Magic Leap Raises $461M from Saudis
bloomberg.com
bloomberg.com
How can you raise that much money without shipping a product? Or better question, why do you need raise that much money in the first place?
Some businesses and technologies are extremely capital intensive and funding can/should/is provided on achieving benchmarks instead of a cohesive product. This is different than shipping an MVP and improving it which in some industries is not possible. YC for example funds hardsci fusion reactor companies and SA talks about how they iterate really fast during the YC period to produce some tangible benchmark which is obviously much less than a full-fledged product but much more than some nebulous "concept".
So yes, it makes sense that certain industries receive larger than average investment relative to other industries at similar product stages. While I myself am extremely skeptical of Magic Leap, their technology and the likelihood investors aren't participating in some sunk-cost fallacy investment thesis there is a non-cyncial view: MagicLeap has been showing significant achievement along both technological and production benchmarks privately to investors and they are confident that the technology & manufacturing improvements warrant continued investment.
I think the amount of capital raised pre-validation is insane as it isn't simply larger than average it is orders of magnitude larger...
https://en.wikipedia.org/wiki/Webvan
Look at all that money down the drain.
That's astonishing.
https://en.wikipedia.org/wiki/Beenz.com
https://en.wikipedia.org/wiki/Flooz.com
https://en.wikipedia.org/wiki/Global_Crossing
to be fair to global crossing, they did build a really awesome international network, the revenues just didn't support the billions spent on it.
Webvan's model hasn't yet been validated. The local delivery startups and offerings are still losing lots of money. If anyone can make it work it will be Amazing, but it has yet to be validated as a profitable business.
Ideas are the easy part.
Why? You're building something that requires massive upfront capitilization.
People here act like this kind of money is unprecedented. How much many goes into building infrastructure? How much money do investors put into building a new building? Large construction projects routinely raise 10s or even 100s of millions of dollars.
Sure, if you're funding a building you're "buying" a "product" that is much better understood and has a higher chance of success (but can also fail!). But it also has a much lower chance of getting you very high returns. All that startups like Magic Leap do is take both of these numbers to the extreme: very small chance of success, but at being a 100-billion-dollar company. Some investors like this tradeoff, and they tend to be pretty savvy and educated. This also tends to be a small part of their portfolio. I think we shouldn't assume we know better than them, just because we read some stuff on the internet.
There's a number of parallels with Magic Leap. Both have engineering founders. Both founders made their first big money in medical tech (Kamen with stents and Abovitz with Mako Surgical).
Where things got away from Segway was on the PR + Hype front and that seems where Magic Leap is at as well. Magic Leap is going to ship something this year, it will likely be "ok" but not brilliant and then after a few iterations and a half dozen years it may well be a device on a similar trajectory to how we use mobile phones.
That's why all the money is going to these companies, the thought is that the patents and expertise is going to lay the foundation for what replaces mobile phones and what's a $500 million dollar bet against a 5 Trillion a year industry.
I having a hard time seeing how this technology (and AR glasses/devices in general, at least what we hear of it) is going to be more of utility in the future than the billions of people with cheap smartphones are today.
I think brain(neural) computer interfaces (transmitters/sensors) have a better chance of leaping over the smartphone than anything coming from this, and currently have utility to some of the most physically marginalized people on the planet, which is a lot more than magic can say for its product.
Also, Theranos was lying to the general public about very important health issues that affect your daily life. So far, Magic Leap hasn't released a single product. Even if they do, at worst it will be a computer that isn't as good at playing games as they claimed it would be. Not really even in the same league as Theranos.
How many people knew that Enron is a scam? I bet 99% of people there were hard working intelligent people who had no idea. Same for Theranos.
Shorting a company will bet specifically against that company, in a way that both:
1. Gives you monetary gain if that specific company/stock decreases in value.
2. Puts pressure on the stock to be lower value.
Thus it acts as a correcting mechanism to the market, since just by the fact that a lot of people who have an incentive to make a correct bet on a stock declining, upon placing that bet, help correct the price downwards.
Funding a competitor doesn't act anything like that, and specifically probably doesn't give you a great monetary reward, since most startups fail (thus most competitors will fail).
They sell dreams. Unfortunately they got social proof - "quickly, other already gave us a lot of money, you should too!". There is already existing HoloLens tech which you can already buy.
We're not talking about people raising money from the general public or using heavy-handed sales tactics. We're talking about billionaires funding this thing - I'm not going to cry if they lose money on a bad investment (unless there is outright fraud involved).
Anyway for me it is sad they still invest in ML only for this reason that supporting more players would greatly improve chances that some company would figure out better solutions and ML is stuck in local minima to keep most of their story and promises.
https://web.archive.org/web/20150402084910/http://www.magicl...
It promises a product far more futuristic and advanced than they are delivering this year: https://www.magicleap.com/
Then went bankrupt and was acquired. The tech was revolutionary at the time, 18 years ago (handheld phone size vs. 10 kilogram fat briefcase sized inmarsat terminal that didn't work above 60 degrees latitude), the revenue just wasn't there.
If you compare a 9505 to a current generation 9575:
https://www.google.com/search?client=ubuntu&hs=DVL&channel=f...
if you hold and use one, a 9505 is huge and has short battery life.
current gen: https://www.google.com/search?q=iridium+9575&num=100&client=...
How do you accept funding from oppressive, dictatorial, mysoginist regimes and then claim to “make the world a better place”?
Sigh. The political implications are so ironically cringe-worthy
You've got the causal relationship backwards.
What nation has the highest level of incarceration in the world?
In Saudi Arabia their regime is hereditary but in the USA we elect our leaders.
Who should we be angry at?
“Be the change you want to see in the world”
“Practice what you preach”
From a previous article
“Most people do not share the belief that a process must be morally pure before its results can be celebrated; they can be jubilant about the Falcon Heavy and question Tesla’s treatment of its workers at the same time, without the one invalidating the other. “
I don't think they want to change the world, just multiply money.
Even it is the best technology ever, if not enough people buy it the company will go down very quickly.
I suspect that they spend a lot for content, because growing organically is almost impossible if you target entertainment with an rumored $2k price point. Nobody would buy that if the're only a few apps, even if they're unlinke anything else.
Then, as the next step they'd need to provide a good developer experience. Needing a PC for a device that aspires to disrupt the industry and replace other devices, won't cut it. It would need to run on the device.
I hope the content is really good and worth the experience, otherwise this is useless. But I am still afraid that if they have to create their own content it might not make sense as a business, why people wouldn't be interested in created content for the next audiovisual platform?
I don't think the PC is the problem here.
http://money.cnn.com/2017/05/21/technology/saudi-softbank-te...
> Frontier hardware tech is expensive. And, the investors have actually seen the tech. As will you, pretty soon ;)
source: https://twitter.com/BenedictEvans/status/971404194300141568
Ultimately, we'll all just have to wait and find out.
My only thinking here is that they expect to be acquired by Google/Amazon/Netflix/Apple et al for the team and promising tech, as they know they'll never make the revenue to justify the billions they ate in funding.
I’ve heard some second hand anecdotes about Magic. Apparently they have one big technology advance, which is that they’ve solved the eye tracking and vertigo challenges of AR. These are hard and not to be underestimated. However the company is supposedly a mess internally - with huge management and political issues. This isn’t surprising - I’ve been in a number of early stage startups and by default they are a mess. Add on top of that billions of dollars of funding and no customers or sales to anchor the company to reality, and its easy to see how AR can become “Alternative Reality”! Further evidence - their recently released headset photos were renderings, not actual products. I genuinely hope that I’m wrong - I’d love for the amazing demo videos they’ve released to congeal into real mass market products.
Does anyone else have good data on Magic?
actual take home after rent or mortgage each month might be greater than something in mountain view.
https://en.wikipedia.org/wiki/Plantation,_Florida
spending 20 seconds looking at zillow for that city I see what looks like some fairly decent 3BD/2BA detached homes for $300,000. which would be a pipe dream in seattle, vancouver or bay area.
https://www.zillow.com/plantation-fl/in-Jacaranda-Lakes_att/
Seattle might have some expensive and exclusive areas but it is not like anyone has erected walls and gates around upper queen anne, magnolia, or alaska junction in west seattle.
If we ever want to get to the cyberpunk dystopian future, somebody has to lead the way.
That said, zero income taxes, low sales taxes, warm weather year round, and great beaches are all very compelling.
https://www.politico.com/2016-election/results/map/president...
as a random white person, caucasian floridians I have met are racist as hell. You would not believe the things that come out of their mouths when there are no ethnic/religious minorities within earshot and they believe you to be a person that might agree with their worldview.
it's a state that believes in cutting taxes to the level that they have the absolute bare minimum of social services, government services and other things that people in a western european nation (or canada, au, nz) take for granted.
florida is a state that regularly elects, at the state and county level, christian-religious politicians who will attempt to do things like make abortion illegal, introduce religious into public schools, and other policies generally supported by the evangelical religious right wing.
Where did you come to in Florida? I haven't met people like what you are describing. Or perhaps you brought up the subject with them? When you say "as a random caucasian" that gives me the impression that there is a little racism in the air.
In a work environment, I in no way brought up the subject of anything controversial race/religious/ethnic related.
At the time I worked for a market sector that does a lot of telecom-related work overseas and in developing nation environments. Probably with a higher than usual percentage of ex military people.
What i meant by "As a random white person", by virtue of me being pale skinned and from a northern country, other people took it as tacit acceptance that they could raise their bigoted views towards me... Basically the sort of folks who go on endlessly about how Sharia Law is coming to the united states, and barack obama is a secret muslim kenyan communist manchurian candidate.
What I have found in the US is that racism is alive and well everywhere. In the US southeast it's more overt.
I live in South Florida and the mix of culture here perhaps helps to alleviate racism. But yes, I agree with you that racism is alive an well in the US. That was very noticeable when I moved here from Brazil.
Half the people in Florida are liberals, it is in fact a swing state that can go either red or blue in any election. If you blanche at the thought of living anywhere that isn’t a liberal stronghold or you shiver at the idea of interacting with a conservative you won’t like it; if you’re a normal person you’ll be just fine.
They're also notorious for refusing to allow employees to sell their shares, even if nothing in the original agreement prohibits a compliant transfer.
This typically happens when there is high pressure to deliver, but you have zero revenues. So, it wouldn't surprise me.
Given my age, the cynic is winning.
a) massive profligate spending
b) great tech, but not much money from customers
c) bankruptcy and acquisition by a new corporation formed to acquire the assets of the defunct company, new acquisition-corp renames itself to magic leap.
d) new company which has acquired everything for pennies on the dollar proceeds to become successful and profitable.
That might be a rumor but it’d make sense for how much money they’re pulling in.
This just isn't possible in the foreseeable future. Maybe someone will figure out how to fit enough processing power for decent AR into the "regular glasses" form-factor within the next couple decades, but there is no discernible path to a viable battery that could work in that form-factor even if we didn't have to also make room for the GPU. Additionally, none of this takes into account heating issues. If this goal is ever reached, its so far out that it's impossible to predict which company will achieve it.
edit: Thanks, I was indeed thinking about Leap Motion. Which makes it even weirder, did these people truly never put anything on the market yet?
edit2: people love giving out downvotes. please, the more the merrier