Heavy layoffs confirmed at Kiwi-American startup 8i

8i co-founder Linc Gasking alleged Sebastian Marino stole confidential information.

UPDATE Dec 19: 8i has now confirmed it will lay make deep job cuts.

In a statement to Variety, which picked up on NBR's exclusive last week, the Kiwi-American VR hologram company says up to half of its staff will go in a restructure (8i told the Hollywood trade title it has 70 staff; it told NBR 80).

Consultation continues. The redundancies are due to be finalised mid-way through next week.

EARLIER Dec 13: Staff brace for restructure at 8i
About 80 staff at virtual reality software startup 8i are bracing for a restructure, which is expected to be finalised early next week.

NBR understands layoffs are on the cards at the company's offices, which are split across LA and Wellington, as 8i repositions.

The company’s vice-president of engineering, Owen Evans, announced his departure on social media overnight.

Mr Evans would not comment, referring queries to 8i’s head of communications, who also declined to comment.

Sources say the shape of the restructure is yet to be finalised – but cuts could run deep.

Big name-backers
The three-year-old company raised $US27 million ($NZ37.6 million) earlier this year in a Series B round supported by Time Warner and a number of celebrity investors, including actor Ashton Kutcher and Madonna's manager, Guy Oseary.

That took its total funding to $US41 million following a Series A round in 2015 that included RRE Ventures, Founders Fund Science, Horizons Ventures, Samsung Ventures, Dolby Family Ventures, Bertelsmann Digital Media Investments, Sound Ventures, Signia Venture Partners, Inevitable Ventures, Freelands and Advancit Capital. Earlier seed investors included Ice Angels.

8i’s technology allows a customer to create a “hologram” or 3D volumetric representation of a person so, when you’re wearing augmented reality or virtual reality goggles, it feels as if they’re in the same room.

The company has big ambitions but, at the moment, like other VR/AR startups, it faces a market that’s been relatively slow to adopt VR and AR headsets that allow its software to be viewed.

Legal dispute
A falling out between 8i co-founders Linc Gasking and Sebastian Marino has also complicated matters.

Mr Gasking alleged Mr Marino stole confidential information and breached a non-compete clause when he left to found Uncorporeal Systems in 2015.

Mr Marino – who argued 8i can’t penalise him because the company itself is in breach of contract for failing to pay him money he says is due – gained the upper hand in a preliminary Employment Court hearing in June, setting the stage for the case to go to a full hearing.

This morning, Mr Marino said he could not comment. NBR understands the case has now been resolved amicably.

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US$41 million invested in 8i and it looks like it has not delivered and if scaling back maybe a serious re-think on the opportunity and capability.

I don't think NZ has the capital base to play in this game at the level probably required, and if people were totally honest we probably do not "lead" the world in innovation in this or most sectors.

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The HTC Vive is the first really great consumer VR experience and I highly recommend for anybody to try it properly at home. Buy one and spend some time using it before you judge it. I bought one on release and have come to the conclusion that the tech is ready but the software and eco system are lacking. There is no 'killer app' that drives it's adoption yet, but there will be and that is what companies like 8i are in business to do.

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don't think any of the US backers expected this to make money... simply did it for the option value and/or a ticket to learn i.e. quite helpful in building a knowledge bank of where/when the breakout company may come from

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Raised $27m a few months ago and now needs to lay off 35 people?
Something doesn’t add up here.

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The obvious conclusion is that the funding came with strings attached - similar to the funds invested into CricHQ, and they have had the cash flow tightened signifcantly - although obviously not totally turned off.

Maybe also a little commercial reality hitting, in that the "killer" app for this technology is not obvious so it becomes more of a waiting game and trying to hold out until revenues can be created.

I wish them luck, but one suspects that some of the investors will need to take a writedown.

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