“Is Magic Leap the next Theranos?” seems to be the question everyone’s been asking in tech circles since tech news site The Information published a report about Magic Leap on Thursday.
For those not familiar, Magic Leap is a secretive, Florida-based company working on a what it calls “mixed reality” technology. It has raised millions of dollars from the likes of Google, but so far it has only published a couple of video of what looks like sci-fi technology overlaying animations on the real world. But at least one of the videos was created using computer animations instead of Magic Leap’s actual technology, according to The Information. That fact, and others pointed out in the article, raise questions about whether the company overhyped its still-unfinished technology.
Theranos, meanwhile, is a Silicon Valley blood-testing company, and over a year ago, a series of reports from the Wall Street Journal called into question its technology and claims. This resulted in lawsuits, government investigations, a ban on its founder from running another lab for two years.
The temptation to compare the two is easy to see. Secret technology, massive amounts of funding, big visions, unproven technology—and public claims that may not match reality. There’s certainly something uncomfortable about this.
Still, there’s a major difference between the two, and it comes down to fraud. Theranos misled the public about the technology it was using on patients, and even when it did use its proprietary technology, the company reportedly overstated its accuracy to regulators. And a few months ago, it voided two years worth of test results.
Magic Leap, on the other hand, has yet to release a product. It’s definitely concerning that it produced a whiz-bang promotional video that failed to show its own technology. But it wasn’t for marketing a specific product (if so, customers would have easily figured out that the product didn’t work as advertised), and it didn’t endanger anyone’s health. Sure investors may be having second thoughts, but venture capitalists are in the business of putting money into risky technology that could be a huge success or never make it out of the lab.
But that still leaves us to grapple with Silicon Valley’s culture of hype. Where is the line between zealous marketing and deception?
The press along with entrepreneurs and their investors will likely always disagree on an answer—after all, they have different prioritizes. Personally, I’d argue that when things veer into potentially hurting people (their health, livelihood, and so on), it might be time to come clean.
Kia Kokalitcheva
This is the Startup Sunday edition of Data Sheet, Fortune’s daily tech newsletter, edited by reporter Kia Kokalitcheva. You may reach me via Twitter, email, or an entirely new platform that your startup developed. Feedback welcome.
Everyone's Talking About
Brandless. The company's approach to consumer packaged goods is to manufacture and sell its own, all for the same price, and offer fewer options for each item—just one type of olive oil instead of five, for example. Founded by Sherpa Capital investor Tina Sharkey and serial entrepreneur Ido Leffler, Brandless recently raised $16 million in funding led by Redpoint Ventures, with Cowboy Ventures, Slow Capital, and Sherpa Capital also participating. (Fortune)
Unicorn Watch
Airbnb now offers 1 million listings via “instant booking.” The home-sharing company touted this service as one way to help curb discrimination of guests on its website. (Fortune)
GitHub cuts sales staff. The online code-hosting company has laid off 30 employees (less than 5% of its workforce) as it refocuses its sales efforts. (Fortune)
Snapchat and Turner expand their partnership. Turner, which has been working with Snapchat since 2015, will create original video series exclusively for the ephemeral messaging app. (Reuters)
The Week in Startups
Online Used Car Startup Beepi Just Made a Major Pivot (Fortune)
There’s Now a Way for Tech Startups to Do Business With NFL Players (Fortune)
Yik Yak Lays Off 60% of Employees as Growth Collapses (The Verge)
Google’s Former Car Guru Chris Urmson Is Working on His Own Self-Driving Company (Recode)
Here’s Why E-Commerce App Wish Raised $1 Billion in Two Years (Recode)
Delivery Hero Acquires Rocket Internet-Backed Startup Foodpanda (Bloomberg)
Breather Expanding Its Urban On-Demand Spaces (Wall Street Journal)
SnapLogic Snaps Up Another $40 Million (TechCrunch)
Johnson & Johnson and HAX Team to Foster Health Device Hardware Development (TechCrunch)
Osmo Raises $24 Million From Sesame, Mattel and Other Big Names in Toys and Education (TechCrunch)
Words of Wisdom
"And there’s only one right thing to do. You help people pack, and that is the hardest thing anyone can do. Your stress level is high, and you just want to hang out in your office and wait for everyone to leave."—PayPal and Affirm co-founder Max Levchin, on the right way to handle layoffs as a manager. (New York Times)
