Can Secretive VR Company Magic Leap Repair Its Reputation?

A little less than a year ago, Magic Leap — the mysterious mixed-reality company from South Florida — was living the startup dream. A handful of YouTube videos demonstrating the wearable that would allow people to view and interact with virtual objects alongside the natural world had wholly enchanted the tech media. Despite the company’s distance from Silicon Valley, major tech figures were filtering through its office to get a peek. And even without a release date for a consumer or developer product, the five-year-old business managed to raise almost $1.4 billion in funding from sources as reputable as Google and Kleiner Perkins.

But, oh, how quickly a startup can tumble from the crest of a wave of success! In December 2016, The Information published a damning report that said the company’s secret weapon wasn’t close to living up to expectations. Up to that point, Magic Leap had been using a hulking, vending-machine-size device known as “the Beast” to perform its mixed-reality demos. Engineers planned to shrink that hardware into something more consumer friendly by using an innovative fiber scanning display that shines a laser through a moving fiber optic cable to conjure images from light. Recently, the inability to make the original idea work forced the company to put that technology on the back burner and focus on a glasses prototype that one reporter says is noticeably worse than Microsoft’s HoloLens — a similar product that’s available to developers for $3,000. The same reporter revealed that one of the company’s thrilling YouTube demos was actually produced by the visual effects studio Weta Workshop.

But that’s not even the bad Magic Leap news that came out this month. Last week we learned that the company’s latest prototype (though Magic Leap labeled it a “test rig”) reportedly looks like it was hastily glue-gunned together by a sixth-grader who forgot about their science fair experiment till the last moment. (This is all according to a reporter who was given a photo of the unit — Magic Leap declined to comment on the report.) It’s no wonder that when the company tried to woo Beyoncé with a mermaid demo, it reportedly “bored” her.

You’d think lack of interest from one of the most compelling performers of our time would be the most damning thing for a business to experience in 2017, and yet. This week, a nasty lawsuit surfaced. Filed by Tannen Campbell, a former employee who says she was hired to increase diversity within the company, the suit claims that the startup harbored a pervasively sexist culture and repeatedly ignored the flagrant misogyny displayed by everyone from an IT worker to high-level male executives. Here are a few allegations from the document:

• The predominantly male team of engineers’ main strategy for making Magic Leap’s product more female-friendly was to offer it in pink.
• An IT support lead told a female employee that “women always have trouble with computers,” and that “in IT we have a saying; stay away from the Three O’s: Orientals, Old People, and Ovaries.” He was not fired despite Campbell’s protests.
• A senior engineer sent out an email to the staff in an effort to organize a social group for spouses titled: “Board (sic) Wives at home while you are loving it at the Leap.”
• The company’s vice president of IT told a group of employees that he voted for Trump “because Melania is hot.”

Within the span of a few months, a company that was formerly seen as cutting edge has been reduced to what feels like an overly valued collection of untalented Redditors. (Magic Leap did not reply to my request for comment on the suit or this characterization.) Is it possible to recover? Considering that Microsoft is already — cruel pun intended — leaps and bounds ahead of the company, seeing as it actually sells something and its product doesn’t look homemade, there may be very little that Magic Leap can do to recover lost ground, techwise. But in terms of reputation, the company has some options. First, Magic Leap should engage in some swift personnel changes that align with the 50-slide PowerPoint presentation Campbell claims in the lawsuit that she created before being fired from the company. It should then go the route of Airbnb, hire a diversity director, and give him or her (preferably her) enough authority to make changes to everything from HR to product design. At least one surface-level problem — the fact that the hiring page on the Magic Leap website is titled “Wizards Wanted” — could be altered immediately. Recruiting language that implies Magic Leap is looking for men with magical powers should be replaced with job descriptions that emphasize equal-opportunity hiring practices and the importance of diversity. It could also publicly announce a partnership with one of the software companies that allows for race- and gender-neutral language when it comes to job descriptions, hiring, and company decision-making.

But let’s be real: Any significant change within Magic Leap is going to require a major shift in culture. That’s something that might not be possible under the leadership of current CEO Rony Abovitz, who Campbell’s complaint describes as a “pouty” leader who surrounds himself with “sycophants” and has threatened retribution when “he didn’t get his way, felt betrayed, or was portrayed publically (sic) in an unfavorable light.” The company boasts a star-studded board of directors, including Alibaba’s Jack Ma, Google’s Sundar Pichai, and Qualcomm’s Paul E. Jacobs (who joined as an observer). If the lawsuit’s discovery phase demonstrates that Campbell’s characterization of Abovitz is accurate, the board members would be wise to try to save their investments (and their own reputations) by lobbying for a new CEO. The man who was once the face of a company that promised awesome technological possibilities is now a poster boy for something much more common: an overvalued company that has jeopardized its success and thwarted innovation by stifling diversity and fostering a retrograde environment.