Magic Leap announced last month that layoffs impacting “every level of the company” were coming alongside a pivot away from its near-term consumer ambitions toward the enterprise space. Now, it appears those layoffs have been avoided with a fresh cash injection from existing and new investors, amounting to $350 million.

Update (May 25th, 2020): According to Business Insider and The Information (via Tech Crunch), Magic Leap CEO Rony Abovitz issued a statement to employees that the company had secured $350 million from new and existing investors. This, he says, will be enough to avoid the previously announced layoffs from affecting what at the time was reported to be 1,000 employees.

Abovitz is also confident in the company’s ongoing deals, something he says is progressing well.

“We are making very good progress in our healthcare, enterprise, and defense deals,” Abovitz says. “As these deals close, we will be able to announce them.”

The original article announcing the layoffs and pivot to the enterprise market follows below:

Original Article (April 22, 2020): In a blog post published by Magic Leap CEO Rony Abovitz, it was announced that the company is facing seemingly major layoffs and reorganization as it attempts to survive as a massive pre-revenue startup in an economically uncertain time. Surprisingly, for a company which has often chosen to be mysterious rather than direct, Abovitz laid out the situation quite clearly:

The recent changes to the economic environment have decreased availability of capital and the appetite for longer term investments. While our leadership team, board, and investors still believe in the long-term potential of our IP, the near-term revenue opportunities are currently concentrated on the enterprise side.

To better prepare Magic Leap for the future, we have taken a close look at our business and are making targeted changes to how we operate and manage costs. This has made it necessary for us to make the incredibly difficult decision to lay off a number of employees across Magic Leap. This has been a painful process, as every member of our Magic Leap team has demonstrated not only unparalleled talent but a true passion for our company’s mission. But after lengthy, careful consideration, I have determined this is ultimately necessary to give us the best chance for future success.

Even put as mildly as Avoitz could, it sounds like layoffs will be significant. “These changes will occur at every level of our company, from my direct reports to our factory employees,” he wrote.

According to a Bloomberg report citing people familiar with the matter, the layoffs will impact roughly 1,000 employees, about half of the company.

Magic Leap is, by all accounts, one of the biggest startups—not just in AR, but all of tech—having raised some $2.6 billion in capital. When it launched its AR headset in 2018, the company seemed to expect that the $2,300 take off like a rocket ship. The company hasn’t announced sales figures, but various reports suggest they were far below the company’s expectations.

AT&T and Magic Leap Partnership is All About 5G, While Selling a $2,300 Headset Without It

Magic Leap pitched its first headset as a “Creator Edition” device in an attempt to straddle the line between developer and consumer. With such a high price and little practical value out of the box, consumers seemed to have largely steered clear. Afterward, Magic Leap’s ambitious vision of a world infused with its headsets seemed to have shifted to its unannounced next-gen headset, Magic Leap 2.

Photo by Road to VR

Abovitz noted that Magic Leap 2 is still the goal, but in the meantime the company will need to become much more lean and focus on enterprise to have enough runway to reach Magic Leap 2.

Adapting our company to these new market realities and our increased focus on enterprise means we must align our efforts to focus on the areas of our business that advance our technology, ensure delivery of Magic Leap 2, and expand product-market fit and revenue generation. This transformation also means that we must decrease investments in areas where the market has been slower to develop, providing us with a longer runway while retaining the ability to explore and build on future use cases when the market signals readiness.

Prior to the layoffs, Magic Leap was already pivoting toward enterprise, and it was reported last month that the company was looking for a buyer, which may have been an effort to avoid today’s layoff announcement.

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Ben is the world's most senior professional analyst solely dedicated to the XR industry, having founded Road to VR in 2011—a year before the Oculus Kickstarter sparked a resurgence that led to the modern XR landscape. He has authored more than 3,000 articles chronicling the evolution of the XR industry over more than a decade. With that unique perspective, Ben has been consistently recognized as one of the most influential voices in XR, giving keynotes and joining panel and podcast discussions at key industry events. He is a self-described "journalist and analyst, not evangelist."
  • Great device to experiment with, but very little practical use at moment, if purchasing it would have to be Hololens 2?

  • Abovitz may say that it is the fault of current economic conditions, but the struggle of ML has begun much before the coronavirus. It is the result of a stupid strategy of targeting the consumers with a device for innovators.

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    • NooYawker

      It was actually a brilliant strategy. He made himself millions. The product… not so much. It never had a chance, consumer grade AR is years away.

      • dk

        nreal is a great headset for not too much money …out this or next year
        facebook/oculus is working in a headset what will be demoed this year might be out the end of 2021 or 22
        apple glass might be announced this year and sold in 2021 or 22 if there r no problems …but that will be somewhat limited but will popularize ar glasses

        • Johnny Comelately

          Apple Glass? Like that dumb rumor that dude made up is actually real. So sad that people will believe anything written down as a legit article, whether it is or not

          • dk

            he is a legit leaker guy if he is wrong someone is intentionally bating him …but he was saying he did see it in person

            yes it could be wrong it’s not verified …and it’s nothing concrete it might be announced this year and might be released 2021 or 22 or even later

            …a second source is needed but everything fits

            ….also it will be mostly just a better google glass (with 2 lenses)/smartwatch for your face than a proper ar headset but it will popularize wearing tech on your face

  • eckehard

    Schade – das wird vermutlich das Ende sein – Microsoft will auch keine Consumer-AR – bleibt eigentlich nur noch Nreal … ??

  • Adderstone VR

    Hopefully this charade can end now

  • brandon9271

    I’m not the slightest bit surprised nor do I really care. It’s been an overly-hyped shit-show from the start.

  • Rudl Za Vedno

    It’s the same story everywhere you look. I’m afraid this corona thing means great setback for VR consumer market development. Retail VR is a luxury product and in times of recession/depression these products tend not to sell well if at all. That equals in jobs being lost.

    • Foreign Devil

      Quite the opposite. LOckdowns and video meetings should be a huge boon for VR developments.

  • Ted Joseph

    The tech demos online looked promising for this device, but unfortunately, most people I speak to (including myself) want a more lightweight set of AR glasses, and wont purchasing anything until this happens. I understand this tech may have been more geared towards the commercial industry, but as we can see, the sales in that market are not enough to keep this company’s cash flow strong. Hopefully Facebook, Apple, or Amazon come up with the AR device we want to use on a daily basis…

  • MosBen

    I know someone who is affected by this. It’s a real bummer. AR has always felt to me like it’s just a bit ahead of where the tech actually is. In 5 years maybe we’ll have an impressive AR device that is useful to people. It just seemed like the tech is good enough to be tantalizing but not good enough to come out of the research stage.

    • I don’t expect to see what we may visualize as “AR glasses” until 2030’s, there are huge technical challenges to overcome first which will burn alot more venture capital…

      From Bill Gates himself:

      “We always overestimate the change that will occur in the next two years and underestimate the change that will occur in the next ten.”

    • kontis

      Facebook had a plan to release the perfect smartglasses in 2025 when they acquired Oculus.

      Now they changed this and admit it may not happen in the next 10 years, because even the most cutting edge experimental prototypes in labs worth millions per unit are not good enough, so the assumption is 2030+ for the magical breakthroughs to hopefully somehow happen.

      As always these 10 years deadlines are indicators of “we have absolutely no idea”.

      VR gaming will be quite amazing by that time…

      • NooYawker

        I think Apple’s approach to use a smartphone to power the glasses is what we’ll get in the next few years. Everyone has a smartphone. Putting a cpu in the glasses just doesn’t seem feasible for many years.

        • Anfronie

          I’m not a fan of apple but this approach is correct in my opinion.

  • Cragheart

    Such a bulky and expensive device won’t ever find mass consumer acceptance. I am surprised that AR glasses don’t use lasers shining light directly onto retinas. Seems like technooptimists were too optimistic about AR future. I really hope there will be something worth the money in the next 5 years.

    • kontis

      I am surprised that AR glasses don’t use lasers shining light directly onto retinas.

      Because VRD still has problems that weren’t solved in the last 2 decades.
      And no, it does not magically solve the bulkiness problem. Lasers cannot be magically bent. Large FOV needs large eye piece.

      • silvaring

        Wait a minute, is North not a thing suddenly?

        • Ben Bega

          Tiny fov, horrible eyebox, bad resolution/general quality

      • Hivemind9000

        There are lasers that can be bent (fiber lasers) and I think it was part of one of the retinal display patents that Magic Leap hold, but I don’t think that is the primary issue with bulk and cost. The “rendering” mechanics, where the laser has to draw across the retina, seems to be one of the big challenges, both technically (precision, speed, resolution) and from the weight/cost perspective. Not sure we’ll see anything in this arena for some time yet (except as lab-based demonstrations).

    • bud01

      Well their road map either officially or non officially will take into account devices such as the Roswell Contact lens as a final ideal best case, slow and steady for the win.

  • Ardra Diva

    it’s like watching an episode of Silicon Valley on HBO

    • silvaring

      I can just imagine Abovitz walking into board room meetings with little animals to use as metaphors… just like Gavin Belson.

  • sfmike

    This company has always been a money laundering operation to funnel 2.6 billion of investment into the upper managements pockets. If we weren’t living in a corrupt country this kind of investor abuse would be investigated.

    • kontis

      They actually had sophisticated tech demos years ago that blew many minds, but they couldn’t turn them into mass manufactured sleek products.

      So, these investment weren’t based on nothing. They actually showed amazing things to investors, but maybe weren’t honest about them.

      • Ex employee

        Sadly, but true. Because manufacturing was kept as hostage for few incompetent directors and managers with no vision, or creative thinking skills. They ran a billion dollars business like a used auto repair garage.

      • Erilis

        that doesn’t seem legal. The bait and switch.

  • ILoveQueens

    Great tech, great engineers, but again, another proof of easy money in the valley. ML will go down the hall of shame with the likes of WeWork and Theranos, etc. I hope all the laid off engineers start their own companies and bring all the expertise to a more realistic business model. Terrible time to be laid off. Best of luck.

  • cataflic

    I don’t know if in an obscure secret laboratory somone is now “cooking” the perfect ar hmd, but this magic has no more magic at all.
    They can again and again fulfill their pockets with founders money, but this is the only real thing that I see beyond this company.

  • JesuSaveSouls

    That’s a huge bailout and hope they can attract their product to their targeted audience.They need to market to the public and have a reasonable price point meeting oculus in competition with their 400 price point,Toys in excess of 1000-3000 is really ridiculous.

  • sfmike

    Not much tech to show for 2.6 billion raised in capital. How much of this has gone into CEO bonuses and as the average Magic Leap executive compensation is $228,972 a year it’s a wonder they can still find suckers to invest. Why the tech sector has a bad reputation.

    • brandon9271

      Some folks got rich off of this but I’d easily wager that ML will NEVER become a consumer product before the company folds.

  • flamaest

    At the rate these guys burn cash, they’ll be out of business in a couple weeks.

  • Marc-André Désilets

    This is ridiculous, this company has always been over valued. Over promise, under deliver.

  • Hivemind9000

    Should have made the cuts regardless of whether they got the money or not. These tech companies don’t seem to subscribe to the lean startup philosophy. I mean 2,000 employees doing what exactly?

    Fools and their money…

  • kaaput

    If I was a rich man I would have paid them too
    A big fan of optical waveguide tech.

  • mfx

    LOL, they found some -naive- persons apparently.

    • Erilis

      naive indeed, but it’s the US government probably and their pledge to support businesses so they won’t do layoffs during the pandemic. Little do they know this layoff had nothing to do with the pandemic, and it’s all in their own making

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  • Jade Lee

    Or he s a pedophile and on house arrest Why does a company take in 350 BILLION DOLLARS for what ??????!!!!!!