They weren't smashing atoms together to discover world-changing new physics. They didn't send people to space or develop some new revolutionary type of transport that could transform society.
They made some really average AR glasses.
Two point four BILLION dollars.
The Tesla Model S cost ~500M to develop from start to finish[0], so Magic Leap has spent 5 times that amount.
The ENTIRE Starlink satellite network will cost ~$10B total to develop, build, and deploy [1]. So Magic Leap spent a quarter of that.
Apple developed and released the original iPhone on a budget of $150M. Magic Leap has spent 16 times that.
These aren't apples to apples, of course. But I think it puts in perspective just how much of a scam Magic Leap is in general.
You could say that none of it was "wasted", people earned their salary there (I assume) and learned something, that led to consumption and investments elsewhere.
Unless someone literally burnt the money, it did some good.
Then again, yea, $2.4B is just ridiculous, wonder what Jeri Ellsworth and Tilt5 (https://www.tiltfive.com) could have done with those resources...
"people earned their salary" and "learned something" aren't great arguments.
Building a bridge that collapses minutes after construction also entails workers earning salaries, and perhaps learning something. that still doesn't mean it's a good use of funds, it's waste. you want the investment to create actual value for someone.
People have tendency to abandon this line argumentation immediately when it's applied to something they admire and have been hyped up. Wasted money was actually R&D.
Example that gets almost everyone: Space Shuttle.
It was supposed to be reusable space truck that reduces cost. It was several times more expensive than conventional approach with non-reusable rockets and shuttle. It was infrequently used. It drained NASA budged from anything productive. Even those combined manned+cargo missions could have been achieved cheaper with double launch. It was objectively failure based on the goals and purpose of the project.
They developed so much new technology and inspired people. It was simply great piece of engineering and PR. We learned a lot.
That being said, I believe the SLS gave many more spin-offs than the Magic Leap
I wonder if there were missions that would not be possible without it (maybe the Hubble launch and the AMS launch and installation) though most likely they would be adapted to work without it.
Another way to say this is that VCs could just have donated money without spending 8 years spinning the wheels. Those employees would have been paid and the opportunity cost of spinning wheels would have not occurred, instead these people would be doing something more productive and adding value to the GDP.
So, I agree with you. It is a waste. It is a waste of human hours that was spent with nothing to show in return.
> Unless someone literally burnt the money, it did some good.
Hey, don't compare the fraud of Magic Leap with the straightforward honesty and artistic legitimacy of K Foundation Burn a Million Quid [1] which produced not only art, but also heat and light, and at a fraction the cost.
It did create something bad: it made it tremendously harder for tech companies that might actually be able to produce some good to get funding because, for every investor other than the one's who're still throwing money at Magic Leap, this is a gigantic warning sign.
Unless someone literally burnt the money, it did some good.
Funny you say that because it is exactly the opposite that seems true from an economic point of view : if they burned the money, they would have reduced the money supply, thereby increasing for everyone a bit their power purchase. Whereas employing hundreds of people and buying resource for nothing is completely wasteful.
The looser is always those spending the 2.4B of course, but the two have different economic impact (the first one benefiting everyone, the second one only a few people being employed)
Spending that money in any fashion leads to equal amounts of consumption and investments elsewhere (indirect spending). So we can discount it from an oppotunity cost analysis of how the money is better spent, leaving us with the common sense conclusion that investing 2.4bn in something useless is indeed a waste of 2.4bn's of resources.
In fact, burning the money is actually better than spending the money on something unproductive - the former doesn't actually consume resources that could be used better. Burning money is essentially the same as giving it to the govt to spend as they would be free to print an amount equivalent to the burnt resources while keeping inflation as it was before.
I agree with all your observations. But Magic Leap can't be understood as a scummy company in an otherwise healthy industry. There are --so many-- SV startups that raise money on hype they can't possibly deliver on, but VCs and founders get rich anyway. LP money gets incinerated, but they're the 'dumb money' anyway so nobody cares.
On the other hand, cash is very cheap at the moment and there is an enormous amount washing around looking for opportunity. It’s not insane to try a few high-risk high-reward gambles.
(Although maybe it is insane not to pull the plug once deceptive communication from the senior leadership becomes apparent).
> the 2.4 billion sunk in to Magic Leap didn’t prevent any of the other things you mentioned from happening
Opportunity cost is real. That capital could have funded other projects. The engineers could have worked on real research. The marketing team could have been promoting something that mattered.
Yes, this is principally the backers’ loss. But that doesn’t preclude broader costs .
There's no shortage of capital floating around, though. In fact, the surplus of capital is probably what caused an investment this bad in the first place. There is no shortage of funding for good ideas. The shortage is in the idea space.
You can compare to phones, cars and satellites but the best comparison would be of course HoloLens development costs and Facebooks acquisition of Oculus.
I couldn’t find how much Microsoft spent on HoloLens but insiders that I talked with mentioned an investment bigger than Magic Leap.
Magic Leap developed an entire platform and also tried to develop content, not just glasses.
A lot of that effort was wasteful and mismanaged, but likely not by an order of magnitude.
I don’t think the word “scam” is appropriate here though. Just poorly managed.
I'm not saying Magic Leap is better, I'm just saying what is their tech advantage and innovation and how is it comparable to people doing novel nuclear physics? So far they have lost money and paid out more in a celebrity fundraiser bonus than all profitable quarters combined.
They weren't smashing atoms together to discover world-changing new physics. They didn't send people to space or develop some new revolutionary type of transport that could transform society.
They made some really average AR glasses.
Two point four BILLION dollars.
The Tesla Model S cost ~500M to develop from start to finish[0], so Magic Leap has spent 5 times that amount.
The ENTIRE Starlink satellite network will cost ~$10B total to develop, build, and deploy [1]. So Magic Leap spent a quarter of that.
Apple developed and released the original iPhone on a budget of $150M. Magic Leap has spent 16 times that.
These aren't apples to apples, of course. But I think it puts in perspective just how much of a scam Magic Leap is in general.
[0] https://teslamotorsclub.com/tmc/threads/model-s-development-...
[1] https://en.wikipedia.org/wiki/Starlink
[2] https://en.wikipedia.org/wiki/IPhone_(1st_generation)