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Business Management

Magic Leap… of faith? Hyped startups don't all succeed

Magic Leap is the latest in a sizeable line of technology startups that become fabled when they are in glamorous ‘stealth mode’ as the world eagerly awaits the answer to the Big Question: ‘What is it exactly that you do?’

To be fair, Magic Leap can point to the small matter of the $793.5m it raised in what might be the biggest Series C round in history. (You can assume the ‘C’ stands for ‘Can’t believe how much…’). That sum almost doubled the total Magic Leap has raised to nigh on $1.4bn and you can buy a pretty solid company for $1.4bn. Backers, led this time by the ubiquitous Alibaba, get in early on a company that is seen as potentially the Next Big Thing in tech.

Florida-headquartered Magic Leap, we are told makes (or will make) wearable devices that enable some form of cinematic augmented/virtual reality immersive experience. Its website breathless promises: “Whales jump out of gymnasium floors, solar systems can be held in the palm of your hand, and you can share your world in completely new ways.”

The sheer scale of the investments and the sources of those investments (Google, Andreessen Horowitz, Kleiner etc.) suggest Magic Leap is onto something but these investments don’t come with guarantees of startups emerging into world-changing companies, and there’s often a hint of Tulip mania at this stage in their lives. Nobody can say for sure if the idea will work, if the company can execute on its plans, if laws get in the way of its promise, or if somebody simply comes along having built a better mousetrap. Stealth-mode startups come and go and often the noise generated before the first product ships becomes a whisper afterwards… and then there’s nothing except memories.

The Segway is a good example. Before it became an odd fixture of trade-shows, niche-case scooter rentals and not much else, Segway was hyped to the gills at the close of the 1990s under the Ginger code name. The hyperbole included quotes from Silicon Valley scions that suggested it could change transportation forever, or be as important as the PC or the internet. Segway inventor Dean Kamen was quoted as saying the Segway would be to the car what the car was to the horse-drawn buggy. The world went back to normal after the first Segway shipped and disappointed.

Incidentally, a very British personal transportation system that anticipated the Segway in some ways was the Sinclair C5, developed by microcomputer pioneer Clive Sinclair. The pod-like vehicle was so slow that a cartoon of the time showed a man explaining to a police officer: “I’m not kerb crawling, this is as fast as it will go.”

Perhaps it was something to do with the millennium because at almost the same time AS Ginger/Segway there was the microprocessor company Transmeta, which included Linus Torvalds among developers. Transmeta was secretive, generated lots of hyperbole but what transpired was the Crusoe - less Intel-killer than sluggish and stranded chip.

We see this on a far smaller scale too, of course. Ballyhooed social networks appear at regular rates and then are never heard of again. It’s human nature to long for the shock of the new, or the “insanely great” as Steve Jobs vividly described it. But exceptional companies and technologies are just that, exceptional, and it’s as well to remember that if many, many more startups end up in failure than success then very, very, very few change the world.

Still, here’s hoping for a Magic Leap.

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Martin Veitch

Martin Veitch is Contributing Editor for IDG Connect

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