
Magic Leap Raises $461M from Saudis - adventured
https://www.bloomberg.com/news/articles/2018-03-07/magic-leap-raises-461-million-from-saudis
======
iooi
> Magic Leap has raised more than $2.3 billion to date, and has been valued at
> above $6 billion.

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?

~~~
walrus01
I wonder if given the bulky size of the thing, the tech might be great, but
it's just too early. For those people who are old enough to have been working
in the tech industry in the dotcom 1.0 boom days, the business model proposed
by the epic failure of Webvan was later validated by Amazon/Prime Now.

[https://en.wikipedia.org/wiki/Webvan](https://en.wikipedia.org/wiki/Webvan)

Look at all that money down the drain.

~~~
mattsoldo
It's possible. The Apple Newton is a great case study of a good idea that was
too early. And the inability to minitiarize it sufficiently to fit in a pocket
was one reason for it's failure. A few years later the Palm Pilot was much
more successful because it could fit in your pocket, especially the baggy
jeans that were fashionable in the late 90's.

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.

~~~
IshKebab
"A good idea too early" makes it sound like they were ahead-of-their-time
geniuses. Reality is that everyone had that idea and knew the technology
wasn't ready.

Ideas are the easy part.

------
Zelphyr
Regardless of whether Magic Leap is a Theranos level scam (and I personally
think it is), this is additional evidence that there are massive amounts of
investment money available out there.

~~~
tnoue0i9nt
I used to work with people who now work there. I can say for sure that they
are both good at what they do and good people. If it is a scam, the employees
I know there don't appear to think so.

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.

~~~
webkike
I also know people who work there. Very talented engineers. I find it highly
unlikely that they have been duped. And even if they are, they're sure as shit
still making money out of the deal.

~~~
mondoshawan
I /was/ one of the leads working there, and I can tell you, I made more money
elsewhere and actually took a pay cut going to ML. All in all, it wasn't
pleasant, and the promises weren't enough.

------
gregwtmtno
Is there any way to short these guys or otherwise get exposure to a value
decline?

~~~
robbiemitchell
Yes, fund a competitor.

~~~
edanm
That's absolutely not the same thing.

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).

~~~
gregwtmtno
He knows all that. He was just trying to be glib. Best to ignore people like
that.

------
dogma1138
Well life imitates art
[http://www.imdb.com/title/tt2980210/](http://www.imdb.com/title/tt2980210/)

~~~
JumpCrisscross
A Hologram for the King (2016): "A failed American sales rep looks to recoup
his losses by traveling to Saudi Arabia and selling his company's product to a
wealthy monarch."

[http://www.imdb.com/title/tt2980210/](http://www.imdb.com/title/tt2980210/)

------
decision_tree
I really can't understand the hatred directed towards Magic Leap. All we know
at this point in time is a) those who have experienced the technology are
impressed (but obviously bound to NDA) and b) ML has raised near-unprecedented
amounts of money for a company with no product on sale (2.3MM by CB[1]). To
think Google and Alibaba, not to mention other big funders, are so wrong in
their large contributions is serious - such a mistake is historic. I'm not
suggesting they will deliver, only that all we can say is we don't know.

[1][https://www.crunchbase.com/organization/magic-
leap](https://www.crunchbase.com/organization/magic-leap)

~~~
wolfcode
Maybe you would better understand if you read technical source like:
[https://www.kguttag.com/2018/02/22/magic-leap-one-tunnel-
vis...](https://www.kguttag.com/2018/02/22/magic-leap-one-tunnel-vision/)

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.

~~~
edanm
This assumes a very high level of naivety by the people funding the company,
who at least theoretically, should be, or have access to, technical experts
that can study the technology for themselves.

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).

~~~
wolfcode
It's was not very high level of naivety to invest in ML back then, they did
impressive marketing job and innovation most often happens in smaller
companies - it is far more easy to acquire company shares than try to build a
team - hard to hire experts, build labs and finally this requires time. Note
that ARKit/ARCore are steps required for this kind of tech - so at least
Google and Apple are building expertise on AR/MR software technology, but the
hardware part is still left for others to figure out. Today except Microsoft
there is Intel using Sony's waveguide simple display and other headsets that
are not giving magic experience by using more primitive tech.

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.

------
jamisteven
There is no doubt the technology is incredible and awe inspiring. However,
zero shipped products, taking in tons of outside money, leaks galore and
internal turmoil including one employee stealing 1M from the company through
recruitment fees, this place has all the right tech but is making all the
wrong moves, its valuation is pure speculation at this point. There will come
a point where their investors demand a product shipped, that point will come
soon and I hope they have this battery issue fixed by then.

------
cryptoz
Their old website shows all the lies.

[https://web.archive.org/web/20150402084910/http://www.magicl...](https://web.archive.org/web/20150402084910/http://www.magicleap.com/#/home)

It promises a product far more futuristic and advanced than they are
delivering this year: [https://www.magicleap.com/](https://www.magicleap.com/)

~~~
Holomakerbot
Nothing you showed demonstrates anything close to a "lie".

------
maxxxxx
Has there ever been a company that sucked up huge amounts of investment, made
vague and questionable claims over many years and then came out with tech that
backed their claims? From my casual observation this type of company
immediately fizzles out as soon as they take something to the market and
people see the real product.

~~~
walrus01
In telecom, Iridium spent close to a billion dollars but did actually succeed
in building a truly worldwide (pole to pole) handheld satellite phone network
which also supported SMS and low-data-rate M2M.

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.

~~~
maxxxxx
I didn't follow Iridium closely but as far as I know it didn't have this
secrecy around them. The tech was well understood. Unlike Magic Leap where
there are still rumors about what they are actually doing.

~~~
walrus01
That is true. What stood out to me about Magic Leap is that the huge/weird
looking AR glasses look a lot to me like the AR version of an Iridium 9505
(first generation handheld) phone. Something that is so bulky and weird that
you'll only use one if you absolutely need to. That and the combination of
ridiculous amount of VC money.

If you compare a 9505 to a current generation 9575:

[https://www.google.com/search?client=ubuntu&hs=DVL&channel=f...](https://www.google.com/search?client=ubuntu&hs=DVL&channel=fs&tbm=isch&q=iridium+9505&nfpr=1&sa=X&ved=0ahUKEwjU19fl5drZAhXiy1QKHUKdAxkQvgUIXigB&biw=1526&bih=1295&dpr=1)

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=...](https://www.google.com/search?q=iridium+9575&num=100&client=ubuntu&hs=cVL&channel=fs&source=lnms&tbm=isch&sa=X&ved=0ahUKEwiz9ubx5drZAhXjylQKHWNoCrQQ_AUICygC&biw=1526&bih=1295)

~~~
maxxxxx
You could sell the old Iridium as "retro" phone and make a lot of money now
:-)

------
igloofoo
Changing the world one murdered-by-starvation Yemeni at a time.

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

~~~
ahtu123
But but but they're our allies! There's definitely some selective enforcement
of our ideals. As long as it doesn't get in the way of military or business
it's fine. This is the country that financed 9/11\. It's not "racist" to be
skeptical of Saudi Arabia.

~~~
maxxxxx
They buy a lot of expensive weapons so they are an ally.

~~~
Maybestring
They buy a lot of expensive weapons using a gift card from uncle Sam.

You've got the causal relationship backwards.

~~~
maxxxxx
What gift card? I thought they are living off oil.

~~~
Maybestring
US military aid is often in the form of dollars with the string attached that
they be used to purchase weapons from US companies.

------
jorgemf
I think this is just incredible. Let's suppose they have an incredible
technology and that works (which it is not true at this time because they
don't have any product out yet). How do they justify the product adoption
which such high valuation? (with patents of products they also don't have any
idea if the people will want them?).

Even it is the best technology ever, if not enough people buy it the company
will go down very quickly.

~~~
deltron3030
They could pivot into being an OEM. Marketing doesn't seem to be their
strength, it only got a bit better recently after they outsourced their
branding to a bigger agency.

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.

~~~
jorgemf
an OEM of a technology that noone wants to use?

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.

------
jcfrei
Link to previous HN discussions regarding Magic Leap's tech:
[https://news.ycombinator.com/item?id=16088516](https://news.ycombinator.com/item?id=16088516)
and
[https://news.ycombinator.com/item?id=13653537](https://news.ycombinator.com/item?id=13653537)

------
econner
Thought it was going to be Softbank, no it actually is the Saudis directly.

~~~
seanmcdirmid
Does SoftBank often act as a proxy for the saudis?

~~~
trimbo
The Vision fund is about half Saudi money

[http://money.cnn.com/2017/05/21/technology/saudi-softbank-
te...](http://money.cnn.com/2017/05/21/technology/saudi-softbank-tech-fund-
target/index.html?iid=EL)

------
philip1209
A16Z investor Benedict Evans's Twitter reply today to a skeptic:

> 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](https://twitter.com/BenedictEvans/status/971404194300141568)

~~~
dalbasal
The magic leap demos that have raised all this cash, it might be the most
successful demo in history.

~~~
petervandijck
Not quite yet [https://www.youtube.com/watch?v=yJDv-
zdhzMY](https://www.youtube.com/watch?v=yJDv-zdhzMY)

~~~
dalbasal
touche

------
edshiro
When will we have a _real_ product? And what is the company's strategy? I mean
they are trying to bring something new to the market (read something much more
mainstream than Google Glass), and aside from the fact that the hardware is
not ready, I doubt they have reached an affordable enough price level for
general public adoption nor developed killer apps yet.

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.

~~~
Holomakerbot
Their strategy is to get devs on board first with their creator edition
launching this year. SDK in two weeks at GDC.

------
mattsoldo
This is great evidence of the greater fool theory:
[https://en.wikipedia.org/wiki/Greater_fool_theory](https://en.wikipedia.org/wiki/Greater_fool_theory)

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?

~~~
ModernMech
Not any good data, but I've had recruiters tell me that they don't pay very
well (in SV terms), instead opting to sell employees on large options packages
that will be "worth millions one day". It's a typical SV story, but one I
wouldn't expect from a company that's valued at billions of dollars. That kind
of behavior seems shady to me, so I wouldn't even consider working there.

~~~
walrus01
not to excuse significantly lower pay from magic leap, but their compensation
might be calculated based on their office location in Plantation, Florida
which I presume has significantly lower real estate (rental or purchase) costs
than the bay area.

actual take home after rent or mortgage each month might be greater than
something in mountain view.

[https://en.wikipedia.org/wiki/Plantation,_Florida](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.

~~~
mlevental
their listed hq is in plantation but their offices are scattered around south
florida (ft lauderdale and miami). i actually grew up right down the street
from their plantation office and housing is very cheap but i guarantee most of
their engineers live here in this neighborhood

[https://www.zillow.com/plantation-fl/in-Jacaranda-
Lakes_att/](https://www.zillow.com/plantation-fl/in-Jacaranda-Lakes_att/)

~~~
walrus01
I am probably showing my anti-florida bias here. But if you google "jacaranda
lakes gated community", real estate in Florida and other parts of the US
southeast creep me out. In a civil society that is functioning properly it
should not be necessary for people in the top 15% income earning bracket to
isolate themselves off in burbclave-like gated communities (proto-snow-crash
style). I have seen this also in Charleston, SC where as a random caucasian,
real estate agents warned me away from even thinking about trying to live in
certain parts of the city.

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.

~~~
bergie
> burbclave-like gated communities (proto-snow-crash style)

If we ever want to get to the cyberpunk dystopian future, somebody has to lead
the way.

------
luka-birsa
Looking from afar it really looks like Magic Leap is the largest money
laundering vehicle that everybody is using. It's either that or the tech is so
freaking groundbreaking that it is literally going to melt brains.

Given my age, the cynic is winning.

~~~
skellera
Apparently their tech is pretty awesome but getting it down to portable is
what’s taking so long.

That might be a rumor but it’d make sense for how much money they’re pulling
in.

~~~
patrickaljord
I think any kind of AR glasses that do not look like regular glasses are going
to be a tough sell to the general public at least. I think we're still years
away from this kind of tech though. I mean if it were possible today Apple
would be all over it. Can Magic Leap pull it off before Apple if it is at all
possible to do it in the next 5 to 10 years? I'm doubtful.

~~~
root_axis
> _look like regular glasses_

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.

~~~
walrus01
as a person who has spent a fair amount of time researching the current state
of the art for battery technology, both in watt-hours per kilogram and watt-
hours per cubic cm: I have to agree with you. Anything with sufficient
processing power to drive a high resolution, 60 fps AR display is going to
need a good amount of battery. And that amount of battery is not going to fit
into a google glass or hololens sized thing without needing to be recharged
every half hour of usage.

~~~
Holomakerbot
That's why long term Magic Leap's hip-worn battery/processor and Apple's
likely to be iPhone connected to glasses solution will trump the all-in-one
Hololens style design.

~~~
patrickaljord
Very good point. But even iPhones can't do HD 60fps video + bluetooth for too
long. I guess if it's just used to send AR text and tiny UI that could last
longer.

~~~
skellera
Speculation but it would be interesting if the rumored over ear headphones
contained additional power that could be routed to the glasses/phone. It’s
another place with space that could contribute.

------
smnscu
I won a magi leap at a hackathon a long time ago, and while it was a cute
device and fairly well working, it was pretty much useless so I ended up
selling it. I wonder what will be different this time, especially given the
internal turmoil of the company, and the ludicrous amount of funding they
received.

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

~~~
gfodor
Your device is probably a Leap Motion tracker, totally different company.

