VIRTUALLY AMAZING: Palmer (right) and Oculus CEO Brendan Iribe with Palmer's virtual-reality gaming headset.
Zuma Press/Alamy

Walt Disney got his start in a garage in California. Mattel’s toy business started in a garage in California. Hewlett and Packard started HP in a garage in California. Steve Jobs and Steve Wozniak started Apple in a garage in California. Google started in a garage. Yup, in California. So please take note: Palmer Luckey started working on virtual-reality goggles … in his parents’ garage … in California.

Palmer is 20. As a teenager growing up in Long Beach, south of Los Angeles, he was a “hacker” and a “console modder.” He wasn’t exactly breaking into United States Department of Defense websites, however. It was simple stuff, like ripping apart old game consoles and modifying them with better video displays. He was into the science in the science fiction that he read (Cryptonomicon) and watched (The Lawnmower Man). He was home-schooled. As long as he kept up his state-mandated test scores (he did), his stay-at-home mom and car-salesman dad let his imagination run free. The holodeck from Star Trek in real life? Sure, why not? “It’s the kind of thing most nerds, most gamers, want,” Palmer says. “They want to be able to step into these virtual worlds inside their computers.”

Palmer started buying virtual-reality goggles. He’d take them apart and study them. One year, he reckons, he spent $32,000 on virtual-reality goggles alone. To fund his purchases, he repaired broken iPhones and Nintendo games in his parents’ garage. “I like to solve problems on my own,” he says, just assuming that everyone knows their way around a circuit board. “The goal was to find a virtual-reality headset like the stuff I’d seen in movies or read about in books.”

He haunted online forums, communing with fellow fans about the science behind virtual reality. The University of Southern California hired him at age 17 to work in its Mixed Reality Lab (MxR) at its Institute of Creative Technologies, where he researched virtual-reality hardware to help returning soldiers with post-traumatic stress disorder (PTSD).

He never found the perfect headset so, of course, he built his own. His first prototype was simple: a pair of LCD-equipped ski goggles duct-taped together. Palmer sent his sixth prototype to John Carmack, the genius behind the games Doom and Quake. Carmack took that super-lightweight headset to the big E3 (Electronic Entertainment Expo) video game conference and trade show in Los Angeles and showed it to a few people. Suddenly, with gamers talking it up, Palmer’s virtual-reality idea became the rage on Kickstarter, the website created for public investment (called “crowd funding”) of creative projects. Nearly 10,000 backers contributed $2.4 million to Oculus VR, Palmer’s startup company.

In 2012, Palmer brought in a few veterans in game development (Guitar Hero), software development (Scaleform) and cloud gaming (Gaikai). They went hunting for a manufacturer in China. Although not yet 21, Palmer began shipping developer kits of his virtual-reality headset, the “Oculus Rift,” to video game developers, sci-fi aficionados and investors in the spring. (The goggles, with their 7-inch LCD screen, aren’t yet ready for consumer gamers, alas.)

But if you think virtual reality is primarily for those out of touch with reality, think again. There are military-training applications (learn to fly a jet and parachute) and medical-training apps (nice virtual suture, doctor). Soldiers with PTSD and kids with attention-deficit hyperactivity disorder (ADHD) are using VR too. By using the virtual-reality goggles to put them in situations they fear, soldiers can confront and learn to deal with bad memories or events in a safe environment. “It’s even used for burn patients as an effective pain-killer,” says Palmer. (Doctors say it actually changes the way the brain processes pain signals.)

So what’s the “Oculus Rift” like? The current headset with its goggles and LCD screen weighs nearly a pound and requires a band of straps to keep it in place. But just inches from your eyes, 3-D images play out in 1280x800 resolution. It’s considered groundbreaking for its 110-degree diagonal field of vision, its almost instantaneous ability to track with your head and its cost — $300.

VR supporters can be a bit too gaga about it, even for its creator. “All of a sudden they are jumping over skyscrapers and they are inside The Matrix,” Palmer says. “We are not there yet. A lot of progress needs to be made before virtual reality is indistinguishable from reality itself.”

Why now, Palmer? After all, Internet pioneer Ivan Sutherland built the first virtual-reality head-mounted display back in the 1960s. (It hung from the ceiling and was so big and dangerous looking, Palmer notes, it was called “The Sword of Damocles.”) Palmer credits part of his success to advances in cellphone technology, which brought down the cost of small, higher-resolution screens and motion tracking. The kid in Palmer promises that even smaller, lighter VR headsets — with better image quality — are on their way for the consumer market. “It’s the ultimate medium — the only thing that lets you experience the whole world with no limitations,” he says. Meanwhile, just like Walt Disney, Steve Jobs and the others, Palmer has boxed up his collection of virtual-reality headsets (51 and counting) and moved into an office in Irvine, Calif. Time to face reality.