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Theranos CEO Elizabeth Holmes Finally Faces Criminal Charges

It's been some time coming, but the CEO of Theranos is finally facing criminal charges for fraud, as the WSJ's Carreyrou repor...

Monday, November 5, 2018

uBeam Glassdoor Review: "Not sure if uBeam even qualifies as a company."

Some of you may not be familiar with Glassdoor - an online site where you can anonymously post a review of your job, your company, or your interview experience. The collated information is made available if you sign up with an email, and for sizable companies there can be a good amount of information as to company culture and even salaries. Somehow they must make money from all this, I guess at some point you hit a paywall or large companies pay for anonymized/collated data, because in June of this year they were purchased for $1.2 billion

I've checked in to the uBeam section of Glassdoor every few months over the last couple of years, and there's only been a couple of reviews posted. They were mildly positive with statements such as such as "5 star. It feels like working in a lab in grad school..." tempered with "Sometimes there is uncertainty with any project and there may be a sunk cost mentality." to the slightly more negative "3 star. No technical leadership at high level". For whatever reason I checked in today, and saw a review had been posted yesterday with the title:

 "Not sure if uBeam even qualifies as a company."

So this got my attention, enough that I finally signed up for a Glassdoor account so I could read it in its entirety, and oh boy, was someone unhappy with their time at uBeam. Before you read this, I'll be clear - this was not me, nor is it anyone I know (that I'm aware of).


Just to repeat:
"Not sure if uBeam even qualifies as a company."
Former Employee - Anonymous Employee
Doesn't Recommend
Negative Outlook
Disapproves of CEO
I worked at uBeam full-time

Pros

Dog friendly office
Benefits paid for 100%

Cons

Like being paid to sit and witness the ramblings of the mentally ill. The female head of the company was beyond delusional, and while I felt sorry for her at times, her delusions gave a complete false sense of reality. This company is more about a small group of engineers getting paid to run experiments than anything else. There is no chance this company will survive or succeed. Not a good career move in any way. I regret ever starting this job.

Advice to Management

She should have never been allowed to run this company - not even for one day.

So that would have been an interesting exit interview...

But, on a serious note, when someone asks me why I started my blog, what you read above is one of the many reasons. When people take jobs, they move their families, change their direction in life, and make choices that have huge impacts which ripple down for years or a lifetime. New entrants to the workforce have no experience of what is normal, good, or bad, and they don't have that metric to tell them "something is wrong". They can learn bad habits or miss out on opportunities for mentoring by talented seniors, or building a career in a worthwhile company. More senior staff can spot the warning signs, but they can be subtle until you're on the inside, by which point you've swapped your kids schools and put your old house on the market, and the practicalities of life force you to stick with a frustrating job for a couple of years. 

uBeam were getting so much glowing and uncritical press coverage (though, hats off to the few journalists who did a solid job) that the public perception was not what I saw as the reality, having experienced it from garage prototype through Series A and the next round. At the very least potential staff had to have some possibility of seeing an alternative view before making a major commitment. In some ways it was the excerpt from Adam Grant's "Originals" about Perry, which in no way resembled the reality I had lived, that was the straw that broke the camel's back and made me write the first blog post. So well done Adam Grant, I can now say your books are not completely pointless.

Update Nov 6th: I just realized that the two 'Pros' in this review were things I had a strong hand in setting up. For the year I worked in the Santa Monica office from its opening, I would bring in my dog Jackie on a regular basis, and so set the precedent. On the 100% benefit coverage, this is something Marc Berte and I had implemented, and fought for when incoming CFOs tried to kill it. We believed that happy, stress free, healthy employees were worth more to the company than ones worried to go to the doctor or stressing about paying bills. The automatic reaction of the MBA class to that setup was horror and an immediate "We have to end that" and "That's far too expensive" even though as a % of well qualified engineer salary it was pretty low and waaaaay down the list of company expenses. Feeling quite pleased with myself this morning. :)

Wednesday, October 31, 2018

Energous Earnings Call Q3 2018

Energous had their earnings call yesterday, and sadly it was a much calmer call than last time - no irate investor actually demanding real answers to pointed questions, demanding accountability for prior statements made. It was completely as expected, same old delays and obfuscation, you can read a transcript here for yourself. Last quarter's earnings call promised hearing aids on the market in the next 90 days, which was essentially today, so what do we get?

Indications are that the hearing aids from SK Telesys and Delight will be the first WattUp enabled products to hit the consumer market hopefully, before the end of this year.

"Indications" that "hopefully" in the next 90 days. Again. Will they just disappear and be forgotten, just like Myant? Why does anyone believe a single thing out of this CEO's mouth? Other 'highlights':

  • Key products such as the spine tracker and some location tags are listed, so essentially tiny markets from non-Tier 1 customers. Not enough to sustain a $200m+ market cap company.
  • Continuing with ~$12.5m per quarter expenses with ~$29m in the bank. Capital raise needed by the end of Q1 2019.
  • They claim progress on their GaAs and GaN chips for transmitter, receiver, and power amp chips, and that they can handle up to 15 Watts. This may actually be true, but the surrounding transmitters and receivers will still be in the <100 mW range. There is legitimate work that can be done in this area, if Energous ever have worthwhile IP, this is where IMO it will be.
  • They still mix consulting and licensing revenues so we can't split them, and they are still a paltry ~$200,000.

One of the more egregious statements came in the Q&A, regarding contact charging vs at-distance:

The strategy has always been that we go in first with near-field, engage the regulators and then migrate the discussions to distance.

The entire basis of the company for the first three years was at-distance, with FCC approval of at-distance always the 'Holy Grail' which finally came in Dec 2017 and then... nothing. They marketed themselves as charging multiple devices, at up to 15 feet, at up to 5 Watts. If they position themselves as a contact only Qi competitor, just without the existing infrastructure, support, standards, efficiency, or max power delivery, they'd never have the funding they have enjoyed. From the earnings call in Feb this year:

We expect the first contact-based transmitters will be in the hands of the consumers in early 2018, followed by the first at-distance transmitters coming in late 2018, culminating in far-field transmitters coming to the market in 2019.

We're heads down focused on commercialization, and we believe that the $40 million is sufficient capital to get us to that point (profitability).

So the first thing never happened, they've just admitted the second won't happen, the third really isn't a priority and never was, and that they will still be in the red by ~$12m/quarter by the time that $40m runs out so they miss the fourth by just a tiny amount.

Why does no-one call them on this? Well, in a way, the markets are doing that. Here's the stock price at around 8am Pacific this morning.


That's nearly a 9% drop first thing in the morning, hardly a ringing endorsement. We'll see if that continues. Unfortunately, you should remember that there are some large institutional investors still owning WATT, so that's part of someone's pension taking a hit there.

Now we wait another 90 days for the same again...

Sunday, October 28, 2018

Energous, Theranos, uBeam Updates

I've been at the International Ultrasound Symposium in Kobe this week, and have hardly had time to do any updates or summaries of what's been going on in Energous, Theranos, and uBeam lately. Having spent the weekend walking around Tokyo, my feet are now sore enough that I'm going to sit still for a couple of hours and write. Let's start with Energous:


We last left Energous after an earnings call where finally someone questioned their basis for optimism, and they were promptly cutoff. Emperors do not like their nakedness pointed out. The other key takeaways from that call were that the long range transmitter was pushed out to 18 months away (again), and that hearing aid products would be out within 90 days. Well here we are 88 days later (which means another earnings call is coming up, Tuesday Oct 30th at 1.30pm PT), and what's happened?

First thing is that the share price seems to be on a long, slow, almost constant trajectory down, losing about $1.50 to $2.00 per month since April, and right now the after hours trading has the share price under $8, putting the company market cap close to $200 million. Not good for shareholders and compensation of employees, nor for any future share offering. Worse, given their revenues, >95% of their valuation is based on the hope of massive future growth - there might be a stock price at which the big institutional investors need to exit, and at that point it's game over. So what are they doing about it? I've indicated in the past that I expected to see some goosing of the stock price with pointless or small-time product announcements and so on, and those products were indeed announced. (BTW Energous, you didn't bother to check your website after the redesign - your "In the News" page is a bad link). 

First of all we have some asset tracking tags by Qubercom, though it seems it's the contact based charging, which kinda defeats the "IoT charging" wireless benefit when you have to drop 20 of them at a time on a charging pad. Seriously if you want to charge IoT low power devices wirelessly, there's already solutions like PowerCast out there. Then we have some spinal position trackers, also with contact based charging from the Gokhale Method, which I did try to buy, but the nice lady there told me they wouldn't be available until next year and only available to practitioners, so it's not really a big market. Apparently Austar Hearing have an upcoming product, but I can't find anything there. Now Energous have also passed regulatory approval for their contact charging in 100 countries (oooooh...), so you can imagine my shock when none of these had any effect on the stock price.

Pretty much, it seems everyone is wise to their games now. No stock bump just before Apple WWDC events, no belief that charging hearing aids is going to make them a $1 billion company. Without a major product release (not announcement), real regulatory approval for something practical, or clear licensing deal with a real company like Apple, this thing is heading to $0. Remember they are out of cash in Q1 2019 so they've less than 6 months to raise more money, and with a declining stock price that's going to be hard to do. Have we reached the limit of this game? I would say so, but the chutzpah of this company, and the gullibility of the press and the public, might mean there's another round left in it.

Theranos

CEO Holmes and COO Balwani of Theranos are facing criminal charges for fraud at the blood testing company. Earlier this month they lost an appeal to try to keep documents out of the government's hands, and according to Bloomberg the judge in the case referred to undisclosed charges and activities, while the Assistant U.S. Attorney bluntly stated that the indictment did not cover all the criminal activity, implying there may be more to come for the pair. Not looking good for them.

Marketwatch had an interesting article on "The Last Days of Theranos" and is pretty blunt with the sub-title of "the financials were as overhyped as the bloodtests". It covers a lot of the mechanics of what happened but the really standout parts for me were the statements from Daniel Warmenhoven, a board member from December 2016. It starts with this quote from him about one of the huge deals that "made" the company:

“The Walgreens deal made no sense, ... It was doomed from Day 1 because it was based on using the minilabs, which weren’t completed when the deal was signed."

So he immediately admits the whole thing was a fraud, but later comes out with this gem:

Warmenhoven told MarketWatch he blames engineers for the final sinking of Theranos. “They lost the recipe. The tests were not coming out right. That 60 to 90 days extra to figure it out took away the runway we thought we had.”

Yes, that's right - after terrible business practices, fraud, intimidation of former staff, 15 years work and over $700 million of investment, it comes down to two months and dumb engineers losing the Post-It with the entire future of the company on it. Damn those pesky engineers!

This seems to be the norm for people like Warmenhoven - engineers as annoyances, replaceable cogs that better behave, not a vital part of the technology development or company, but rather the true irreplaceable geniuses are the CEOs who are the innovators and aren't held back by such things as fraud, physics, or Post-Its. 

This ties with statements I've heard C-level execs make with all sincerity "I told the engineering team what they needed to do, they just didn't understand/weren't good enough". There's some school of MBA that says engineers are fungible units, and are lazy and always say they can't do it, and so need pushed. To an extent there's usefulness in pushing a team to achieve more, and then as a C-level exec providing them the resources, cover, and time to execute, but those without the training and experience seem to regard measured statements that something can't be done as demanded as more of the frustrating whining of a developmentally challenged child than of an experienced employee trying to do the right thing. The idea that the C-level is wrong or mistaken is clearly an option never to be considered.

uBeam

And so that brings me to uBeam. Only a couple of things to say here, there's really precious little new information on this. Mark Suster, the lead investor in uBeam, seems to have deleted all his Tweets from prior to October 1st this year, which is shortly after Perry "moved on" as CEO. He's been a prolific poster on many topics over the years, so this was surprising to see. Further, his Medium post supporting uBeam from just after my blog gained publicity, seems to have been altered. The article "What is it Like to Wake Up and Have the Press Ready to Torpedo Your Business?" used to contain the line:

“If for any reason we fall short of expectations we have set in the market, I will be the first person in line to admit it and then to immediately fund Meredith’s next company.”

for which Mark drew high praise - you can see references to it in the original blog comments, as well as articles from other investors here, here, and here - but at some point between original publication and now, that line disappeared. I wonder why it's not there anymore? (Thanks to HowardLong of EEVBlog for spotting this).

Last thing - I've been asked "What would you do if you were made CEO of uBeam today?" Here's my simple answer, and bear in mind I have not seen the status of the company or the books, I'm just inferring from public information:

I'd give the staff 60 days notice that their jobs were ending, and an offer of a bonus should they stay and tidy up their work (document, and pack it up), along with services to help find another job. Then I'd close down the company, and return the remaining money to the investors. In my opinion, it's the most they'd ever get back.

I'll be surprised if that happens as usually the "sunk cost fallacy" along with legal hurdles prevents such an approach, but I just can't see how the company is viable at this point.

Thursday, September 20, 2018

End of an Era - Thoughts on uBeam Founder Stepping Down as CEO

Earlier today news was broken by Axios that uBeam founder Meredith Perry had "stepped down" as CEO to spend more time with her family... I mean make way for a more seasoned CEO. As always seems to happen with big uBeam stories, I had work commitments that meant I had barely a few minutes to type up a post as it happened, so I'm only just getting to my thoughts on this late at night. Now bear in mind I have access to no more information than any of you on this event, so this article is simply my best guess based on knowing much of the history and the personality of the people involved.

There's a small number of articles that have any hint of original information - there's the original story from Dan Primak at Axios, a series of tweets from lead investor and board member Mark Suster, and the statement from uBeam on the company blog. There's also an article on Techcrunch by Josh Constine that recaps some of the history of the company. From the company blog:

Meredith Perry has decided to step down as the day-to-day CEO of uBeam and will assume a role as a senior advisor and an active board member at the company.  Having overseen uBeam from its inception through its development of a functional working product, Meredith felt it was time to bring on a seasoned executive in the electronics field to lead the company through its commercialization phase. The company has begun a search for this new CEO.

The official accounts are very professional, making it clear that it was absolutely the decision of Perry herself to step down, praise for her great ability, and positioning that her stepping aside is actually a new era in the company. A bold step that bodes well for the future! Yeah, right, that'll be why Suster's tweets seem to quietly admit they've abandoned the phone charging thing, which is pretty sad considering they raised $10 to $14 million dollars on that promise less than a year ago, and (by my guess) around $37 million promising over the lifetime of the company.

So let's take much of this in turn - first of all the Perry I thought I knew would never, ever, in my opinion, voluntarily step down from her position in the company. If an interviewee for a senior role ever asked if she might consider stepping into another role in the future as the company grew into a new phase, it appeared to me as if that ended any chance of a job offer, no matter how talented or capable they otherwise were. In describing her role I would hear her talk about "the mission" and her "destiny" to bring wireless power to the world. I always felt that in Perry's mind, she was uBeam, and uBeam was her, and given how much stock I believe she held in the company at least when I was there, legally that was pretty much true.

A "functional working product" made me raise an eyebrow. If they had that, I'm pretty sure an Apple or Google would have taken them off the field by now, and neither would they be moving from "consumer-facing mobile charging to b2b licensing for IoT". A functional working product that could charge a phone at 15 feet and faster than a wire would not be pushed to IoT (Internet of Things), in my opinion. As I've commented in the past, pointing at Energous and Ossia, there's a pattern to the at-a-distance wireless power companies of initial bold claims of producing devices working at multi-meter distances and multi-Watt charging, then to 'trickle charge', then to a licensing model, then to IoT. I would expect at some point investors just don't buy that the 10 to 100mW charging levels under good conditions will work for phones, so the business model shifts to saying IoT because you can make some half-baked argument it'll work, right up until it doesn't. In my opinion, if you want an IoT charging option for distance, that's low cost and been on the market for years, and you only need micro- to low milli-Watt charging, look at Powercast. Basically, what they have works and none of the other options, to me, offer anything better (but some possible big downsides).


Taking a look at uBeam's product roadmap from the last fundraising round, you can see that by now they should have completed multiple new transmitter and receiver designs, licensing deals, and about to start a private beta test, with a product launch starting early next year. I'll just quote Techcrunch here saying "repeatedly missing self-imposed deadlines" and leave it there.

The "begun a search for a new CEO" line is interesting, as normally that line is "and introducing our new CEO" or "long serving COO steps into this role" or similar. Problem is that uBeam has bled senior executives - by my count it's 1 CEO, 1 CFO, 2 CTOs, 2 COOs, and 3 VP Engineering that have departed, and that doesn't include the other staff. The COO who left most recently (according to LinkedIn), around May 2018 after barely 9 months on the job, had an extensive background in IP licensing and would have been perfect for a role to transition to "b2b licensing for IoT". To me, there's a red flag here, if this were well planned out and in a well running company, I'd expect to see a smooth handover to an experienced executive happy to take on the role, and you don't hand it over to the head of HR, no matter how talented they are, they're not the right choice for a tech company looking to do licensing deals.

Next thing that I notice is not what is said, but what is not said. Where's the quote from Perry herself? These releases usually have something from the founder/CEO saying "It's been the honour of my life to grow this company and build this team, but I feel my talents best serve the investors on the board and evangelizing for the company, and I leave it in the capable hands of my successor." but this time - nothing. From Constine's article "TechCrunch spoke to Perry but she declined to comment on the record." is interesting, there wasn't even the prepared one liner to hand out. Nada. Zilch. Nothing... Hmmm.

Update 9/21/18: Perry tweeted a short statement after close of business yesterday, which managed to say very little but was at least professionally written. Still strange this wasn't prepared ahead of time, it's the sort of thing that takes a few minutes to prepare and is standard in this type of situation.
End of update, back to the original post.

So jumped or pushed? I don't know, but this doesn't smell to me like a regular founder transition.

I'll leave this post with a story about my time at uBeam, and specifically my last day at the company, in October 2015. Things had been untenable for some time prior, and I had exhausted every route available in trying to correct what I saw as a terrible situation for myself and the company, all the way to the board. I had been interviewing and things were clearly going well enough that I was prepared to go, and had some upcoming personal events I wanted to attend to.

One meeting in particular pushed me over the edge, and I told the CEO that I was extremely unhappy, and we should discuss a way to amicably separate. I knew the transducer and acoustics side better than anyone, and would give the company as much time as needed to transition and pass over my knowledge. It was a tense meeting, and I went home after, and there were then a series of ... interesting ... emails and phone calls with Perry, that ended with no conclusion. Ironically, among the demands from the company was a statement for the press about how I still believed in uBeam's goals and the technology, but I declined. I got a text the next morning to come to the downstairs company conference room, and to bring my laptop, lab-book, and any company property - it was clear what was about to happen.

I arrived and the room had CFO Hushen and CEO Perry. It was tense, and Perry sat at the head of the table in her position that she used when about to be CEO-like and give a prepared speech - straight back, leaning slighty forward, hands together. She looked at me and said:

"Today will be your last day with the company. But before we go on to that, it is important that you understand that you are a quitter. You have quit on me, you have quit on yourself, you have quit on the company, you have quit on your team, you have quit on.... wait what are you doing?"

At this point the speech was so ridiculous I had picked up my phone to start taking notes because this was too good not to write down. I looked up and she seemed shocked and demanded "Are you texting someone? I'm talking." and I looked at her and said "Just taking some notes." Sadly, this seemed to throw her off, and I never did hear the rest of that prepared speech. She simply mumbled then moved to telling me that I would now give an exit interview, and was again perturbed when I declined. She insisted and the CFO, acting as HR, had to step in and say that wasn't necessary. I handed over my laptop and the few items I had, and made a clear instruction that the company was not to make any statements or quotes that were to be attributed to me - I heard from the team that about ten minutes later they were all told in a company meeting by the CEO that "I wanted them to know that I wished them all the best and success for the company, and still believed in the company mission" or something similar.

The next few weeks were also interesting when it came to the mechanism of departure, but that's another story. So to end this post I'll address Perry herself and say that if you stepped down from your role:

"Today is your last day as CEO of this company. But it is important that you understand that you are a quitter. You have quit on yourself, you have quit on the company, you have quit on your team, you have quit on.... well, you'll have to look at your own notes for who else you quit on.

Oh, and the exit interview is optional."

Meredith Perry No Longer uBeam CEO


Meredith Perry has stepped down as CEO of uBeam, the controversial wireless charging startup she founded in 2011.

uBeam wants to commercialize its technology via licenses to embed it in third-party products, and Perry was not viewed as the right person for that task.

If only someone senior in the company could have told the board and investors that back in 2015...

Perry will remain a "senior advisor" to the company and on its board of directors.

I didn't think that Perry would ever willingly step down, so if I am correct there, this was forced by investors after failing to meet milestones. I'm certainly surprised it happened this early after the last round. More comment as I learn more.

You can find my uBeam posts here and more detailed thoughts on this event in a much longer post.

Wednesday, September 5, 2018

It's Dead, Jim - Theranos Edition

Yesterday I posted pointing out the Theranos website was down, and wondered if that meant the company was defunct. Today, the Wall Street Journal confirms - Theranos to dissolve. From the article:

In the wake of a high-profile scandal, the company will formally dissolve, according to an email to shareholders. Theranos will seek to pay unsecured creditors its remaining cash in coming months, the email said. 

Most of Theranos’s two-dozen remaining employees worked their last day on Friday, Aug. 31.

All told, investors in Theranos have lost nearly $1 billion.

I think it's all been said in previous Theranos posts. Nothing more to add really. Now to see what happens in the court cases.

Monday, September 3, 2018

Magic Leap - Product Delivered and Oculus Founder Reaction


In late 2016 I wrote a post on Magic Leap, the company that had raised billions of dollars for its Augmented Reality (AR) product, which they promised would be so far beyond anything else it would be like magic. Journalists fawned over them, willingly signing NDAs just to get a peak and then allow the company to decide what they can say (hint: if a journalist admits they signed an NDA with the company they are covering, they are simply, IMO, a stenographer and mouthpiece for PR whitewashing). It was amazing, and we had wonderful insights into the amazing character of the founder Rony Abovitz, and learned that he met Beaker from the Muppets, a factoid so compelling it could be used 18 months later to fill column inches and avoid talking about the technology and failure to deliver.

By the end of 2016 a lot of questions were starting to be raised about the extent of their promises, and that videos they had claimed were actual AR turned out to be more a rendered version and not truly representative of what would be seen by a user. The company got very defensive, understandably, and the CEO put out a statement that users would get an experience "powered by unicorns and rainbows" (It looks like that blog post has been taken down, but excerpts are here).

The usual cohort of big-company defenders sprang into life, proclaiming that hardware is hard (Is it? Really? Thanks for that, never would have guessed), those criticizing don't understand, to have faith (Faith? This isn't a sports team or deity, it's a technical product and business) etc. I'm sure the oft-quoted "Man in the Arena" speech was used to silence those who dared question. I've never quite understood why individuals leap to the defense of multi-billion dollar companies (yes, I did it here with Verily, my point being not to defend the company but to try and point out the difference between doomed "Mars Shots" held up as fait-accompli and difficult but achievable "Moon Shots" that are honestly explained) As usual, they focused on the "they are trying, you shouldn't be mean, what are you doing?" As an example:

"I don't get why we live to shoot down people who try something new and ambitious. Why we get this urge to say 'No.  Stop. You can't be good.' Why we jump on them as soon as we see a chink in their armour and are proud of ourselves for it...

We should be praising companies and people that try. Especially new companies that want to break the Google/Apple/Microsoft mold we are currently trapped in. We should celebrate their success and encourage them when they struggle. We should acknowledge that ambitious things are hard and not expect too much of them (something I am certainly guilty of)."

Yeah - it would be nice if they acknowledged these things are hard to the point of being decades away upfront and not lie about what they have already achieved. That's the thing about lying to people, they tend not to like or trust you when they find out. It's a natural reaction...

Anyway - it's nearly two years later and Magic Leap are finally releasing a product, their Magic Leap Creator One, and for $2300 you can get the package with the eyewear (Lightwear), the portable/wearable computer/GPU that drives it (Lightpack), and the handheld controller. Along with the $500 "professional development package" this is broadly the same price range as the Microsoft Hololens, their AR offering, which came out 2 years ago. Various tech media have reviewed it and given it a resounding shoulder-shrug, and mostly "Meh, nice start, might be awesome in the next version though". I'd love to review it myself, with a more technical eye, but quite frankly I'm not going to pony up $3k for the privilege. Fortunately, someone with a lot more understanding of the in-and-outs of VR and AR has already done this.

Palmer Luckey, the founder of Oculus VR (now Facebook's VR company), has weighed in with his review, and it's hardly full of praise. Now as the founder of a rival company, there is room for skepticism, but read the review for yourself, it's pretty clear about the concerns, where it succeeds, and where it doesn't. To briefly summarize his views:

  • Motion tracking method is a poor technical choice that causes issues, worse than competition
  • Controllers are hefty and not ergonomic, depart from industry norms
  • Lightpack is well designed and built
  • Lightwear visual quality does not live up to the PR expectations
  • OS is on a par with an Android watch, no more
  • The only rainbows are artifacts in the visual field

There's an explanation for each of his points, it's well reasoned. He praises them where they deserve, and it seems at the end had it not been for the ridiculous PR and billion dollar funding the response might have been "Nice first shot, a little better than the Hololens, great to see some competition".

Luckey makes points beyond the technical though, and that's really the bit I want to concentrate on as it's part of the larger picture of tech funding and tech media coverage. He shows this image that was used by Magic Leap in promotion of their tech, and comments on it.


"Above is a telling picture from a piece Magic Leap did with Wired magazine a couple years ago, back when they were still hyping up scanning fiber displays.  See the fancy-looking, high-tech light up  strands?  They don’t do anything.  It is just electro-luminescent wire.  It looks great to casual observers, but does not hold up to any kind of scrutiny from people who are in the know."

Basically, you're being lied to. Shiny things and glitter are supposed to make you say "ooh" and "aah" and think it looks cool. But there is a more insidious side to this, as once you are invested in liking it, thinking it's awesome, when an expert comes along and rubbishes it, you take it personally. Like the victim of a con, rather than admitting you were duped, you double down and take the side of the conman. From then on, you are a member of a "tribe" and it becomes "us against them", the "believers vs the heretics" and it's no longer about the tech or the business, but about belief. You're far enough in the hole you're just going to keep digging. Once you're there, there is no amount of data or evidence that will budge some of these people. Look at Tim Draper even after Theranos has been proved to be a fraud, he's still claiming it was just because a journalist and the government were out to get the CEO.

There are other, invisible, costs to this type of hyped startup. To quote from Luckey's post:

"Their current offering is a tragedy in the classical sense, even more so when you consider how their massive funding and carefully crafted hype sucked all the air out of the room in the AR space... It does not deliver on almost any of the promises that allowed them to monopolize funding in the AR investment community."

This echoes a point I have been making in this blog over the last couple of years - certain companies like Theranos or Magic Leap come to the table with bold claims of advancements vastly beyond what anyone else offers, with "Star Trek" levels of capability. Their charismatic founder gets puff-pieces in the tech press, with little scrutiny of the actual technology - which, of course, is a closely guarded secret you can't be allowed to see. They get huge amounts of funding, and the common wisdom quickly becomes "They've already won, how could you compete with them?" Theranos are clearly in the realm of fraud, Magic Leap perhaps is more "extreme exaggeration", but the chilling effect on entrepreneur funding is the same at the outset.

To quote from my last Magic Leap post:

"It creates the standard by which all other companies now must be compared. Imagine you've a small company with solid VR technology that actually works and can be delivered as a product, but when you present it to a VC you're told "Magic Leap already beats that - I won't invest, there's no market". Because you are honest, you don't get funding and your company never takes off, we as the public don't get the benefit of that technology, and the VC's investors (like pension funds) don't get the benefit of the profits. Worse, it encourages the less-than-honest founder to "exaggerate" capabilities and exacerbates the problem. As a society we all lose from this."

And this is the key for me - on the one hand you can't blame a company for putting the best spin they can on what they have, it helps with fundraising and recruitment, and harms potential competition - however there is no excuse for the tech media (at least the ones who claim to be reporters and not in it for page clicks alone) to enable this, nor for institutional investors to fund in a way that encourages the less-than-honest (or above-average delusional).

Perhaps a worse outcome is that when the over-promised thing under-delivers (or delivers fraud), it taints the entire sector for investors and potential employees alike Sure, Magic Leap finally got a product out, but it's was a resounding "meh" and with $2 billion in funding, you really have to work to screw up one delivering something. But what if that something is a negative for the industry overall? As Luckey says "That is not good for the XR industry."

How many advances have we lost because media and investors allowed the PR departments of companies to bamboozle both us and them into ignoring a small but capable and honest company? If you're in engineering, you know of many people working on great technologies that struggle to raise because they just don't lie, or are better at the tech than the pitching. It still confuses me that professional investors heavily bias their selection towards the well-connected, gifted presenters and fundraisers, rather than those with the actual capability to deliver a realistic if bold vision.