Pear VC’s Keith Bender: Investing in the Newly Attainable Promises of Mixed Reality
Thesis BriefsKeith BenderPear VCMetaverseMixed RealityEVC List 2022

Terra Nova Insights Team,

Pear VC’s Keith Bender: Investing in the Newly Attainable Promises of Mixed Reality



After a decade of slow adoption, mixed reality may be turning a corner as design- and operability-focused players enter the space. Keith Bender, principal at Pear VC, sees potential in practical mixed reality applications that shift consumer screen-time and improve professional efficiency within specific and hands-on roles. Apple’s entry into the space could be the inflection point that solves consumer friction around mixed reality’s' historically clunky and awkward hardware.


Why is mixed reality such an important category moving forward?

  • Mixed reality could represent the next paradigm shift in hardware. “It's possible that the next hardware platform and device shift is underway,” says Bender. “There has been a decade-and-a-half mobile gold rush, and you  have to ask how long it will last. I don’t expect imminent categorical replacement or domination of existing devices like smartphones, tablets and laptops, but it’s quite reasonable to think that some of our many hours of screen time will increasingly be better spent in immersive extended reality – AR or VR – in the future.”
  • Apple’s entrance into the space - with mixed reality glasses - could be a gamechanger for consumer adoption. Other tech players have launched into mixed reality, but none with the consumer and marketing savvy of Apple. “Apple is famously interoperable, and I expect to see both more compelling out-of-the-box single-player utility and more native social experiences on their xrOS or realityOS platform compared to other devices we’ve seen from big tech,” he says. Despite Meta selling nine million Quest’s last year, Bender's bullish bet is that it is Apple’s market to lose.
    • “As a ‘what could go right’ exercise, I remind myself of the iPhone launch,” Bender adds, “Steve Jobs announced the iPhone in June 2007 and predicted 10M sales in 2008, only 1% of the phone market at the time. He was roundly ridiculed - until Apple beat that prediction and hit 10M sales by September 2008.” The Apple Watch launch similarly outpaced expectations.

What are the business models that might be attached to this category?

  • Early consumer use-cases will likely enhance or supplement current screen time with immersive experiences. Gaming is an obvious example. Mixed reality would be a natural fit with the immersive world of some games. Bender points to rumors that there will be native VR support for GTA 6. Other potential use-cases he cites include: entertainment streaming, such as a “court-side 3D view” from ESPN during a game; an application that connects people in these settings together, i.e. you are watching the game court-side with a friend; and communications applications similar to FaceTime. Skill building and training applications with connected sensors could offer simulative products. “I might finally fix my golf swing,” Bender says.
  • Enterprise solutions will offer mixed reality environments for both training and real world application that improve job performance and safety. “There are many professions where you can imagine time being spent in a mixed reality environment that gets jobs done cheaper and more effectively,” Bender says. He thinks initial adoption areas could include architecture and interior design, mechanical engineering, repair and maintenance diagnostics and installation, security and law enforcement, and healthcare.
    • Bender is more pessimistic about use-cases in virtual collaboration: “I may be wrong, but I don’t think people are screaming for VR remote meetings. Most zoom fatigue is just meeting fatigue in a new substrate.”

What are some of the potential roadblocks?

  • Founders and investors will need to differentiate practical use-cases from noise. “On the application side, there will be a lot of junk initially and founders need to do real work to find useful applications,” says Bender. “Many of these bad initial use cases will be ‘metaverse for metaverse's sake,’ similar to many failed examples of ‘crypto for crypto’s sake.’ We’ll see the VR equivalent of yield farming for some fake currency. Nonetheless, I’m sure that many people will be building or chasing investments in ideas like these.”
  • There is a shortage of skilled labor which will affect development output. There’s not a lot of talent in this space yet, so everyone will have to train developers and designers, says Bender. This comes on top of an already painful skill gap in the software development space as a whole. However, Bender is encouraged: "At the same time, leaps in AI-generation capabilities means that virtual worlds can be rendered, refined, and extended much faster."
  • Hardware design needs to be solved early in the adoption process. “Most of the hardware is still awkward to use. I’m hopeful and excited around what more design-minded companies like Humane might achieve,” Bender says.

VISUAL: Meta's content revenue growth for Quest &Oculus

Data for Quest/Oculus from 2019-2022 (Source)


saidbyblock~ via Email Correspondence

I reserve around 25-50% of my thesis development time and mindshare for exposure to spaces that extremely talented founders, or even  the most capable technology builders who are perhaps not founders yet, nerd out on and find fascinating.

While there are standing sectors and theses I track closely - B2B commerce, cross-industry marketplace platforms, B2B software, and commerce FinTech - I have to pay attention to the frontier cases where brilliant builders are exploring and doing something a little outside the hordes of similarly talented founders pursuing the latest thing.

Lately, some of the sharpest prospective founders we meet, especially young ones who are thinking about where to level up their engineering skills, are building in mixed reality. It’s easy to be dismissive of the space, based both on what is often perceived as Meta’s recent idealistic grandiosity and memories of decade-old failed promises and potential. While a lot of crypto founders became generative AI founders overnight, there are outliers I meet who have ignored the stampedes jumping from one space to the next and have been making a thorough and thoughtful study of newly attainable promises in mixed reality.

We can use a screen-time framework to ask what powerful and delightful applications will most likely arise first for advanced and mass-available mixed reality.  I am looking for places where the hours spent staring at a handheld or laptop screen will shift to hours spent interacting with an immersive, wearable screen.


Q: What do other market participants or observers misunderstand about these categories?

A: “Hardware has been a mainstream venture taboo recently. This space has been too dependent on funneling investments into clunky hardware for a decade. With a refreshed focus on design and the entrance of interoperable players like Apple, we may finally be turning a corner.”

Q: What can you say about the time horizon for the adoption of this thesis?

A: “Everyone is holding their breath for the Apple release. Next year won’t feel like a mixed reality tsunami, but if Apple’s XR device launches without significant delay, then by late 2024 the technology will probably feel familiar. As a rule of thumb, you can expect that 2 years after the device’s launch, nearly every current iPhone owner - and there’s 120M in the US today - will interact with someone else who has used a mixed reality device on a daily basis. This would mean that something like 10M Americans will be a mixed reality DAU by the end of 2024or early 2025. But the really exciting growth will be in the decade that follows.”


As mixed reality adoption gains momentum, there will be massive incentives for developers to build on and revitalize existing big tech platforms. “Many of the largest tech companies invested billions in hardware and R&D in this space,” says Bender. When the momentum starts to build, strong incentives will emerge to develop on these platforms.

The space will need to outgrow failed and abandoned early use-case ideas. “Many people already have low expectations for AR/VR based on bad experiences with gimmicky, cheap products,” Bender says, “or hearing about ‘meta-verse’ use cases that are reminiscent of the old dotcom company Second Life, something to the effect of - ‘we all live in the meta-verse and hop from virtual island to island there with our digital avatars.’ No matter how much the space grows it's unlikely that these kinds of use cases will be revitalized. I’m looking for applications so novel and purposeful that users will wonder how they ever lived without them before.”

The 2022 EVC List honors the top 50 rising starts in venture capital. Terra Nova’s Thesis Brief series showcases each investor’s insights and category expertise.

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