I was, at one point, very excited about this company, to the point where I recommended a colleague join the company (she thankfully did not). I strongly believe there's only so much vaporware that the general public will accept, and Magic Leap has definitely overstayed that period.
If they aren't more honest about their current progress and more realistic with their near-future plans, they'll end up cratering their reputation with the public before they even have anything off the ground. At that point, it might not matter how many billions they have in the bank if they ruin their reputation to do so.
Worse, if they don't get in front of their persistent vaporware problem, they could find themselves in the dust by the time they do come out with a product. Microsoft has already released their first version of the HoloLens, and is said to be working on their next version at full steam. By the time Magic Leap comes out, Microsoft might already have a compelling ecosystem and device portfolio. Other companies are joining suit.
It'd be nice if Magic Leap showed the public the same thing they're showing these investors - clearly, their demo is convincing some supposedly smart people to pour lots of money in, so why can't they show the public?
Pretty much. This is pretty much a classic analysis of execution risk. The company spends so much time in development that the market passes them by. One of my favorite poster children for this is Plastic Logic.
I have no direct knowledge of anything that Magic Leap is doing so I can only speculate. My speculation is that they have raised too much money, and as a result they lost their edge. People are naturally more productive when a deadline is looming, especially if it is an existential one, and startups typically have a limited amount of cash before they have to raise more or die. But sometimes startups get enough money that they can operate for years before they die, and then their delivery deadlines seem to ooze out to years.
It can happen easily enough, if you have to deliver next year, and your schedule it tight, then you start narrowing the scope of your delivery. That naturally prunes the things that are less critical to your success from the delivery and focuses the team on the critical bits. If your delivery is in two years, there often is pressure for some "quick wins" which are features which are not critical to the product but easily completed to show progress. As a result you make lots of progress on things which are not part of the critical path. It can make an engineering team feel good ("Hey, look at all this stuff we got done!") but it pushes off the question of whether or not they can even do the critical bit.
One unexpected side effect of this I saw in a company I advised was that the group working on the critical bits were penalized in terms of recognition for not getting more done (even though their part of the problem was much harder) and some key members of the group left, putting the critical pieces in still more jeopardy.
What I'm trying to say is that taking a big funding round is exceptionally risky for people who haven't managed through the sorts of ups and downs a startup has to weather. Magic leap took in a lot of money early on. That sets the stage for disaster. Not that the problem will actualize; People go out sailing on the San Francisco Bay without enough life vests for the people on board every day and that situation only occasionally intersects with an event that results in the loss of life. But once you've left the dock without enough vests, you have just increased the importance of the competence and abilities of your crew without necessarily realizing it. So to with startups that take too much money, they increase the importance of having a management team with exceptionally good discipline.
We will get to see how it turns out for Magic Leap.
Agreed, but PL had an excellent product, the flexible e-ink display, that had they sold it as a component[1] they could have funded any number of future products. Instead they felt they had the funding and runway to build the entire experience and dominate the e-reader market with a more durable, less expensive, and larger format product.
The interesting bit was that they were not wrong, if they could do all those things they could have dominated the market. But they had too much money relative to the market window. As a result they spent way too much time working through product issues that were completely unrelated to their game changing display and once full color tablet readers were a competitive threat they had too much margin pressure to recoup any of their development costs.
[1] And yes, I met with their VP of Marketing/Product Development and explained this to them when they had time to take the advice, but they did not.
I agree, they tried to do more than they should have.
A general issue I see, however, is that the real world need for flexible displays is far more limited than earlier projections suggested. If you switch to a rigid display, there is no reason to use an organic transistor back plane - that's where things start to unravel. PL were not even the first company in that space. There also were Polymervision and a couple of others.
It is quite difficult to predict exactly the road not taken, I realize that PL's demise may have been written long before they chose the path they chose. That said, I could see other markets, markets that have yet to be exploited, which they might have reached. One was the 'flimsy', a bare bones e-reader so simple it could be sold very cheaply if its display was built using roll to roll printing technology. It was the 'e-reader as printer' something that sat perhaps in a network connected cradle with the 'smarts' and you printed to the display and then could detach it and take it with you. With a flexible display you could feed in a new display like you would a sheet of paper, with either a set of contacts along one edge or the driver in the surface on which the sheet rested. Lawyers carry around literally pounds of paper for trial, putting all of those in a dozen e-readers so that you could have all the interesting pages up to read at the same time. That would be something.
The key though is cost. A slam dunk product would cost what the Boogie board does ($30) have 200dpi+ resolution and let you write on it with a simple stylus.
On the other hand, maybe they just don't care. Why should they, if they're landing a multi-billion-dollar D round without having done that? They seem doing a good job of convincing the people they need to convince to stay in business, if "business" is the right word for an organization which, if this news is accurate, will be most of $10 billion into debt before it has its first cent in revenue. Why split focus and try to convince anyone else? If the tech gets off the ground (and exists in the first place, of course), everyone who sees it will be convinced once the product hits retail. Until then, I don't really see how it matters.
It doesn't really help them until they need to start marketing. Even oculus/vive mismanaged the expectations of the public so there's no advantage to start doing it until you have to. Given how bad hololens(probably their closest competitor) is, magic leap is probably still a few years away.
And it's not their fault. Humans are biologically very good at vision so it takes a lot to trick our eyes and brains. I am sure no one is going to pop out of their garage with a better solution anytime soon.
Right now it doesn't matter where the capital concentrates at long as it's concentrating somewhere. Throw enough money/R&D/engineers at the problem and it will be polished enough to be declared solved. And at that point the world will change and no one is going to care how we got there.
Hololens may never be a commercial success, or even a very compelling product, but that was not it's purpose. Hololens at it's core is a POC and tech demo, and we are already seeing that tech trickle down into the next gen. The upcoming VR dispalys for Win10 will all incorporate the inside-out tracking developed for hololens. This is huge because it offloads a very large tech burden from display manufacturers which opens the market for more, cheaper, simpler VR displays. ML could see their market inundated with competitors before they even reach it.
Well, many of the secretive startups remain secret because (1) they do have a great product but they want to test the water first, keeping initial customer happy and until enough maturity they go out and take over the market (and in many case their customers aren't any Internet users, often corporates and government so they don't care if you and I know their existence), or (2) they are really just bluffing. I have seen both. In both cases, the founders don't care about public opinions because their goal is to raise funds from VCs. In the first case, they obviously have a good intention, but in the latter, obviously they just want to buy time hoping one day they assembled a star team and get something delivered. Although I am very surprised how VCs are willing to buy time, specifically the top ones are known to be really sharp in investment. Something is up with this startup.
What "public" are you speaking about? I don't think the average consumer has any idea what Magic Leap is or what they do. You compare it to Microsoft and the HoloLens which had much greater public awareness and because of that is already dealing with the vaporware label. Gizmodo just posted an article today discussing the HoloLens as a current consumer failure. People in the tech bubble might be tired of not seeing anything out of Magic Leap, but I don't think that automatically means it is the wrong strategy for eventual mass market success.
Yep; as Magic Leap goes longer and longer without publicly providing any details about their product I've slowly grown more and more skeptical.
On the other hand though, you and I aren't the ones they have to convince; for now they only have to convince investors. And so far, investors seem to be pretty convinced. Whether those beliefs are well-founded is impossible for us to determine one way or the other, since again, we haven't been provided with any information on Magic Leap's product.
If Magic Leap ever does release a product it won't matter how skeptical the general public is or isn't initially; the product will speak for itself.
IMO, assuming the tech is comfortable, their best path to success v1.0 is simply replacing monitors. 'Full' VR has issues and needs to black out the room, but if you can put on a pay of glasses and have a virtual 100" screen while sitting in a lazy boy that's worth quite a bit.
Alternatively, if all it could do was show YouTube videos on a virtual screen while I am working on a hands on project that's an awesome tool. It's not what the demo shows, but it could bring in a lot of money while the technology improves.
I think its okay what they are doing. They are competing with Microsoft, Apple, etc... Raise big and play to win I think is a valid strategy, even if it means keeping things secret.
"But wow, the demos! I played a shooting game and designed a universe of stars and planets that stretched across a living room wall. I watched a boxing match on the desk in front of me, and saw a friendly droid wave up at me from beneath it. One scene in particular moved me: a firefly buzzing around the room. It looked real–there was no pixilation. Its wings were faintly translucent. I held out my hand and the bug flew down to perch on my index finger. I had injured this finger in an accident five years ago, and since then, it has had no sensation. But as the firefly perched on it, even though I knew it was just a hologram, I felt the slight tickle of its legs. Magic Leap had tricked my brain into telling me that my finger tingled."
I don't find that very hard to believe considering it's sometimes possible to use something as simple as a mirror to trick the brain into correcting phantom limb pain:
You have to look at this valuation (and things like Facebook's Oculus investment, etc.) as these big companies trying to figure out what is going to come after smartphones.
Whatever does is going to print money and own an ecosystem for a couple of decades. What is that worth?
Today:
Apple's about to cross the $1 trillion cumulative revenue milestone iOS.
Android's generated revenue of $31 Billion [2]
In a world where Apple is suing Qualcomm for $1B over fundamental networking chips. Even if MagicLeap does nothing but license their patents to all the other tech players, could they still be worth $8B dollars?
Surely won't be AR/VR though. I still cannot imagine why regular people need them besides gaming. At least with smartphone you can browse the internet anytime. What is AR/VR's killer selling point??
Sure, look at a comparable "AR" company. Snap generated $150M in revenue last quarter, and is valued at $24B (market cap).
Magic Leap would need to generate $50M quarterly, or $200M annually to sit at a comparable valuation multiple. Given that they are working on an enterprise/industrial AR play (not selling ads to consumer like Snapchat), and that the enterprise/industrial AR market is in the $billions for yearly revenues, I think this valuation is totally feasible.
Facebook, Google, and Microsoft will play in the mix, but the market for industrial/enterprise AR will be big enough to sustain a few large players.
Obviously only time will tell as it's impossible to evaluate what Magic Leap is actually developing and selling at this point.
Interested to see any lit that confirms which mkt they are targeting? No clear message from the company, just some demos of 3D simulated objects. Could be applied to any vertical mkt/industry at this point from what I can tell.
My overall point is that the $8B valuation could be justified if they are targeting a large multi $B yearly revenue market.
I used to think the company was called Magic Leap because their technology made images magically leap out at you. I didn't realize it referred to the magical leaps their valuation would take.
Sure, look at a comparable "AR" company. Snap generated $150M in revenue last quarter, and is valued at $24B (market cap).
Magic Leap would need to generate $50M quarterly, or $200M annually to sit at a comparable valuation multiple. Given that the "AR" market will be in the $billions for yearly revenues, I think this valuation is totally feasible. But that is still an assumption nonetheless. Facebook, Google, and Microsoft will play in the mix, but a billion dollar "AR" market will be big enough to sustain a few large players.
Obviously only time will tell as it's impossible to evaluate what Magic Leap is actually developing and selling at this point.
The problem is that AR can't make things dark. You can add light, but you can't take it away without blocking whatever you're looking at.
Whether that's an extremely serious hindrance to the AR movement remains to be seen. Adding text overlays would be most of the benefit of AR, but there might be optical reasons why you can't just block out some light and then overlay text in a readable way.
It might turn out that AR only works well at night, when it's dark.
Nope, I thought so too, but you can't. When the transparent-or-black layer activates, you end up with a blurry blob of black, not a sharp one. That means the best you can do is sort of muddy the image, not block it. It's the same reason you can't see scratches in glasses -- it gets blurred because your eyes' focal plane is in the distance.
Or more precisely: You could do this, but it's probably not going to have the results you wanted. The effect has a good chance of being too distracting to be practical. But it's hard to know without trying it.
Good analogy w/r/t scratches in glass ... but if that's a solvable problem for what you want to show (the additive layer), it seems like it should also be a solvable problem for the subtractive layer (?)
It might be interesting to get a pair of glasses, put some black tape on the lenses and see what it might look like in practice. You could get some partially transparent tape to simulate what AR would end up doing.
It seems like an experiment worth doing. If you put your finger up to your eye and close the other, then focus on your laptop screen, you can see the blurry edge of your finger interfere with whatever you're looking at. But that's opaque -- it's hard to know what a partially-transparent blob might look like, or how much of an impact it'd have.
Then you can't see what's in front of you. Take away the "R" in "AR" and all you've done is stuck another screen in front of your face, albeit much closer than any previous technology.
Yes, but Magic Leap generated 0 revenue. How can you be so sure it will generate something? It can be something like google glass, very cool but noone used them. Or the next smartwatch, some traction for a year and later the market size is really small. That is why it sounds crazy for me, it is a huge risk, and the have 0 feedback from users.
They release a conceptual video, throw some jargon, have yet to release an MVP even, but have high valuation because it is very promising. I am not saying they are evil or they are doing something unethical.
I'm pretty sure they are going to build a nice, licensable operating system. No doubt, packed full of wonderful patents. Interaction design and ux will be the most difficult part of AR.
I went to a VR talk by Ted Schilowitz last week (futurist at 20th Century Fox, formerly of RED Camera) and he was raving about Magic Leap's tech. He said it was actually as good in person as the demos would suggest. I was surprised to hear this because I had previously come to the conclusion this was just a visual Juicero.
I spent an hour or so going through the about 1000 people listed as working at Magic Leap on Linkedin the other month. I had a wow moment back then. So many deeply unqualified people for something like this. I think the number whose subject areas could even be relevant to the development of the tech was like at most 20. Out of about a thousand.
The profiles of the rest of the people seemed like they were hired to create cool demos. So many graphics designers, motion designers, PR people, marketing people etc etc.
> I think the number whose subject areas could even be relevant to the development of the tech was like at most 20. Out of about a thousand.
That is utterly bizarre. I know a few very qualified folks (tons of experience in VR, a couple at Oculus) who had applied to Magic Leap and were flat out ghosted.
a) Quite possible. I think he had an NDA with them.
b) No, I think he gets VR/AR, he had some interesting points and claimed to spend his entire workday with various VR/AR devices (lots of early prototypes)
Your analysis of Magic Leap's employees is really interesting though, how complete do you think it was? I mean they must have more than 20 engineers working on it, what percentages did the employees break down into in terms of engineering, design/visual arts, office staff, etc.?
I have heard from someone I trust who worked there, that the office is very crowded, noisy and chaotic, and it's difficult to get any work done because there are so many people chattering and having phone calls and meetings. The term "turkey farm" came to mind.
I had the same feeling when I did that exercise last year, I think their headcount was in the low hundreds back back then. They personnel demographics still seems disproportionally skewed towards a "imminent" product launch, I see only a few photonics phd's, most of which don't have product experience.
I used to be as skeptical, but conversations I've had through the grapevine with people I personally trust seem to imply that there really is something to Magic Leap's tech, but then again early Hololens demo-ers also raved.
I'm guessing it'll end up a lot like gen 1 consumer VR headsets: you can see a clear demonstration of something really cool and under specific conditions it's genuinely engrossing, but it'll take a lot more before it really becomes widely useful.
I've played with a Mircosoft Hololens dev kit and, even though it's clearly a first version (field of view is tiny, relatively low res, etc), the potential applications for a second or third generation version are immense. It's not hard to imagine AR headsets replacing monitors entirely with a short period of time. That's a big market. If Magic Leap have something better they could well be on to something that justifies a crazy valuation.
TLDR; This seems to be the only new information in the article:
I asked a few folks, and discovered that the company is raising funds again. The D round, I’m told, isn’t locked up yet, but it will value Magic Leap at $6–8 billion. Once again, the Chinese e-commerce giant Alibaba will lead. (Alibaba’s executive chairman Joe Tsai sits on the board along with Google’s Sundar Pichai.)
My theory is that they built a swimming pool with a thin surface that looked like a wooden high school gym floor, then bought a real whale to jump up through it. And they bread tiny little elephants, and children with really big hands, and combined them together.
I mean if they had the a semi working prototype of a device that was the HoloLens but more like a pair of RayBans then I could completely see investors just throwing money into the furnace with them but are they stuck on the sunk cost fallacy? What the hells happening in Ft. Lauderdale
The amount of money this company has raised without putting a product to market is unprecedented. The track record for startups raising tons of money pre-launch is spotty to say the least. At what point does potential have to face reality?
I can't understand what they think the market is going to be. I very much doubt they will make money from the hardware (they'd need to shift a serious number of units), they will want to make money from the software (just like PS4, XBOX, Nintendo)
But without the product in developers hands, software is going to take years to create. Look at VR, devs have had VR kits for, what? three years or so and still content is thin on the ground. Nothing compelling with a consumer buzz like Zelda or Halo did for the consoles.
I want AR to be a thing. I don't think this cloak and dagger secrecy is doing them any favours. They can't possibly live up to the hype.
That kind of thinking can be used to justify just about anything. That's nonsensical. The issue I have is that they seem to be deliberately misleading investors based on what has leaked out. They are certainly trying to mislead the public with their claims.
You mean going big to fool investors and the public? They have no sales, no functioning tech demos, nothing but hype.
Give me a fucking break. So few think critically on HN anymore, it's just hype cycle after hype cycle. Remember when Snapchat was gonna change the world because they did AR and had spectacles?
Technical Illusions is in this space and they seem to be going after a realistic goal. TI has a product that projects an image by reflecting off of material. They have working demos. Magic Leap seems to be creating AR by projecting a pixel onto your eye. That is a much harder problem that results in low field of visibility, low resolution, and short depth of field...at least from what I have been able to read.
I don't know if the $8bn figure is rational, but listening to Graeme Devine talk about about magic leap's vision for the future of mixed reality gives me an idea how they're managing to part people from their fat investment dollars.
The ML HQ is in FL, and their investments are overwhelmingly from corporate venture. Other than an office on the peninsula, and Sundar on the board there is nothing Silicon Valley about them.
Benedict Evans has tweeted glowingly a few times about Magic Leap, following product demos. I sceptical but I trust his opinion, regardless of the fact that he works for a16z
[Disclaimer: This is based on playing with developing for the Hololens for all of 3 days]
Until we have some absolute killer -- and I really mean killer -- APIs for image recognition and AI, their use is going to be rather limited. It is telling that the vast majority of demos that they have used to demonstrate Hololens would actually be more compelling as VR experiences. Navigating the solar system, the human body, or the silly shooting game they used to demo it a few years ago are all fine uses of the technology, but they don't in any way meaningfully interact with the world around you -- which is ultimately the value add with AR as opposed to VR.
When I used it, all I could get as a developer was a mesh with the surfaces that the Hololens had recognized in the environment. That is really good for properly occluding objects and allowing things to appear in real space; it is insufficient if your goal is to actually meaningfully interact with the world. I don't just need to know there's a wall there; knowing that it has a TV in the middle of it is important if I want to build an experience to accompany a live sports broadcast. This technology will really shine when we can, with incredible speak and accuracy, put a Hololens on and instantly know that its in a living room, and that the object in front is a coffee table, and there's a picture frame on it, etc.
We do have a lot of this capability already available, but to me the key leap that is missing is a way of accessing and using all of that in a coherent and easy way as a dev.
Check out PTC ThingWorx Studio. They're working on 3D CAD recognition and tracking tech for industrial and enterprise use cases. One of the more advanced products on the mkt based on my research (I think they're still in private beta though).
If n_products = (claimed products that do exist) - (claimed products that don't exist), maybe. Of course, no one knows whether Magic Leap actually has a product, so there's that...
A bit off topic, but you're missing that the number you mentioned doesn't exist. What you're describing is an infinitesimal value, or, the largest negative number. This number doesn't exist in the reals.
If they aren't more honest about their current progress and more realistic with their near-future plans, they'll end up cratering their reputation with the public before they even have anything off the ground. At that point, it might not matter how many billions they have in the bank if they ruin their reputation to do so.
Worse, if they don't get in front of their persistent vaporware problem, they could find themselves in the dust by the time they do come out with a product. Microsoft has already released their first version of the HoloLens, and is said to be working on their next version at full steam. By the time Magic Leap comes out, Microsoft might already have a compelling ecosystem and device portfolio. Other companies are joining suit.
It'd be nice if Magic Leap showed the public the same thing they're showing these investors - clearly, their demo is convincing some supposedly smart people to pour lots of money in, so why can't they show the public?