The Challenge of Replicating Reality with Steve Zhao from SandboxVR | Summary and Q&A

February 22, 2023
The a16z Podcast
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The Challenge of Replicating Reality with Steve Zhao from SandboxVR


Sandbox VR, a full-body VR experience company, faced numerous challenges including lack of funding, bankruptcy, and the impact of the pandemic. However, they persevered by investing their own savings, focusing on immersive content, and leveraging the power of social sharing. The company aims to become the new movie theater experience and continue expanding worldwide.

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Key Insights

  • 👻 Sandbox VR's success is based on providing an immersive full-body VR experience that allows customers to feel fully present in the virtual world.
  • 🤩 The company's focus on social interactions has been a key factor in its growth, with customers using Sandbox VR as a unique and engaging way to spend time with friends and family.
  • 🤑 Highlight videos have been instrumental in creating word-of-mouth marketing, with customers sharing their experiences on social media platforms.
  • 🤐 Sandbox VR's partnerships with popular IPs, such as Star Trek and Squid Game, have helped attract a diverse customer base and enhance the brand's appeal.
  • ❓ The company's ability to adapt and navigate challenges, such as limited funding and the impact of the pandemic, has been crucial to its survival and growth.


you know running a startup is hard running a retail start during the pandemic is really really hard and running a retail stock during the pandemic while going through chapter 11 is really really really really hard what would you do if you believed in an idea but no one would fund you everyone thought it would fail and the industry you're in also ha... Read More

Questions & Answers

Q: How did Sandbox VR survive during the pandemic?

Sandbox VR faced a steep decline in revenue during the pandemic and had to refund customers and downsize their team. However, they secured funding from investors and renegotiated rent agreements with landlords to survive the challenging period.

Q: What sets Sandbox VR apart from other VR experiences?

Sandbox VR differentiates itself by offering a full-body immersive experience that can be enjoyed with friends and family. The company prioritizes building high-quality content and creating partnerships with popular IP brands to enhance the user experience.

Q: How does Sandbox VR plan to evolve in the future?

Sandbox VR aims to expand its global presence by opening more locations and attracting franchisees. They also plan to invest in hardware development to create a seamless and immersive VR experience. Additionally, the company aims to continue diversifying its content offerings to cater to different interests and preferences.

Q: How has the pandemic affected Sandbox VR's business model?

The pandemic forced Sandbox VR to temporarily close its locations and refund bookings, resulting in a significant decline in revenue. However, the company adapted by renegotiating rent agreements and focusing on countries where restrictions were lifted earlier. This allowed them to bounce back and attract customers seeking immersive social experiences after extended periods of isolation.


In this video interview, Steve Zao, the founder of Sandbox VR, shares his journey of building the world's leading full body VR experience. He discusses the early challenges he faced, how Sandbox survived the pandemic, the difficulties of building across hardware, software, a new computing platform, and real estate, and his thoughts on the future of VR.

Questions & Answers

Q: How did Steve's experience as the child of entrepreneurs influence him?

Steve grew up watching his parents work hard as entrepreneurs, starting from their garage and eventually growing their business. This showed him the value of hard work and the potential for great things to happen through entrepreneurship.

Q: How did Steve start his first gaming company, Blue T Games?

Steve started Blue T Games while in university as a game development studio creating downloadable shareware games. It was born out of the 2001 stock crash when Steve needed to find a way to fund his tuition. Blue T Games ended up being successful, with one of their games, the Dark Parable series, being downloaded millions of times.

Q: Why did Steve decide to start Sandbox VR in 2016?

Steve saw the potential of VR as a consumer platform and wanted to get involved early on. He also had a vision of creating a full body VR experience, inspired by the movie The Matrix, and believed that VR was the missing component needed to bring that experience to life.

Q: How did Steve and his team overcome the challenges of limited funding and building a demo for Sandbox VR?

With limited funding, Steve and his team had to be resourceful and focused on what would have the biggest impact. They created a highlight video feature that customers could share, which became a viral marketing tool. They also found a cheap location in Hong Kong with low foot traffic but affordable rent to launch their first Sandbox VR experience.

Q: How did Steve and his team survive the pandemic and the resulting loss of revenue?

The pandemic hit Sandbox VR hard, causing a 110% loss in revenue. They had to refund all bookings and had only three months of runway left. Steve had to make the difficult decision to let go of 80% of the team. However, they rallied together, created a comprehensive plan, gained investor support, and went through Chapter 11 to secure funding and protection. They also focused on countries with low pandemic impact to reopen and renegotiated rent deals with landlords.

Q: How did Steve convince landlords to fund Sandbox VR's projects and provide long-term leases?

Steve and his team showcased data from their pandemic operations, such as having 100% of bookings done online in a mall with zero foot traffic. They demonstrated the appeal and profitability of the Sandbox VR experience and convinced landlords to take a bet on their company.

Q: How does Sandbox VR differentiate itself from its competitors?

Sandbox VR aims to create a new market and sees itself as the new movies experience. They offer highly active and immersive experiences that can be shared with friends and family. They focus on social interaction and building relationships, making Sandbox VR more than just a gaming experience.

Q: How does Sandbox VR plan to scale and release new games?

Sandbox VR currently has six games, and each game takes about 12 months to develop. As they expand their locations, they envision a franchising model where third-party developers will create content for the platform. This will allow for local content, branded content, and a variety of genres to be added to Sandbox VR's offerings.

Q: How does Sandbox VR engage and retain its customers?

Sandbox VR emphasizes new experiences and encourages customers to come back and try something different each time. They focus on creating a memorable experience that can be shared with friends and family. They also prioritize customer engagement through social media sharing and video highlights.

Q: How does Sandbox VR see itself in the future of VR?

Sandbox VR believes in the long-term potential of VR as a gaming and social platform. They aim to be at the forefront of this future, expanding globally and revolutionizing the way people play and socialize. They see themselves competing with box office movie hits and becoming a staple in the entertainment industry.


Sandbox VR's journey is a testament to the challenges of running a startup, especially in the retail industry, and overcoming obstacles such as limited funding, a pandemic, and bankruptcy. The company's success lies in its unique and immersive full-body VR experience, its resourcefulness, and its focus on creating social and memorable moments for its customers. As VR technology continues to evolve, Sandbox VR aims to lead the way in redefining entertainment and social interaction.

Summary & Key Takeaways

  • Sandbox VR founder, Steve Zao, faced significant challenges in running a startup, particularly in the retail industry, during the pandemic and while experiencing bankruptcy.

  • Despite the obstacles, Sandbox VR became a leader in full-body VR experiences with over 30 locations worldwide.

  • The company emphasizes immersive social experiences, using highlight videos to engage customers and create word-of-mouth marketing.

  • Their focus is on building a wide variety of content and creating partnerships with popular IPs, such as Star Trek and Squid Game, to attract a diverse customer base.

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