Rony Abovitz, the CEO of $6.3 billion-valued Augmented Reality (AR) company Magic Leap, is to step down. Mr Abovitz is also the company’s co-founder but has decided to step aside due to stalled progress on bringing AR headsets to the mass market. The company has raised a total of $2.3 billion from investors including Google since it was founded in Florida in 2011. But a series of setbacks mean that it is yet to commercialise its AR technology.
On announcing his decision to allow new leadership to carry the company he co-founded forward, Mr Abovitz stated that there was now “very positive momentum” toward Magic Leap selling its AR offerings to enterprise customers. However, a lack of tangible revenues saw the start-up release 1000 employees last month – around 50% of its workforce. The decision was made as a result of the company reaching the conclusion that it would have to take a step back from ambitions to introduce AR products to the consumer market.
Mr Abovitz’s statement announcing his resignation read:
“I discussed this with the board and we have agreed that now is the time to bring in a new CEO who can help us to commercialise our focused plan for spatial computing in enterprise. We have been actively recruiting candidates for this role and I look forward to sharing more soon.”
He will continue as CEO during the recruitment and transition phase for his replacement and discussions with the board over an ongoing advisory role are ongoing. Despite ultimately reaching the conclusion it was time to step aside and allow new leadership to continue to try and realise his ambition for Magic Leap, the co-founder has been a big personality for the company. The company is closely associated with the unabashed enthusiasm Mr Abovitz has for bringing AR to the mass market.
Magic Leap has done many things well under Mr Abovitz’s leadership, becoming the best funded start-up in the AR space, where it is competing with peers that include Facebook’s Oculus. It achieved a $6.3 billion valuation two years ago after the telecoms group AT&T bought a small minority stake.
However, gaining traction in AR headset sales has proven difficult, with the devices retailing at over $2000. Even a memorable advertisement that featured a whale emerging from a gym floor wasn’t enough to see any major breakthrough in unit sales, despite creating an impression.
That lack of progress came home to roost last month when major job cuts and a pivot in strategy away from the retail market towards enterprise was pinned “decreased availability of capital and the appetite for longer-term investments”.
A sale has even been discussed with Facebook interested before discussions quickly floundered and failed to progress past the preliminary stage. Earlier in May Mr Abovitz announced $350 million in new investment from undisclosed parties that would minimise redundancies.