
All Magic Leap Patents Have Been Assigned to J.P. Chase Morgan as Collateral - contemporary343
https://www.kguttag.com/2019/11/10/all-magic-leap-patents-have-apparently-been-assigned-to-j-p-chase-morgan-as-collateral/
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berberous
The title and tone of this article make it sound unusual that the company used
its IP as collateral.

You can get better loan terms (such as the interest rate) if your loan is
secured. If you are going to get a secured loan, the default is that it's
secured by 'all assets', which includes IP. In order to perfect a security
interest in IP, you need to make this type of filing -- and a lender will be
especially sure to do so when making a secured loan to this type of company
because the company likely has little other assets of value with which to
secure the loan.

~~~
kguttag
Using patents to secure loans is not new. Most Famously Tesla did it.

What makes it "news" is that Magic Leap was able to raise $2.6 Billion without
having to resort to using the I.P. as collateral. It usually does not make the
previous investors happy and you usually resort to this when you can't raise
money any other way. It is also a one-trick-pony in that you can't do it again
and future potential investors know that the I.P. is already gone if the
company goes bust.

They just announced a $280M investment from NTT Docomo, but base on my and
other people's estimates, Magic Leap was running out of money while burning
through about $600M/year so that only bought them about 5 months of runway.

~~~
riffraff
How is magic leap burning through so much cash? It can't be all salaries and
at the same time they don't seem to be selling a ton of devices at a loss.

Are they building factories or something?

~~~
DonHopkins
Nepotism. The people running the company hired all of their friends and family
into kooshy do-nothing positions.

~~~
rawoke083600
I've seen this ! My fav-no-useful positions I've seen filled was a "Business-
Analysis" and "UX-Expert(basically a graphics artist)". The B.A spend his days
drawing the most useless and not even pretty diagrams of how the "new
business" which never arrived was going to work and integrate with our current
systems(which he had no clue how they worked or what their limitations were).
Lol those graphs and diagrams had more fantasy in them than all of the LOTR
combined. Once we got to retrenchments he was the first to go and the loudest
to protest of the unfairness !

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Jerry2
> _Magic Leap is estimated to have over 1,800 employees and 19 office sites._

For a company that has no consumer product and has no revenue, to have this
many employees is quite shocking to me.

~~~
myrloc
They have had a consumer product out for over a year. You can find it clearly
available for purchase on their website:
[https://shop.magicleap.com/](https://shop.magicleap.com/)

~~~
criddell
Huh. I had no idea it was for sale. I'm guessing not many of those two
thousand employees are in marketing...

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Animats
_Magic Leap is spending somewhere between $600M and $800M per year and that
they have burned through all of their initial $2.4 Billion._

Doing what? They've sold a few thousand glasses, and have done a fair amount
of R&D. But $2.4 billion? That's 12,000 engineer years.

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TheSoftwareGuy
I’m really hoping magic leap makes it in the long run. They’re a huge tech
employer in south Florida, and frankly we could use more tech companies. I’m
always afraid a recession will wipe them out and flood the market with
experienced engineers.

~~~
arthurcolle
Couple years back when I was dating a girl in Ft Lauderdale, I was looking at
companies in Florida. Interestingly enough, it was the only (!) state that was
cutting funding for the CS program across its state programs.

Ended up in NYC, and now, Washington D.C.

Don’t think a single company can save the tech economy of a state that doesn’t
seem to think its worth the investment. That being said, I love Florida and it
would be awesome to build out a tech sector down there.

~~~
75dvtwin
Newly elected FL governor, in the first 6 months in the office, offered some
positive developments in this area.

Computer science and math were addressed explicitly

[https://www.flgov.com/2019/06/24/governor-ron-desantis-
signs...](https://www.flgov.com/2019/06/24/governor-ron-desantis-signs-cs-
hb-7071/)

\---

Highlights of CS/HB 7071 include:

    
    
      -    Establishing the “Florida Pathways to Career Opportunities Grant Program,” which provides competitive grants to eligible institutions to create or expand apprenticeship and pre-apprenticeship programs.
    
      -    Requiring a reverse transfer between Florida universities and colleges to award an associate in arts degree to students who have completed necessary requirements.
      
      -  Requiring career centers and Florida College System institutions to establish regional career pathways guaranteeing college credit toward an aligned associate degree program for eligible students who graduate with a certificate from a career center.
      
      -  Establishing the “Last Mile Scholarship Program,” that will pay for eligible individuals to finish their first associate or baccalaureate degree.
      
      -  Creating increased opportunities for students to take high quality computer science courses in high school by allowing students to count one course as either a require science or required math credit.
      
      -    Codifying Governor DeSantis’ required audit of career and technical education, from Executive Order 19-31, as an annual requirement to ensure high quality pathways for students.
    
    

\---

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sytelus
> Magic Leap is spending somewhere between $600M and $800M per year and that
> they have burned through all of their initial $2.4 Billion.

Is it possible for ML to be viable at all? Assuming they manage to make $1000
profit _eventually_ per device, they will need to sell at least half million
devices each year. It seems militery usage probably won't be able to fund this
alone as the size of US militery is just 1.5M. In US, 40M iPhones are sold
each year and one can think of largest possible market for $2000 devices is
likely around 5M to 10M per year. So 10% of that is certainly possible if
there was a compelling experience device.

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nickpinkston
FYI - normal venture debt companies like WTI include IP as collateral as part
of their standard deal docs. Just know what you're signing.

You as founder are most likely going to be the one trying to sell your IP if
your startup fails and your debt guys will essentially give you a commission
to do so.

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hogFeast
Wow. You think Jimmy would have learned after getting hosed down on
WeWork...nope.

Just anecdotal but JP Morgan appear to be involved in quite a few shitty deals
this cycle. I know they are going hard in syndicated loans, which is very hot
right now, wonder what we will find out when the tide goes out.

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kelsolaar
Looks like his server is in damage control, Web Archive has a copy but is in
the same state for me:
[https://web.archive.org/web/*/https://www.kguttag.com/2019/1...](https://web.archive.org/web/*/https://www.kguttag.com/2019/11/10/all-
magic-leap-patents-have-apparently-been-assigned-to-j-p-chase-morgan-as-
collateral/)

~~~
kguttag
Thanks for providing the link to the archive.

I have up the capacity, but when the cite hits #1 on Hacker News (as it is
right now), it looks like the traffic is still overwhelming. It probably does
not help that I put the larger associated document for people to download (I
was going to put a link up but the link was not working in the Chrome
browser).

~~~
kelsolaar
Thanks Karl! Seems like it is fine now.

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gumby
Interestingly when I have gotten credit from Silicon Valley Bank they have
always secured the debt with all the assets _excluding_ IP. Why? Because they
can't do anything with the IP while I presumably can find a buyer and pay them
back.

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Bud
I'm amused that anyone ever took Magic Leap seriously. It's basically Apple's
Newton; a good idea without the tech, without the infrastructure, without the
content to sustain it and make it useful. Check back in after 10 years.

~~~
mceachen
Newton's second release of hardware and software was actually pretty solid. It
needed some user training (there were many features that simply weren't
discoverable, but were slick one you knew), and it was expensive.

It certainly wasn't a toy with a couple half-baked demos and no actual apps.
There was a healthy third party hardware and software developer ecosystem. A
lot of people (including me!) wanted to see it work, and it was frustrating to
have Jobs kill it right when it was getting traction.

~~~
Bud
I wanted to see it work too; I bought one! But in retrospect I think it's
clear that it was a product that was about 10 years before its time. Once it
was possible to build something (iPhone) about 5x smaller, about 10x faster,
with about 100x the connectivity, and about 10x the display resolution, that's
when it really took off.

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Ididntdothis
What happened to them? They were in the news a lot for a while but lately it’s
totally quiet . I thought they finally had released something. Has anybody
tried their tech?

~~~
jayd16
Yeah, they have a devkit you can get. Its neat but with no install base and
Hololens looming over them, there's not much to talk about.

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foolfoolz
Magic leap founded in 2010

Raised $2.6 Billion

Revenue: $0?

~~~
nrp
It wouldn’t be $0, since they have likely sold a few tens of thousands of dev
kits. Gross profit on those devices is likely zero or worse though.

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Nition
> a few tens of thousands of dev kits

I'd be willing to bet that it's more like a few thousand at most. Does anyone
here know anyone with a Magic Leap One (maybe yes, since this is Hacker News,
but still...)?

~~~
nrp
Fair. Karl is probably close to the mark with his estimate of 5-8k. I would
also guess that the vast majority of those are in the hands of other companies
in the AR space rather than end-users of AR experiences.

~~~
soylentgraham
^ this. I am unable to buy a pair (in London), but I have some loaned to me
from ML so I can help someone deliver a product (for festivals, not the
store/consumers)

Both these things continue to point toward the hype machine over mass
market/sales/consumer consumption

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twic
So what is up with AR?

The way i naively imagine startups work is that they identify a market,
develop a product for that market, then sell the product to the market.

So where have the AR startups gone wrong? Did they not actually identify a
market? Does the market turn out not to exist? Have they not been able to
develop a product that adequatly fits the market? Are they unable to sell a
perfectly good product to the market for some reason?

~~~
rwallace
As an outsider taking a quick look, this reminds me of the Apple Newton.

\- Hard problem, immature technology that barely works as yet.

\- Correct strategy would be vertical markets that have a particular need of
the product, would pay enough per unit to pay for the R&D, would put it in the
hands of professionals who can be trained to work around the inevitable bugs.

\- Company instead unwisely aims straight for the consumer market.

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aaron695
If any wanker goes on about Theranos but didn't call out Magic Leap years ago
delete them from your feed.

And ML still goes on.

We know its technologically impossible yet people still go on like its
something.

But the sad thing is, it's hard to say the actual value of the patents, to ML
nothing but as a troll maybe a fair bit.

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echelon
How did they ever raise such capital?

I want in on it. Capex for R&D is prohibitive.

~~~
SenHeng
A company I used to work for was recently acquired because they were
supposedly working on some kind of block chain technology. After the
acquisition, all ‘work’ on the block chain was stopped and everyone reassigned
to other, more mundane projects. Word is, the ex-CEO somehow sweet talked the
acquirers with some fancy PowerPoint slides. He spends most of his time coming
up with these proposals and shops them around to unsuspecting VCs and
acquirers. Took him a few years but seems like he finally got one to bite.

I suspect many smaller tech firms are similar.

~~~
specialist
A buddy works for a permanent startup. Has never shown a profit. He's
convinced it's a money laundering operation. He likes the work, so he doesn't
ask too many questions.

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egdod
This is a recordation of a security interest, not an assignment.

~~~
kguttag
The patents show as Assigned to J.P. Morgan Chase.

I'm not a lawyer, but I think it was done this way so the I.P. would
immediately become J.P. Morgan Chase's in the case of default. We don't have
access to the contract between Magic Leap and JP Morgan Chase to know what the
exact terms and condition.

Regardless, whereas before Magic Leap was able to raise money without putting
up the I.P. as security for a loan.

~~~
egdod
No, this looks just like any other recorded security interest.

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ironfootnz
As expected. I don’t feel they will ever deliver anything.

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dannyw
This is just an anecdote, but everyone and everything about Magic Leap has
always struck me as pretentious, elitist, and ego-driven.

I walked by their booth at GDC a couple years ago, and tried to struck up a
conversation with the representatives. I was essentially shooed away and given
a sticker.

Later on that night, an invite to their Magic Leap party was sent to a
telegram channel with an open invitation to 'come hang'. The only problem: the
invite was sent 10 minutes before it was wrapping up, almost like a "look at
our party you aren't invited to".

~~~
kbar13
if they sent an invite 10 minutes before it was wrapping up it's because
nobody showed up lol

~~~
dannyw
We walked by the venue earlier that night and saw a pretty buzzing party (with
lots of security).

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dfcagency
Remarkable how banks just, always win.

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telaelit
Big businesses taking over, yet again.

