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.
A super-believer founder who seeks out press attention.
Brand-name investors (U.N., China, EU, and anyone looking to put someone else's money in their
pockets)
Big-name board members (Al Gore, Barack Obama and any other politician looking for a global problem to solve that doesn't exist).
Industry buzz and fawning media articles.
Periodic promises of the most amazing doom ever – just sit tight and believe.
The only science involved is "political science", an oxymoron if I've ever heard one.
It's an operating manual, and as a future vapourpreneur, I offer you my thanks.
Initially, I thought, Elizabeth Holmes, Meredith Perry, they had it easy, one smile and a wink, and the VC's were drooling, that won't work for me. Then I saw the pictures of Rony Abovitz, and I thought, yes, in fact that approach could work for me.
So far so good, I have the plan, I have a face (if not a pretty one). Help me out here commantards, because I need a snazzy name, and a vapourware product. Self driving vehicles and AI appear to be the flavour of the day, so I think I should promise a "quantum advance in autonomous vehicle technology" using "secret algorithms derived from protein folding mathematics". Demonstration vehicles would be shown, although they'd really be driven by dwarfs, or remotely controlled by gullible RC enthusiasts to give me a convincing demonstration product. The name? Autonamo sounds good to me, and has an "Autonomy" ring about, suggesting cutting edge software and a high value exit to a flat footed corporate.
I can't do this alone, so who's up for this? There's at least three years fun, fuelled by the cash of gormless VCs, we'll have bean bag offices, attend and speak at global AI and AV conferences (only if they are in nice places), have our own coffee shop (with naked baristas, natch), pool tables, massage at desk, our corporate policies will allow molesting of willing interns, and anything goes when it comes to expenses. Company car policy is Teslas all round. And unlike Uber, there's no sexism here, if we have any ladies willing to sign up for the management team, we'll let you recruit your pick of interns to molest or abuse.
At the end of three years the VCs will be wondering where it all went wrong, but you'll be known as an experienced tech entrepreneur (who has "learnt wisdom from failure"), and can just slide onto another fully funded gig. But be under no illusions, there is a price for this: The two main downsides will be that we will have to have an office in Shoreditch, and any younger male recruits will have to grow a pointy beard and wear a lumberjack shirt in order to keep up with VC expectations.
Sign up below.....
My only concern is what will the baristas look like?
Chosen by the management team. Nude baristering is not something for a fully time person, so we'd be able to pick eight - morning and afternoon shifts, for our four day working week. Obviously we'd all need a three day weekend to refresh our creativity, and spend those generous salaries we'd be paying ourselves.
My choice of barista would be somebody of the age and appearance of Michelle Pfeiffer; Female (or gay male) members of the management team might want somebody who looks like a Chippendale; If the choices of some members of the team overlapped, we'd have some spare slots to indulge ourselves with a collective choice.....what's Monica Lewinsky doing these days? On second thoughts, she'd not be on barista duty, she'd be in charge of selecting and managing the interns.
Corporations as solid as M$ have gotten away with vaporware for years. Many computing gadgets and software fail to do what it says on the can.
The problem has been exasperated with the demonstration by the banking industry of how uncomfortable authorities are to collar well-to-do criminals.
Many, many credible people have posted publicly about having experienced a working, delightful Magic Leap demo. Yes it remains to be seen if the technology can be miniaturized/commercialized -- but to place them in the same category as companies with no real working demos or patents is a journalistically unfortunate angle for The Register to take.
FYI, I have no affiliation with the company nor have I received a demo but a simple
Twitter search is all it takes to figure out that many people have tried out their product and seemed to like it.
Please print a retraction or update the article with a truthful counterpoint to your opinions.
"Many, many credible people have posted publicly about having experienced a working, delightful Magic Leap demo."
The same could be said for Waterseer yet after years of "research" and "development" all they managed to produce was a rough beta model which was basically the exact same thing as an average water condenser which can already be bought in stores right now.
A more recent example would be Hyperloop, many "credible people" (mostly journalists seem to speak up though) are raving about that and seem quite excited about the current test pipe which is being build right now. Many have made reports about it and seen the pipe from the inside.
However, much to my surprise, no one has ever mentioned the enormous amounts of rust which can be seen inside. If you look at the edges in almost any video shot from the inside the tube you can easily spot that for yourself. How is a rusted up pipe a good thing for a test track? What kind of engineering skills, or lack thereof, does that demonstrate? I mean, it only costed them a million or so....
Solar 'freakin' roadways anyone? Lets make glass roads (that is going to be so much fun in the rain) and place solar panels inside the roads. You know, the area where cars actually pass over and by doing so will block out the sun so prevent the panels from producing any energy at all. That too got massively positive media coverage. Well, as you might know they actually made a test model which was build for real.
Totally invisible during day time, several panels already broke, the whole thing even caught fire once and most of all: it doesn't collect any energy. It's by far capable of even sustaining itself right now.
In this day and age "credible people" means nothing anymore.
In a totally unrelated example: Last week in the Netherlands a company was going to build on a stroke of land and as determined by national law a group of professional archaeologists screened the area and eventually gave the go for construction because there was nothing there. After the 'go' a group of amateur archaeologists set to work and what do you know?
Those "amateurs" found what could very be the greatest archaeological discovery for the Netherlands in a long time. Hundreds of items and several complete ships were restored. Complete, intact, ships.
You can read the full story (Dutch) here.
Had it been for the "professionals" then we would have missed out on an enormous historical treasure.
SO yeah.... credibility really means very little in this day and age. Because people get often credited for who they are, not for what they did or have done.
Nice quote:
"SO yeah.... credibility really means very little in this day and age. Because people get often credited for who they are, not for what they did or have done."
Techcrunch reported that an NBA star loved the Magic Leap demo https://techcrunch.com/2017/04/13/magic-leap-just-had-some-of-its-secrets-spilled-by-andre-iguodala/amp/
and various stars such as British actor Ricky Gervais as well https://www.roadtovr.com/ricky-gervais-says-magic-leap-will-change-world-company-courts-celebs/amp/
It's entirely plausible that non-technical celebrity types can be wowed by a fake demo that they don't understand so view it as more innovative than it really is--but in Magic Leap's case there are technical publications such as Wired and MIT Review whom have seen the demo as well and they would have been able to say if it was fake which they didn't.
Off topic but responding to your comment: Funny coincidence that you mention Solar Roadways, this year, part of our pitch as a finalist for SingularityU was using hybrid roadways, we looked at Solar Roadways which are super efficient but impractical so went with piezoelectric roadways instead; take a look at two pilot projects being funded by the State of California this year https://spectrum.ieee.org/cars-that-think/transportation/infrastructure/good-vibrations-california-to-test-road-vibrations-as-a-power-source
"It's entirely plausible that non-technical celebrity types can be wowed by a fake demo that they don't understand so view it as more innovative than it really is--but in Magic Leap's case there are technical publications such as Wired and MIT Review whom have seen the demo as well and they would have been able to say if it was fake which they didn't."
Unless, of course, they didn't actually write the articles. Were the articles written by actual reporters for the magazines or were they just ghost-written fluff pieces? Were the articles subject to peer review and verified by third parties, preferably outside the country?
"Twitter search is all it takes to figure out that many people have tried out their product and seemed to like it."
It may come as somewhat of a surprise to you, but there people who post Twitter and Facebook comments because they've been paid to. There are even companies out there who, for a price, will "guarantee" to make you message "trend" by Tweeting it themselves through a myriad of accounts, using more accounts to re-tweet it and pay other to do the same. I would imaging burning though a $$$BEELION could quite easily buy some of that. It's "disruptive advertising", or as we mere mortals call it, lying.
"Many, many credible people have posted publicly about having experienced a working, delightful Magic Leap demo."
Many, many people insist publicly they have been cured by faith healers. I find many, many people an unconvincing standard of proof.
I did some research, kind of - namely checking your account history - and finding that you seem to have signed up just to post your praise of MagicLeap.
So while I'd like to welcome you as a new fellow commentard, please excuse me for doubting your credibility regarding all things concerning MagicLeap.
Ponzis R Us Rule and are a Fab Fabless Means of Pumping and Dumping Flash Crashing Cash when Economies do not Present Wealth for the illusion of Growth.
Who will the Conservative leadership [excuse the oxymoron] try to spin ownership of the Brexit Bill, if they still be hanging on to Parliamentary Power. Do dumb ignorant people pay the price for arrogant political failure or does Carney just write a big bouncy cheque and bring the painful charade to an abrupt end and have everyone pondering on the crazy way things are being done ....... and always always touted in your best interests and in the interests of national security. I know, it's a joke but it isn't funny, is it .
Sure, they've burned through a billion bucks of money that was easily parted from the fools who funded it. Just celebrate the fact this has failed, because otherwise every time you went out you'd have to dodge hundreds of the folk who downloaded apps made with it that are walking down the street just staring at their smartphones watching whales jumping out of the pavement, like a zombie army on some digital LSD trip.
Nice.
"Origin story" my wrinkly old bottom.
That would be HC Andersen "The Emperor's New Clothes"
My jacket. Isn't it magnificent? The shop said it's the lightest, warmest, coolest coat I would ever wear. I can barely feel it when I put it on.....
So there must have been more than a bit of optimism in this article ... https://www.forbes.com/sites/davidewalt/2016/11/02/inside-magic-leap-the-secretive-4-5-billion-startup-changing-computing-forever/#5cbc1be24223
which in several paragraphs, seems to give the impression the writer had some very concrete experiences with the ML technology.
Or perhaps this is all a misunderstanding, and they're actually doing what they set out to do in 2010 ...
According to past versions of its website, the startup evolved from a company named "Magic Leap Studios" which around 2010 was working on a graphic novel and a feature film series, and in 2011 became a corporation, releasing an augmented reality app at Comic-Con that year.[10]
Reminds me a bit of a little-known scam where a movie production company came into existence just to get its hands on a load of government / EEC grants and funding, which they did ... then the funders said something like, 'Oh, and we want to see the movie' ... at which point the scammers realised they had to make one after all ... (can't remember the name of the movie ... anyone ?)
see also: https://www.technologyreview.com/s/538146/magic-leap-needs-to-engineer-a-miracle/
https://gizmodo.com/how-magic-leap-is-secretly-creating-a-new-alternate-rea-1660441103
https://www.technologyreview.com/s/534971/magic-leap/
"Reminds me a bit of a little-known scam where a movie production company came into existence just to get its hands on a load of government / EEC grants and funding [...] (can't remember the name of the movie ... anyone ?)"
Sorry, no idea. But it reminds me of a stunt that Joe May alledgedly pulled off in WW1.
Already working as a director in Germany, he had to return to Austria for military service. He managed to get posted to a propaganda unit and talked the Austrian military into investing in a brilliant scam: he would develop a projector that could make images appear in the sky, using clouds as a screen. His pich was that he would use images of his wife, acress Mia May, made up as an angel. This was to be used on the eastern front, convincing the Russian footsoldiers that God was on the side of the Austrians, scaring them away.
May used the time and the money to produce a couple of conventional films and get ready to set up his own production company after the war, which he did in 1919. As the Austro-Hungarian empire was gone, so were his investors.
This story is not in the Jimbopedia article linked above; I've read it in Billy Wilder's biography by Hellmuth Karasek (Billy Wilder, eine Nahaufnahme, Heyne, 2002) - which is based on a series of filmed interviews with Wilder that Karasek made together with Volker Schlöndorff called "Billy, how did you do it?" If you like films and are interested in how they are made, this is a very interesting series to watch.
"Reminds me a bit of a little-known scam where a movie production company came into existence just to get its hands on a load of government / EEC grants and funding, which they did ... then the funders said something like, 'Oh, and we want to see the movie' ... at which point the scammers realised they had to make one after all ... (can't remember the name of the movie ... anyone ?)"
Springtime for Hitlers, a musical?
The Producers is what you want. A Mel Brooks flick, if you're interested. Springtime for Hitler was the musical being produced within the film that was supposed to fail, close on opening night, and let them cash in on unused investment. Trouble was, they didn't figure their shoddily-produced tasteless production to be taken as satire.
Keep in mind that many VCs don't invest their own money, but someone else's money from the funds that they are managing.
Therefore, the VCs also have a vested interest in keeping the hype machine going, because then they can keep pretending that it all looked very promising and seemed to offer great returns on their investments -- when they are eventually sued for neglect by the fund's shareholders. Hey, the demos looked great, and how was I supposed to know that the engineering was impossible?
And in the meantime they make a pretty dime for their fund management. Or sitting on the board. Or both. Hey, they've all been pals at the same fraternity!
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