Despite recently having to announce the lay off of 1,000 employees, it would now appear that Magic Leap has somehow pulled a £287 million miracle out of its arse.
In a letter sent to employees – first obtained by Business Insider – Magic Leap CEO Rony Abovitz said the company had secured a new round of investment to the tune of $350 million (around £287m). As a result, Abovitz wrote the company was withdrawing the WARN notice – a 60-day written notice employers are legally required to provide before mass layoffs – sent to staffers in late April.
But who exactly is ponying up this much cash for Magic Leap, a company that after years of secrecy and hype produced an utterly mediocre mixed reality headset? And how does it keep pulling absurd amounts of investment out of thin air?
That’s not abundantly clear from Abovitz’s letter, which merely says this current round of funding came from “current major investors,” and “new investors.” Earlier this month, the Information reported Abovitz had told staff that he was in talks with a ‘major healthcare company’ to drum up cash, and Indiana-based Zimmer Biomet was floated as the possible investor. Other previous investors include Google, AT&T, Saudi Arabia’s Public Investment Fund, NTT Docomo, and Alibaba.
In all likelihood, the moolah probably came from companies interested in Magic Leap’s pivot to focusing on enterprise customers. When news broke in late April that Magic Leap was laying off 1,000 employees, roughly half its workforce, it was paired with the revelation that the company was winding down its consumer business and refocusing efforts for enterprise products. You know, the same path tread by every other major AR headset, including the Google Glass Enterprise Edition and Microsoft HoloLens 2. In his letter, Abovitz hints that the company is “making very good progress in [its] healthcare, enterprise, and defence deals.”
While this £287 million will temporarily stave off further layoffs, it’s by no means a panacea for the company’s troubles. Even before April’s mass layoff, the company was quietly laying off dozens of workers and reportedly shopping around for a buyer. A lot is riding on whether the Magic Leap 2 can compete with other enterprise-focused AR headsets, which frankly, have been around longer and have a head start establishing themselves in enterprise settings. Perhaps the most magic thing about Magic Leap is Abovitz’s ability to convince people to keep emptying their pockets for a gadget that may never live up to its own hype.