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This is such a weird company. They created big buzz over years and it seems they are just fading away quietly with nothing to show for the money they took in. R

This is such a weird company. They created big buzz over years and it seems they are just fading away quietly with nothing to show for the money they took in. Reminds me a little of Theranos (although not as criminal). Why do these investors keep pumping so much money into a company that has nothing to show? I thought they do due diligence.

abhisuri97 7y ago
It's just about taking a bet. I'm sure that magic leap must have had some demo (perhaps rehearsed) of a rudimentary alpha version they showed investors that was enough to convince people it was possible. From an investor standpoint, there isn't much downside outside of losing money. But the potential upside would have been huge.
gamegoblin 7y ago
I assume they must have had a killer demo. 1. Put the goggles on some investor's head (in a normal looking room, but with known lighting and spatial properties...). 2. Show them some flashy demo that has some limitations, but promise that with their investment, they will be able to remove those limitations. 3. Investors, who probably lack the deep knowledge of optics to know that those limitations aren't so trivial, throw money at them. Because if those limitations (e.g. FOV, opacity) were removed, it would be world-changing tech.
- geerlingguy 7y ago
  Reminds me of Silicon Valley's fictional Keenan Feldspar and his VR demo (likely based on Magic Leap): https://www.youtube.com/watch?v=S8MAV9jhf04 https://www.youtube.com/watch?v=S8MAV9jhf04
  - creato 7y ago
    Surely that was their take on Palmer Luckey and Oculus?
    - jagannathtech 7y ago
      Didn't seem Palmer had any reality distortion field.
- DonHopkins 7y ago
  Now with COVID-19, they really DO have a killer demo: 1. Put the goggles on some investor's head. 2. Investor catches COVID-19 and dies. Nobody wants to share VR or AR gear any more. The whole idea of location based VR / AR entertainment centers is deadly now. If it's so great you can't believe it without trying it yourself, and nobody wants to stick their head in a device that anybody else has been drooling and coughing and vomiting in, it doesn't matter how great it is, nobody's going to try it.
  - DoofusOfDeath 7y ago
    > Nobody wants to share VR or AR gear any more. The whole idea of location based VR / AR entertainment centers is deadly now. There's a price range where I could see buying one to be shared by everyone in my house, but not one for each individual. For example, Valve Index is in that category for me.
  - core-questions 7y ago
    Don't be such a wuss. None of that is something a little Lysol can't fix, and these places should have always been using such (though I imagine they don't).
    - VRay 7y ago
      You can disinfect your electronics with rubbing alcohol and/or removable covers, but don't put Lysol or other harsh cleaning agents on them
      - catalogia 7y ago
        > Don't put lysol [on electronics] Why shouldn't I? The exterior surfaces of "electronics" are just glass, plastic or aluminum and lysol seems to work fine on all three. It's sold in plastic bottles so it's not like it'd create nerve gas or something. Not that I generally take marketing claims seriously, but lysol advertises itself as appropriate for use on electronics: https://www.lysol.com/cold-flu/home/how-to-clean-electronics-in-your-home/ https://www.lysol.com/cold-flu/home/how-to-clean-electronics... If there were any real danger, I expect their lawyers might not let them do that.
- mattw815 7y ago
  I've had the opportunity to demo their product on 3 different occasions. Each time it was a clunky interaction, stopped working in the middle of the demo, and I left thinking my kid's Playstation VR could run circles around their tech.
  - qppo 7y ago
    they allegedly had an insane demo for investors only, before around 2016 (at least that's when I heard of it) you needed to sign an NDA to even get in the room to see it. The consumer product is quite lacking compared to what people said was a demonstration of game changing technology.
    - raverbashing 7y ago
      So: NDA, exclusive demo, controlled environment. It makes it sound to me more like a Séance (with its usual implications) than anything else. Or, for an easier to understand analogy, selling a Disney ride as if it was real.
filoleg 7y ago
I am not sure if financials really work out the way i assume, so i could totally be talking out of my ass here. But i have a feeling it could work as a really nice money laundering vehicle for investors (even though i dont think it was fully the case here), and the company doesn’t even need to be aware of it. You make X in dirty money, then invest it into a cool sounding company promising groundbreaking stuff that has a bunch of big known investors on board already. If the company does well, you take the clean money out with a nice profit on top. If it doesn’t work out, hopefully you pulled out at a level where you lost some money but not much. And it still returns you clean money at the end, so the goal is accomplished. Typically, this kind of money laundering is done through retail businesses like restaurants and such, but it is way easier to just drop those money as an investment into another company, rather than maintaining your own retail business. Plus, the amount of money you could launder by investing is way higher, since it isnt as suspicious to drop a few hundred millions on a startup investment, as opposed to claiming that your small restaurant that is almost always empty is bringing you tens of millions per year.
- aero142 7y ago
  Is there some exception to money laundering rules I'm not aware of where the government doesn't investigate the source of cash if it is invested in a company from overseas?
  - filoleg 7y ago
    Oh, if it is a foreign power, they arent laundering it to prevent the US government from discovering the source, they are doing it to prevent discovering the source from their own governments. Because those foreign actors wouldn’t be running away from taxes from the US, since those money were never in the US in the first place. Also curious on how it would work. If a rich foreign national decides to invest into a random startup, i dont think US has the ability to look into where the money came from, unless that foreign national claims to have made those money in the US. Again, could totally be wrong here, so please someone correct me if that’s the case.
    - 7y ago
ssully 7y ago
I feel like I have heard rumors about amazing closed door tech demos for Magic Leap for years now, so I always assumed that's how they got so much money. The question then is did they just have a really good pitch/canned demo, or do a good job of stirring up rumors and riding off that.
lgleason 7y ago
One of the early seed investors is close friends with the founders of Google. Needless to say it wasn't surprising when Google funneled a bunch of cash into it. After that, I'm sure it made it easier to get others to follow suit.
gkoberger 7y ago
It's easy to say in hindsight, but investors were taking a bet based on the little bits of promising information they had a decade ago. Both sides knew the risks, and that's the whole point – VCs and the company both believed they could make something happen, and it seems they weren't able to, and that's just how this works.
- bsanr2 7y ago
  This is it. Everyone knew that it was a hedge to get in on the ground floor in case the technology blew up faster than anyone could predict. Nobody wants to be the person who missed out on the next Google or Facebook, especially Google or Facebook.
kick 7y ago
Palmer Luckey (Oculus founder) has repeatedly dragged them for cheating on their demos. Given how much faith some investors have had in them, I imagine that's what happened there, too, at least for the first batches.
deleted 7y ago
[deleted]
netcan 7y ago
In some sense, if these things didn't ever happen then it would be a sign that VC is broken. They're not supposed to be investing in sure things.
Alex3917 7y ago
> Reminds me a little of Theranos (although not as criminal). More like Dean Kamen's launch of "Ginger" in 2001.
- swebs 7y ago
  The Segway actually launched and sold and delivered on its technical promises. The problem was that most people didn't want to spend $3000 on one.
  - Ididntdothis 7y ago
    And it’s really not very useful.
alephnan 7y ago
From the article: > Saudi Arabia’s Public Investment Fund. So maybe similar reasons to WeWork.
throwaway55554 7y ago
> ... with nothing to show for the money they took in They made some Incredibles 2 style goggles.

abhisuri97 7y ago

It's just about taking a bet. I'm sure that magic leap must have had some demo (perhaps rehearsed) of a rudimentary alpha version they showed investors that was enough to convince people it was possible. From an investor standpoint, there isn't much downside outside of losing money. But the potential upside would have been huge.

gamegoblin 7y ago

I assume they must have had a killer demo. 1. Put the goggles on some investor's head (in a normal looking room, but with known lighting and spatial properties...). 2. Show them some flashy demo that has some limitations, but promise that with their investment, they will be able to remove those limitations. 3. Investors, who probably lack the deep knowledge of optics to know that those limitations aren't so trivial, throw money at them. Because if those limitations (e.g. FOV, opacity) were removed, it would be world-changing tech.

geerlingguy 7y ago
Reminds me of Silicon Valley's fictional Keenan Feldspar and his VR demo (likely based on Magic Leap): https://www.youtube.com/watch?v=S8MAV9jhf04 https://www.youtube.com/watch?v=S8MAV9jhf04
- creato 7y ago
  Surely that was their take on Palmer Luckey and Oculus?
  - jagannathtech 7y ago
    Didn't seem Palmer had any reality distortion field.
DonHopkins 7y ago
Now with COVID-19, they really DO have a killer demo: 1. Put the goggles on some investor's head. 2. Investor catches COVID-19 and dies. Nobody wants to share VR or AR gear any more. The whole idea of location based VR / AR entertainment centers is deadly now. If it's so great you can't believe it without trying it yourself, and nobody wants to stick their head in a device that anybody else has been drooling and coughing and vomiting in, it doesn't matter how great it is, nobody's going to try it.
- DoofusOfDeath 7y ago
  > Nobody wants to share VR or AR gear any more. The whole idea of location based VR / AR entertainment centers is deadly now. There's a price range where I could see buying one to be shared by everyone in my house, but not one for each individual. For example, Valve Index is in that category for me.
- core-questions 7y ago
  Don't be such a wuss. None of that is something a little Lysol can't fix, and these places should have always been using such (though I imagine they don't).
  - VRay 7y ago
    You can disinfect your electronics with rubbing alcohol and/or removable covers, but don't put Lysol or other harsh cleaning agents on them
    - catalogia 7y ago
      > Don't put lysol [on electronics] Why shouldn't I? The exterior surfaces of "electronics" are just glass, plastic or aluminum and lysol seems to work fine on all three. It's sold in plastic bottles so it's not like it'd create nerve gas or something. Not that I generally take marketing claims seriously, but lysol advertises itself as appropriate for use on electronics: https://www.lysol.com/cold-flu/home/how-to-clean-electronics-in-your-home/ https://www.lysol.com/cold-flu/home/how-to-clean-electronics... If there were any real danger, I expect their lawyers might not let them do that.
mattw815 7y ago
I've had the opportunity to demo their product on 3 different occasions. Each time it was a clunky interaction, stopped working in the middle of the demo, and I left thinking my kid's Playstation VR could run circles around their tech.
- qppo 7y ago
  they allegedly had an insane demo for investors only, before around 2016 (at least that's when I heard of it) you needed to sign an NDA to even get in the room to see it. The consumer product is quite lacking compared to what people said was a demonstration of game changing technology.
  - raverbashing 7y ago
    So: NDA, exclusive demo, controlled environment. It makes it sound to me more like a Séance (with its usual implications) than anything else. Or, for an easier to understand analogy, selling a Disney ride as if it was real.

filoleg 7y ago

I am not sure if financials really work out the way i assume, so i could totally be talking out of my ass here. But i have a feeling it could work as a really nice money laundering vehicle for investors (even though i dont think it was fully the case here), and the company doesn’t even need to be aware of it. You make X in dirty money, then invest it into a cool sounding company promising groundbreaking stuff that has a bunch of big known investors on board already. If the company does well, you take the clean money out with a nice profit on top. If it doesn’t work out, hopefully you pulled out at a level where you lost some money but not much. And it still returns you clean money at the end, so the goal is accomplished. Typically, this kind of money laundering is done through retail businesses like restaurants and such, but it is way easier to just drop those money as an investment into another company, rather than maintaining your own retail business. Plus, the amount of money you could launder by investing is way higher, since it isnt as suspicious to drop a few hundred millions on a startup investment, as opposed to claiming that your small restaurant that is almost always empty is bringing you tens of millions per year.

aero142 7y ago
Is there some exception to money laundering rules I'm not aware of where the government doesn't investigate the source of cash if it is invested in a company from overseas?
- filoleg 7y ago
  Oh, if it is a foreign power, they arent laundering it to prevent the US government from discovering the source, they are doing it to prevent discovering the source from their own governments. Because those foreign actors wouldn’t be running away from taxes from the US, since those money were never in the US in the first place. Also curious on how it would work. If a rich foreign national decides to invest into a random startup, i dont think US has the ability to look into where the money came from, unless that foreign national claims to have made those money in the US. Again, could totally be wrong here, so please someone correct me if that’s the case.
  - 7y ago

ssully 7y ago

I feel like I have heard rumors about amazing closed door tech demos for Magic Leap for years now, so I always assumed that's how they got so much money. The question then is did they just have a really good pitch/canned demo, or do a good job of stirring up rumors and riding off that.

lgleason 7y ago

One of the early seed investors is close friends with the founders of Google. Needless to say it wasn't surprising when Google funneled a bunch of cash into it. After that, I'm sure it made it easier to get others to follow suit.

gkoberger 7y ago

It's easy to say in hindsight, but investors were taking a bet based on the little bits of promising information they had a decade ago. Both sides knew the risks, and that's the whole point – VCs and the company both believed they could make something happen, and it seems they weren't able to, and that's just how this works.

bsanr2 7y ago
This is it. Everyone knew that it was a hedge to get in on the ground floor in case the technology blew up faster than anyone could predict. Nobody wants to be the person who missed out on the next Google or Facebook, especially Google or Facebook.

kick 7y ago

Palmer Luckey (Oculus founder) has repeatedly dragged them for cheating on their demos. Given how much faith some investors have had in them, I imagine that's what happened there, too, at least for the first batches.

deleted 7y ago

[deleted]

netcan 7y ago

In some sense, if these things didn't ever happen then it would be a sign that VC is broken. They're not supposed to be investing in sure things.

Alex3917 7y ago

> Reminds me a little of Theranos (although not as criminal). More like Dean Kamen's launch of "Ginger" in 2001.

swebs 7y ago
The Segway actually launched and sold and delivered on its technical promises. The problem was that most people didn't want to spend $3000 on one.
- Ididntdothis 7y ago
  And it’s really not very useful.

alephnan 7y ago

From the article: > Saudi Arabia’s Public Investment Fund. So maybe similar reasons to WeWork.

throwaway55554 7y ago

> ... with nothing to show for the money they took in They made some Incredibles 2 style goggles.