I Think Facebook Got A Mike Trout-Like Deal On Oculus

I’ve been asked a number of times to expand on my quick thoughts the other day about the Facebook/Oculus deal. And because we clearly haven’t gotten enough opinions on the matter, why not?

To me, it’s pretty simple. Facebook is taking out an option on the future. And, in my view, it’s a pretty cheap option to boot. In some ways, it’s not unlike the deal the Los Angeles Angels (of Anaheim or whatever) just signed with Mike Trout.1

Yes, $2 billion is a lot of money. But it’s also roughly 1/8th of what Facebook just spent on WhatsApp. And it’s roughly 2x what the company spent on Instagram — and that has turned out pretty well so far. One of the better deals this decade, perhaps.2

I caveat all of this by noting that I haven’t actually used an Oculus Rift myself yet. But plenty of people I trust on such matters have. And the consensus amongst them seems unanimous: Oculus is clearly the future.

But the future of what? If Oculus was just the future of gaming, I’m not sure it would be so interesting to Facebook. And certainly, Mark Zuckerberg’s own comments indicate he sees this as something far beyond much of the current talk about the company. He sees it as the next great computing platform after mobile.

That’s a lofty goal. We’ll see if it gets there. But despite some of the outrage over the deal, there’s no question in my mind that Facebook acquiring the company will only help Oculus. The dream of virtual reality has failed so many times that it’s hard to take it seriously any more.3 Yet, with the news yesterday that Michael Abrash would be joining the company, the signs seem to be pointing in the right direction this time. And as Abrash lays out, that would not be happening without this deal. VR may finally have the resources it needs.

Yes, it’s easy to write this deal off as crazy right now. But I’m not sure how easy it will be to do that in a few years. There’s no question it’s a gamble, but again, it seems like a pretty good bet to me. Too many companies drift into a state of malaise once they get big and dominant. Regardless of what you think of them, Facebook has proven they will not be one of those companies. They will disrupt themselves or die trying. It’s hard not to admire such gumption.

I remember when the iPhone was announced and the world was full of skeptics. I was one of them. I was sure I would never buy an iPhone. Why would I spend $700 on a phone when I rarely use the phone I already had? I was thinking small. Very small.

A few months later, I walked into an Apple Store on launch day to see what all the fuss was about. I picked up an iPhone and within 30 seconds knew I had to have one. And I left the store after spending $700 I didn’t really have.

30 seconds: that’s what it took to know that nothing would ever be the same again. It sounds like hyperbole. But we have the benefit of hindsight here. It was not. And that’s the type of talk you hear about Oculus as well.

I’m not saying Oculus is the next iPhone. But I’m also not comfortable saying it’s not the next iPhone. No, I don’t think it will be as ubiquitous. But I think it could end up being ultimately more profound if the company can execute.

And now that’s on Facebook. And if they can execute, I think this deal could look even better than the one the Angels just got with Mike Trout. We should have a clearer picture on both in about five years.

  1. Trout is just 22 years old, so he doesn’t have a long history of putting up numbers. But given what the Angels have seen, they’re comfortable “paying up” to lock in such talent right now. Some, like myself, think they’re getting an absolute steal by doing so this early. 

  2. Which is crazy when you think about it. Remember how incensed the blogosphere was when that deal went down? “$1 billion?! For a photo sharing app?! Has Facebook lost their minds?!” Nope. Awesome deal. 

  3. Even more so than tablets before the iPad. 

  1. alxmlv reblogged this from parislemon
  2. reneeberry reblogged this from parislemon
  3. paulsanduleac reblogged this from parislemon and added:
  4. echotoall reblogged this from parislemon and added:
    If it walks like a duck, talks like a duck, its a… wait for it… a swan?
  5. xatanas reblogged this from parislemon
  6. nutullabrain reblogged this from parislemon
  7. edwardmarkets reblogged this from edwardeclectic
  8. edwardeclectic reblogged this from parislemon
  9. emkwan reblogged this from parislemon and added:
    Interesting analysis on #Facebook’s acquisition of Oculus.
  10. parislemon posted this