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Why do people keep giving Magic Leap money?

Magic Leap, an augmented reality company that has never shipped or even shown a product, has just gotten a $502 million investment on top of its nearly $1.4 billion in existing funding. The round is led by Singapore holding company Temasek, and includes major existing investors like Google, Alibaba, and J.P. Morgan Investment Management. It adds to the mystique around the secretive company, which has been on the verge of unveiling a pair of compact augmented reality glasses since at least 2015. Two years later, its main output is still flowery paeans to its own greatness.

Investors have proven more than willing to throw money at overblown tech startups, like Theranos and Juicero. But Magic Leap still seems like a potentially viable company — just one that I doubt will deliver exactly what it’s promised.

Magic Leap’s prototype hardware is supposed to produce incredibly realistic virtual objects. Its reputation is nearly mythical — someone, secondhand and possibly apocryphally, once told me it stands people in a demo room and challenges them to identify what’s real. The company is also building a powerhouse media division, staffed with creative talent like author Neal Stephenson and game developer Graeme Devine, and is partnered with major digital effects studios Weta Workshop and ILMxLAB.

But Magic Leap seems unlikely to release workable consumer-oriented augmented reality glasses any time soon. While augmented reality headsets are already popular in factories, hospitals, and other workplaces, no company has successfully built glasses that people will casually wear in daily life. Magic Leap has shown progress on the very first and very last steps: the core visual technology, and the entertainment content. It’s avoided discussing the many difficult steps in between, including:

  • Building glasses-style displays without compromising a wide field of view
  • Shrinking the electronics to a comfortable weight
  • Designing a control system — physical buttons, gesture tracking, voice recognition, or a combination of the above
  • Designing an intuitive user interface
  • Supporting popular, existing AR-enabled apps like Snapchat
  • Implementing image recognition for objects in the world
  • Ensuring privacy and security for a massive amount of personal data
  • Convincing people that smart glasses aren’t creepy

Magic Leap’s patent applications hint at answers, but they’re generally far-fetched, sometimes terrifying, and only rarely practical. It’s supposedly having real trouble miniaturizing its design, although the company has denied these reports. And CEO Rony Abovitz’s gee-whiz mysticism ignores the massive responsibility Magic Leap would have toward users who trust it to record and annotate everything they see.

Facebook, Apple, Google, and Microsoft are all interested in making AR glasses mainstream, yet they’ve all downplayed the idea that this will happen soon — Tim Cook said just last week that “the technology itself doesn’t exist” for quality AR glasses. Companies that promise the impossible usually don’t deliver. Especially companies that have no experience releasing hardware, and whose management is disorganized and antagonistic, as a now-settled lawsuit alleged. Magic Leap may have the right tech eventually, but by that point, its competitors probably will too.

So, seriously, what makes Magic Leap worth its new $6 billion valuation?

Magic Leap got its first round of funding at the peak of Oculus hype, about six months after Facebook acquired the VR company for $2 billion. Like Oculus, Magic Leap was an upstart company with an eccentric and idealistic founder, showing off a breathtakingly futuristic product in its early stages. Unlike Oculus co-founder Palmer Luckey, Abovitz had already successfully founded the medical hardware company Mako Surgical, which was acquired by Stryker Corporation in 2013. If you missed out on the first big modern VR company, looking for the first big AR one was a reasonable gamble.

Magic Leap might still be a solid gamble three years later. It’s producing a regular stream of patent applications for augmented reality glasses technology, which everyone seems to agree is going to be important at some point. While we have really no idea what the creative team is doing, it’s assembled a veritable nerd-culture supergroup, and anything they produce will grab attention.

But we still don’t know exactly what investors want out of Magic Leap. Google loves throwing money at weird, possibly fruitless experiments — remember Project Ara? The new players in this latest round don’t have the same tech sector bona fides, and could just be casting around for a potential success.

The continued funding definitely doesn’t mean we’ll ever be wearing those magical glasses. Magic Leap’s alleged graphical prowess means nothing if it can’t deliver solid, lightweight hardware, and nobody seems to be talking up its industrial design abilities. The company is on a hiring spree that could change that, but its work seems worth more as a series of parts than a product, and its bombastic promises aimed more at generating vague publicity than reaching potential consumers. We don’t know even know what Magic Leap is doing with all its money, beyond the expanded hiring.

In ten years, Apple and Google may sell glasses made with official Magic Leap lenses, the way they sell phones made with Gorilla Glass now. Magic Leap Studios could produce great works of augmented reality fiction. Putting money toward that makes as much sense as lots of tech investments — without being a vote of confidence in Magic Leap’s bombastic claims.

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