diff --git a/CLAUDE.md b/CLAUDE.md
new file mode 100644
index 0000000..f84afd6
--- /dev/null
+++ b/CLAUDE.md
@@ -0,0 +1,110 @@
+# CLAUDE.md
+
+This file provides guidance to Claude Code (claude.ai/code) when working with code in this repository.
+
+## Project Overview
+
+This is "immersive" - a WebXR/VR diagramming application built with BabylonJS and React. It allows users to create and interact with 3D diagrams in both standard web browsers and VR environments, with real-time collaboration via PouchDB sync.
+
+## Build and Development Commands
+
+### Development
+- `npm run dev` - Start Vite dev server on port 3001 (DO NOT USE per user instructions)
+- `npm run build` - Build production bundle (includes version bump)
+- `npm run preview` - Preview production build on port 3001
+- `npm test` - Run tests with Vitest
+- `npm run socket` - Start WebSocket server for collaboration (port 8080)
+- `npm run serverBuild` - Compile TypeScript server code
+- `npm run havok` - Copy Havok physics WASM files to Vite deps
+
+### Testing
+- Run all tests: `npm test`
+- No single test command is configured; tests use Vitest
+
+## Architecture
+
+### Core Technologies
+- **BabylonJS 8.x**: 3D engine with WebXR support and Havok physics
+- **React + Mantine**: UI framework for 2D interface and settings
+- **PouchDB**: Client-side database with CouchDB sync for collaboration
+- **Auth0**: Authentication provider
+- **Vite**: Build tool and dev server
+
+### Key Architecture Patterns
+
+#### Singleton Scene Management
+The application uses a singleton pattern for the BabylonJS Scene via `DefaultScene` (src/defaultScene.ts). Always access the scene through `DefaultScene.Scene` rather than creating new instances.
+
+#### Observable-Based Event System
+The application heavily uses BabylonJS Observables for event handling:
+- **DiagramManager.onDiagramEventObservable**: Central hub for diagram entity changes
+- **DiagramManager.onUserEventObservable**: User position/state updates for multiplayer
+- **AppConfig.onConfigChangedObservable**: Application settings changes
+- **controllerObservable**: VR controller input events
+
+Event observers use a mask system (`DiagramEventObserverMask`) to distinguish:
+- `FROM_DB`: Events coming from database sync (shouldn't trigger database writes)
+- `TO_DB`: Events that should be persisted to database
+
+#### Diagram Entity System
+All 3D objects in the scene are represented by `DiagramEntity` types (src/diagram/types/diagramEntity.ts):
+- Entities have a template reference (e.g., `#image-template`)
+- Managed by `DiagramManager` which maintains a Map of `DiagramObject` instances
+- Changes propagate through the Observable system to database and other clients
+
+#### VR Controller Architecture
+Controllers inherit from `AbstractController` with specialized implementations:
+- `LeftController`: Menu interactions, navigation
+- `RightController`: Object manipulation, selection
+- Controllers communicate via `controllerObservable` with `ControllerEvent` messages
+- `Rigplatform` manages the player rig and handles locomotion
+
+#### Database & Sync
+- `PouchdbPersistenceManager` (src/integration/database/pouchdbPersistenceManager.ts) handles all persistence
+- Supports optional encryption via `Encryption` class
+- Syncs to remote CouchDB via proxy (configured in vite.config.ts)
+- URL pattern `/db/public/:db` or `/db/private/:db` determines database name
+- Uses `presence.ts` for broadcasting user positions over WebSocket
+
+### Project Structure
+- `src/vrcore/`: Engine initialization and core VR setup
+- `src/controllers/`: VR controller implementations and input handling
+- `src/diagram/`: 3D diagram entities, management, and scene interaction
+- `src/integration/`: Database sync, encryption, and presence system
+- `src/menus/`: In-VR 3D menus (not React components)
+- `src/objects/`: Reusable 3D objects (buttons, handles, avatars)
+- `src/react/`: React UI components for 2D interface
+- `src/util/`: Shared utilities and configuration
+- `server/`: WebSocket server for real-time presence
+
+### Configuration System
+Two configuration systems exist (being migrated):
+1. **AppConfig class** (src/util/appConfig.ts): Observable-based config with typed properties
+2. **ConfigType** (bottom of appConfig.ts): Legacy localStorage-based config
+
+Settings include snapping values, physics toggles, fly mode, and turn snap angles.
+
+## Important Development Notes
+
+### Proxy Configuration
+The dev and preview servers proxy certain routes to production:
+- `/sync/*` - Database sync endpoint
+- `/create-db` - Database creation
+- `/api/images` - Image uploads
+
+### Physics System
+- Uses Havok physics engine (requires WASM file via `npm run havok`)
+- Physics can be enabled/disabled via AppConfig
+- `customPhysics.ts` provides helper functions
+
+### WebGPU Support
+The engine initializer supports both WebGL and WebGPU backends via the `useWebGpu` parameter.
+
+### Encryption
+Databases can be optionally encrypted. The `Encryption` class handles AES encryption with password-derived keys. Salt is stored in metadata document.
+
+### Environment Variables
+- `VITE_USER_ENDPOINT`: User authentication endpoint
+- `VITE_SYNCDB_ENDPOINT`: Remote database sync endpoint
+
+Check `.env.local` for local configuration.
diff --git a/src/util/functions/groundMeshObserver.ts b/src/util/functions/groundMeshObserver.ts
index 0aab068..53346a7 100644
--- a/src/util/functions/groundMeshObserver.ts
+++ b/src/util/functions/groundMeshObserver.ts
@@ -1,10 +1,11 @@
-import {AbstractMesh, WebXRDefaultExperience, WebXRMotionControllerManager, WebXRState} from "@babylonjs/core";
+import {AbstractMesh, Vector3, WebXRDefaultExperience, WebXRMotionControllerManager, WebXRState} from "@babylonjs/core";
 import log from "loglevel";
 import {WebController} from "../../controllers/webController";
 import {Rigplatform} from "../../controllers/rigplatform";
 import {DiagramManager} from "../../diagram/diagramManager";
 import {Spinner} from "../../objects/spinner";
 import {getAppConfig} from "../appConfig";
+import {Scene} from "@babylonjs/core";
 
 
 export async function groundMeshObserver(ground: AbstractMesh,
@@ -60,6 +61,8 @@ export async function groundMeshObserver(ground: AbstractMesh,
                         logger.debug(event.detail);
                     }
                 });
+                // Position components relative to camera on XR entry
+                positionComponentsRelativeToCamera(ground.getScene(), diagramManager);
                 break;
             case WebXRState.EXITING_XR:
                 setTimeout(() => {
@@ -76,4 +79,68 @@ export async function groundMeshObserver(ground: AbstractMesh,
     rig.turnSnap = parseFloat(config.snapTurnSnap);
     const webController = new WebController(ground.getScene(), rig, diagramManager);
 
+}
+
+function positionComponentsRelativeToCamera(scene: Scene, diagramManager: DiagramManager) {
+    const logger = log.getLogger('positionComponentsRelativeToCamera');
+    const platform = scene.getMeshByName('platform');
+    if (!platform) {
+        logger.warn('Platform not found, cannot position components');
+        return;
+    }
+
+    const camera = scene.activeCamera;
+    if (!camera) {
+        logger.warn('Active camera not found, cannot position components');
+        return;
+    }
+
+    // Get camera world position
+    const cameraWorldPos = camera.globalPosition;
+
+    // Create a horizontal forward direction from camera's world rotation
+    const cameraRotationY = camera.absoluteRotation.toEulerAngles().y;
+    const horizontalForward = new Vector3(
+        Math.sin(cameraRotationY),
+        0,
+        Math.cos(cameraRotationY)
+    );
+
+    // Create a left direction (perpendicular to forward)
+    const horizontalLeft = new Vector3(
+        -Math.cos(cameraRotationY),
+        0,
+        Math.sin(cameraRotationY)
+    );
+
+    // Calculate base target world position: 0.5m ahead horizontally and 0.5m below camera Y
+    const baseTargetWorldPos = new Vector3(
+        cameraWorldPos.x + (horizontalForward.x * 0.5),
+        cameraWorldPos.y - 0.5,
+        cameraWorldPos.z + (horizontalForward.z * 0.5)
+    );
+
+    logger.info('Camera world Y:', cameraWorldPos.y);
+    logger.info('Base target world position:', baseTargetWorldPos);
+
+    // Position toolbox: 0.2m to the left of base position
+    const toolbox = diagramManager.diagramMenuManager.toolbox;
+    if (toolbox && toolbox.handleMesh) {
+        const toolboxWorldPos = new Vector3(
+            baseTargetWorldPos.x + (horizontalLeft.x * 0.2),
+            baseTargetWorldPos.y,
+            baseTargetWorldPos.z + (horizontalLeft.z * 0.2)
+        );
+        const toolboxLocalPos = Vector3.TransformCoordinates(toolboxWorldPos, platform.getWorldMatrix().invert());
+        toolbox.handleMesh.position = toolboxLocalPos;
+        logger.info('Toolbox positioned at:', toolboxLocalPos);
+    }
+
+    // Position input text view: at base position
+    const inputTextView = diagramManager.diagramMenuManager['_inputTextView'];
+    if (inputTextView && inputTextView.handleMesh) {
+        const inputLocalPos = Vector3.TransformCoordinates(baseTargetWorldPos, platform.getWorldMatrix().invert());
+        inputTextView.handleMesh.position = inputLocalPos;
+        logger.info('InputTextView positioned at:', inputLocalPos);
+    }
 }
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