Theranos had no trouble getting funded and even Walgreens to trust them. They were eventually found out to be charlatans. Just because you can raise money doesn't mean you have anything to back it up. When people are skeptical they sometimes have a grain of truth to it. From what I have read about Magic Leap they seem to have vaporware. Even if they didn't the VR / AR space is getting more and more competitive so the longer they don't release even if they have something it may not even matter.

Usually when people present something that is new an innovative you can understand how they did it. Take for example the new iPhone camera with Face ID. They gave enough details for someone to understand generally how it was done. You can look at the physical pieces of it to see how they did it. Sure Apple may have made some claims that were bending the truth to market it but the technology has applications other than security (animojis for instance). Also, it was an extension of previous technology.

When people do the same analysis with Magic Leap they find that they are outright lying and that they can't actually have anything to backup their claims. Instead they are trying to pass off technology that doesn't have the advantages that they state as something completely different.

Walgreens (and CVS) both also sell homeopathic stuff of all kinds, all over.

Even charlatans can sell stuff and make a ton of money. "Can raise money" or "can trick people into buying" (remarkably similar, really) can not in any way be construed as a validation of a product.

Agreed. Just getting on a store shelf doesn't mean you have a good product, it just means that store believes customers will pay for that product.

Like you said, Walgreens, a major pharmacy specializing in real medicine, sells homeopathic crap. They also sell very unhealthy food and alcohol. They also sell cigarettes. Not because they believe the product is good, but because that product makes them money.

The problem is there are huge gaps between having a great idea, creating something really impressive, and bringing a product to market successfully and selling at scale. That last step is the most difficult of all. Very few companies pull it off.

The best I can tell, once a dev kit is released they still have 3 or 4 years before they will be selling their hardware at a meaningful scale - if everything goes alright. Their burn rate is way too high, guessing by how many people they hired. They will need to have an IPO or they are expecting to raise Uber level funds. Maybe that’s realistic but I wouldn’t bet on it.

>They will need to have an IPO or they are expecting to raise Uber level funds.

neither is possible with no revenue or only dev-kit revenue. you are overlooking the third option: do an ICO.

That might be the most realistic solution, ironically. They might end up in the bin of start up death from pre-mature scaling.

I have no doubt that someone is going to win big in AR. Apple can hit the ground running with all of these ARKit apps. Unless Apple really screws something up, they will have the software advantage by a wide margin.

I'm not convinced that either Google's Series B investment in 2014 or Sundar Pichai's board seat indicate that Google believe's Magic Leap has a high probability of success. The series B was now quite a long time ago. Google has had no trouble getting in to the same line of business as their own investments or companies were the CEO sat on the board.

Or get purchased by a larger entity

If you look at Ponzi schemes or con artistry, a little skepticism and a little peer pressure help part people from their money.

In fact, if you're at all familiar with con, the best marks are the people who think they'll never be a mark and have a little bit of greed in them.

And a key part in this is that a lot of experts openly claimed that Theranos was selling snake oil. You can't do those kinds of tests with that little blood.

High expected value can make investment with low probability of success a good investment. Hard to implement and develop optical VR technology could launch company that has similar dominance as Intel has had in the CPU markets.

If the underlying development path of Magic Leap is promising, investors may keep Magic Leap going for a decade even if they don't deliver anything.

Investors include Google, Qualcomm, Alibaba, Kleiner Perkins and a16z.

Huge expected value can also make people fools, without a scrap of real hope of future returns. A lot of money has been flushed down a lot of glittery drains by many a smart person/org in the search for wealth. When you add subtle yet incredibly challenging technical hurdles buried deep within the hype, the odds of flushing greatly exceed fortune.

It’s not as though Google, to pick one example from your list, is some kind of techno-prophet; they’ve killed more projects than asteroids did dinosaurs.

> Huge expected value can also make people fools, without a scrap of real hope of future returns.

See also, Gambler's Ruin.

https://en.wikipedia.org/wiki/Gambler%27s_ruin

That's only an issue if you are making bets such that a large loss will make you go bust. If you are facing that possibility, then you need to move down a level. If you can continue to make bets at your level, then the +EV will increase your roll over time.

Poker lessons.

You don't have to know if any particular company has real changes or not, what you need is is reasonably good estimate of how likely you are a fool.

That estimate made in ignorance of the relevant technology is all the answer you need as to foolishness.

> Huge expected value can also make people fools, without a scrap of real hope of future returns

The probability of failure should already be factored into the term "expected return"

I think Clinkle and Juicero have shown us that viability and product are only tangentially related to being able to raise VC money

> Either they have something that is real and extremely convincing to investors that they have been able to keep very secret

Hate to be that guy, but wasn't Clinkle the last top-secret-many-vc-much-money startup that went bust before the product was even released?

Look how long Theranos was able to keep it up despite experts calling b.s. from basically day one.

Yes, but that's why healthcare investors stayed away from Theranos - that should have been a sign that the core tech wasn't workable.

But MagicLeap had huge funding rounds led by Google and Alibaba. They presumably did their due diligence and involved people who know what they're doing. That suggests to me that MagicLeap is doing _something_ that's real. I'm gonna wait and see.

I suspect that Google Ventures isn't made up of engineers.

I'm not sure what difference it makes but it was actually Google, not Google Ventures, that made the investment.

> Google is placing a big bet on it: in addition to the funding, Android and Chrome leader Sundar Pichai will join Magic Leap's board, as will Google's corporate development vice-president Don Harrison. The funding is also coming directly from Google itself — not from an investment arm like Google Ventures — all suggesting this is a strategic move to align the two companies and eventually partner when the tech is more mature down the road.

https://www.theverge.com/2014/10/21/7026889/magic-leap-googl...

It is ironic to see that Sundar Pichay has degree in metallurgy and material science. I expected something better from him.

For me, it is hard to believe to that a man with effectively a physics degree bought into that.

Enron is a prime example for keeping things secret for long time.

Bernie Madoff is another standout example, and the many scams in the supposedly expert world or wine, such as Rusy Kurniawan.

https://en.m.wikipedia.org/wiki/Rudy_Kurniawan

I watched a documentary about this guy (though I can't remember the name). What a totally fascinating story! The fact that even today there are people who think that he wasn't involved in forging wines really speaks to how easily and thoroughly people can get caught up in a convincing lie proliferated by a convincing liar.

Sour Grapes I believe.

Or the Moller Skycar.

People mention Theranos, I'd also add uBeam - probably the longest running joke in the Silicon Valley.

Apparently investing doesn't require belief in laws of physics.