In January, Microsoft stole headlines by unveiling the HoloLens, its so-called “mixed reality” headset.

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The software giant says that HoloLens, which joins Facebook’s Oculus Rift, Sony’s Project Morpheus, HTC’s Vive, and Magic Leap at the forefront of augmented-reality and virtual-reality technology, “is the first fully untethered, see-through holographic computer,” a platform enabling “high-definition holograms to come to life in your world, seamlessly integrating with your physical places, spaces, and things.” It also says that this new mixed reality “will unlock all-new ways to create, communicate, work, and play.” Of course, the only way that unlocking can actually happen is if there are applications for HoloLens. Microsoft will develop many of its own, but the lion’s share will almost certainly be built by outside companies. One of the very first teams that will be developing for HoloLens is a Portland, Oregon, startup called Object Theory. Launched earlier this week, the new company was founded by Michael Hoffman, who recently left Microsoft, where he was a principal engineering lead and led the creation of “showcase experiences” for HoloLens, and Raven Zachary, the founder of iPhoneDevCamp, the largest non-Apple iOS development conference. Zachary also helped found Small Society, a mobile apps development company that sold to Walmart in 2012. Object Theory plans on building HoloLens apps for paying clients, and expects to focus mainly on business applications–leaving the games to gaming companies. Yesterday, Hoffman and Zachary sat down to talk with Fast Company about their new venture, about why they wanted to build for HoloLens, and about the magic of floating sugar cubes.

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Fast Company: What is Object Theory? Raven Zachary: We are a software development agency focused on building mixed reality applications for Microsoft HoloLens. This means working with clients from the inception of the idea all the way through delivery and including ongoing maintenance and support. Raven Zachary Michael Hoffman: Object Theory will deliver enterprise solutions for clients who wish to be early adopters of a new platform, particularly those interested in a launc- ready showcase app (in our early days). What is mixed reality? Hoffman: It’s the spectrum of real world all the way to full virtual reality (VR), which in the middle includes augmented reality (AR). It differentiates from the older use of augmented reality which was 2D-screen-based since that’s just one solution on the spectrum of all of these realities. And when you say clients, who do you imagine that being?

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Zachary: We’re focused on the business market. We see a whole spectrum of opportunities to make HoloLens applications that provide tangible value. Michael worked on a number of these examples at Microsoft to demonstrate the opportunities. Michael Hoffman Hoffman: We see opportunities in a variety of different business verticals. Such as? Hoffman: The Keystone demo–which showed how HoloLens could be used in architecture, engineering, and construction, was one I worked on. Any application where one is designing 3D objects is an obvious one. Traditionally, designers have to resort to 3D prints to ever experience their creation. With HoloLens, you can see your creation in real-time with correct colors and materials.

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Zachary: One example is retail. I just spent three years working at Walmart as part of my company sale, Small Society, in early 2012. You can imagine it being used in assistance-purchase situations, such as automobiles, jewelry, and high-end fashion, where you are being guided through a purchase with customizations, to try things out before the final purchase decision. You could also use this in retail space planning, where you could experiment with store layout, shelf placement, products, advertising, and other aspects of the in-store retail experience. Hoffman: And you can walk around it, collaborate with others, and discuss an object that doesn’t yet exist. Another area is medical imaging and other aspects of medicine. The human body is inherently 3D, so HoloLens opens up so many possibilities to assess, learn, and otherwise interact with information about the human body in 3D. So clients would hire Object Theory to build these applications for them, and then they’ll market and distribute them? Hoffman: In general, yes.

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Zachary: In some cases, market and distribute, and in other cases, use internally for their employees. Why did you decide to focus on enterprise, and not entertainment/gaming? Hoffman: It was a combination of our personal interest in enterprise, as well as seeing the biggest opportunities. Solving for real-world challenges and making people more productive is exciting to me. Zachary: I think the entertainment and gaming opportunities for HoloLens will be actively pursued by existing gaming studios. That’s not our background.

Why did you want to do this? In particular, Michael, why did you want to leave Microsoft and the HoloLens team? Hoffman: It’s a multipart answer. One is that I was long-distance commuting to [Microsoft’s headquarters in Redmond, Washington] for almost a year-and-a-half with the intention of eventually moving up there, but for personal reasons it became clear that we would not be able to as soon as we thought.

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The other is that, given my personal situation, how could I stay close to something that has been so amazing, that I have so much confidence in? I’m a startup guy, so starting my own company around this was a natural way to solve this. Knowing Raven and his skill set was another key component to this working. Zachary: I spent a lot of time in 2014 thinking about what I wanted to do next, and after the Facebook acquisition of Oculus, I purchased a developer kit and started thinking about business models in VR. As much as I love VR, I was turned off by the lack of clear business value and the industry’s focus on entertainment. When HoloLens was announced in January, I was excited that AR would be arriving years sooner than I expected. Michael updated his LinkedIn profile on the day of the HoloLens announcement, and we started talking immediately. We’ve known each other for years. There will be business uses for VR, but nowhere near the extent of AR.

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Why is that? Zachary: VR is an isolating technology. You can’t see your physical world. You basically need to go into a room, shut the door, and immerse yourself. That’s great for entertainment, sports, relaxation, not so good for business or collaboration. Adding digital objects to the physical world is a better model for collaborative problem solving. Even the Oculus CEO Brendan Iribe keeps saying in interviews, “The Rift is for gaming.” It will evolve over time, but the drumbeat of gaming is going to hinder business use of VR in the early days. Hoffman: With AR, you can see the world around you, you can collaborate, you can see your monitor and keyboard. It does not lock you out of all that is so natural already.

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With that in mind, will you be exclusively developing for HoloLens, or can you imagine working on applications for Magic Leap as well? Hoffman: We’re definitely focusing exclusively on HoloLens for the foreseeable future. Zachary: HoloLens is the only mass-market AR headset that will ship in the immediate future.

Given Michael’s history on the HoloLens team, how closely will you be working with Microsoft? How much access will you have—especially compared to others that might want to develop for the platform? Hoffman: There’s nothing to announce right now. I did leave in very good standing, have great relationships there and expect to be able to leverage that. There are many nuances to developing successful user experiences for HoloLens where I have insights from all the experimentation and app development that I was part of at Microsoft.

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Tell me about some of those nuances? Hoffman: There is an entirely new emerging field of user interaction called NUI (natural user interfaces). It’s just being paved and not all the problems have been solved. To interact in 3D requires new ways of thinking about how a person interacts. Also, just like a mobile phone app, you can’t simply port your desktop or web ideas directly to such a new environment and expect it to perform well, or be intuitive and efficient. All of that requires cleverness and thoughtfulness to solve for, some of which is not so obvious. How do you think HoloLens will be adopted in the enterprise?

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Zachary: Microsoft has a very strong enterprise ecosystem. They will be doing outreach actively, those companies where there is a clear 3D-in-3D fit (architecture, construction, medical, industrial design, retail, real estate, etc.) will adopt first. Others will adopt as the value is proven out in the industry. We are the first HoloLens software company, but there will be dozens emerging over the coming year. In your launch announcement, you argued this signaled a shift from hardware to software. What does that mean to you? Zachary: So much of the AR conversation to date has been about hardware platforms. As these hardware platform launch, the conversation will shift to the software ecosystem. Hoffman: Microsoft is nicely doing the very heavy lifting in hardware, so we don’t have to. Now, the next challenge is taking this amazing hardware and operating system platform and building software to solve business challenges, enable entirely new businesses and augment existing solutions.

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How much fun is it to be doing this? Zachary: It’s definitely exciting. There is something magical about this. Hoffman: I’ve had the time of my life this past year at Microsoft and am so thrilled to keep doing it. It really feels like inventing the future of computing. I’ve been at the bleeding edge most of my career and this is definitely the most exciting of them all.

What’s your favorite story about working on this technology? Hoffman: I’ve got one from my final days at Microsoft. One of my engineers, Donna, put a tiny little sugar-cube-sized cube in the holographic world at eye level. It happened to be right behind my desk, and it was a placeholder for future objects in the scene. I’d get up out of my chair, try out the current state of the app, and I’d see the cube and duck or sway. My brain was telling me “don’t run into that cube, it will hurt you!”

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It was so magical that my brain was so ready to believe that this tiny cube was really there and in my way. But then you could walk up really close to the cube and see every little detail on it, like that it had a texture on it. It was such a magical reminder of how amazing this new world will be. When do you think you’ll be delivering your first application? Hoffman: Most likely nothing will be announced until HoloLens is launched. The only exception would be if we create something that Microsoft themselves likes so much, they request to showcase it before then on behalf of one of our clients. How is Object Theory funded, and what’s the size of the team? Hoffman: We’re entirely self-funded. Today, it’s just Raven and myself. But we are already interviewing for 3D artists, developers, etc. We’ll ramp up fast as our clients become more clear.