Diana Hu on Augmented Reality and Building a Startup in a New Market

All right, Diana! Whoo! Welcome to the podcast. Thank you for having me here. Correct, so maybe we should start from now and then go backward in time. So, you're working on AR at Niantic after your company, Escher Reality, has been acquired. How did you serendipitously stumble into AR?

Well, AR is a funny field; it’s not like a single discipline. AR is a culmination of so many fields. To really build a great experience for augmented reality, you need, of course, part of the computer vision aspect to be able to take sensor image data to understand the world, graphics to render it. Then there’s actually a lot of engineering to make all this run in real time—so systems, distributed systems, to make the experience just gel together. Together, working at some point in devices, you have hardware, optics, and there are so many of those pieces.

Personally, I’ve come from a very diverse technical background. I’ve done, before I worked, a lot in cloud television, recommender systems, and doing analysis on television streams with computer vision techniques. That was one space I was in. The space of semiconductors at Intel, we understood a bit of a few things about hardware. Coming into AR was an interesting point because it is such a kind of technology that I really do think it's the next technology evolution. So, we went from desktop to mobile, and the next one, in terms of representing information in a very rich way, is going to be the space of mixed reality with AR, VR, and beyond.

And that will take many, many disciplines to join in to do something interesting. The reason for coming into AR was that part, plus I think I’ve always been interested in some sense of the possibilities of what AR could do. I’m a lot of curious—very, very curious about that. What it could take to be able to see information blend in in the real. This is this concept of like, pixels versus photons—where’s the line now between pixels and photons?

Do you recall the kind of first exposure you had to it? Where it clicked?

Yeah, first exposure. So, I think part of it is the thing that I really enjoyed about AR is about being engaged in reality instead of escaping it. Where imagination to show or tell a story is used to engage even more—so, more deeply—with more layers of information represented rather than really skipping it. The magic in AR, it’s not just whimsical. The reason why magic is so magical in AR is that you see a lot of the digital representation believable there.

The first time I worked on projects, there were some in the past. I did help some startups build some projects way back. One of them was building a 3D life-failure display, so basically you could see 3D without glasses. It was like, “Oh, that’s really cool!” Psychologically, Holograms and in Star Wars—so that was one part. Then you start peeling the onion, or rather, all the pieces needed from the technology.

AR is a fundamental piece to build this new kind of infrastructure to just change the way we do computation for information. And so obviously, like Niantic, you’re working on games. At what point do you think AR becomes this kind of like first-class citizen in media—alongside video, photo, and I guess audio?

Yeah, I think it will take time because we're at the early stages. I think the progress of technology has different cycles. I mean, if you read some of the work by like Carlota Perez, talking about innovation cycles, there are like big two stages. Stage number one is when technology gets installed—quote-unquote. So installation types of technologies are when the applications are not ready to be built because you really need the tooling to be able to express those applications.

Examples of types of installation technologies are just like network infrastructure, operating systems, programming languages—all these levels of abstractions that are needed. Because you're not going to, let’s say, an example today: It would be crazy to program a website based on assembly. So you really need those abstractions to be built, to be able to have a richer way of creating experiences that are more advanced because you know you want to kind of build on top of the abstractions always.

So, AR is kind of at that phase of really building the installation phase, you know, solving all the hard problems so that you get to a very expressive world in the future that I imagine where programming AR could be just as simple as spinning up a website. Because right now, it’s very specialized; there’s a lot of understanding needed to create AR experiences. There are things with 3D environment development that are a very good mix for gaming. This is why gaming is also very good for AR in the early stages.

That’s kind of part one. And just to close this, the second stage for this technology cycle is the deployment phase. That is when really you see the explosion because you have this kind of solid infrastructure built. Deployment is when you have all these applications built into different industries. At that point, let’s say just to give you another example: The installation phase was about just getting the hardware devices and the operating system with iOS and Android. Then the deployment was all this proliferation of apps—and it just exploded when the tooling and level abstractions were right enough.

So, for AR, just to close that, we’re not there yet at all. There’s a lot of groundwork that needs to be done. There are some early choke points because you do need examples of applications to be able to inform and build the right kind of OS infrastructure to accelerate that.

In particular for Niantic, it’s an exciting place to be because we do build a lot of real-world games; that’s our bread and butter. Functioning is a very good information internally for the company to really take that knowledge to really build this platform that we call the real-world platform—the Niantic real-world platform!

Yeah, and going further than that, as you talk about expanding past games into other markets, what are the signals you’re looking for that you’re even building the right thing? You know, think about it in the context of product-market fit, right? How do you even know you're going in the right direction? Because you can make analogies to the software stack in the web, but like, it could be the wrong direction, right?

Yeah, it could totally be the wrong direction, right? I mean, it’s kind of making educated guesses sometimes. The thing about AR is actually it’s not a completely new concept. The concept of augmented reality has actually been around since way, way back— even in the seventies. The first VR headset might have been even in the sixties. I don't recall the exact date, but it was by this kind of monster thing called the Sword of Damocles—it was like this giant thing.

Yeah, okay, it’s like early days where people were just exploring things—how would it mean to display things directly to people's retinas? But of course, the computational power wasn't there, the optics weren't there, there were a lot of challenges—not quite there yet. But with AR, it got a more concrete head start in the nineties with flight simulators. But that was super high-end stuff; it was only available to the government, right?

Yeah, and it takes couple cycles to really get the technology at a price point ready for consumers. So, I think the timing—knowing AR has been—it’s not necessarily new, but the timing is getting there. There are a couple things that are exciting why we decided to tackle AR.

One of the things about starting companies is you can have a great idea, you can have a great team, and also great investors, but sometimes the timing is just something you don’t control. You could have all those other things be amazing, but the timing is so hard, and that gives you some time that multiplier effect. The fact of it is there are just so many things outside your control and in the environment.

For AR, it came to be two coupled trends in technology that really made sense. A couple of them, one, AR is tagging along a lot of the infrastructure that the mobile world built. Like it is very easy now to build a phone if you want. There’s, like, the supply chain for all the components, sensors and cameras, and even processors associated with that. This is getting reused. In fact, for a lot of the AR versions or AR headsets to hit the consumer price point.

So, riding that wave was like building on top of that infrastructure built by mobile—repurposing and swapping some things. Still, the optics need to be figured out, but a lot of those can be reused from the mobile space. So, the second technology trend that is really hitting for AR to be something real, besides Moore’s law—everyone is familiar with it. Computing is getting faster every 18 months—twice kind of, kind of sometimes.

I mean, now, it's more about many cores so you could do more complex computation for algorithms in tiny devices, right? The other thing is—I don’t hear many people talk about—but there are many versions of Moore’s law. But for other things, like Koomey’s law, okay? It’s very similar. Every 18 months, with the exact same computation, it’s gonna be a half, third power efficiency. So what that means is, if you really look at the numbers, the last time I looked at it, the iPhone 7 beats all benchmarks for CPU and GPU loads when you compute something as much as any MacBook Air that has been launched at a fraction of the power.

Isn’t that crazy, right? That’s insane! It tells you how powerful mobile devices are, and at the exact same time, you think of a MacBook Air being a pretty beefy chunk of computer that could do a lot of things. Yeah, and your iPhone 7 beats it at a fraction of the power! And you could apply that to, if you really track it, it’s really getting to that point where you’re having compute that’s becoming a lot more power efficient to get to headsets.

In AR, it would at some point hit that magical total power cost, which they want to be in single digits. So you feel certain constraints on the actual hardware side and then getting there—so shrinking—that's another one—yeah, power efficiency. The third one, another law—there’s Edmund’s law. It comes from—it was the CTO for Nortel, okay? He predicted way back talking about technologies with speed and bandwidth of a wireline.

So basically, if you have a wired connection for the internet, wireless does the other one. The other one you call it ‘the nomadic,’ but one nomadic really means in our language is like 3G, cell tower, LTE, 5G type of connections. They all kind of also moving exponentially as well, tracking behind the other ones. So at some point, the concept is that right now, our LTE connection is just as good or better than dial-up in the nineties relative to AR for networking.

Right, so that applications built in AR are data-hungry because there’s a lot of—you’re pushing pixels, a lot of content. It’s not just with mobile apps; it’s a lot of, kind of, more tech, the formation, yeah—pixels are expensive. So at some point, the thing that’s exciting right now is just to give you some numbers: like 4G or LTE right now—your cell connection is about 1 megabit; with what 5G infrastructure is supposed to get, you can get to 10 gigabits. It’s like 10 times more, I guess like hundred times more, times, yeah, tens of megabits.

Ooh, thank you! A bit—wait! So, if you’re thinking about starting a company in, I mean, like you described, AR/VR, it’s kind of been around for 50 years or whatever, but it’s relatively nascent area—what is your advice for a founder thinking about starting something? Because you went through the whole thing, right? Like you did YC, raised money, got acquired, all that—like, you know, kind of like more traditional sort of stuff. How would you tell a founder to strategize around, like, even choosing a product to build?

Yeah, it depends on the industry. The challenge with spaces like AR and VR is that there are a lot of unknowns, right? Okay, and it’s hard to be in the space right now when there are so many things moving—it’s supremely difficult. I mean, I know kind of a sense AR is following on the footsteps of what’s happening in VR and the maturity cycle a bit.

Okay, where for VR, it was—at some point, I mean the hype when Oculus got acquired hyped up the whole space. Right after that, it has been difficult for sometimes to raise money for that space. For content creators, it can be difficult sometimes. I mean, not impossible, but sometimes it's difficult.

For AR, it has a bit of that—people are still right now testing the waters on what is the killer app for AR. That's so early to be determined! The one that we see right now is Pokémon GO. Niantic’s—there’s one of the few, maybe only AR games that are significantly profitable. So it’s hard for a founder starting right now.

Well, my bet—and I’ve been talking about these technology trends and economic cycles—is personally thinking of betting more on the installation phase kind of style of companies which have to do more with core technology that gets built out. Because a lot of those, there are tons to do; there’s so many problems to solve before any of that—before going into the application.

Right, those I think have a better chance right now if you ask me about now—later could swing and change. But those are some of the companies I see in AR having a bit better chances right now.

Right, so you can kind of have conversations with investors around tooling, around developers? Those are the kind of paths you found?

Yeah, more interesting, but it’s also a bit challenging because as a tooling and infrastructure company, if the investors are going into a tree—okay, through your customers who are developers, they still make money, right? Yeah. Or are they just like kids goofing around in their basement?

Yeah, it’s just hard to kind of have to sometimes find the believers in that. So, creating technologies in kind of this emerging tech sometimes is difficult because it’s all about finding what was that process like—how’d you find the right folks?

So, in one sense, we had the good timing that AR just got launched at that time. I mean, that’s another funny story when it got launched, so there was a lot of positive enthusiasm for the space around that. Yeah, that was one. The other one, we were lucky to really get connected with investors who really believe in this future and with us, that it would take a long time.

So, we got backed up. Our early investor for our seed round was Jeff Clavier from unclog capital who really was with us and really believing in where all these pieces were coming about and really taking that. And besides, there was also Founders Fund also seeing that vision with us—that yes, this makes sense!

So, kind of finding those people. So, were those folks through demo day, through intros? How did they find you? Because I think we’re invariably people are asking me to say, “How do I find the right investor to support my vision?”

So, part of it is through the YC brand carries a lot of gravitas in a sense. Hopefully, part of it is... before demo day, we had shown one of the first AR multiplayer cross-platforms at that time—it’s like, two years ago! That worked and that created a lot of buzz that we got contacted.

And that was one of the big things about really driving the technology to have provable points. With emerging tech, you kind of have to show that it’s doable, and where it’s going—give a sense instead of so... it was actually building it, like a minimum viable product—a demo.

Yeah, which is a bit different than, you know, other founders’ friends, where sometimes that first thing is really having more actual paying customers or early traction—but for us, it was about kind of nailing down the tech early on. Okay? And then once you showed people, they were like, “Either I don’t think so—not right now.”

What were the real responses like?

I think when they saw it, the demo we showed was Pong in AR. We took a classic one—that’s a classic game—and showed it how it would—you have a ball of fire bouncing on the ground over the wall, and it would scorch the ground. That just really connected with people.

It’s just that kind of thing that people are like, “Oh, wow!” So it took some time to figure out that exact—what was that? It was more technologists to come up with that. So that was working with a lot of, I guess... whatever I’m kind of asking is like, you know, the people didn’t say yes who maybe gave you a no, or like, you know, maybe if this develops further, which is basically no—how did those conversations play out?

Because I’m trying to put myself in the shoes of someone else who’s trying to raise money in one of these, like, newer markets.

Yeah, the thing about those responses is that at times it is—but it’s kind of scary to bet in this space. One is very unknown, and it is about finding really those investors that are independent thinkers. Because sometimes, it’s funny—when someone invests, then all the other people follow.

Yeah, that’s kind of a... yeah, but you keep trying it, sometimes finding those. I think I’d rather really take someone really on board with the vision to be with you, whether... whether... the future, to do it—that’s way better!

Yeah, but, yeah, I mean, with everything is only for us, it’s a bit of an anomaly how it happened. But we did get some no’s, but it’s okay—you kind of go and keep trying, right? It worked out... worked out.

Yeah, so related to working out, you are now at Niantic as a founder. I mean, because you guys weren’t around that long before the acquisition.

Oh, yeah! That was super! I mean, it had to be one of the fastest in YC!

Yeah, we’re just joking! Was like, I don’t know if that’s a good record to set!

Yeah, yeah, for better or worse—for sure! But regardless, it happened.

There are some founders who have been on the podcast before who are now at larger companies that have acquired them. What’s your advice just to a founder who is now at a big company who is managing people leading a team? How do you make the most of it? Because you would just put, you know, your heart and soul into something that you started.

There’s a degree of passion in your thing that’s really hard to feel for someone else’s thing.

Mm-hmm, so how do you make it work and get satisfaction out of it?

It’s a very good question! I mean, part of it for us, why Niantic was a good fit is that the vision of what Escher Reality started as we are still building it, so that’s a huge motivator to continue to do that.

To do that, that’s huge—to be able to at least do that. I know it’s not a luxury for every acquisition, but to be able to do that and still have some of the freedom and the trust from the founders at Niantic is great.

The other thing is, I guess the way I like to tell Niantic still also startup, but is it much larger scale? The way sometimes is thinking about it—I’m kind of taking a shortcut, which was a seed stage, skipping it and going into series B.

Okay, it’s like... skip fast-forward. It’s what it felt like! The other thing is to take this opportunity and reframe it a bit. It’s still a very valuable space to learn other kinds of skills. So now it’s kind of more taking in that hyper-growth company.

I mean, when we joined the company, I mean, from last year to this year, it’s like at least 5x—it’s a crazy 5x increase!

5x employees?

Yeah, that kind of growth and being part of that—that was so exciting. And learning other kinds of skills and reframing those because it is kind of leading in a bigger, bigger scope.

Mm-hmm, and that’s part of it that kind of worked out. I know it’s like a lot of it comes down to relationships with people—having a good rapport with the leadership, executing, and getting all those things aligned.

I know sometimes it can be difficult because there are different cultures, right? It’s kind of like immigration, immigration.

Yeah, there’s a mutual respect for things that we can learn from each other and work together. Eventually, there’s a path to feel as a single company, to feel like now I feel as that Niantic employee, right?

It’s not. And that is when it starts kind of more working out—to really feel that bought into where Niantic is going, and that I am excited about where we’re going.

And at this point, it is exciting to see all the things that we’ve done! I mean, a lot of the demos that we showcased last year created the splash where they are, where a lot of the work in my team—yeah, great! And all the things this year announced at Niantic that are also great.

I announced the developer contest where we allowed, invited, I mean, the contest invited ten—selected, selected! That’s a word—select the ten developers to work on our platform to see what else they could build outside of the Niantic world.

So, that started as a conversation with one of the leaders at Niantic. I’m gonna work with him, who was one of the platform—he leads a platform. The early parts of a platform were non-tech sort of the conversation last year. And then it became a thing this year!

Yeah! And it’s been great to be welcomed by people like him! Like, to work on something bigger together, right?

I think if we executed this as Escher, it would have been at a smaller scale than what Niantic—we were able to do at Niantic or a longer timeframe or both!

Yeah, we got the luxury of the rest of the Niantic machine to get this out. Did you find that there were tricky elements culturally in transitioning the team together?

There’s always those when you join! I mean, right when you join—yeah, those kind of happened. Part of it is having to take the time, patience to work through those things and having faith in the long term to make it happen.

And so, this is funny—you mentioned it already, but it’s all tied back to also you being an immigrant to the U.S. and that whole experience. So, could you explain it? Because it’s actually a super interesting story. But to set it up, you emigrated from Chile to the U.S. during high school.

But maybe you can provide the backstory?

Yeah, perhaps! I think you integrate with different things in your life. It is a series of immigrations to that context. Yeah, think of it that way.

So, a bit of a summary of my life story. I grew up in Chile; I’m still a Chilean citizen. The way I ended up in the U.S. is—oh, Chile, maybe start with that? My parents were trying to find a better life outside of Chile because of all the situations that were happening back in the 70s.

So, they applied for a visa, and wherever it took them first, and the first place that they followed was Chile because another family member had been there. So, they went there.

Then I was born—and normal life things happen, right? So, I didn’t know anything about the U.S. I knew I had an aunt in there, but apparently, my parents also applied for a family visa lottery to the U.S. before I was born.

And happenstance, which is really bizarre, that went through when I was around 16, 17. My parents said it was very difficult to immigrate because you leave all your roots, learn a new language, unknown environment, start your life from scratch—from zero—you drop in the middle to do that.

It’s like we’ve done that once already; we could do it again, but it’s really hard! Think of it—take this opportunity to do something. I know there were scenes that I’ve been always curious and been good at tinkering with things and math, it’s like take this opportunity to do some things!

Like, you might end up doing something interesting. I was like, “I never had to take that chance, because otherwise I would regret it forever.”

And then moved with my aunt for a bit for the last two years of high school in there and I was boot camped for me to catch up with everything because the education in Chile is not great.

Just for comparison, you learn kind of algebra in your senior year, so I did a crunch for a lot of things in a year!

I caught up to calculus in a year—up to calculus, like that pre-calc, geometry, and all that algebra—crunched it in one year. Plus also, physics and all these things. I was up in English, I’ve been in ESL! I was still in ESL in college, so I had to take ESL when I went to college.

Self-English, it was hard! Yeah, still hard! So that was kind of the resilient part of really understanding what I could do, and it was really challenging. I mean, coming to this new space and being by myself in school—it was the hardest thing I had to do back then.

And also all of that, and because I had to really do something good out of it, and it was hard for my parents too because they were earning in pesos, and then I was living in dollars.

So, I really wanted to figure out how to cut college short. Yeah, so then I managed to also take AP classes in the last year and finished college early and then go to job and take loans and pay all that back. And that’s kind of the story of immigrating.

And through those, lots of lessons through that feel almost like a different person!

Yeah, but yeah, I was very focused on that goal—to really graduate, do something interesting and ended up doing engineering in computer science because that seemed to be what I was good at.

So, as someone who then worked in a big company, started a company, what advice would you share for other immigrants to the U.S. around starting a company and even maybe perhaps bigger than that, like just like motivating yourself to leave a big company and go out and do your own thing?

Yeah, so with the one about immigrants, I think the thing that’s exciting about U.S. versus Chile—and imagine other countries as well—is a lot of this positive determinism mentality. Yeah, but really entrepreneurial, where people really want to go out of them because things are in a state of abundance in a sense in the U.S. with stability mostly.

I mean, yes, there’s a lot of not for everyone, but yes—mostly yes here, at least! More so than, let’s say, in other countries. It is still very challenging in other parts of the U.S.—poverty lines.

But during that level of abundance, when you do get into those environments, it’s something that frees you up psychologically to really explore, and it’s exciting coming as an immigrant because you get more like-minded people.

I think in the U.S. where I found more people that kind of thought like me—more so than when I was in Chile to explore and try things out.

And there will be challenges, of course! Coming from depending as an immigrant what type of company you start, there are some that need more understanding of the cultural norms or laws. Some tiny need to be more, have more years in the U.S. to do, but there are certain things that they don’t have any barrier in those, and those are great to start.

In fact, actually, this is actually very quoted—a lot of the big tech companies have been started by immigrants, right? There’s something about that!

Yeah, about having gone through—now it’s a version of the human installation and deployment, right?

Yeah, absolutely! I didn’t mean—I think that just immigrant mentality is wonderful!

So, right now, you know, July, we’re in the middle of the YC batch. You know, in spite of being acquired and for, you know, a large company, Rena, what would be your advice to people in that batch right now to make the most of it and to be—honestly, make the most afterwards because I think that’s something that often stresses people out.

Yeah, there’s a lot of angst about what to do with your life and so I see the pinnacle and things like that. It’s a process in your life to keep always recommitting to what you’re doing.

But advice is YC is a great time to really get your... I think YC has amazing—it’s really taking that brittle stage of companies—seeing to make them pass that because that’s kind of the incubation stage where a lot of companies have a lot of difficulties.

I mean, we did too, and with YC, it gives a lot of focus on direction because that’s part of the things—like a startup, you’re limited resources, limited time, and you’re competing sometimes with larger companies that may be going after the same space with a lot more resources.

But what are the things that you can do differently, like the bigger companies? It’s things with doing activities of high leverage—there’s advice from YC that big companies wouldn’t do because they don’t scale.

It’s part of that is sometimes just doing things by hand, right? Like sometimes big companies wouldn’t just do a very brittle hacked-up demo—yeah, things like that.

So, really taking advantage of that! And YC is great for fundraising your seed and getting to know also your batchmates.

I think you never know! Sometimes a lot of these things might be the current company that you’re working in, but this is like in the future.

It’s not meant to be a kind of zero-sum or finite; you will live many lives. It might be this current company—hopefully, it’s this one that you’re building; that’d be great—that’d be great!

But sometimes it doesn’t, but there’s a lot of awesome people that you can get to know as well.

Yeah, it’s something I need to do more often!

Actually, all right, thank you so much for your time!

Yeah, I’m gonna thank you!