Sources detail what went wrong at Magic Leap, which raised $3.5B and failed to build its much-hyped AR headset, with most blame placed on founder Rony Abovitz
What changed by September was accountability. Abovitz had already stepped down as CEO in May after an emergency $350M internal raise pulled the company back from layoffs, and Bloomberg's sourcing now assigns most of the blame for the $3.5B outcome to the founder himself.
First-order effects
Rony Abovitz's reputation takes the definitive hit: with the founder formally blamed, any return to a founder-led hardware bet becomes a harder pitch for him and for the investors who backed this one.
Magic Leap's remaining staff and its new leadership inherit a company defined by failure narrative, making the already-announced enterprise pivot the only story left to tell.
Second-order effects
Investors in consumer AR startups face sharper diligence on demo-to-product gaps, since Magic Leap's staged demonstrations became the cautionary template for the entire category's funding conversations.
Competing headset makers gain a recruiting window into a Magic Leap team that has already survived one layoff cycle and now works under a publicly discredited founding vision.
If founder-vision failures keep ending this way, governance in mega-funded hardware ventures will drift toward earlier founder succession — the step Magic Leap took only after the capital was largely spent.
The trend: Once-hyped AR hardware ventures are being forced from consumer device ambitions down to enterprise licensing models, with founder-led vision culture taking the blame for the gap between fundraising and product.
Let's hope the great minds at the company go on to create great world changing things. Maybe the Magic Leap vision will become reality in 15 years... https://twitter.com/...
General Magic 2.0? https://www.generalmagicthemovie.com/ Founders should avoid “Magic” in their company's name... Magic Leap tried to create an alternate reality. Its founder was already in one. https://www.bloomberg.com/...
The thing that stands out to me the most about this Magic Leap story is the second paragraph. He's essentially burnt through $3.5 billion but look: He's already working on another startup and investors will no doubt throw money at him again. https://www.bloomberg.com/... https://…
I just keep thinking of better uses for $3.5 billion than funding a possibly never workable idea and someone's pet project factory. https://www.bloomberg.com/...
Post-mortem article in Bloomberg on @magicleap's downfall. @rabovitz's story of what AR could be went way beyond what Magic Leap could incrementally deliver. They also preferenced secrecy over ecosystem cultivation & operates within a self-imposed vacuum. https://www.bloomberg.co…
Can it be saved? Most of my friends have written it off. I have been studying the ashes and there are a few things that could lead to success but if this company is going to come back it will need to land some new partners who can show its new role in the future. https://twitter.…
“People familiar with Abovitz's next project said it centers on building entertainment content for smartphones and augmented reality devices, including Magic Leap.” https://www.bloomberg.com/...
A good tip for reporters is if a company is talking about a product for years but cannot produce a working demo for a broad audience, you probably shouldn't believe them. Also, VCs invest in dreams. Sometimes they pay off. https://www.bloomberg.com/...