Build Impactful Ecosystems At Any Organization Size

From running Australian agencies and startups to competing with Netflix, improving the Spotify podcast, and radio experience on Alexa Music at Amazon, and building a spatial analytics platform called Spatially, Teilo spent the last 25 years of his inspiring career at the intersection of design and technology. We talked with him about Virtual Reality (VR) and how to build impactful ecosystems in large and small organizations.

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Gregor: You spent the last two years as Head of Product at Magnopus building a platform for immersive cross reality (XR) experiences, and you have extensive experience with augmented reality (AR) and mixed reality (MR) ecosystems. It would be great to hear your perspective on the evolving value propositions around these technologies.

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Teilo: Before Apple announced their headset at WWDC this year, Big Tech had largely shifted focus from AR and VR to focus on the massive generative AI arms race, sweeping aside anything that was not AI-related. The play for Big Tech is to own the stack: everyone is trying to build and economically control proprietary vertically integrated ecosystems. Apple, Meta, Snap, and Epic are all trying to control the ecosystem, while Unity and Google’s approach is to make the tools available to developers and OEMs; With the threat of AI to their core business, will Google be focused enough to win XR is an open question. Even with their powerful datasets like Earth and Maps, they don’t have a powerful consumer story.

While the fundamental glasses technology is being developed, Big Tech companies are not promoting this work yet, because it is not mass consumer ready yet. Depending on who you listen to, we are perhaps a decade away from wearable hardware that is small enough and offers the technology supporting a real breakthrough in user experience. Until that happens, we will continue to see niche, high-value B2B use cases for XR. Industry is already taking advantage of practical solutions for simulations, training, architecture, construction and maintenance applications, and there is money being made in those technical fields. The consumer ecosystem dream is waiting for the killer use case. What is that killer app that will drive adoption despite the hardware limitations? Magnopus built the largest connected XR space in the world in Dubai, but for most users, your phone will die in 45 minutes and your arm will get sore well before then. So until we get this hardware problem is solved, we're going to be very limited and the use cases will have to be so compelling that people get drawn into it. Even with the billions spent by Meta and Apple on their flagship devices, we still have a long way to go.

The other area that really holds us back is content creation. Currently, content creation is super expensive to produce and incompatible across the platforms. So you build content for one platform and you have to build it all again for another platform. AI will, is already, drastically changing the economics for 3D asset creation. This is an area ripe for disruption over the next 24 months. Beyond content, creating compelling immersive applications is hard. Look at the tiny number of apps in the Oculus store. Apple knows this and you can see from the Reality Pro announcement, they have put a lot of thought into streamlining the process for existing app developers who are familiar with existing Apple toolkits. The next layer is who will create the no code app builder for XR, so that anyone can build VR and AR experiences. If I'm a photographer or I have a lifestyle brand, I could just publish my content without having to build my own app or do any custom development. And I'd be willing to sacrifice my control and my audience, because Apple can give me access and distribution and will make it easy to publish.

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Gregor: Considering all these insights, where do you see the near-term success of AR and VR ecosystems?

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We are already seeing compelling VR use cases driving profitable business models for medical solutions, building and equipment maintenance, and specialist training. These will continue to be the main area of growth until VR’s broad adoption as a consumer device kick in.

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Teilo: AR and VR are currently very different markets. With the rise of AI and the adoption of easier, AI-driven creator tools, the two are going to mix in interesting ways. Apple just announced the first effort to build an ecosystem that combines the two worlds into one experience. While seemingly best in class, it is still missing a compelling consumer use case and beyond watching content, VR was the poor sibling in the announcement. As beautiful as the device appears to be, we are stil in the era of Ski google sized devices. Even Tim Cook is yet to be seen wearing one. So, we are likely generations of devices from mass adoption. VR is still moving ahead. We are already seeing compelling VR use cases driving profitable business models for medical solutions, building and equipment maintenance, and specialist training. These will continue to be the main area of growth until VR’s broad adoption as a consumer device kick in. The AR use cases are more advertising-driven, driven by Meta, Snap, and Google. Snap is already playing heavily in the space with their filters. Few people know it, but Snap has one of the best web 3D engines in the world and they are already experimenting with 3D content anchored to real world locations. They are quietly building the technology and creator community in the background. For AR to succeed in the near team, we need to break out short form experiences that go beyond marketing gimmicks.. Phone based AR has been around a long time and still has not found its moment in the sun. We need an AR instagram moment, maybe AI can help.

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Gregor: Steve Jobs famously called Apple the world's biggest startup. How much of a game changer is the new VR/AR headset? Will Apple dominate this market as they leverage their ecosystem approach?

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Teilo: The device has clearly targeted the biggest pain points with existing XR devices. Like reading and viewing resolution, passthrough quality, feeling connected to people in the same space, and the need for controllers. These are great, as is the industrial design, the developer ecosystem, UX guidelines, and the promise of 100k 2D apps on launch. Yet, it is still a large headset obscuring your face with a limited battery life. Because of this, it will remain a limited reach device for professionals with real use cases and the digirati. This may still be 50M units over the next 3-5 years, which would be an amazing success. But it won’t be the ubiquitous iPhone replacement until it looks like a pair of Warby Parkers, and then everyone will have to have them, and the revolution will be complete.  

In the meantime, Apple will still dominate the conversation of XR, they will set the UX and quality standards, have the most prolific app store, reward customers and developers committed to the ecosystem, and build out their existing App store into spatial computing.

I suspect we will see the familiar story play out. Apple will focus on innovations that directly let it own the high end with a price and margin premium, at the expense of market share by providing customers with simplicity, great design, and privacy.

Functionally, it appears to be less of a game changer than the fact that Apple is now in the game. A massive validation for everyone in the XR industry and a confidence boost for consumers that XR is coming and it is going to be good this time.

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Gregor: You worked at very large organizations and you built your own agencies from the ground up. What kind of strategic approach do you recommend to develop a product in a large organization versus in a small and nimble company?

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Teilo: It's a really good question and something that I have thought about for decades. The startup environment forces you to take bigger risks. You're betting everything on one idea, and you have to move quickly. It’s not too difficult to keep everybody aligned; you can generally get the whole team on a call to talk about what you're doing. Your problems are around speed of discovery with limited resources and finding product-market fit. Iterations happen quickly. When you're in a startup, you wish for the perceived resources of a big company, but you have what everyone wants, focus and alignment.

Larger organizations talk about the iteration cycle, but the reality is that they are trying to do so much that each initiative doesn’t get that many resources. As a product manager, you have to be on top of your value proposition and message, but you can't move with the same freedom as in a startup, and you generally can't take the same high-risk/high-rewards big bets. The equation shifts and the skill set shifts quite dramatically. Being successful in a larger organization requires honed navigation skills to bring the organization along with you.

The biggest challenge in product management today is alignment: finding the right alignment with your customers and getting your teams aligned internally. When you're in a small organization, you're collaborating very closely with engineers and your decisions impact the entire technology stack, while in large organizations most products are built on existing legacy frameworks–sometimes decades old with rigorous internal processes to reduce risk. These considerations change the time horizon and ambition of what you can do from a product point of view. So, they both have pros and cons, and they're both really challenging and exciting places to be. With a big organization, you can make an impact on millions, if not tens of millions of customers with a small change in your product, whereas just getting access to a million people for a startup is a Herculean effort. They're both really rewarding once you adjust your mindset on how to be successful.

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Gregor: ‍What are the best tools in your experience to align tech companies to embrace a common mission and vision?

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Teilo: The alignment problem in larger organizations is really tricky and no single tool is great at it, as it is predominantly a people challenge. How to ensure your relationships with your stakeholders and partners are both effective and healthy. How can you, and your tools, contribute to building a great company culture and to have the mechanisms in place to share a common vision and strategy upstream and downstream. I believe that AI will be a game changer in that regard. We already see tools that can summarize your meetings, create high-level overviews of your codebase, write the majority of your communications and so on. People have very entrenched ways of doing things. The world is changing much faster than most people are able to embrace. It really is an exciting time to be building products.

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‍Gregor: Thank you so much Teilo for your fascinating insights!