Let's go live now to Magic Leap and... Ah, still making millions from made-up tech It's been nearly a year since augmented reality upstart Magic Leap was called out for the fact that its revolutionary technology didn't actually exist. Despite having put out several videos that the startup claimed showed its 3D graphics tech in action – exciting images of whales leaping out of gym floors, and killer robots …
They have been doing this stuff in the good old US of A for many years, it used to be snake oil and quack doctors, once in while it works (Coke) but most times some one gets a pot of money and many people lose a lot for no benefit.
Would have thought a regulator or two would get interested but if you pitch right you can fall between the cracks.
I guess it depends at what point the founders realized their plan was a)completely impossible or b)Infeasible in less than a couple of decades (either to mfg or, in the case of that phone charger, to work).
Let me suggest that few people in the world have so little understanding of how any of it works that they believe in "technology" in the way a medieval peasant belied in "magic."
Despite the ability to acquire a crash course in nearly any branch of technology through the internet and access if this sounds like complete BS.
It seems people quite like being ignorant.:-( .
Admit it, you were thinking about Amber Rudd and encryption, weren't you?
Apparently it must be technically possible to both break encryption for the spooks AND keep it secure so internet commerce doesn't all fall over. Like having a lock everybody has a key to. It's locked but not very secure.
But does seem to be an effective way of moving money from "stagnant" VC accounts and back into the economy, at least in some small measure. Burning through millions if not actual billions is putting some of it back in the pockets of staff who spend it elsewhere, both directly employed staff and the staff of suppliers, be that advertisers, CGI effect companies or in some few cases, actual suppliers of goods. Or maybe not :-)
But isn't this how technology companies have always formed? Well, to be more accurate a sizeable portion of them. I kind of remember reading several articles throughout the years about how businesses came to be and several followed the path of: 1. Come up with an idea that you think might be possible. 2. Seek out venture capital where you tell that you have cracked it. 3. Head back to the garage after you have secured the funds and learn the skills needed to solve the problems. 4. If it pans out, sell and go to one. If it doesn't, sell and go to one. (To be fair, a few keep it if it succeed.)
This will go on as long as there is enough stupid venture capital out there, venture capital is high risk anyway and you keep reading about these kids that made it big on a simple idea. After all technology is complicated so just go with your gut about what you think has a chance. Spread your billion on a hundred companies and hope that one of the return your investment a thousandfold.
There's a difference in scale. Wasting a few thousand, or even a couple of hundred thousand, to find your idea doesn't pan out, ... well that happens. But here we're talking about investments of over a billion dollars, which is clearly massively excessive to build a first working demo. At the end of the day Magic Leap is a flipping computer program. It doesn't cost that much to write a computer program unless you're grossly mismanaging it.
And the idea that these companies have valuations over a billion when they don't even have a first working demo is ludicrous.
"But isn't this how technology companies have always formed?"
Er, no. The companies listed here have all pissed away north of a billion (with a B) dollars and have yet to produce a product. I don't mean to belabour the point, but BILLION WITH A B.
You could hire a thousand engineers for a year for a million dollars each for that kind of money. Or, you know, a hundred on $100,000 per year for...
Well, I'll let you do the maths and come to your own conclusion as to whether this money is being spent on serious R&D or on vapourware and marketing.
With a B.
Given the scale of funding at this point, I suspect this is either a fraud or money laundering scheme. But unless someone complains, I doubt any of the flatfeet will even think of getting out of the doughnut shop over this.
As one commented, to write some code, if you some clue what your doing, might cost at most a few million to getting out. Back of the envelope calculation, 5 devs at 100K each/per year for a couple of years is 1 million plus another 500K for expenses, equipment, etc. The small number of developers is because after a certain point, adding more developers actually slows you down.
When you read this:
“Impossible” is not part of our lexicon. (uBeam)
You should know you're in trouble because you are dealing with someone who thinks (s)he can precisely define the position and momentum of a subatomic particle while exceeding the speed of light in a vacuum. It therefore follows that this person is either:
a) the greatest scientific mind in the history of the species.
b) a delusional idiot.
Essentially, if you don't see a place for the word "impossible" then you don't believe in mathematics, or science or the human understanding of reality itself. Can you use an insanity defence in a civil lawsuit? Is that what this is about?
Not all tech companies, and I would surmise probably not the majority either (although you are quite right in suspecting that waaaaaaaay too many have formed and folded on the back of vapourware of one form or another).
What I can say from personal experience and approach is that the angel and VC circuits are way tougher than they used to be. Dotcom handouts just don't happen much anymore. I/we have done things the longer, harder way (concept, invention, proof of concept, translation into commercially-viable MVP ... and THEN some networking and panhandling. Taken a while to get to this stage, but we now have investors hungry to get onboard BECAUSE we have someting tangible and provably what it says it is.
Of course VC is high risk ... if it wasn't, the more conservative institutions would be all over investing in or loaning money to startups.
And kids? Yeah ... there are PLENTY of them. But I grant them this - they're almost all bright little buggers. I am somewhat older than the median of the startup pack - hmm - maybe that has a little to do with my/our refusal to go panhandling with some vague tho sexy-sounding concept.
I think you'll find there is little stupid VC out there ... sure, there is some, but the majority has wised up considerably. At least it has in Canada (which is where my little thing has taken root). South of the border, it's a pretty serious game too. I cannot speak for the rest of the world - I've only had experience of London (the real one ... GMT etc etc), and the West Coast of Canada, and a little of the US scene.
Startup World is a seriously hard place to be ... well, certainly if you take the whole process seriously and are not trying to scam 7 or 8 figures to Get Rich-ish Quick.
Your closing sentence is pretty much what VCs do. It's betting. The clever ones bet more winners than losers. But even great tech sometimes just ... doesn't make it.
I am of course hoping like hell that mine does!
"But isn't this how technology companies have always formed?"
No. Because back in the days people would come up with a design or a plan for a design which was really feasible. Meaning: they actually studied on their ideas, they could back up their claims with factual arguments and (and this is the most important part!): they could also recognize and discuss the negative aspects of their plans (for example: "It costs too much right now, but part of the project is to do research in order to cut down the design costs").
These days you see companies (mostly American for some reason?) which don't even mind totally ignoring 1st degree laws of physics and still try to pursue their ideas, while anyone with a bit of common sense can see (or reason) that it simply can't work. Take Waterseer. A project which was to condense water out of air so that you would end up with drinkable water whenever you're in an area which has less.
After years and years or marketing, trying to obtain more funding, and doing "stuff" (mostly marketing) they eventually managed to build a prototype which is basically not much more than an average condenser which you can pick up in a store right now. Of course, in the store it'll cost you much less money. Investors are likely to end up having spend approx. $200 in order to get a machine which 1) Totally doesn't match the original marketed product. 2) Is basically a much more expensive version of already existing machines (approx. $50 - $75).
In my opinion the whole thing is very close to plain out scamming.
Interestingly, there are companies that sell condensers for exactly that use, at a reasonable scale and apparently profitably. It's an expensive way to obtain water, but there are some niche uses where it's more expensive to bring your own than to grab it from the air. Desalination is another example: stupidly expensive, but if you've got the money and energy to burn and you don't want to move somewhere wetter, then go for it. With Magic Leap: AR is clearly possible. The question is whether they are able to make it practical and profitable.
The warning signs are usually as pointed out in the article. Doesn't look great for Magic Leap, but from outside you can't see enough to tell absolutely for certain until either they succeed or fail.
One assumes that their current investors are not morons and have been asking the same basic questions as The Register, with their own engineers and business strategists in tow prior to investing. I don't really care, because... I'm not an investor. If they haven't bothered, then more fool them. The Register seems to be so frothy about the whole thing because they find the founder very irritating (I have sympathy there).
I'm sure the technology works, because you can't fake a perceptual experience in the same way you can fake a condenser or a solar grid or a medical testing machine. The question is whether it works flawlessly yet, and if they can get it all into a reasonably priced practical package. Even then they aren't home free, as people need to have a good reason to shell out for this, which means compelling exclusive functions and content from day 1. History is littered with beautiful tech that died because it had no obvious purpose.
I've no real idea how much of their burn is given to bsing themselves, but their target it real enough. If you look at MS's HoloLens and the demos of MagicLeap the difference is obvious and simple: ML is tracking head and/or eye focus, as well as merging some real-time surface/shape recog into their presentation. So there needs to be an eyetracking sensor and a forward looking sensor to recognize the display environment. Verrry snazzy sw needed to merge sensory inputs in rt. Must be a bitch gettin' them to work together. Now if you could put a sqid alongside the temple/optic nerve (NMR) you could _see_ what they are looking at, as well as where, but then you might not need that silly looking lens affair ...
>So there needs to be an eyetracking sensor and a forward looking sensor to recognize the display environment
Conversely (as the silence is deafening) - SMI had actually working (Google for IRL demos at various shows) foveated rendering with staggeringly good eye tracking via a pair of $10 mini cameras when Apple acquired them (depressingly though I guess it was inevitable someone huge would) earlier this year.
Cost in terms of sensors and processing power for rendering is pretty much cracked I think - there's already a huge weight of successful work in terms of environment sensing. I'd guess it's genuinely useful applications as much as anything which is now the challenge.
A bigger problem is Theranos never published, patented, or submitted a device for approval. Also, another alert is the vultures funding them were not those who specialize in biopharm startups. Having some knowledge of the biopharm industry, a competent vulture would be asking about their research and publications to review before committing money. It costs far amount of money to get a product approved anywhere in the world. But the funding vultures were IT specialists and did not know much about biopharm.
The pervasive problem with all of these cash graveyards is the implicit belief that Jobsian "reality distortion fields" can defeat science. They can't. If any founder of a science based startup regards Jobs as a role model - run.
Debunking Theranos never required anything more sophisticated than popping down to your local hospital and asking an MLSO if it is possible to get reliable diagnostic information from microliter, trans-dermal blood samples. It isn't. Blood is insufficiently homogeneous and with such a small sample significant contamination from the surface of the skin is inevitable. You can get crude estimates of a restricted number of highly soluble compounds that way (diabetics and glucose, for example) but little more. You don't need PhDs or Nobel Prizes or CDC Presidents, you just need to ask someone whose actual day to day business is blood sample analysis.
The startup I'm waiting to see is the specialist Law Firm dedicated to locating, debunking and financially eviscerating these farcical scams and the credulous VCs who fuel them.
"The startup I'm waiting to see is the specialist Law Firm dedicated to locating, debunking and financially eviscerating these farcical scams and the credulous VCs who fuel them."
Never going to happen because this is private capital and you have the right to piss off your money any way you feel like it. It's up to the VCs to not get taken in by bogus claims or overbearing personalities.
The startup I'm waiting to see is the specialist Law Firm dedicated to locating, debunking and financially eviscerating these farcical scams and the credulous VCs who fuel them.
All this bullshit is part and parcel of a bubble economy running on fiat money that is heading for the biggest crash in the history of mankind. Immense amount of sloshing Quantitatively Eased "money" leads to a "fund anything, it's cheap, maybe we will get rich, and let the bridges burn" mentality. It happened before. It's happening now.
You can get crude estimates of a restricted number of highly soluble compounds that way (diabetics and glucose, for example) but little more
And, even then (speaking as a practising t2 diabetic) the results can be highly variable. Two samples, taken from separate[1] fingers 2 minutes apart, differing by 40%.
Add in the fact that most home units for measuring blood glucose are, frankly, pretty bad and you have recipe of error. And, sadly, the most reliable blood glucose measurement unit I had went EOL 4 years ago since the manufacturer couldn't make enough profit[2] from the test discs.
[1] Cos, by the time you've sucked the first sample site to stop it bleeding and make it stop hurting, you've thoroughly contaminated the site with potentially-glucose-laden saliva.
[2] The manufacturers generally give the units away free (or vastly under cost) in the UK and hope to make their money by charging the NHS when their consumables go on your prescription. If a GP decides to drop your unit from their compatible lists then it's not worth using the unit. And, if enough GPs do that[3], then the manufacturer will withdraw the unit because they can't shift enough consumables.
[3] It's apparently quite a competetive market out there for the reps to get their units onto the GPs preferred lists. Lots of money to be made.
Got to drive one around the office carpark a few years ago - we had one of the original ones that was donated to us for developing and producing one of the key components.
Even without the tilt steering, it was great fun.
Almost as fun as watching others try it out, but not trust it to balance itself, leading to wild overcompensation on their part, causing it to run forwards and backwards to compensate for them, very rapidly.
They didn't like it quite as much...
..well, not actually. But wow, a BEELION dollars spent. That could do a lot of good in the world instead of buying 2nd yachts and summer homes for some folks that probably couldn't hack a job flipping burgers. I'm sure this is more than the budgets of a lot of fairly large cities and some third-world countries. Even if you just converted it to $1 bills and burned it publicly, some needy people could gather around it and keep warm for a while, and this would still be a more efficient use of the money.
Even if you just converted it to $1 bills and burned it publicly, some needy people could gather around it and keep warm for a while, and this would still be a more efficient use of the money.
Well, burning a paper dollar doesn't actually make a blind bit of difference to the accumulated wealth of society. It would trivially inflate the value of remaining dollar bills by an amount too small to measure.
But here's a thought for you, where is the multiplier effect maximised? If a rich twat buys a yacht, then the yacht maker makes money, employs people, they buy stuff, that goes to people who grow stuff, mine stuff, make stuff, and in turn they buy things. A Larry "Fat Twat" Ellison yacht certainly doesn't represent a useful investment, but it won't represent a loss to the poor unless you're going to redirect the resources to this mythical "poor". Which means you take people who are specialist hull and sail designers, the state of the art manufacturing people, the expert crew, hell, even the top-of-their-game marketeers, and you;re going to have them shovelling swedes and carrots? And as a logical extension, society abandons all cutting edge technology, because that doesn't in the short term benefit the peasants. If that's what you want, then Venzuela and Cuba are your economic models.
So by your logic, it's perfectly fine if a company's proprietor, board, or whatever ruling body rips people off and uses the money taken to benefit no one but a small select group of self-serving elitists because they are spending it somewhere and thusly keeping people employed? Wow, that's really "trickle-down" economics at its best. (or worst) To extend that only a little, it's just fine if I vandalize something because it keeps the police employed and provides useful work for whoever has to clean up after I defecated on a salad bar somewhere. I'm all for free enterprise, but this smacks of fraud on an amazing scale.
"That could do a lot of good in the world instead of buying 2nd yachts and summer homes for some folks that probably couldn't hack a job flipping burgers."
So long as the money is moving around, it gets to everyone eventually. That 2nd yacht has to be built by people who spend their earnings, passing it down the line.
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