'We set a goal: make virtual reality accessible to everybody'

HSE graduate Ilya Flaks’ company Fibrum began selling the Fibrum Pro virtual reality headset and its accompanying software in 2015, and both have since become well known throughout the world. In the latest edition of Success Builder, Ilya talks about how one can make tens of thousands of dollars while still a student, why he never ‘worked for the man,’ and whether virtual reality is really dangerous.

Let’s start with how virtual reality came into your life. What got you interested in the topic?

The computer came first. I was born into a family of engineers and teachers. My parents graduated from Kazan Aviation Institute, so I had had a BK personal computer since I was very young – then a Spectrum, MMS, and finally a 486. At the time, the films The Lawnmower Man, Johnny Mnemonic, and The Matrix were popular, and all of this got me thinking about the future of the virtual world. I made my first game when I was 15; it was called Gambling Race and had an entire internal economy. Around 400,000 people played the game. I also created a game with my partner Renat Akmalov. He worked on development, but I did marketing, promotion, game design, and audience communication. We didn’t spend a dime on advertisements the first two years of our gaming business. I would write to different sites about software, saying I’m a ‘poor schoolboy’ and asking for help. So they gave it to us.

Did you make any money off that?

Tens of thousands of dollars, which is now equivalent to between $50,000 and $100,000. These were some of the first Russian games in the gaming arena of the entire CIS. This was an insane amount of money for a student. I made more than the parents of all of my classmates combined.

Why didn’t that ruin you?

The temptation was there. But at the time, I understood a very simple truth: the more you do of something, the more free time you have. This goes against all universal laws of physics and time, but while my classmates were chasing a ball at recess, I was able to study at an art and music school, graduate high school with honours, and then university with honours. School is an important stage for growing and structuring your thinking, and it’s from this structure that excellent time management skills come. I founded the company Sokol, which provided students with an entrepreneurial education, while I was in school. I was the president there. We even created a mini factory, and during labour classes we’d made different crafts and sell them at fairs and markets. I simply understood that having a lot of tasks organises and energises you, which is probably why it was easy for me to study at HSE with the pace of life here. I also managed to play all of the games that existed during my time at school.

How did you turn it all into an official business?

After school I started working with IT technologies in the gaming industry at the company Inform Mobile (IMMO Games), which was right around the time social networking was growing rapidly. After about a year we had built up a user base of 65 million people. The company was around between 2011 and 2013 and was a top-five company by number of users among Russian social networks. We were already having meetings with Pavel Durov. I can say that he’s not a mythical person, but very few people got to meet him at the VKontakte office and that’s the truth.

How did Fibrum start?

I saw the Oculus virtual reality headset, which cost $500-$600. After analysing the product, my colleagues and I understood that the inside of the headset was practically of the same configuration as any mobile smartphone. Every person has a phone – there are now 1.9 billion phones in the world, 700 million of which can be used for virtual reality. Based on such simple analytics, I set a goal: make virtual reality accessible to everything. You can buy a $50-$100 headset and load any software in any location. Right here and now, you can experience emotions that you don’t let yourself experience in real life. Simply put, the headset makes your dreams a reality. I founded Fibrum, which developed the Fibrum Pro headset. This particular headset can be used with smartphones and was created entirely in Russia.

We took the headset to the SEO Conference in Kazan and raised a ruckus we hadn’t expected. People put the headset on and were amazed by the unexpectedly realistic software. Everyone wanted to buy the headset, but at the time we only had prototypes. After becoming certain there was a demand, we began creating more software and putting the finishing touches on the headset. This is how four of our software products came about: Roller Coaster VR, Crazy Swing VR, VR Cinema, and Zombie Shooter VR. Now we already have 29 software products, and 13 million users have downloaded them around the world. All this and we never spent a ruble on advertising.

We were hoping to sell the headset by the millions, but we unfortunately didn’t understand that the Chinese make everything faster and for less money. Plus, the market wasn’t ready to accept our product; retail chains and online stores were scared of the new and revolutionary, which is what the Fibrum Pro was at the time. The market was only taking shape, but all players have problems with software and cheaper Chinese analogues. The Chinese market has a lot of cheap virtual reality hardware with our, Russian, software. We go to international exhibitions, walk up to our Chinese colleagues’ stands, and see our own products. Clothing designers will understand this very well.

What did the market look like when the Fibrum headset came out in 2015, and what has changed since? How did you prepare for the launch of the product?

There’s no market right now actually. This was a total experiment, and no one knew what would come of it. I’ve been able to create cool software many times before given my experience in the gaming industry, but as for the headset, we were going into uncharted territory. I studied different types of glass, production processes, capacities, certification problems, logistics, etc. Now we have other market players following in our footsteps, and there are other headsets out there, so we make money largely from our quality software. When a client buys a headset with the wrong software, this undermines his or her relationship with virtual reality as a whole. This is why it’s important to make an excellent first impression with the right emotions.

Is the headset essentially just a pair of glasses?

It is, and you can hook up any phone to it – iPhone, Android, Windows… Remember, virtual reality should be accessible to everyone. One of our apps is a virtual movie theatre where you can download any film to watch, and you get the feeling that you are actually there in the train, on the airplane, or at the house shown in the film. We give people personal space wherever they want to be for $50-$100.

Is the headset harmful? How does it affect the brain? Have you consulted any physiologists?

We worked out the physiological aspects on our own. The first product was reworked many times because you have to strike a balance, and it should be interesting and exciting, not scary. This is a very fine line. Virtual reality tricks your cerebellum, and I’ve seen how unpredictably people have reacted to this. In the headset’s two years of existence, our team has accumulated the expertise, knowledge, and experience with experimentation. As for literal physiology, we realised that we needed hypoallergenic silicone, which improves hygiene. We hired our own optician to develop lenses that don’t require different settings. They are made from high-quality glass, not plastic like the majority of headsets. Thanks to this, they don’t require adjusting. People with vision between -5 and +5 see the image clearly. With any other headset, you have to spend 10 minutes or so adjusting – who needs that? Pleasure here and now!

How is virtual reality used in the travel industry and at museums?

There are a lot of different areas within virtual reality – medicine, education, virtual theatres, tourism, architecture, entertainment… Taking into account the dollar’s exchange rate, not everyone is able to afford to travel around the world. Instead, there are several larger applications like VRSE and Jaunt VR. As for real estate, you can come to the sales office, put on a helmet, and see how your future apartment will be constructed. We also had an interesting project with Yandex.Taxi in Moscow and St. Petersburg. You put on the headset and while you’re riding in the cab, you are immersed into virtual landscapes, just without snow or dirt everywhere… The same thing is happening in education. Imagine taking physics, chemistry, or biology classes completely in virtual reality. The student puts on the headset right in the classroom, forgets about his or her out-dated textbook, and learns about anatomy in a 3D format, for example. We have released a charitable product about the history of World War II, Road to Victory, for children, and they were able to see the raising a flag over the Reichstag first-hand in virtual reality.

This will make kids no want to go to school...

On the contrary, this can take the education market to a new level and make learning more interesting. Electronic textbooks were unable to gain popularity, but virtual reality can help with students’ medical training, for example, since they will be able to practice with virtual operations in the same way that pilots do flight simulators.

How much does it cost to develop this sort of virtual software?

App development costs vary and can be between $10,000 and $50,000. It was much more expensive to develop the helmet because we had to carry out a lot of experimentation and make mistakes first. Good software is the focal point on the virtual reality market. Why are the Chinese analogues to our headset still not sold in Europe or the U.S.? Because they are simply pieces of plastic without the pretty packaging, certificates, annotations, logistics, and good software. Simply put, they’re not a complete product.

How do you see the future of your product’s success?

There was a virtual reality surge in the 1990s when the VPL headset came out. It was a failure, though, because it wasn’t in demand and didn’t have the hardware needed to give the user an instantaneous sense of euphoria. Now the technology becomes better and better with each version, and the industry is growing two- and threefold. Between 2014 and 2015, the market grew 100%, and between 2015 and 2016 – anywhere from 200% to 300%. Virtual reality is a market for big investments and big players who are powerful tech movers. The market has three large segments right now: computer VR, console VR, and mobile VR. The latter is the most progressive, and it’s the segment we prefer. Everyone has a smartphone and a large proportion of these phones are compatible with virtual reality apps.

My favorite aspect of this is the ethical question. Could real conventional values undermine VR as a whole?

I am against Skynet [an AI system and the made-up supercomputer of the U.S. Department of Defense in the movie Terminator] and I’m against terminators taking over our universe. Since I was in school, I’ve kept track of the lives of famous gamers. They were leaders in electronic reality and formed clans. It gave them experience and taught strategic thinking. Now they are bankers and cool businessmen who have been training in VR since their school days. I believe that virtual reality gives you emotions that you are unable to allow yourself to experience in the here and now, and this in no way replaces friends, love, or your relationship with the outside world. Virtual reality is the cherry on top that decorates, but does not replace, life.

You’ve never been tempted to ‘work for the man’ for your career’s sake?

Never. All of the projects I worked on were my own or in certain cases my partners’ and mine, such as IMMO GAMES. Experience with virtual reality gives you new emotions and sensations, and the rave reviews really motivate the team. I’m really inspired by working with the team and working around people I’m comfortable with and with whom everything just works out. This might be an important factor in my independence as well. I have a great team where energy and motivation, not quantity, are at the forefront. Fibrum’s headquarters now has 24 employees plus developers who work remotely.

Why have you stayed in Russia despite the allure of the innovations market? Why don’t you go to California, for example?

We are actually actively entering the global market right now. While last year we sold 15,000, or 90%, of our helmets in Russia and only 10% in Europe, this year 70% are already being sold abroad. We are in several stores in the U.S. – Fry’s Electronics, Bluwire, and Best Buy – and you can buy the headset at larger airports as well. We also participated in an official Emmys party (Doris Bergman's 7th Style Lounge & Party in Celebration of Emmy Season).

Plus we almost never engage in PR activities. We give interviews, show our products, and participate in events, but if your product is truly good then you really don’t need PR. When people see the wonderful emotions users experience from our products, they want to write about it. We are currently opening up a company in the U.S., where the main VR team is concentrated and where this isn’t a special ‘know-how’ anymore like it is in Russia, but an everyday product. We have a company in Hong Kong that distributes the headsets and software around the world, and in Russia this is the Fibrum trading house. Additionally, 90% of our downloads happen not in Russia, but in the U.S., South Korea, Canada, and England. Our participation in various events is good advertising for us.

What were you missing after your first college degree? That is, why did you go to HSE?

I was invited to study at HSE on a grant, and I came to Moscow for a year to do an internship. HSE reformatted me – I came to the first lecture with a notebook and pen, but everyone was sitting there with laptops, which I wasn’t used to. I understood immediately what was happening, and as soon as the year was over I enrolled in HSE’s E-Business master’s programme. It was surprising that the teachers weren’t older academic scholars, but real businessmen who gave us a lot of practical things to do. At the time, several classmates were already working at my company, but HSE gave me new connections, resources, experiences, and viewpoints. It was very serious.

Can you talk a little more about connections?

My team is an example of this. Ekaterina Krechetova, who is the marketing and PR director, and Daniil Shcherbakov, who is Fibrum’s development director, came to the company from HSE. For five years already, I’ve been leading the final stage of the Winter School of Economics for the School of Business Informatics, where I’m a judge for a project competition, and at the same time I look out for people to join my team. I periodically give lectures at the School of Business Informatics. I’d like to spend more time at HSE. To be honest, the company takes up so much time that I practically have no time to see my family and I haven’t had a vacation for two years.

Does Yaroslav Kuzminov have one of your headsets?

We gave him a headset in 2015. We can provide a proof pic. [laughs]