Translation from VC-Backed PR Jargon to English of Magic Leap CEO Statement | Hacker News Reader

Translation from VC-Backed PR Jargon to English of Magic Leap CEO Statement

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239 pointsdocdeek78 comments

$2.4B wasted on this.

They weren't smashing atoms together to discover world-changing new physics. They didn't send people to space or develop some new revolutionary type of transport that could transform society.

They made some really average AR glasses.

Two point four BILLION dollars.

The Tesla Model S cost ~500M to develop from start to finish[0], so Magic Leap has spent 5 times that amount.

The ENTIRE Starlink satellite network will cost ~$10B total to develop, build, and deploy [1]. So Magic Leap spent a quarter of that.

Apple developed and released the original iPhone on a budget of $150M. Magic Leap has spent 16 times that.

These aren't apples to apples, of course. But I think it puts in perspective just how much of a scam Magic Leap is in general.

[0] https://teslamotorsclub.com/tmc/threads/model-s-development-...

[1] https://en.wikipedia.org/wiki/Starlink

[2] https://en.wikipedia.org/wiki/IPhone_(1st_generation)

For $500million did Tesla invent the cell chemistry?

No, but for $2.4B Magic Leap didn't invent much physics or chemistry either (or anything, really). Seems like a fair comparison.

Hell, Cards Against Humanity achieved more (and faster, cheaper) with their hole in the ground Black Friday fundraiser: https://www.npr.org/sections/thetwo-way/2016/11/27/503502142...

I'm not saying Magic Leap is better, I'm just saying what is their tech advantage and innovation and how is it comparable to people doing novel nuclear physics? So far they have lost money and paid out more in a celebrity fundraiser bonus than all profitable quarters combined.

How does that compare to General Magic and Magic Cap -- by the way the name can't be an innocent coincidence, could it be?

[0] https://en.wikipedia.org/wiki/General_Magic

You could say the same thing about Leap Motion, but sometimes you have to admit that a coincidence of names is nothing more than that.

I dunno.

I just view it all as a spot of gambling.

All the 2.4 billion sunk in to Magic Leap didn’t prevent any of the other things you mentioned from happening.

Could it have been better allocated? Perhaps. But who am I to tell others what to do with their money?

I’ll leave that up to the Snake Oil salesmen, politicians, and marketing-types.

> the 2.4 billion sunk in to Magic Leap didn’t prevent any of the other things you mentioned from happening

Opportunity cost is real. That capital could have funded other projects. The engineers could have worked on real research. The marketing team could have been promoting something that mattered.

Yes, this is principally the backers’ loss. But that doesn’t preclude broader costs .

There's no shortage of capital floating around, though. In fact, the surplus of capital is probably what caused an investment this bad in the first place. There is no shortage of funding for good ideas. The shortage is in the idea space.

This cuts both ways.

The resources were allocated to something fairly innocuous, rather than to something potentially detrimental.

I agree with all your observations. But Magic Leap can't be understood as a scummy company in an otherwise healthy industry. There are --so many-- SV startups that raise money on hype they can't possibly deliver on, but VCs and founders get rich anyway. LP money gets incinerated, but they're the 'dumb money' anyway so nobody cares.

On the other hand, cash is very cheap at the moment and there is an enormous amount washing around looking for opportunity. It’s not insane to try a few high-risk high-reward gambles.

(Although maybe it is insane not to pull the plug once deceptive communication from the senior leadership becomes apparent).

You could say that none of it was "wasted", people earned their salary there (I assume) and learned something, that led to consumption and investments elsewhere.

Unless someone literally burnt the money, it did some good.

Then again, yea, $2.4B is just ridiculous, wonder what Jeri Ellsworth and Tilt5 (https://www.tiltfive.com) could have done with those resources...

But there is an opportunity cost attached to it. Such a large sum of capital, on other hands could have created real value. This created none.

As I mentioned elsewhere, this cuts both ways.

The 2.4 billion could have been used to create something bad.

It did create something bad: it made it tremendously harder for tech companies that might actually be able to produce some good to get funding because, for every investor other than the one's who're still throwing money at Magic Leap, this is a gigantic warning sign.

They would probably had to literally burn up $2.4B with nothing to show frankly. It did some good in the sense handing out money to people I guess ?

"people earned their salary" and "learned something" aren't great arguments.

Building a bridge that collapses minutes after construction also entails workers earning salaries, and perhaps learning something. that still doesn't mean it's a good use of funds, it's waste. you want the investment to create actual value for someone.

People have tendency to abandon this line argumentation immediately when it's applied to something they admire and have been hyped up. Wasted money was actually R&D.

Example that gets almost everyone: Space Shuttle.

It was supposed to be reusable space truck that reduces cost. It was several times more expensive than conventional approach with non-reusable rockets and shuttle. It was infrequently used. It drained NASA budged from anything productive. Even those combined manned+cargo missions could have been achieved cheaper with double launch. It was objectively failure based on the goals and purpose of the project.

They developed so much new technology and inspired people. It was simply great piece of engineering and PR. We learned a lot.

That being said, I believe the SLS gave many more spin-offs than the Magic Leap

I wonder if there were missions that would not be possible without it (maybe the Hubble launch and the AMS launch and installation) though most likely they would be adapted to work without it.

Are you satirizing? Because you make exactly the two invalid arguments I mentioned.

I am not, I'm referring to missions where the Shuttle arm was used

Yeah, maybe they could be a double launch or worked in some other way.

Another way to say this is that VCs could just have donated money without spending 8 years spinning the wheels. Those employees would have been paid and the opportunity cost of spinning wheels would have not occurred, instead these people would be doing something more productive and adding value to the GDP.

So, I agree with you. It is a waste. It is a waste of human hours that was spent with nothing to show in return.

  Unless someone literally burnt the money, it did some good.

Funny you say that because it is exactly the opposite that seems true from an economic point of view : if they burned the money, they would have reduced the money supply, thereby increasing for everyone a bit their power purchase. Whereas employing hundreds of people and buying resource for nothing is completely wasteful.

The looser is always those spending the 2.4B of course, but the two have different economic impact (the first one benefiting everyone, the second one only a few people being employed)

> Unless someone literally burnt the money, it did some good.

Hey, don't compare the fraud of Magic Leap with the straightforward honesty and artistic legitimacy of K Foundation Burn a Million Quid [1] which produced not only art, but also heat and light, and at a fraction the cost.

[1] https://en.wikipedia.org/wiki/K_Foundation_Burn_a_Million_Qu...

>You could say that none of it was "wasted", people earned their salary there (I assume) and learned something,

ah, the good ole broken windows fallacy strikes again.

Not like if we had spent that 2.4B on something else, those people who worked on that something else wouldnt learn anything, or earned any salary.

https://en.wikipedia.org/wiki/Broken_window_fallacy

Spending that money in any fashion leads to equal amounts of consumption and investments elsewhere (indirect spending). So we can discount it from an oppotunity cost analysis of how the money is better spent, leaving us with the common sense conclusion that investing 2.4bn in something useless is indeed a waste of 2.4bn's of resources.

In fact, burning the money is actually better than spending the money on something unproductive - the former doesn't actually consume resources that could be used better. Burning money is essentially the same as giving it to the govt to spend as they would be free to print an amount equivalent to the burnt resources while keeping inflation as it was before.

You can compare to phones, cars and satellites but the best comparison would be of course HoloLens development costs and Facebooks acquisition of Oculus. I couldn’t find how much Microsoft spent on HoloLens but insiders that I talked with mentioned an investment bigger than Magic Leap.

Magic Leap developed an entire platform and also tried to develop content, not just glasses.

A lot of that effort was wasteful and mismanaged, but likely not by an order of magnitude.

I don’t think the word “scam” is appropriate here though. Just poorly managed.

How come VCs are not learning from examples like this? Perhaps get engineering consultants take a look at the tech, provide their independent assessment of the tech and guide them to not make these mistakes again?

Hindsight is always 20/20 except when you also have foresight which is maybe 20/40? Surely, Juicero with foresight was a bad idea.

Or ostensibly, these things are not that straightforward as they seem to be?

Because the VCs get paid win or lose? There's literally no downside, there's massive amounts of money looking for returns and as has been proven time and again, even a long terrible track record is no deterrent to getting money out of public pension funds that also have no real downside to making terrible decisions.

This isn't really accurate. VCs would much rather get paid 20+% carry than 2% management fees (and raising a follow-on fund would be quite difficult if you failed to make returns and publicly blew most of your fund on a boondoggle like Magic Leap).

At some point reputation is on the line I would guess. The whole credit system and all.

In any given fund, true. VCs re always raising the next fund and need to show results.

Success of the product isn’t necessarily the point.

The volume and velocity of money certainly would have fattened the wallets of more than a few consultants, lawyers, accountants, and their hangers-on.

I think there is (or was at least) a combination "dumb money" and a general oversupply of VCs, which means that they can't be too aggressive in vetting deals. Note that for example Theranos did get turned down by a number of VCs, but they got lots of money in the end anyways.

People act like Juicero was claiming they had some crazy proprietary way of squeezing bags, and when it turned out you could squeeze them by hand the game was up, but that's just not true. Nespresso hasn't collapsed because some plucky journalist ripped open the little capsules and stuck them in a Cafetière. We all know nespresso is just coffee in little pods.

Juicero was selling a lifestyle product to people who wanted super premium juices. It was for the sort of person who buys stuff from Gwyneth Paltrow, has a siphon coffee machine and gets teenagers blood injected into their face to stop aging. While that's not the vast majority of us, it doesn't mean there isn't a market for it.

I should elaborate more. I see past the “oh, I can squeeze it with my hands, too”. I was referring to the marketing aspects of “lifestyle” product which when properly analyzed sounds like a bad idea. Nespresso is successful because it has actual technology to make excellent coffee given how easy it is to use. If my constraint is 20 seconds of time, please find me an alternative to Nespresso that makes excellent coffee. They provide real value even though it seems similar to Juicero. I implore people to look up Nespresso’s patent. It is no Keurig when it comes to the quality of the shot. I would say it even beats coffee from professional machines but that’s debatable and aficionados of coffee will correct me.

Juicero did no such thing. It had nothing to offer. It didn’t make better juice given the time constraint. It couldn’t market itself. And VCs couldn’t see this.

Nespresso does not come with an insanely steep price, you can't squeeze the little capsules by hand :) and it has actual use cases:

* I would never drink the stuff some of my colleagues like, and vice versa, so we all buy our preferred capsules and are all happy.

* I have 3 variations depending on time of day or how I feel, and my favorite is (to my own surprise) a really cheap supermarket brand with compostable capsules which is not actually even from Nespresso

* I don't have to deal with the dirt and messes with loading and emptying the machine.

* Even my most clueless colleagues and guests can put a capsule in, push a button and obtain coffee. I assure you some of them couldn't operate anything much more complex than that.

* Capsules are sealed so they retain taste for longer. I don't drink enough to go through a bag of raw coffee before it loses its taste.

I think Nespresso makes the best espresso shot, even better than a coffee shop. Nespresso is exactly the same everytime.

Also their pods are manufactured in Switzerland with extreme care for quality and precision.

I believe the Juicero machines used to cost at least 5x more than your average Nespresso, not to mention they were overengineered to 11

Coffee machines: has a heating element and a high-pressure pump. No DRM except for that one (which backfired quickly)

Juicero machine: mechanical press (useless in the end) and some DRM BS (also useless)

Karl Guttag has tried to debunk their technology since their inception. Really interesting blog: https://www.kguttag.com/

'spatial computing in enterprise' << for some reason I expect this to be the result of a summer intern's project

Do we have any evidence of the $350mm raised? Might the e-mail have gone out on a term sheet, as opposed to anything binding having been signed?

On a whim, I tried to see if the SEC’s EDGAR [1] showed any recent Forms D by Magic Leap. Not that surprisingly, it looks like they haven’t ever bothered filing one.

[1] https://www.sec.gov/edgar.shtml

For anyone wondering about how much Google invested in them, it was at least $542 million [1].

[1]: https://www.businessinsider.com/magic-leap-google-investment...

Wow, they managed to raise another $350m.

What a strange world we live in.

VC money printer go brrrrr.

This is my first time hearing about Magic Leap, and it is quite a story. Reminiscent of Theranos. Was the retinal projection tech ever real, even in an imperfect, non-miniaturised form?

Also, I stumbled upon a Variety piece [1] about a Magic Leap conference that sounds straight out of HBO's Silicon Valley:

>However, Magic Leap decided to go a different route. When its CEO Rony Abovitz took the stage at the beginning of the conference’s opening keynote, he vaguely framed the company’s technology as a remedy to political and other divisions plaguing today’s world, postulating: “Our new medium of spatial computing is fresh. It doesn’t carry the baggage and negative headlines that are dominating the news today.”

...

>“The conversation that we are starting here goes on for decades,” proclaimed Abovitz. He went on to talk about Magic Leap’s idea to build city-wide AR information layers — an interesting idea, but not anything we should expect to materialize any time soon, as he freely admitted, while inexplicably bringing up the spectre of fascism:

>“There is gonna be other companies proposing alternate x-verses. There will be all these competing universes and systems, like there is competing governments. There is monarchy, there is democracy, there is fascism, and there is progressive, liberal thought. And these holistic systems will be how governance might happen. How many people live their life. And this is not tomorrow, this might be a few years from now. But you set the stage for that right now.”

>Abovitz seemed to sense that there was still some work to be done before Magic Leap could defeat fascism in the Magicverse — and he promptly proposed to host a Burning Man-style gathering to get it done:

>“In order to continue this conversation, we probably kind of need a Burning Man in the desert. Like a kind of Magicverse event where we hang out for a few days, do a vision quest, build weird things. So more on that later, can’t commit to it 100%, but we think it’d be cool.”

>There were some other odd moments that morning. A third-party developer read a poem to the audience. Science fiction author and Magic Leap chief futurist Neal Stephenson talked close to 10 minutes about virtual goats. The three-hour keynote didn’t feature a single live demo.

[1] https://variety.com/2018/digital/opinion/magic-leap-leapcon-...

retinal projection tech is pretty old actually, from the HIT lab at UW (http://www.hitl.washington.edu/projects/vrd/)

"The VRD, based on the concept of scanning an image directly on the retina of the vi ewer's eye, was invented at the HIT Lab in 1991."

"Magic Leap: Spatial Computing for Enterprise"

you gotta love whoever come up with "Spatial Computing for Enterprise".

Who put in $350 million more? Did anybody? So far there's just an internal email from Magic Leap management.

Someone suffering from sunk cost fallacy maybe

Softbank?

They've been know to do way dumber things.

or it's almost as if they sold to someone, just named it differently. I'm assuming if they flop after those 350M, everything (IP, materials, etc) will go to those investors.

An entertaining read, but I don't believe for one second that this is how it was for most of the life of the company. Perhaps toward the end this became their reality.

It's really more of a case of drinking too much of your own kool-aid and biting off more than you can chew.

I believe that everyone from the top down really did believe they were creating an amazing future. It reminds me of the similarly named company General Magic from the 90's. I tried it out in the day and the documentary is simultaneously sad and joyous. Hats off to Magic Leap for trying. But.. they should have released sooner and often rather than trying to create an entire medium and ecosystem behind a curtain for v1.

Predicting the future is notoriously hard.

I think plenty of successful products were once in a shaky/buggy/bulky state. The hype was high on AR and only a few experts had a good understanding of the constraints, especially about optics, physics, and sensors.

Realistically, which "enterprise" would buy this?

Given that HoloLens already exists, I guess, they're looking to leverage their investor selling skills on some enterprise execs that don't need this stuff...

Who will then force it on to their subordinates who have no use for it.

This. I have worked and developed on the HoloLens; it is 20% cool tech demo and 80% cardboard propped up by Microsoft's over-eager marketing (think Xbox Kinect). Only difference between them and Magic Leap is that Microsoft has a large swath of existing gullible enterprise customers who will happily buy whatever superfluous products they can be talked into buying, whereas I guess Magic Leap's core competencies are on the opposite end, selling to gullible VCs.

As for the Hololens, it's used by Trimble[1], Volvo[2], Mattel[3].

There are also cases where hospitals use it [4],[5].

[1]https://mixedreality.trimble.com/ [2]https://www.media.volvocars.com/global/en-gb/media/pressrele... [3]https://vrscout.com/news/mattel-mixed-reality-toy-design/ [4]https://www.medgadget.com/2018/08/hospital-introducing-holol... [5]https://www.businessinsider.com/london-doctors-microsoft-hol...

“We have closed significant new funding and have very positive momentum towards closing key strategic enterprise partnerships”

So meaningful...

Loosely translates to:

Some (more?) fools agreed to part with (more?) of their (someone else’s?) money, and we’ve nearly finished transferring those funds to our cronies.

Rofl. The last startup I worked for had "very positive momentum towards closing key strategic enterprise partnerships" from the day I joined to the day we went down like the Hindenburg.

Very smart people might have been duped into investing alright, but it's not because they were duped to believe in the tech or the product, rather it was because they were duped to believe that a bigger sucker will come along as from their previous experience one usually did eventually.

ELI5 what constitutes spatial computing platform for the enterprise? $500 measuring devices (aka rulers)?!?

When I visit https://www.magicleap.com/ without cookies enabled, I'm redirected to a non-existent page.

Don't hate the player, hate the game

I think this is harsh. The CEO surely must be acting in good faith to his investors?

The CEO has actually stepped down: https://www.theregister.co.uk/2020/05/29/magic_leap_ceo_rony...

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