Magic Leap Announces Layoffs & Pivot Away From Near-term Consumer Ambitions

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Magic Leap today announced layoffs impacting “every level of the company” and a pivot away from the company’s near-term consumer ambitions and toward the enterprise space.

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.

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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