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> 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?

• walrus01 9y ago
  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 9y ago
    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 9y ago
      "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.
    • maxxxxx 9y ago
      I think it's more likely that Magic Leap will be way too late at release time.
  • quasse 9y ago
    > "The company raised an additional $375 million in an initial public offering in November 1999 that valued the company at more than $4.8 billion.[14] Up to that time, the company had reported cumulative revenue of $395,000 and cumulative net losses of more than $50 million.[15]" That's astonishing.
    • walrus01 9y ago
      oh, that's nothing https://en.wikipedia.org/wiki/Beenz.com https://en.wikipedia.org/wiki/Beenz.com https://en.wikipedia.org/wiki/Flooz.com https://en.wikipedia.org/wiki/Flooz.com https://en.wikipedia.org/wiki/Global_Crossing 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.
  • wmeredith 9y ago
    Timing is... everything.
• Holomakerbot 9y ago
  Only a couple weeks to find out. They have multiple presentations slated for GDC, the largest gaming developer conference.
  • vernie 9y ago
    I expect that they'll do what they do at every conference: show video of a celebrity wearing and reacting to the product.
    • Holomakerbot 9y ago
      I think you'll be surprised if that's really what you expect. Developers don't pay money to see something like that. They're there to learn and the three presentations are aimed at using the platform. Expect an SDK release as well.
      • vernie 9y ago
        It's GDC, not MLC. I doubt many people decided to attend the conference solely due to Magic Leap's presence.
        • Holomakerbot 9y ago
          Er, I didn't say that. But the three presentations are to teach devs how to use their platform. I'm sure you were just being snarky with the assumption that it will just be another celebrity appearance, but I'm pointing out that there is about to be a windfall of info about their device, it's capabilities and real world demos.
          • vernie 9y ago
            So... that went exactly as expected.
• batmansmk 9y ago
  Would you give 400M without trying the product?
• ggg9990 9y ago
  It always depends on how great the product is. If you had a credible approach to improving power plant efficiency by 5% you could raise ten times as much investment before shipping a product as long as you were privately hitting your development milestones.
• wand3r 9y ago
  > How can you raise that much money without shipping a product? 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...
• edanm 9y ago
  How? You convince people it's worth the investment. 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.