Google Takes A $542M Magical Leap of Faith

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Yes, you read that right. $542 million. That is a lot of cabbage for the newest (likely) member of the $1B valuation club. The Company is Florida  (and Silicon Valley) startup Magic Leap. And it recently collected that amount from an unprecedented and incredibly interesting collection of prominent investors, most notably, Google, Qualcomm and Legendary Pictures.

To elaborate, Google itself (not Google Venture Capital), VC firms Kleiner Perkins Caufield & Byers and Andreessen Horowitz, private equity firm KKR, film production company Legendary Pictures, and mobile phone chipmaker Qualcomm Inc. poured the $542 million into Magic Leap. Following the move, Google added Sundar Pichai – head of Chrome, Android and Apps – to the startup’s Board of Directors, while Qualcolmm added Paul Jacobs, its Executive Chairman, to the board as an observer. These companies follow in the footsteps of investors that took a $50 million stake in the company during January and February of 2014 when series seed and A shares of stock were sold to develop Magic Leap’s proprietary technology platform.

But what is Magic Leap’s proprietary technology platform? Put simply, no one outside of Magic Leap insiders truly knows, but we can make some guesses certainly from the parties involved or at least try to infer from their likely points of interest.

The company creates “cinematic reality,” innovating ways to “commercialize what we believe will be the most natural and human-friendly wearable computing interface in the world,” as put by CEO and founder Rony Abovitz. In layman’s terms, Magic Leap is improving the technology for virtual reality (VR) and augmented reality (AR), and more relevantly, wearable VR products.

Patents filed by the startup protect “digital light field” technology that projects selectively transparent images at the viewer’s eyes in order to create lifelike images in three-dimensional space that do not disorient the viewer. And that might be enough of its “secret sauce” to differentiate itself from the competition.

Google’s obvious interest in Magic Leap is not surprising given recent actions by Facebook and a quick recall of its core business, which  is organizing information and access to that information. The obvious conceit is that an integration of Magic Leap’s technology with Google Glass would diversify the usefulness and overall appeal of the Glass to its customers. Another obvious conceit is that this is a defensive move against Facebook, in response to Facebook’s $2 billion acquisition of Oculus Rift earlier this year – a VR eye wearable device. Or in other words, a defensive buy to ensure that it has the next major computing platform in its clutches.  But considering that Mr. Pichai was moved to Magic Leap’s board, and that the investment came from Google’s treasury as opposed to Google Capital or Google Ventures, it seems that there is a bit more wood behind this initiative, wood that would signal that this goes far beyond enhancing Google Glass or a defensive action against Facebook. Given his massive role and history at the Company, Pichai’s involvement certainly might imply baking capabilities for Magic Leap’s technology into Chrome OS and Android in ways that creates massive differentiation for its ecosystem and its partners if VR apps, games and experiences take off. Differentiation leads to devices, new wearable devices, devices lead to use, and use leads to data, something Google cares deeply about!

 

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