Oculus VR Co-Founder Jack McCauley: Five Things You Need To Create A Highly Successful Startup

… I’d say the first trait that was instrumental to my success was being nice and getting along well with others. It never gets old. Being considerate to others and being honest can go a long way. The second trait would be networking. It’s important that a business leader learns how to network. Go out to lunch or coffee with people and don’t forget the basic stuff. The third trait is building lasting relationships and investing in them. This was the key to my success and has helped me so much along the way. I am extremely thankful for the people in my life. Be authentic when you are building and investing in those relationships. For instance, calling or sending a note to one of your contacts if their child is sick, or just checking in with people can go a long way. I got many of my jobs by staying in touch with people. One of these people happened to be the CEO of Ferrari. I stayed in touch with him and it has proved to be an advantageous relationship to this day.

Startups have such a glamorous reputation. Companies like Facebook, Instagram, YouTube, Uber, and Airbnb once started as scrappy startups with huge dreams and huge obstacles.

Yet we of course know that most startups don’t end up as success stories. What does a founder or a founding team need to know to create a highly successful startup?

In this series, called “Five Things You Need To Create A Highly Successful Startup” we are talking to experienced and successful founders and business leaders who can share stories from their experience about what it takes to create a highly successful startup.

I had the pleasure of interviewing Jack McCauley.

Jack McCauley is an American Engineer, Inventor, Innovator-in-Residence and Board of Trustee at the Jacobs Institute for Design Innovation at the UC Berkeley College of Engineering, EV, Auto, VR, AR, and AI expert, Hardware Designer, Gaming-interface developer, and philanthropist. He is best known as a Co-Founder and former Chief Engineer at Oculus VR, for his work in designing the guitar-and-drum interface for the Guitar Hero video game series, inventing the first scrolling feature for the computer mouse and as one of the USB inventors. Jack also holds numerous U.S. patents for inventions in software, audio effects, virtual reality, motion control, computer peripherals, and video game hardware and controllers.

Thank you so much for joining us in this interview series! Before we dive in, our readers would love to “get to know you” a bit better. Can you tell us a bit about your ‘backstory’ and how you got started?

When I was a child, I would spend hours drawing and painting, building with Legos and erector sets. I also spent a great deal of time at the library and reading books. I was fascinated with machines and engineering and enjoyed taking apart various models and the challenge of putting them back together. Through this process, I gained an understanding of how common items were constructed and designed. I became known as the “Junior Tinkertoy Engineer” by Tinkertoy at age nine and won $1,000 in savings bonds in honor of my earliest inventions. After high school, I took courses in mechanical engineering, science, and math at Diablo Valley College, then took a job as a nuclear power engineer with the Department of Defense. The Department of Defense was impressed with my talent and awarded me a full scholarship to the College of Engineering at UC Berkeley where I earned my BS EECS. My tinkering instinct developed into a career spanning several disciplines and industries in the technology arena.

What was the “Aha Moment” that led to the idea for your current company? Can you share that story with us?

Palmer Luckey and Brendan Iribe approached me with the Oculus VR Rift headset prototype and said, “this is going to change the world.” I didn’t think it was a good idea at first. I thought there’s no way a person can stay on the headset for eight hours like being in front of a computer for that long. My gut was telling me that it wouldn’t resonate but there were reasons why I wanted to move forward. I could tell Brendan was on to something really good based on his enthusiasm for the prototype. I also liked the people I’d work with — they were team players and I liked engaging with them. When I checked out the prototype, I was critical of it and there were many things that needed to be developed further with it. I knew I could do my part to further develop it so I then became a Co-Founder and (former) Chief Engineer and built the Oculus Rift into a working product for Oculus’ first Kickstarter campaign. I led the team that built and shipped the DK1, DK2 developer’s kits, and the Oculus Rift headset, led production, designed the test equipment and managed the entire production and engineering teams until Oculus was acquired by Facebook for $2.3B. I underestimated the skills and talent before me in the beginning, and in the end, the product experienced more success than I thought it would.

Was there somebody in your life who inspired or helped you to start your journey with your business? Can you share a story with us?

I’m thankful there are so many people who helped to inspire me and advance my career. Elwyn Berlekamp who was a professor of mathematics and computer science at UC Berkeley was a notable mentor to me. He provided me with input on what to do in certain situations and had such a wide breadth of knowledge. He was influential in getting me more involved at UC Berkeley as Innovator in Residence at Jacobs Design for Innovation which I love to be continually involved with. Kelly Sumner, Former CEO, Take-Two Interactive Software, also did great things for me. His militant style commanded attention and he told me exactly what he was thinking, which I valued greatly. Lee Guinchard helped get me my job at Activision, which turned out to be a great experience.

What do you think makes your company stand out? Can you share a story?

The story of Oculus is about Palmer Luckey, who at the time, was an 18-year-old kid kicked out of his house and enjoyed tinkering with things. People can resonate with that. His skills and talent were truly noteworthy to me.

Initially, I underestimated the wealth of talent at Oculus. One team member seemed to be a party boy to me, but he turned out to be a massive talent and great at marketing and sales, which helped the company really stand out. He was really dialed into social media, which was advantageous for us.

How have you used your success to bring goodness to the world?

As Innovator in Residence at Jacobs Institute for Design Innovation at UC Berkeley and a Professor at the school as well, I get to inspire and be inspired by young people. It is an honor to watch them learn how to take things apart mechanically and rebuild them and challenge their minds.

I’m also an avid philanthropist in the areas of education and science and have recently established the McCauley Chair in Drug Policy Innovation at the RAND Corporation, aimed at supporting fact-based drug policy research to improve the health and well-being of communities around the world. I plan to start a mentoring and education foundation to help disadvantaged youth that are tied up in the foster system and train them in salable job skills. This would be a mentoring and paid apprentice program that would provide them with a wage and educational training on-site at my school. We plan to train them in welding, CNC machining and programming, electronics design and firmware. The term of the program would be five years, full time and when they exit they will receive a certificate and we would work to get them interviews with tech companies and possible placement.

You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

I’d say the first trait that was instrumental to my success was being nice and getting along well with others. It never gets old. Being considerate to others and being honest can go a long way. The second trait would be networking. It’s important that a business leader learns how to network. Go out to lunch or coffee with people and don’t forget the basic stuff. The third trait is building lasting relationships and investing in them. This was the key to my success and has helped me so much along the way. I am extremely thankful for the people in my life. Be authentic when you are building and investing in those relationships. For instance, calling or sending a note to one of your contacts if their child is sick, or just checking in with people can go a long way. I got many of my jobs by staying in touch with people. One of these people happened to be the CEO of Ferrari. I stayed in touch with him and it has proved to be an advantageous relationship to this day.

Often leaders are asked to share the best advice they received. But let’s reverse the question. Can you share a story about advice you’ve received that you now wish you never followed?

I have found that most people typically give good advice, even if they don’t like you. When they are put on the spot, they do the best job they can, so I try to listen to the advice others give to me. One piece of advice I received is to always have humility and listen to what others are saying. For example, if I am told I am being too harsh on someone, I will always try to listen and take a step back.

Back in the day, Palmer Luckey asked me if I had ever heard of bitcoin. I thought that was probably the worst investment I could make — but how wrong I was. At the time, bitcoin was only 30 or 40 cents, and if I had invested then it would have paid off for me. I was also told by an early investor to buy Tesla stock. I refused to listen and dismissed the idea because he was a kid! I could be stubborn back in the day, so I now use those experiences to learn from moving forward.

Can you tell us a story about the hard times that you faced when you first started your journey?

There were definitely struggles that came with the early days of my career. In general, startups do not bring in a lot of revenue, so those days consisted of long hours with lower income. I was also dealing with a lot in my personal life at that point in my career. I was in a meeting in China and heard the news of my mother’s passing. I burst into tears when I heard the news.

Where did you get the drive to continue even though things were so hard? What strategies or techniques did you use to help overcome those challenges?

I used to get up at 1am and go to bed at about 8pm. Sometimes I would go back to bed at 5am and sleep for an hour. I was productive from 1–3pm, then afterwards I would do something totally different. I enjoyed taking walks, hiking, and other activities. Finding my own rhythm and taking frequent breaks helped to keep my productivity high.

The journey of an entrepreneur is never easy, and is filled with challenges, failures, setbacks, as well as joys, thrills and celebrations. Can you share a few ideas or stories from your experience about how to successfully ride the emotional highs & lows of being a founder?

At Oculus there were six founders. When you join a company as one of the founders, you need to be aware that not all founders will have money. This can be a huge challenge. I did have money when Oculus started, so I had to put skin in the game and be willing to cut a check in order to show investors my commitment to the company. I am of the mindset that you should put your money into an investment or initiative that you care about. Myself and other founders had to learn to handle the money we made with care and not to take any big risks.

Let’s imagine that a young founder comes to you and asks for your advice about whether venture capital or bootstrapping is best for them? What would you advise them? Can you kindly share a few things a founder should look at to determine if fundraising or bootstrapping is the right choice?

Go for VC money — these people have the capital. You need big money so it’s important to take this seriously. Money from family and friends is good, but you need investors. We burned through $120 million in one year getting Oculus going — roasted right through it. One of my co-workers knew Mark Zuckerberg which helped and we then got the VCs more interested to invest in the company. Brendan Iribe was a great salesperson and very persuasive; a great asset. He got the VCs to invest in the hardware, which is really hard to do. A lot of VCs avoid hardware because of its high cost. VCs can get you connected and they want to sell your product too which is very advantageous.

Ok super. Here is the main question of our interview. Many startups are not successful, and some are very successful. From your experience or perspective, what are the main factors that distinguish successful startups from unsuccessful ones? What are your “Five Things You Need To Create A Highly Successful Startup”? If you can, please share a story or an example for each

The first thing you need to have to create a successful startup would be having and building lasting meaningful relationships and staying in touch with those people. This includes constant networking. The second would be that it’s important to be pleasant to work with; no one wants to work with a jerk. Third: be well capitalized — the money has to be there. VC is extremely important as you’ll need a lot of money. The fourth is to have education and learning under your belt. I advise my students to get five years of work experience on the job somewhere. The first five years you do all your learning. It takes 10,000 hours to play an instrument well. You have an ability and know what you can do. Then start your startup. The fifth is the talent pool as the people you hire matters. Hire the best and smartest people you can; now is not the time to have an ego.

What are the most common mistakes you have seen CEOs & founders make when they start a business? What can be done to avoid those errors?

I’ve seen errors in hiring and starting a business by just believing in something someone says or someone working a CEO over. If you don’t get the proper funding with high overhead and high expenses you will run out of money fast. I know of a company that made a security device and ran out of money, which was unfortunate. Remember that you’ve got to make or sell something unique; fill a gap in the marketplace. Another mistake can be when a business leader can’t see the future. Forecasting different scenarios is part of good business planning. Be sure to talk with successful founders. Don’t make the mistake of not having on the job work experience. That hands-on learning is critical to then be prepared for your startup.

Startup founders often work extremely long hours and it’s easy to burn the candle at both ends. What would you recommend to founders about how to best take care of their physical and mental wellness when starting a company?

Be prepared to work 14 hours a day. If you love what you do then it should be easy. Be sure to take breaks, whether it’s going for a walk, to the gym, or just a change of scenery. You can’t work well and at your best when you’re overrun and don’t have a chance to step back.

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I’m an avid philanthropist in the areas of education and science. I’ve focused a lot of effort and contributions to the recent establishment of the McCauley Chair in Drug Policy Innovation at the RAND Corporation. It supports fact-based drug policy research to improve the health and well-being of communities around the world. The goal is to develop and promote actionable solutions to reduce and prevent drug addiction and overdoses and ensure that individuals and communities can have a healthy wellbeing. The contributions will help researchers explore new strategies for improving the lives of those who need the most help. I invite everyone to get involved in some way in supporting the prevention of drug use and addiction — a movement of looking out for others and their wellbeing.

We are blessed that some very prominent names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US with whom you would love to have a private breakfast or lunch, and why? He or she might just see this if we tag them.

I’d like to have lunch with Woody Harrelson. I think it would be a really interesting conversation; he seems like a really cool guy. I’d love to talk to him about his movie choices and starting out on a sitcom as a bartender. I would ask him about his kids and how family has impacted him. I think it’s interesting that people expect celebrities to look the same year after year and never age. I’d like to ask him how he feels about that.

How can our readers further follow your work online?

You can find me on my website where I post my recent work, speaking engagements and my blog. You can also follow me, @jackmccauley1 on Twitter and on LinkedIn.

This was very inspiring. Thank you so much for the time you spent with this. We wish you continued success and good health!