With the recent news of Tesla considering going private in order to curve speculator concerns, luxury semi-autonomous electrical vehicles are in question. Is it because the technology is not solid enough to attract customer demand? Or because customers are not comfortable giving up the ease of access for gasoline engines ? Or because suppliers are not able to ship materials fast enough for Tesla to manufacture their vehicles? Or is it something else?
I think it’s something else.
The answer may be a lesson learned by studying the history of Tesla and Magic Leap. Both are technology companies, and both have a fundamental issue that’s concerning investors, making their suppliers uneasy, and raising concern from customers.
In case you missed it, in 2014, Magic Leap announced they received $2.3 billion in funding and were backed by Google. Their focus was to build a new product in the AR/VR space. Alongside those exciting announcements, they stated that they would not show any demos or explain what their technology could/couldn’t do for two years. They claimed this decision was because they were giving their engineers time to focus on the ultimate product, and that they already owned all of the IP in their space. They then began to on-board a ton of high-cost talent ranging from engineers to “technology evangelists” to recognizable science fiction authors like Neal Stephenson.
Magic Leap’s technique of creating mysterious “magic” worked until prototype photos leaked in 2017. The world scratched their head. A few billion for a Ghostbusters costume? And still no solid explanation of what their “magic” technology actually does? Sheesh.
Then came reports that Beyonce tried a demo, but she thought it was “boring.” Uh oh.
What Magic Leap and what Tesla have in common has little to do with cutting-edge technology. Rather, what they have in common is that they both make large fluffy technology-based claims to support a “magical” theory that their product solves a problem. Elon Musk’s Instagram account carries the subtle undertone that he is the “most interesting man in the world,” when it should be focused on the impact of Tesla’s products on their customers. Magic Leap’s focus should have been solving a real application’s problem for AR/VR, not spending time with celebrities to stir up PR.
Whatever you call it, Tesla and Magic Leap are two technology companies that are suffering from the same issue. They are not going to be around longer without serious focus on solving a customer problem. And a real one, not a “magic” one.