Augmented reality hype-machine Magic Leap has lost its chief financial officer (CFO) and creative director, putting yet more question marks over the company's future.
CFO Scott Henry and senior VP of creative strategy John Gaeta have both left the company while it is in the middle of its fifth official round of funding and following revelations that the company has been forced to put up its patents as collateral.
Henry has been with Magic Leap since 2014 and seen it through several funding rounds, during which the company has taken in $2.6bn. But despite that massive influx of money and having hired a slew of engineering and creative talent, Magic Leap has yet to make a breakthrough product or resolve several technical issues with its AR headset that severely limit its appeal.
John Gaeta is best known for being the creative mind behind the "bullet time" special effect, now a staple of Hollywood action movies, in the first Matrix movie while he was at Lucasfilm. He joined Magic Leap in 2017.
Rumors that Henry was leaving the troubled company were confirmed by CEO Rony Abovitz in an email sent to all staff late Friday. As usual, Abovitz attempted to impose his own version of a Jobsian reality distortion field by claiming that he had decided that it was time for Henry to go. "I want to let you know that Scott Henry and I have mutually decided that it is time for us to part ways," Abovitz said.
And just to make things absolutely clear that there are no problems at Magic Leap and it's just a matter of time before the company is a huge success, Abovitz added in a quote from Henry saying exactly that. Which is absolutely normal and entirely believable.
"I firmly believe that Magic Leap has moved from being an IF company to a WHEN company and is destined for success and will continue to shape the spatial computing market," Henry was quoted as saying.
"But the time has come for me to think of life beyond Magic Leap and Rony and I have mutually agreed that it is time for me to step into an advisory role, which will enable me to continue to be a friend and partner to the company."
Gaeta didn't get his own quote.
Abovitz also used the email to claim he has raised "over $500 million" so far in the company's series E funding. Some of that is likely to be from JP Morgan Chase – which has taken the company's patents as collateral. Another source is possibly NTT DoCoMo, which invested $280m in April and, Abovitz reveals, a team of senior execs from Magic Leap visited earlier this month in Japan as part of a "steering committee review".
But the truth is that Magic Leap is struggling. Its headset is very expensive – $2,295 – and limited. It has a small field of view, it requires a dark room to work properly, it is fiddly, under-powered and, most importantly, it can't "track" virtual objects very well, meaning that moving objects appear to judder from the viewer's perspective. As a result, the entire system is limited to static or slow-moving interactions.
In addition the latest version of its Hololens AR headset and Apple is reported to be getting close to its AR/VR headset with rumors that it has an AR headset that connects to an iPhone in the works. Magic Leap is currently suing a former employee for producing an AR headset that does the same: uses a smartphone to provide the graphics, rather than a separate but connected device as Magic Leap currently does.
Magic Leap rattles money tin, assigns patents to a megabank, sues another ex-staffer... But fear not, all's fineREAD MORE
Magic Leap has additional products in the works, due in "early 2020" according to Abovitz, which, as ever, will be an "incredible breakthrough". But losing your CFO during fundraising and your creative director while claiming to be developing a never-before-imagined "Magicverse" where entire cities are given their own virtual overlay is not a good sign.
Ever since it was revealed, back in December 2016, that Magic Leap's extraordinary debut of its technology was in fact entirely fake and developed by movie special effects people, we have been extremely skeptical that the company will ever come good on its promises.
We have never seen any reason to doubt that assessment, even when we finally got to try on its much-delayed AR glasses. There is a good reason why people compare Magic Leap to fake blood testing company Theranos – and it's not because there is no functional product. Magic Leap does have a product, just not a very good one.
The reason is that the company has brought in billions of dollars of investment based almost entirely on what the CEO claims is happening, rather than what is really happening. What is really happening is that senior execs are jumping ship. ®