"Hopefully soon-ish": The story of Magic Leap's massive funding and ongoing delays
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Magic Leap arrived in 2011 promising to be the next major step in computing. With an incredible $1.39 billion in investment from some of Silicon Valley's largest VC's, and enthusiastic hype around a series of eye-popping promo videos, Magic Leap seemed poised to change the way we think about Augmented Reality. But it has yet to release – or even publicly demo – a market-ready product, leading some to question whether or not the technology can succeed. We looked into the background of Rony Abovitz, head of Magic Leap, the product, the investors and some of the controversy behind the startup.
THE LEADER: Rony Abovitz
Abovitz is the 46-year-old president, founder and CEO of Magic Leap. He says his primary creative influences are the Muppets, “Star Wars” and “Willy Wonka and the Chocolate Factory.” When presenting at a TEDx conference in Sarasota, Florida, he came out on stage wearing an astronaut suit. He also describes himself as an underground indie rock musician.
Abovitz is the oldest of five children. His father, Isaac Abovitz, was a real estate broker and his mother, Itta Abovitz, was an artist. Isaac and Abovitz arrived in the United States from Israel in 1962, first settling down in Cleveland. In 1983, the family moved to Florida, where Rony attended Nova High School in Davie. The school is known for its experimental curriculum. He graduated with good grades and was accepted to Northwestern, MIT and the University of Michigan, but decided to stay close to his family and attend the University of Miami.
At Miami, he received a bachelor’s degree in mechanical engineering in 1994 and a master’s degree in biomedical engineering in 1996. In college, he was a cartoonist for the student newspaper, a DJ for the college radio station and a member of the university’s varsity track and field team, where he threw javelin.
After graduation, Abovitz started experimenting with biomedical engineering solutions, eventually forming his first startup Z-Kat in 1997. The robotics group within that startup was spun out, forming MAKO Surgical Corp. The company built a robotic arm that would assist surgeons during operations. In 2006, MAKO’s technology performed its first knee replacement. MAKO became publicly traded on NASDAQ and eventually merged with medical technology company Stryker in 2013.
He told the Broward Palm Beach New Times that he was inspired to build Magic Leap after visiting the Goldeneye estate in Jamaica, “I loved being out here just looking at this amazing place and I noticed some of the people that came with us had their phone in front of their face, and all they were doing was staring at their BlackBerry or iPhone or Android phone. So I realized computing had to change."
In 2011, he quietly launched Magic Leap. According to older versions of the website, the AR startup originated from a company named “Magic Leap Studios,” which was developing a graphic novel, music and a series of feature films. But by May 2011, Magic Leap started experimenting with augmented reality through an app that was released at Comic-Con. The company worked with Weta Workshop - a frequent collaborator - on the app. Weta Workshop CEO Richard Taylor is a founding director of Magic Leap.
THE PRODUCT: Magic Leap
Magic Leap plans on selling a “mixed reality light field” headset that projects 3D light sculptures onto the user’s retina. The company wants to generate images indistinguishable from real objects, complete with a sense of depth, and then place those images seamlessly into the world of the user. This system would offer a closer resolution to the power of the human eye. The headset has been compared to others on the market, like the Microsoft HoloLens.
Is "augmented reality" a brand new term to you? This 2 minute video from BBC can get you up to speed
As other companies build AR software and hardware for enterprise use, Magic Leap’s sole focus is to build an AR platform for consumers. Magic Leap envisions games and experiences on top of the world the consumer is already living in. This promise has led some of the world’s largest content companies to jump on board and develop for Magic Leap. For instance, Disney’s Lucasfilm division is creating “Star Wars”-related content for the platform. Both companies are working at a joint research lab at Lucasfilm’s San Francisco campus to work on the project. Walt Disney CEO Bob Iger has mentioned the partnership briefly in the past, saying that Disney could use AR at its theme parks. He also said that he hopes the device would be lighter and more comfortable [to wear] someday.
But what does the Magic Leap product actually look like? Besides a few leaked images, the device has yet to make a public appearance. Anyone who uses a prototype of its device is sworn under a non-disclosure agreement not to talk about the technology or take any pictures of the device or software.
Golden State Warriors small forward Andre Iguodala was given a demonstration of the headset, saying that Magic Leap has plans to use the headset in sports. "Magic Leap was amazing," Iguodala told CNET. "They want to do some things with sports. I don't know how you even think of doing something like that. And then the actual device is so small, the one that's going to come to market, it's almost like you have a pair of sunglasses on.”
Magic Leap has published a few videos of what the software interface would look like, for marketing purposes. However, as The Information uncovered from former employees, a video produced in 2014 did not actually use the technology. The employees claimed that it was produced using special effects from its partner, Weta Workshop, and used for recruiting purposes. Magic Leap has clarified that recent videos were shot entirely using its software.
THE INVESTORS: Google Ventures, Alibaba and more…
Magic Leap raised its first round of Series A funding in February 2014, about $50 million. Just a few months later, it raised $542 million dollars in a Series B. Most of that investment came from Google Ventures, but Andreessen Horowitz, K2 Global, Kleiner Perkins, Vulcan Capital, Legendary Entertainment, Obvious Ventures and Qualcomm Ventures also participated in the round.
Magic Leap then raised a whopping $793.5 million at a $4.5 billion valuation in a 2016 Series C, with a lead investment from Alibaba. Google Ventures, JP Morgan, Fidelity Investments, Morgan Stanley and Warner Bros also invested in the Series C round. These investments would make Magic Leap’s funding rounds some of the largest in venture capital history.
THE CONTROVERSY: Is Magic Leap real?
According to The Information, the first prototype of the product, known as “The Beast,” was the size of a refrigerator and used a projector with a motorized lens that enabled images to have more depth and look more realistic. Magic Leap used this prototype to pitch investors. It would then show investors a pair of sunglasses attached to an iPhone-sized battery pack using a cable. The company told investors, the sunglasses prototype would eventually be able to operate very similarly to “The Beast.”
Magic Leap hoped to create this technology using a “fiber scanning display,” which would be a projector the size and shape of a piece of spaghetti. This would be capable of performing the work of the large projector from “The Beast,” but in a much more compact size. Former employees have said that Magic Leap's fiber scanning displays were not working as hoped. Efforts were refocused on another prototype, WD3, which is essentially a large helmet tethered to a computer. This has been the prototype used by Magic Leap in investor meetings since 2014.
Magic Leap still reportedly shows off a device that looks like a pair of sunglasses connected to a battery belt pack, known as the PEQ (or product equivalent). But no one has seen a live prototype. The PEQ doesn’t have the same level of depth as previous prototypes and is not the highest-quality version of the technology, as Abovitz told The Information. In February, engineers at the company were scrambling to complete the prototype before a board meeting. This is after the price of Magic Leap stock was slashed in the secondary market, partly due to the findings by The Information in December.
One high-level source told VentureBeat, “They are scattered so thin. They are doing 1,000 things badly. They should be doing three or four things really well. Magic Leap is not as good as HoloLens, and it’s two years later. It won’t be as good when it ships.” Magic Leap has not given a date of when they’d be releasing the product, only saying last July that they’d be releasing something “hopefully soonish.”
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