Despite its critics, the secretive startup is raising more cash in its quest to be the Apple of augmented reality.
Magic Leap quietly settled a gender discrimination lawsuit this week. I reached out, both to the company and to the former employee, to see if there was more story to share and—no surprise—there wasn’t.
But there’s one interesting question to ask when such a document drops: Why would Magic Leap settle this now? The timing isn’t that unusual — the suit was filed in February and the settlement suggests the company addressed it promptly. But I asked a few folks, and discovered that the company is raising funds again. The D round, I’m told, isn’t locked up yet, but it will value Magic Leap at $6–8 billion. Once again, the Chinese e-commerce giant Alibaba will lead. (Alibaba’s executive chairman Joe Tsai sits on the board along with Google’s Sundar Pichai.)
Just 15 months ago, the Florida-based mixed reality company raised $793.5 million, adding to the $592 million it had previously raised and earning a valuation at $4.5 billion. Since then, aside from stay-the-course tweets from CEO Rony Abovitz, we’ve heard little from Magic Leap, and we have yet to see a product come to market—or even a date announced for when it will. Skeptics aren’t sure Magic Leap can pull off what it has promised, and a December report in The Information suggested that the company’s first product won’t ship with the technology that it shows in its demos. Meanwhile, competitors such as Microsoft’s HoloLens have been available for so long that they don’t seem new anymore.
The company is trying to do a crazy thing. It’s trying to introduce the future of computing not incrementally, but all at once, out of the box. (I toured Magic Leap several times last year, and tried the tech. It was impressive.) And rather than moving headquarters to Silicon Valley, it’s doing that from a suburb outside of Fort Lauderdale in Florida, with a charismatic, empathetic dreamer for a leader who speaks in Star Wars metaphors, doesn’t let anyone into his Chocolate Factory, and avoids conflict at all cost.
And because there’s no product, we have no signs by which to judge the potential of its success—except the rumors that leak out.
But it’s also important to remember that there’s no clear market yet. We know augmented reality is on the horizon, but on Gartner’s hype cycle, we’re currently in the trough of disillusionment. The HoloLens is finding its initial customers among enterprise clients, who have deeper wallets. Consumers have so far shown they’re not as interested in paying big bucks for virtual reality headsets as Oculus hoped, and it’s not clear what they’re going to want from augmented reality headsets. Not to mention the fact that we need better everything, from batteries to 5G networks to conversational interfaces, for headsets to be awesome.
Magic Leap may fail. It may fail spectacularly, in the kind of blowup that makes for a great business tale. Or it may fail only in its ambition to be the Apple of augmented reality — and instead become yet another technology company powering devices and services that help Alibaba to better compete with Microsoft and Facebook. It’s also possible that it may succeed spectacularly.
But the only thing that is true now is that we don’t know. And Alibaba is about to buy Magic Leap even more time to figure its future out.