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How I Built an $80M Annual Revenue Business in Just 5 Years | Sandbox VR, Steven Zhao

EO13:29Added Aug 31, 2026

Join to explore the inspiring journey of Sandbox VR, a leader in the virtual reality gaming industry. Founded by Steven Zhao, CEO and Founder, Sandbox VR has...

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Contributed by 刘嘉琪

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  1. Intro

  2. 00:00I remember vividly there was a story where we tried to hide a game producer,
  3. 00:02and he asked, how can Sandbox VR beat Sony or Nintendo or any big VR players
  4. 00:08in the United States?
  5. 00:09And of course, coming from a Hong Kong company where we've never seen success
  6. 00:12in Hong Kong at that scale, that was a very valid question.
  7. 00:15I always believed that in order to make a big change, you have to have a direction
  8. 00:19that's uniquely different.
  9. 00:20We believe that what we are building is something that no one else
  10. 00:23in the world is doing right now.
  11. 00:25I put all the money into the company and then in six months time,
  12. 00:29we built the technology infrastructure.
  13. 00:31At that time, it was what we call the winter of VR. Us trying to raise in 2017
  14. 00:35was essentially impossible.
  15. 00:37So we had just two months of runway left.
  16. 00:39And then I really wanted to build this physical space in VR.
  17. 00:43None of the investor came in.
  18. 00:44One of the biggest feedback that we've gotten is like,
  19. 00:47well, this works in Hong Kong.
  20. 00:48It could work in Asia, but this probably would not work
  21. 00:51in the US. That kind of pissed me off.
  22. 00:53So I thought, okay, you know what, we're going to bring this to the US.
  23. 00:56And we decided to open in San Mateo, in the heart of Silicon Valley.
  24. 00:59You know, this is our flagship store. We're able to share this with the world.
  25. 01:03And of course, we're ready for the next stage, which is get to series B.
  26. 01:07But a couple of months later, the whole world shut down.
  27. 01:11My name is Steven Zhao.
  28. 01:12I am the founder and CEO of Sandbox VR. So what we do is we provide
  29. 01:17a full body VR experiences for friends to play together in our retail spaces.
  30. 01:22So we create our own technology that enables that.
  31. 01:24We also create our own content and we both open our own locations
  32. 01:27and franchise them out.
  33. 01:28Today we have 47 locations, so we grew pretty quickly.
  34. 01:32We have eight pieces of title, not just original IP.
  35. 01:35We're also working with Netflix. So Squid Game is in Sandbox VR.
  36. 01:40Rebel moon is going to come out later this year.
  37. 01:42We hope to continue to partnership with them and other IP holders.

  38. Chapter 1. Lessons Learned from Pivoting the First Game Company

  39. 01:48So I grew up in San Francisco.
  40. 01:50As a child, I spent a lot of time pretty much alone, just like do a lot of reading,
  41. 01:54sometimes playing games.
  42. 01:55And part of it is the immigrant stories.
  43. 01:57Both my parents immigrated here when I was a child, and they work a lot of nights,
  44. 02:01so I have a lot of time to myself just kind of doing my own things.
  45. 02:05But luckily at a young age, my parents got a computer.
  46. 02:08And then I really started to kind of figure out how to use that machine.
  47. 02:12And one day my friend showed me a game creation software, which I put into
  48. 02:17the computer, and I started making games and it started becoming a hobby of mine.
  49. 02:20So since 12 years old, I've been building games.
  50. 02:23So I studied in UCSD at University of California, San Diego,
  51. 02:27in electro engineering.
  52. 02:28After college, I moved to Hong Kong to build a gaming studio called Blue Tee
  53. 02:31Games, where we made PC and mobile games.
  54. 02:34You know, we grew from two people to 40 people.
  55. 02:37It was pretty successful for a time during that period, PC was pretty hot.
  56. 02:42People would download the game on their computers,
  57. 02:44but the shift to mobile created like a brand new way of playing experience.
  58. 02:48And for me personally, I didn't adapt fast enough.
  59. 02:52I was late to the mobile space and because of that, when we transitioned
  60. 02:56to mobile, we didn't catch up and we weren't able to create games
  61. 02:59that was able to be successful.
  62. 03:00So that was a pretty big learning for us.
  63. 03:03Is always look at what is trending in terms of technology
  64. 03:07and how do you build for that future?
  65. 03:08So when you build a game, it's important to not build what is popular today,
  66. 03:12because by the time you finish, you know you'll be nine months too late.
  67. 03:16What?
  68. 03:16It's going to be popular 1 or 2 years down the line from my first startup at Blue Tea games
  69. 03:20we failed to do that and we weren't able to scale.
  70. 03:23And it was around 2015. We saw that VR was becoming very hot.
  71. 03:27So we decided like, hey, why don't we take our learning as a game developer
  72. 03:31and bring it to a whole new medium, double down on VR?
  73. 03:33And we decided to do that with a brand new company.
  74. 03:37So that was essentially how Sandbox VR was formed.
  75. 03:40So when we started the company, we were like doing two things.
  76. 03:43Number one, we were building games on the VR consumer market.
  77. 03:46A part of us also took our learning back at blue Tea, which was you
  78. 03:49always want to build for the future.
  79. 03:51What do people want two, five, ten years in the future?
  80. 03:54And we felt like the consumer VR headset itself wasn't enough.
  81. 03:58We wanted to be fully immersed.
  82. 03:59We want to be able to interact closely with friends and to us like, you know,
  83. 04:03I grew up watching The Matrix.
  84. 04:04It's like, hey, do we have the technology to actually create the matrix?
  85. 04:08And then we look backwards like, hey, we do.
  86. 04:10So we did a regular consumer game and we basically iterated
  87. 04:14on what the matrix looked like.
  88. 04:15Come the end of 2016, we launched a consumer game.
  89. 04:18It was like a top 10% best selling game, but the market just wasn't there.
  90. 04:21Like we weren't able to make enough revenue to keep the company going.
  91. 04:24So at the end of 2016, like all our bet was putting into building this
  92. 04:29other project, which is basically it's now Sandbox VR location based VR experiences
  93. 04:33for group of friends to play together.
  94. 04:35But for us, that was our pivot.

  95. Chapter 2. How a Small Hong Kong Game Company Successfully Entered the US Market

  96. 04:40At that time, it was what we call the winter of VR.
  97. 04:42The Christmas sales didn't live up.
  98. 04:44People thought the hype of VR us trying to raise in 2017 was essentially impossible.
  99. 04:49So we had just two months of runway left, and then I really wanted to build
  100. 04:53this physical space in VR. None of the investors came in.
  101. 04:56One of them invested with asked us, well, you're just a team of six people.
  102. 04:59We didn't have a big team, so that was one big challenge we had.
  103. 05:02The second challenge we had was you were not located in the US.
  104. 05:05There was a geography challenge.
  105. 05:07You know, our team is based in Hong Kong and it comes
  106. 05:09to a certain type of perception.
  107. 05:10But really, like, you know, you're not in the dominant market.
  108. 05:13How do we know that this is something that can work in a different country?
  109. 05:17So for us, we have to build our technology, build our content
  110. 05:20and build our retail location.
  111. 05:22So there's not a lot of money to come around.
  112. 05:24We have to be very resource creative.
  113. 05:26And, you know, for us is how do we use technology to solve something that can
  114. 05:31be replaced by using a lot of hardware.
  115. 05:33So for instance, in order to do full body tracking you need a lot of cameras.
  116. 05:37But each camera were very expensive.
  117. 05:39So we spent a lot of time figuring out how to use software
  118. 05:42to minimize the amount of cameras.
  119. 05:44And this turns out to be a blessing because it was very important later
  120. 05:47down the road, as we scale that, every location will be as low cost as possible.
  121. 05:52Another challenge we had was in terms of being resource constrained,
  122. 05:56we tried to figure out how to, you know, get people to come to our location.
  123. 05:59You know, one of the hardest things is marketing our business.
  124. 06:02As a small company, you don't have a big marketing budget.
  125. 06:05So we had to be very creative, like, how do we get people to come?
  126. 06:08So we decided that, hey, why don't we productize it?
  127. 06:12Why don't we make it so that we create a software video that after you come
  128. 06:16and play, will give it to you.
  129. 06:17And this video is going to be capture the most embarrassing and funny moment
  130. 06:20of you playing with your friends.
  131. 06:22And then you can easily share it on social media.
  132. 06:24And when we created that, every customer that comes in start putting
  133. 06:27it on social media, and that generated an insane word of mouth.
  134. 06:30So that taught us like two important things.
  135. 06:32Number one is every problem is like looking really deeply into it,
  136. 06:36like really analyzing it.
  137. 06:37There's probably a creative way to solve it with less resource,
  138. 06:41but also to get a much better outcome.
  139. 06:43And the other thing that we've learned is it's not only important
  140. 06:46to just build a product, but it's also really important to build
  141. 06:49a distribution strategy for that product.
  142. 06:51So at that time, I took all the money I had and I put it into Sandbox VR.
  143. 06:55And then in six months time, we built the technology infrastructure and we
  144. 06:59opened a really small shop in Hong Kong.
  145. 07:01And I remember vividly there was a story where we tried to hire a game producer,
  146. 07:05and he asked, how can Sandbox VR beat Sony or Nintendo or any big VR players
  147. 07:10in the United States?
  148. 07:11And of course, coming from a Hong Kong company where we've never seen success
  149. 07:14in Hong Kong at The scale.
  150. 07:16That was a very valid question.
  151. 07:17And what I told him was, I always believed that in order to make a big change,
  152. 07:22you have to have a direction that's uniquely different.
  153. 07:24And for us, we believe that what we are building is something that no one else
  154. 07:28in the world is doing right now.
  155. 07:31The moment we felt like we had product market fit was during a test run before we
  156. 07:36even launched a product, my friends came and played and within experience,
  157. 07:40they were like screaming and yelling and so loud to the point that the neighbors
  158. 07:44came knocking on the door saying, hey, is everything all right?
  159. 07:46Like, we didn't know the type of visceral reaction that customer would get.
  160. 07:50And we felt like that visceral reaction is something
  161. 07:53that has never been done before.
  162. 07:54And we're like, okay, there's probably something there.
  163. 07:56So after we got done product market fit in our one Hong Kong location,
  164. 08:00we got funded by Gobi Alibaba.
  165. 08:03That allowed us to really build out our location to really fine tune our
  166. 08:06unique economics, to restart franchising.
  167. 08:08And at that time things were going well.
  168. 08:11But one of the biggest feedback that we've gotten is like,
  169. 08:13well, this works in Hong Kong.
  170. 08:15It could work in Asia, but this probably would not work
  171. 08:18in the US. That kind of pissed me off.
  172. 08:20So I thought, okay, you know what, we're gonna bring this to the US.
  173. 08:23And we decided to open in San Mateo in the heart of Silicon Valley.
  174. 08:26We put the location there and people came and played many of the people that, if not
  175. 08:30all of them, it was like, wow, we never experienced anything like this before.
  176. 08:34And pretty soon I remember Marc Andreessen and Ben Horowitz.
  177. 08:37They came and tried it out.
  178. 08:38The partners did, and they're like, yeah, this is really awesome.
  179. 08:41We're gonna bet on you. And that became my series A,
  180. 08:43and the funding was able to allow us to really scale out the business and
  181. 08:46open about nine locations across the US. And I remember we're sitting here
  182. 08:51in the San Francisco downtown location.
  183. 08:52This was at December 2019. We're like very excited.
  184. 08:55You know, this is our flagship store. We're able to share this with the world.
  185. 08:59And of course, we're ready for the next stage, which is get to series B.
  186. 09:03But a couple months later, the whole world shut down.
  187. 09:06We have a new name for the coronavirus.
  188. 09:09The World Health Organization has officially called it Covid 19.

  189. Chapter 3. From $68M Series A Funding to the Brink of Bankruptcy : How Sandbox VR overcame and Secured Series B Funding

  190. 09:23Around March April 2020, when the pandemic hit, all the stores that we had
  191. 09:27had to close right away and we didn't know how long this was going to last.
  192. 09:30I thought it was like it was like a funny joke.
  193. 09:33It's already really hard to run a startup and it's really
  194. 09:36hard to run a retail startup.
  195. 09:37The first thing we did as a company, which unfortunately was we had to downsize.
  196. 09:41It was pretty dramatic. We lost about 80% of our team.
  197. 09:44And you can imagine morale was like at all time low.
  198. 09:47And the people that stayed like in the months following that,
  199. 09:50a good amount of them left as well.
  200. 09:51So it was really number one we had to do was keeping the team motivated,
  201. 09:55kind of having that vision of like, hey, we can survive Covid.
  202. 09:58What does this mean for Sandbox VR? What does this mean for us?
  203. 10:01And it just repeating that message and just kind of like being a cheerleader and
  204. 10:04be like, hey, we can fight through this.
  205. 10:06You know, this is one of the biggest tests for any of us.
  206. 10:09It's a tough story.
  207. 10:10It's something that you'll be proud about even if you fail.
  208. 10:12And that's what we wanted to set, was having that really strong story
  209. 10:15of the future.
  210. 10:16And the last part is we had to go through chapter 11 bankruptcy
  211. 10:19because as a retail business, we have a lot of leases, and there's no
  212. 10:23way to get out of the leases at that time.
  213. 10:24So we had to go through chapter 11 to get an emergency and work
  214. 10:28through with our landlord to figure out how do we survive out of this.
  215. 10:32That was just a lot of collaboration with people that we owe money to.
  216. 10:35We work with different lawyers across different groups, but during that period,
  217. 10:39we also took the opportunity to really fine tune our business,
  218. 10:42like to the minor or minor details, like how can we build the most
  219. 10:45economically strong retail that we can?
  220. 10:48You know, in terms of how do we improve our technology,
  221. 10:50our operations, our content, so that when we do reopen back up again,
  222. 10:55not only will we have a very strong people will come back in droves, but we also have
  223. 10:58very strong profit margin because that's what we need to come out of this.
  224. 11:02And around that same time in 2021, it's kind of when the world
  225. 11:05started to open up again, especially for our stores in California.
  226. 11:08And the moment they did, people came back in droves.
  227. 11:11I remember there was an incident where the mall was completely empty,
  228. 11:15but 100% of customers booked had online.
  229. 11:17We had to wait for customers in the parking lot to guide them inside the empty
  230. 11:21mall to our store, and we've been seeing that across all the Other locations
  231. 11:24and very soon the locations are filled up.
  232. 11:26Customers are happy to have a place where they can share with their friends
  233. 11:29and family, and then we're able to take that traction to open more locations
  234. 11:33by working with landlords who can fund us.
  235. 11:35By grabbing those traction, we're able to kind of paint, hey, this is how sandbox
  236. 11:38is going to look in the next few years.
  237. 11:40And fortunately, we started fundraising again.
  238. 11:42They've seen our progress.
  239. 11:43They know everything that we've been through.
  240. 11:45It's like, okay, you guys survived the worst.
  241. 11:47The future looks bright. We're going to back you.
  242. 11:49And they did a series B, so after we got a series B funding
  243. 11:53in 2021, we had about maybe 13 locations.
  244. 11:57Today we have 47 locations. So we grew pretty quickly.
  245. 12:00We see Sandbox VR as pretty much like the new movies.
  246. 12:04This is something where we believe that people will go out for.
  247. 12:07They will go with their friends and family and colleagues
  248. 12:09instead of just watching it on a screen.
  249. 12:11You get to live in it, embody it.
  250. 12:13It's a very social experience that you really get to share,
  251. 12:16and it creates a lot of team bonding moments for us is how do we create
  252. 12:20a repertoire of amazing experiences,
  253. 12:22you know, on a regular cadence to get people to come back again and again?
  254. 12:25And how do we continue to open up more locations so that we can
  255. 12:29have a Sandbox VR in every neighborhood?
  256. 12:31And our strategy for that is to continue to build up our franchising, because
  257. 12:35the more locations we have, the more we can reinvest back into our technology,
  258. 12:39into building better and bigger content to have more content, which in
  259. 12:43turn will help create more demand.
  260. 12:44And with more demand, we can have more locations and go from there.
  261. 12:48So the next big thing for Sandbox VR is two pronged is how do we build better content?
  262. 12:53And that's just a very iterative process, but also just working with
  263. 12:56strong IP holders to bring their world in the Sandbox VR in a really organic way
  264. 13:00that works best for our platform.
  265. 13:01What I see in ten years is you have what you get at home home consumer VR
  266. 13:05that gets better over time.
  267. 13:06That headset gets lighter, better quality experiences.
  268. 13:09That's something that you would likely just do, you know, multiplayer
  269. 13:12and you can play on hours on end.
  270. 13:13And then for us, out of location is in ten years time having thousands of locations,
  271. 13:18one in your neighborhood where you have a reason
  272. 13:20to go out and play with your friends.