When $17 million in venture capital funding was raised in June 2013, that was a red flag. When $75 million in venture capital funding was raised in December 2013, that was a huge, enormous, really big red flag. The news from yesterday was not shocking.

The buyer, of course, was a little surprising.

Yesterday, Facebook purchased Oculus, the company behind the beloved Oculus Rift virtual reality tech, for $2 billion. People are upset.

Let's unpack why this deal is causing such an emotional reaction. It's complicated, may have more to do with Facebook than Oculus, and underscores some other, unresolved trends coming to a head.

The Kickstarter proposal for the Oculus Rift launched in August 2012. The company was asking for $250,000 to build a developer kit for its pet technology project. People flipped for the idea, and it raised $2.44 million over the next month. The company has likely seen even more money from the many who decided to purchase development kits after the Kickstarter campaign concluded.

In the two years since, Oculus has carefully worked on the Oculus Rift, slowly making advances in its technology, as the hype slowly built through excited word-of-mouth. That hype seemed to reach a peak (if we're lucky, one of many) this month, as Sony revealed its Project Morpheus VR kit (spoiler: it's very similar to the Oculus Rift), and Facebook announced it would purchase Oculus for $2 billion in cash and stock options.

People have become emotionally invested in the idea of VR. Just watch the way Fez designer Phil Fish spoke about its potential (even in, say, our dystopian apocalypse) on our GDC live show last week. VR is Star Trek brought to life. VR is about better realizing the potential for virtual worlds that's been happening in our imaginations for years. I'm a convert, and been a believer in VR ever since strapping on the Oculus Rift for the first time. After that, I tracked down a development kit to play with. In short, I'm a fanboy. I'm not alone.

It's why there's a backlash. The term "emotional investment" is key, and it's why Kickstarter has been such an interesting business tool these past few years. It plays on emotion. On Kickstarter's "What Is Kickstarter?" page, the company outlines what it means to be part of Kickstarter, from the perspective of both a consumer (better known as a "backer") and a creator. There are a couple of sentences worth pulling out more closely:

"Backing a project is more than just giving someone money. It’s supporting their dream to create something that they want to see exist in the world."

When it comes to games, there are many that would not exist without Kickstarter. Broken Age, Shadowrun Returns, Wasteland 2, and others. Several of these games have shipped to players, and some of them turned out to be really good games. Crowdfunding allows us to help make dreams happen, and that's lovely. But emotional investment is not an actual investment--it does not give you control over the company. It does not provide equity, and you are not owed anything by the creators. The ROI (return on investment) is fulfilling hope.

Which leads us to this:

"Backers are supporting projects to help them come to life, not to profit financially. Instead, project creators offer rewards to thank backers for their support."

Backer. That's a problematic term. It sounds too much like investor. It implies more control than what Kickstarter actually offers. Kickstarter is, at its base level, little more than tossing dollars and cents into a tin can, and hoping the person goes and does something nice with it. When established people come to Kickstarter, we can be a little more confident something will happen, but that's not a guarantee. Every time you back a Kickstarter project, this should be how you feel: "that could be cool, I hope it works out." That's it.

I don't root for Kickstarter projects to fail, but it's healthy when some do. Lots of video games are cancelled every single day. Lots of video games with promising ideas turn out to be total crap. We just don't hear about those games. Those are tossed under the rug, and we focus on the success stories. But success only comes through failure, and failure is far more common than people understand. When Kickstarter projects fail, when people get angry over their investment, it gives them a better sense of how development actually works. These stories happen all the time.

What doesn't happen all the time, however, is the complete opposite, which is exactly what happened with Oculus. Oculus delivered what its Kickstarter project promised: a development kit. But people became emotionally invested in the prospect of a new, independent technology company coming out of nowhere and changing the world. The emotional investment fused with the ideals behind Oculus, a notion the company's founders stoked with press quotes that suggested Oculus had no interest in selling to the usual suspects.

Of course, it's easier to say that before a deal is in your face, and when you're being offered an opportunity to, if it works out, do everything you ever wanted and more.

At GDC last week, Facebook reportedly hashed out its deal with Oculus. Scattered chatter at GDC suggested that Facebook was not alone. I heard other companies were interested, but apparently Facebook was offering the best deal. I haven't done enough reporting to say much more than that. Perhaps the reveal of Sony's Project Morpheus forced Oculus to tip its hand, perhaps the initial investors wanted to cash out while the news was hot.

When the Facebook news was announced, Minecraft creator Markus "Notch" Persson announced he was cancelling his deal with Oculus to officially bring virtual reality to Minecraft. Persson wrote a lengthy blog post outlining his decision, and included this line:

"And I did not chip in ten grand to seed a first investment round to build value for a Facebook acquisition."

Yes, you did. Everyone did. And Oculus probably won't be the last time backers struggle with this idea.

On some level, I get it. It doesn't feel fair. You were on the ground floor, and a bunch of other people get the big money. Polygon's Chris Plante put this best in a tweet earlier today:

But how else was this gonna end? John Carmack, Cliff Bleszinski, Michael Abrash, and Gabe Newell were part of the pitch video. From day one, this was shooting for the stars. If Oculus wanted to be a company producing electronics for the masses, that was not going to happen on its own. It would be like the Pebble SmartWatch: the fuel of a potential revolution without being at the center. Oculus owes you nothing. Oculus does not have to pay everyone's Kickstarter investment back because the company just made a load of cash.

Persson's original tweet on the subject, which has been retweeted more than 16,000 times now, struck a nerve. Persson represents our ideal vision of a rich person with money. He's a self-made altruistic gazillionaire that invests his money into things he loves, and wants to see them grow. But it's called idealistic for a reason: it's not reality. The response on Kickstarter proved there was interest in the Oculus Rift, and the venture capital funding was simply a way to let the company grow its ambitions and make a move like this. It's clear that Oculus wants to be the tip of the spear, and partnering with Facebook is one way to give it a real shot.

This loud, angered reaction is the feeling our toy, our collective dream, is being taken away from us. And that leads me to what's driving most of the vitriol: a distrust of Facebook.

Persson actually touched on this part in his original tweet.

"Facebook creeps me out."

He probably could have tweeted only that and received a similarly big response. If we conveniently ignore the disturbing hot-or-not reasons that drove the creation of Facebook in the first place, what Facebook once (and still sort of does) represented was connecting disconnected people. Friends, family, lovers, ex-lovers. Hell, the whole world. Someone took part of what the Internet provides and harnessed it in a way that could bring us all closer to one another. I love that, and still love that. I got over the fact that my mom uses Facebook a long time ago because it does a better job of informing her what's going in my life than my less-than-regular phone calls. (Sorry, mom!) It's hard to imagine she will ever sign up for another social network. Facebook is it.

But as Facebook has expanded and become a normalized social commodity, it's also had to make money. The whole reason Facebook was able to buy Oculus this week is because it went public, and has access to a pool of real money (the $400 million) and funny money (the $1.6 billion in Facebook stock options). In making that transition, it's started eroding its foundation: trust.

(If we want a recent reason to feel better, Instagram was acquired by Facebook for $1 billion and seemingly remains unscathed as part of the buyout process.)

When we engage with "free" software like Facebook or Twitter, we understand the "free" part comes at a cost. Scratch that. I don't think most of us think of it that way, even if that's reality. Nothing is free. But that "cost" is companies finding ways to make money on us via advertisements, and it's hard to blame Facebook for that. What we can blame them for, however, is often dragging us there without our knowledge. How many people have spent a significant amount of time tweaking your privacy settings? You probably did it once and then figured you were good, right? For a while, that's true, but Facebook has time and time again forced its users to share more and more and more and more and more and more, often without explicit consent.

(Side note: I also think people have distanced themselves from Facebook, intimidated by how many people they have friended on Facebook. Social norms make us feel weird about deleting them. I'll disclose my method of dealing with this, but don't tell anyone, okay? Every day, Facebook notifies whose birthday it is. If you can't muster the energy to write someone a virtual happy birthday note, what are you doing being friends with them on Facebook? I've been slowly deleting people from my feed for years this way. I'm a monster.)

This breach of trust is combined with a common buyout tactic in Silicon Valley: talent acquisitions. Companies are often bought to bring in the people who work there, not the product they're making. If you take Facebook at their word, that's not happening with Oculus, but it's not hard to imagine the Oculus folks won't be asked to work on whatever hardware projects Facebook's making. (Facebook seems a bit like Valve, constantly tinkering with internal ideas, even if very few of them see the light of day.)

Even if we look squarely at games, how many studios did the old EA ruin by purchasing? It's a graveyard.

All of this adds up. The emotional investment, the distrust of Facebook, the cynicism we have towards companies with billions of dollars. It doesn't feel like there is much pure in the world anymore. Oculus felt pure. It was a kick ass idea becoming reality. "We made this happen, you guys! And we were going to change the fucking world!" That was, sadly, naive, and helps explains the yelling and the screaming happening today.

I listened to the conference call with Facebook and Oculus. They were saying all of the right things. Oculus will keep doing what they're doing, and Facebook looks at Oculus as an investment that might pay off in five or 10 years. Facebook doesn't intend to make a profit on the hardware, which means Oculus should get to ship the device it wants. Kotaku noticed the company is also performing some damage control, and answering concerns on Reddit. You won't need a Facebook account to use the Oculus Rift, the money from Facebook will mean better hardware and investment in cool games, and a promise there won't be specific tie-ins to Facebook technology. Facebook has also told TechCrunch that it denies The New York Times report that the Oculus Rift would be re-branded and re-designed with Facebook look and interface.

Facebook's social ubiquity means it has time to take chances on long-term gambles, and Oculus seems like one of them. They might screw it up, but also might not matter.

Oculus did start a VR revolution, even if that revolution never takes off and flounders in the same way 3D did during the last five years. But without the Oculus Rift project on Kickstarter, none of this would be happening. It's easy to be upset that you're not walking home with tens of thousands in your pocket, but that was never going to happen. You were a part of something big, though. You contributed to a dream, and that dream is about to take off. Not all dreams succeed, but, hey, we can't control everything.

I hope it all goes well.

Plante's tweet perfectly puts into words the thoughts going through my head yesterday at the responses that were so concerned about "investing" through Kickstarter.

It's Facebook. One of the least trust-worthy companies there is. I can't see what else needs to be said. They now own Oculus, hence they can no longer be trusted anymore. End of story.

I'm glad they have a bunch of money now and all, but I will never have interest in their product again.

For me personally, none of this has anything to do with OR starting off as a Kickstarter. It has everything to do with FB.

I think Kickstarter might be the real boondoggle in this story. The Oculus needs capital and crowd funding can't do it.

You're the best Patrick. Excellent article.

That picture of Will Smith is the best!

Excellent write-up Patrick, Thanks.

Amazing article @Patrick Klepek - you hit the nail on the head!

Thanks for this Patrick.

I wasn't aware people hated facebook this much. Isn't it good to have a large company supporting you?

Well said Patrick. I have to admit that my knee-jerk reaction was along the lines of Notch's, but after calming down and really thinking it through, I came to the same conclusions. Now we just have to wait and see how it goes...

This is one of my favourite tweets from the whole event. I just don't see VR going 'main stream' in the near future. I think this all happened too fast. I didn't think I was quite ready for the VR future let alone my Parents...

But success only comes through failure

This article, son.

No?

good job patrick !

@christaran: Google does the same stuff. truth is if you do not want your information sold get of the internet. if they can not charge for a service, they have to use your information for advertising.

I don't have any concerns about the quality of Oculus. But don't want anything to do with Facebook. That has not changed. It is sad news to me (I didn't back OR though) but I can live with it. If VR takes off there will be others.

I really feel like the outcry is less about Oculus being bought, and more about who bought them.

Facebook more like fartbook.

(If we want a recent reason to feel better, Instagram was acquired by Facebook for $1 billion and seemingly remains unscathed as part of the buyout process.)

This is simply not true. It may be easy to load up Instagram for two seconds and say "Looks good" but it has been changed since the Facebook buyout. All Twitter integration has been pulled, censoring is now an issue and there was a copyright movement that almost sunk the service. It's foolish to think Facebook, or any company for the matter, would invest billions in something and not have any say in the direction.

Counterpoint: If your dream was to see a scrappy tech company create a revolution through crowd funding and public support, the buyout by Facebook meant your dream died. Dean Putney on BoingBoing said it well. http://boingboing.net/2014/03/25/oculus-vr-could-have-changed-b.html

I think the biggest issue is that Facebook has in the past treated both consumers and developers poorly, groups that the oculus rift had already won over handily. When you consider that groundswell of positive support has a price tag then it starts to feel pretty gross.

Despite all my rage, I ended up preordering a dev kit with the intent of developing for it. It does add a ton of legitimacy to the concept of VR, and that much backing means that we're going to get there that much sooner. It's going to be big.

After all this, some dark, sinister part of me kind of wants to see EA swoop in and purchase the rights to Star Citizen. But then again, that's the part of me that just wants to watch the online world burn.

Good article Patrick, your stuff is getting better and better.

I think the distaste at FB was to be expected. The crucial point here, and the understandable reason why people are getting angry, is because they feel they have invested in a dream which has been commodified and sold for profit. But I think this presents a greater problem for Kickstarter and the crowd funding model than it does for FB or Occulus. People are going to be looking with greater scrutiny at the projects they donate to and maybe asking more questions before coughing up, especially to tech projects with greater potential than the average video game. This is maybe not a bad thing and maybe KS will evolve to a service which funds just artistic projects rather than technologies.

On the whole if you have funded Occulus I think the pride in supporting a potentially revolutionary project should be your reward. That and the Dev kit....you got that right?

Great write up and wonderfully all tied together.

It's such a complex issue that diving head first into a forum thread on the issue can bring on such a complicated conversation that comments usually aren't good for.

I think so few fans of VR and video games actually understand how the business side works and operates. That's where you have this obvious disconnect between reality and idealism. As if fandom and Kickstarter dollars are all you need to survive as a budding hardware technology manufacturer.

It's really disappointing to see "luminaries" like Notch followed so closely and yet still make the same 'fanboy esque' knee jerk decisions.

Kinda grossed out that someone as immature as Notch has so much sway with gamers.

I backed the Rift and have absolutely no regrets. They promised a dev kit at an incredible price compared to the current market and a level of fidelity that would bring VR back into the limelight. Both of those things appear to have happened. Any other upstart company could come along tomorrow with an OLED, low persistence, head tracking VR device, simply because Oculus brought the discussion into the public imagination and got people think-tanking their way around the problems VR has suffered from in the past.

Regardless of the final product and whether it is ruined by facebook or not, the proposition of VR is now strongly in view and not going away anytime soon.

Patrick, you are a phenomenal writer.

@christaran: Can you elaborate on what makes them untrustworthy? I'm not fighting you or anything. I honestly don't know.

Another great read. Patrick Klepek, You are quickly becoming my favorite game "journalist" and justice warrior!

If it was EA that bought them, there would be bitching, but eventually it would calm down since EA is still all about games. With Facebook buying them, it all seems to be much more up in the air since the games they are known for are far more different than what we've been wanting out of the OR.

I have conflicted feelings about the whole thing, for the most part I agree with Notch in his entire post that everyone should read. While I agree that they can do what they want as a company, still, it's facebook. FACEBOOK. Yes its a logical fallacy but to join up with them makes no sense. Period. It doesn't make any sense to me. They got an offer they couldn't refuse and took it, can't blame them. But it does ruin their goodwill that they have built up since 2012. Good luck gents but I'm out.

Are you shitting on Notch for having integrity?

Klepek with another home run!

The only thing anyone is owed from a Kickstarter campaign is the specific reward tier that they pledged money for. If I backed the Oculus Kickstarter to get a t-shirt, but the actual device never made it to retail, I'd be bummed out, sure, but I quite literally got what I paid for. Maybe an argument could be made regarding Kickstarters for games that end up cancelled, but a fancy piece of technology was never going to make it to stores with just the $2.4 million from Kickstarter backers.

nice write-up Patrick! im also glad you snuck in that picture of Will Smith! =D

Patrick made a very interesting point and that the concept of an "emotional investment".

While trying to parse this piece of news, I find it difficult to pin the blame (if any) on a single entity. What if development for the Oculus was running out of money, and they needed cash. Fast. Creating brand new technologies is costly and it's something that cannot be funded by niche sales of a $300 piece of hardware. Maybe Oculus needed more money to fulfill an obligation they felt they had to the community? An obligation to realize the dream of non-shitty VR. Maybe they could've partnered with someone more... favorable in the eyes of the dedicated community? But, according to Patrick, that wouldn't yield as much money as what Facebook was offering.

On the other hand, shouldn't Oculus realize the ramifications of partnering with one of the least favorable companies of all? Wouldn't they know that partnering with a company that has zero interest in furthering advancements in technology (other than ones that assist in selling ads and collecting big data) would be betraying that trust and obligation they felt they had to the community?

Or maybe, like Patrick said, they don't give a fuck. They have zero legal obligation to anyone. They have already delivered on what their Kickstarter set out to achieve; delivering Oculus V1.0. As far as the black and white is concerned, Oculus has done their job and their "contract" has been fulfilled.

There's so many angles to look at this news but who are we to say which is true? We won't know what the reasoning behind the deal was and we probably won't.

Great article.

I don't know -- maybe you could explain WHY Facebook is less trusty-worthy than, say, Wells Fargo? They've made significant progress regarding protecting user's account information, and, like most things in social media, most of the personal information out there is put there voluntarily (for good or bad).

Brad had stated that he was upset with the Facebook acquisition because he was worried that they would turn it away from video-game development. That's a fair concern, but still not a big deal. It's not like people will be deprived of VR gaming accessories forevermore while the bad guys cackle and bury the Oculus in an uncharted wasteland; Sony just announced their VR project, you can bet that Microsoft (and others) are falling over themselves to get their own projects out.

All in all, you can have legitimate reasons for not liking Facebook, but tweeting that you're going to cancel your plans to release a game because "Facebook is creepy, and everyone who uses it by extension are creeps, and I'm too cool for school because I don't like it" seems pretty petty.

I think my main issue with the deal has a good deal of the inherent distrust and weird feelings Notch and @patrickklepek both pointed out combined with the fact that there's no real reason why facebook would look at this as a gaming device. That's what the Oculus has always been pitched as, something to fundamentally change the way we game--to do the stuff I care about.

With the facebook acquisition it feels like that it's going to be losing that focus. Facebook wants it for its potential to change the way we communicate in a very real way. No more awkward international phone calls (business or otherwise), VR has the ability to put those people in the same "room" as each other without the necessary travel.

I don't care about that, I want to use it to game. Though I guess if I were being honest with myself, there's no good reason why VR to just exist and be successful as an enhanced way for people to play games. I just wanted it to be that way.

Maybe put the focus on games because that's where they knew they could get the most kickstarter money from... if that's true then I'd really feel like they pulled one over on us.

I don't even care about the Kickstarter part. I understand all of that, even if other people don't understand that Kickstarter is a little more than a pre-order system.

What I care about is advertising, and I don't trust Facebook to not advertise through this. It's how Facebook makes money. My picture of the Rift was as a (for lack of a better term) dumb device. I saw it as a peripheral. Now that they're owned by Facebook, I don't see it that way. No matter what they say, I don't believe that Facebook won't get their hooks into it somehow.

I fully understand that advertising is sort of necessary for lots of things to function they way they do. Google can offer free e-mail and an online productivity suite, among other things, because they're selling me to advertisers. That's fine. But the thought of me being sold to advertisers via a $300-ish peripheral that I'm trying to use for entertainment INFURIATES me. I know it hasn't happened yet, and they assure me it won't, but now they have to prove it. Regardless of Facebook's acquisition history, these sorts of takeovers rarely have zero negatives associated with them.

If the Rift remains a device that I can simply use while launching a game from Steam, I'll be happy. But like I said, now they have to prove it.

I'm reminded of that time when Notch decided he was going to fund Psychonauts 2 all by himself and then was like "Wait, it costs how much?"

Well spoken, except you can't do a "scratch that" it's just odd in an article. Too self aware. :P Keep up the good work.

Any Kickstarter backer asking "where's mine" after this deal is crazy, but I don't see it as naive or entitled to complain that people backed a project that now could be in an entirely different place than was originally promised. People weren't just funding a devkit, they were backing a promised idea of an independent, open, revolutionary gaming platform that was "by gamers, for gamers." With the exception of VR still being revolutionary, Oculus being independent, open, and gaming-focused are all in question with this acquisition.

As you say, part of the problem is that the $250k requested, or the $2.5 million earned, was not nearly enough to get Oculus into market. It quickly became evident they were going to have to get further outside investment, and that investment was going to have a far greater say in whatever Oculus became than the initial vision presented to the backers. The problem is that they didn't tell anyone about that path in the Kickstarter or the potential need for hundreds of millions to ever succeed. Whether intentional or not, leaving out that context is significant, as it's doubtful they would have gotten the funding they did had they revealed they would have to relinquish control of the company and product in order to get to market.

So I can't fault people for feeling burned or used that they tossed money at a dream that apparently had no chance. And it sets another bad precedent for Kickstarter - projects and "free money" that can be used as seed money to get off the ground and flip your idea for real money. It's still backer beware out there, but it's a big black eye to the Oculus team, and I wonder if developers who provided them with such vocal support early on feel a little used.

Nicely written.

(If we want a recent reason to feel better, Instagram was acquired by Facebook for $1 billion and seemingly remains unscathed as part of the buyout process.)

I think this is pretty significant. Facebook seems very self-aware of the things that they acquire and what the consumers want out of it. Everyone enjoyed how Instagram was ran. Facebook maintained what people liked, and added even more to it. I highly doubt they're going to fuck Oculus up within the next several months. Later on, however, I think they might start toying about with the Rift. Still, as much as I despise their website, I think Facebook as a company is gonna do the right thing with Oculus.

I was a bit concerned initially, until Palmer took to reddit to explain a bit more. I truly hope the Rift achieves what it originally set out to do, because I've been following it since the beginning, and have a been a huge advocate of what developers have accomplished with it already.

@patrickklepek you articulated how I felt exactly. Great article and well thought out.

I think people are kneejerking in reaction to Facebook way to much. What ever happened to giving things a chance?

Do people really hate Facebook that much? I use it daily, it keeps me in touch with friends and family. So they push some ads, it pays the rent. I think it's a fair trade. Do people hate sponsored tweets on twitter with such vitriol? I guess I just don't understand.

Really, this highlights the fundamental problem with Kickstarter: you get emotional investment with no hope of ROI. Now, many people will say that they are just giving the money to seed creative ideas, which is a perfectly legitimate exercise of charity. But until the new SEC rule kicks in later this year, there's been no way for the small group of people who want to push the new idea forward with crowdfunded financial support to receive any sort of return for their faith and support. Instead, VCs get to come in once the idea is "marketable," and financially support the idea until it's bought by a big company. The VCs, already possessing more capital than any small backer possesses, gets to make a windfall off of their investment, while the backer ultimately gets a small token of thanks and none of the reward for helping the idea go from the drawing board to production. It's why I've never used Kickstarter, and will continue to avoid it until I can acquire some interest, minimal though it may be, for my support.

I wonder if Carmack ever thought that he would one day work for Facebook?

Facebook is a godawful company and I ditched my account years ago, going so far as to refuse any work that involves using their site or their terrible ever changing API. I've successfully removed them from my life.

I simply don't trust them if they sell OR hardware at more or less cost price - they are not a hardware company so it's baffling the OR guys thought they were a good match. My fear is the rift will perhaps not immediately, but eventually require some layer of Facebook login to use and that's how they'll monetise.

Not to mention that the generous way OR were sharing their research with anyone else in the field is likely going to stop once lawyers and patenting happens.

I hope I'm being cynical here, but I kinda expect the worst to slowly happen.

I've always thought of Kickstarter as patronage. You're giving money to an artist to produce work, the artist will probably give you something specific in return but you aren't just paying for a specific thing.