
Magic Leap looking to raise at a $6B valuation - paladin314159
https://techcrunch.com/2017/09/13/magic-leap-reportedly-looking-to-raise-even-more-cash-this-time-at-a-6-billion-valuation/
======
InTheArena
So the new Apple iPhone X has a front sensor that can generate depth maps, and
a rear-sensor that does even more sophisticated depth mapping. They also have
a CPU that is as powerful as anything you get in Desktop PCs.

So tell me, what's to keep someone from using the depth information on the
front camera, using a Google Dream VR setup (but instead of covering the back
of the iphone, use that sensor for the world around them) and then projecting
poor man's AR with today's world. If the answer is wrong sensors, they can fix
that next year, and do it at a size and a scale that no one else can touch.

You just took a hardware problem, and made it a software problem.

The fact that Peter Jackson has evidently jumped ship to ARKit is a pretty big
sign that Apple is going to get there first.

Apple's focus on ML on the phone directly, not requiring a server at the RTT
latency is perfect for this application. They have hardware no one can touch,
and do full stack miniaturization like no one else. Plus they also attract
"lifestyle" buyers.

~~~
knowaveragejoe
> They also have a CPU that is as powerful as anything you get in Desktop PCs.

Is this actually true?

~~~
valarauca1
No.

Geekbenchmark is a bad test. It does a series of short burst tests spaced out
over time. These avoid harsh thermal throttling on mobile devices, yet on
larger desktops they don't register as a heavy workload so the maximum clock
doesn't come into play. Bigger chips will stay down clocked.

Effectively what Geekbenchmark's result ends benchmarking sleep state
transition speed.

Desktop/Laptops don't spin up/down as fast as cellphones so this heavily
favors them. Just doing a continuous long test would heavily favor
desktops/laptops as they have better designed heatsinks.

\---

iPhones do have great processors, just fair mobile/desktop test are very hard.
They are different chips, that require different power, change clock states in
different ways, and have different thermal constraints.

The core workloads in most scenarios are very different, so fair for one isn't
fair for another.

~~~
SirHound
I might be talking from ignorance here, but if you put the iPhone chips in a
different environment that included the same active cooling that desktop CPUs
enjoy, would this still be true?

~~~
valarauca1
Unlikely.

Modern X64 cores are super smart. Not just on _easy_ things, like predicting
branches, and how data flows though instructions. But with caching, memory
access, inter-core communication, cache snooping, and cache
synchronization/invalidation.

The real issue for modern system is RAM access. Everything you CPU does
between hitting RAM may as well be instant how expensive a RAM hit is.

X64 has a large cache hierarchy to make this rarer. A11/A10X/A10 less so.

------
beager
Have any other companies raised at this valuation pre-product, much less pre-
market fit? Where does this value come from? Have they booked even 1% of that
valuation in sales, or is it all speculative?

And I'm baffled in light of the space (AR), where I feel like there are a lot
of high profile players and fast movers. Not delivering seems incredibly
untenable.

~~~
jmcgough
I'm skeptical, but the Magic Leap engineers I've met have been really
confident that their tech is going to be a game changer (and of course
wouldn't tell me anything about it ;)). Guess we'll see when they show their
product publicly - it's weird that they've decided to stay stealth for this
long.

~~~
objclxt
> the Magic Leap engineers I've met have been really confident that their tech
> is going to be a game changer

Sure, but I'm sure there were engineers at Theranos who thought their tech was
going to be a game-changer as well. Being confident in a product doesn't mean
the product is actually any good.

> Not delivering seems incredibly untenable.

I would happily place a bet they will never deliver, or if they do deliver it
ends up being lackluster and nowhere near what they originally promised. They
showed a demo video _two years ago_ (that turned out to not actually be a
demo), and haven't released anything since.

Technology does not stand still in that time: in 2015, the iPhone had a single
rear and front-facing camera. Soon you'll be able to buy one with
stereographic rear cameras and a dot-projection IR depth mapper on the front,
with what is from all accounts an extremely good AR software framework.

Oculus, Apple, and Google aren't just twiddling their thumbs waiting for Magic
Leap to release a product. They are actively putting money into R&D, and
shipping iteratively. Apple's going to have real-world AR experience and
feedback from iOS 11 and the iPhone X that Magic Leap won't have.

I'd love to be wrong - it'd be great to have another player in the space, and
maybe their tech is awesome. But if you look at what everyone else is doing
compared to what they've released...it doesn't look good.

~~~
apersona
Yeah except Google is one of the backers. If one of the companies actively
working on R&D is backing it, isn't that saying something?

~~~
Judgmentality
Google Ventures is legally distinct from Google. And Google Ventures is
actually a mediocre venture firm based on their history.

~~~
gumby
Google Ventures passed on Magic Leap but Sergey liked it so produced an
investment directly from Google's balance sheet.

------
sjcsjc
As correctly predicted by Taek eight days ago

[https://news.ycombinator.com/item?id=15175635](https://news.ycombinator.com/item?id=15175635)

------
aresant
Apple's ARKit release has opened many people's eyes to the potential of AR as
the true nextgen platform.

Made possible by apples truly vertically integrated hardware/software biz.

Especially in comparison to goog with their stillborn Project Tango due to the
huge android platform fragmentation.

So how is a magic leap worth $6b? Consider that Android generated in excess of
$31billion in revenue by Jan '16(1).

Having a "killer app" to capture market share in the coming AR consumer
platform wars is easily worth that price of admission and if ML pulls it off
$6b will look cheap.

[https://www.bloomberg.com/news/articles/2016-01-21/google-s-...](https://www.bloomberg.com/news/articles/2016-01-21/google-
s-android-generates-31-billion-revenue-oracle-says-ijor8hvt)

~~~
kayoone
I think you missed googles recent announcement for ARCore. They seem not that
far off as it will also work on older phones to some extent.

~~~
tigershark
I don't think so. AR kit to work effectively needs carefully factory
calibrated cameras for SLAM, cheap android phones will always offer a subpar
experience.

------
rgbrenner
This company is now 7 years old and has no product.

Total raised: $1.39B[0]. The last round was almost $800M in Feb.

This $500M will bring the total to $1.9B.

Truly amazing.

0\. [https://www.crunchbase.com/organization/magic-
leap#/entity](https://www.crunchbase.com/organization/magic-leap#/entity)

~~~
tryingagainbro
They must know something we don't or there's so much money laying around, so a
certain % goes into trash. For the company it makes sense to have as much cash
a possible, not even blue chip companies could raise cash in 2008. 2008 is due
to make a comeback IMO, in some form.

~~~
api
Then why is it so damn hard to raise anything when you have a product that
works and traction? Of course reality always pales in comparison to what might
lie behind door number two.

~~~
tryingagainbro
Potential maybe? This market _might_ bring an iPhone-like revolution

------
cm2012
There has to be a lot of really dumb people at venture capital companies if it
turns out magic leap has no real tech. Which, given the Theranos debacle, is
very possible.

~~~
mevile
It's all about who's on their board and who they've raised money from. If they
have relevant industry expertise on their board and have raised money from
smart investors like sequoia they probably have real tech. If they have bunch
of dumb money and people who bring nothing technical to the board they're more
likely to be another Theranos. Not having medical and science expertise and
raising dumb money was part of Theranos' problem.

Having said that Magic Leap's investors are Google, Andreessen Horowitz and
Qualcom. The board is comprised of Google's CEO and Qualcom's executive
chairman.

That's all very impressive in my opinion.

~~~
bobsil1
The amount of your prior exit (Rony's $1.65B) ≈ amount you can raise for next
(Magic Leap) :)

------
tonystubblebine
The contrarian in me is wondering what would make this feel like a safe bet
from an investor's perspective?

For example, what is the value of the patent portfolio they are putting
together by being first to most technical challenges?

------
jorgemf
The Magic Leap is investors putting so much money in a 7 year old company
without a product. Even considering they have now a game changer product, what
did they have 5 years ago to make investors put money on them? This is
technology, who the hell put money in technology as a bet for more than 3
years in the future?

~~~
tigershark
They had a prototype much much bigger than the current PEQ and as far as I
know every investor before putting money tried it and was blown away by the
experience.

~~~
jorgemf
What is a PEQ?

~~~
tigershark
Product EQuivalent: [https://www.magicleap.com/#/blog/why-creativity-
matters](https://www.magicleap.com/#/blog/why-creativity-matters) It's an
advanced prototype of the finished product that has been presented to the
investors for the first time this February as far as I know.

------
adventured
The only thing missing at this point is an ICO for an AR coin from Magic Leap.
You know, to just really drive it home.

~~~
oscilloscope
That would put Magic Leap somewhere between Litecoin and Bitcoin Cash in their
crypto market cap.

------
res0nat0r
Unless this company comes out with a public demo showing their product minus
any obfuscation you have to be a massive sucker to buy into this. Maybe this
will be better than Segway and Theranos combined?

------
lwansbrough
Seeing that Apple has packed so much into the top of the iPhone X gives me
some hope for Magic Leap. I'm not a proponent nor a skeptic of their business,
but I'm familiar with the space.

The technology has to be undeniably the most advanced thing ever created in
order to succeed. Look at HoloLens. Truly incredible technology with lots of
potential. But the UX isn't great and the form factor is a showstopper for
every day use. Microsoft has opted to cancel their second iteration in favour
of the third. Perhaps we'll see a magic leap then, from them, before Magic
Leap.

It appears as though the technology is there to get near the form factor of
glasses. If you tethered the glasses to a phone sized device in my pocket,
that's good enough. I suspect that's what MS is working on now, and I suspect
that's Magic Leap's goal.

What remains to be seen is how these companies can adapt their technology to
interface better with humans. When you're using a computer, you sort of forget
you're using a mouse. When you're using HoloLens, you're painfully aware of
the input mechanisms - they leave a lot to be desired, and are in no way
immersive. That's the other 99% of this problem for these companies. Holograms
are one hard problem. But there are at least two. You have to make it useable.
It needs to fall away from your consciousness when you use it.

VR is easier in that regard, and when it comes to user interfacing, VR still
falls flat on its face. VR _sucks_.

Make it work and not look dorky, and make it easy to use and you'll kill
cellphones.

------
godelski
They keep talking about a sunglasses size product. Is even such a thing
possible? I understand they are using vectored graphics, and I can't imagine
you could create an immersive world within a sunglasses sized computational
unit, unless they have massive compression and crazy hardware. But can you
pass that data wirelessly? Can BlueTooth 5 handle the necessary traffic?

~~~
strangeloops85
Last report I read mentioned two waist-mounted units for computing and battery
that would be linked up to the sunglass-sized product (presumably by wires).

I'm sure they have made some good technical advances. But the fact that it's
taken this long to productize it to something people can try is.. not
promising.

Given their burn rate they really need the first product to have substantial
market traction to sustain such valuations and keep moving. That's challenging
to say the least..

~~~
6nf
More details here: [https://gpuofthebrain.com/blog/2016/7/22/how-magic-leap-
will...](https://gpuofthebrain.com/blog/2016/7/22/how-magic-leap-will-work)

~~~
knowaveragejoe
It's worth noting that this is some guys educated speculation on the matter.
Nobody knows how this will actually work without signing an NDA at this time.

------
6nf
So they previously raised a BILLION dollars. Why are they raising more? I
can't imagine this company spending a billion dollars in only a couple of
years considering they're not even shipping anything yet.

~~~
rl3
Because cutting-edge hardware is expensive as hell to develop.

For example, Nvidia's R&D budget spend for _just_ their Tesla architecture was
$3B.

~~~
Aeolun
But they make the money to justify it...

------
smegel
> Sources also told Bloomberg that Magic Leap will likely begin shipping
> devices

For $6B I would hope you would use a stronger word than "likely". Such as
"definitely".

~~~
jonny_eh
I would have said that 4 years ago, when they were 3 years in.

------
mirimir
> All we have seen are a slew of videos “shot directly through Magic Leap
> technology” that give a sense of what is possible with a football helmet-
> sized rig, but perhaps not in their final consumer product which the company
> believes will be sized like a pair of sport sunglasses.

From "football helmet-sized rig" to "sport sunglasses" is a _huge_ leap (ha
ha). Is that much miniaturization plausible within a few years?

------
aaron695
Is there anyway to bet AGAINST it? Can you buy some sort of put option on
Magic Leap?

I guess like all bubbles/crazy tech you can know they are there, but unless
you know exactly when they are going to pop, it's not to useful.

This is going to be a solid fail once they start selling the tech and everyone
catches on. How could one go about betting against?

------
amrrs
Wouldn't be surprised if Apple R&D is also working on AR Glasses considering
their ambitious attempt in making AR the big in the newly launched iPhones. In
fact they need a new product for masses just like their iPhone.

That must be a day when Magic Leap could face the fate of Blackberry or
Pebble!

~~~
dnh44
I believe they are working with Zeiss in that field.

------
aorloff
And really, who isn't looking to raise at a $6B valuation that hasn't released
a product yet ?

------
dogruck
Magic Leap somehow feels less sketchy than Theranos for some reason.
Definitely have my popcorn out though.

It's almost comforting to read about negative to neutral gossip from ex-
engineers.

------
yborg
7 years, $1.4B in funding. What are the odds that they are, you know, just a
mere $500 million from showing a multiple on all that cash?

------
rburhum
It is going to require a magic leap for that company to ship anything! Sorry,
could not resist...

------
paul7986
Do AR Glasses or contact lenses exist yet?

They act like normal glasses or contacts (prescription or not) until you use
voice controls to view info and such.

