—blamed for driving many small independents out of business—has opened a dead-tree bookshop in University Village and another in Portland. Change happens.

Still, the news spurred memories of the not-so-distant past when the U-Bookstore’s move to Bellevue in the early ‘80s was part of a wave of urbanization—you could call it the “Seattleization”—of the Eastside suburbs. Back in the ‘70s and ‘80s, Bellevue became of the focus of what became known as “Edge City” city building. Skyscrapers popped up, much to the surprise of Seattleites who looked east and saw high rises. Between them and the Cascades.

There were other signals. Microsoft moved to Bellevue in 1979, before settling in Redmond, and became the vanguard of the Silicon Forest. In 1976, Starbucks opened its first outlet in Bellevue, and today the oldest Starbucks in Bellevue sits in a strip mall across from Bellevue Square on NE 8th and just around the corner from the U-Bookstore. Crossroads shopping center revamped as a kind of suburban mall-meets-Pike Place Market with a newsstand, bookstore, public chessboard, and a catalyst for social services. The demand for “third places” in the suburbs—often criticized as a desert of “no place” cul de sacs—was growing.

That growth was nurtured by other developments. In 1976, Bellevue got its own daily newspaper, the Journal-American, so Starbucks goers had first-rate local news and columns to read over their lattes each morning. In the late ‘80s, the statewide magazine I worked for, Washington, which had launched in Bellevue in the mid-80s, did a cover story on the fact that two major national celebrities were based on the Eastside: Bill Gates and Brian “The Boz” Bosworth. One seemed to reflect a new braininess in the ‘burbs, the other a kind of brazen, bleached Seahawks celebrity whose attitude suggested an in-your-face approach far different from quiet good guys suburban dads like Steve Largent. It seemed like the Eastside was an Edge City gaining some edginess.

In 1990, Seattle Weekly launched a sister paper on the Eastside. I was the editor and publisher and we arrived because we saw the changes of the ‘70s and ‘80s—the spread of cafes, the yearning for arts, the demand for urban amenities and services—increasing. An essential part of that was reflected in moves by chains like University Bookstore were a sign that a new kind “psychographics” was emerging, a population that wanted something more than split-level, bedroom community isolation. A population of readers, for one thing, that didn’t want to have to cross a bridge for culture, or good coffee.

The trend has been a steady, prosperous for Bellevue and the Eastside. Bellevue is in many ways more “urban” than Seattle now—certainly, it’s racially more diverse, which is complete flip from the white-bread suburbs of the ‘60s and ‘70s. It is now a majority minority city—the largest in the state!

Bellevue used to be Ronald Reagan country, but has been shifting “blue” politically since the early ‘90s. Light rail is coming, the cranes are still building, and the Edge City is now a big city in its own right. The seeds for that vision were planted long before the University Bookstore came to downtown Bellevue to serve hungry minds.

But the U-Bookstore’s move to Bellevue in the ‘80s was like an indicator species signaling to Seattleites and Eastsiders that the Puget Sound ecosystem was shifting. And boy, have they.