Meta Platforms – Cash not Limitless

Looks like an acqui-hire

• Meta is acquiring a company that makes yet another AI pin, which Meta thinks will help it to dominate the evolving AI ecosystem, but history is pointing to an acqui-hire rather than a financial exit.
• Meta is acquiring Limitless for an undisclosed amount that I suspect is far less than the $397m valuation at which the company raised money in 2023, as life has been pretty rocky since that heady day.
• I suspect that this is an acqui-hire rather than an exit, as a public company has to declare the size of a meaningful transaction, and no details are being given, leading me to think that the price might have been zero.
• The fact that all of the company’s current activities are being immediately sunsetted, and existing device support being ended in 12 months, is yet another clue.
• Limitless started life as an app called Rewind AI for the Mac that recorded the activity on the screen that could be searched, but it had a strong privacy and local storage promise.
• Then in 2024, hot off the back of raising $33m at $397m, it pivoted to become Limitless, making yet another AI Pin similar to the Humane AI Pin and the Rabbit R1.
• This was around the time that this seemed like a good idea, and before the reality set in that this is much harder than it looks, and before Humane and Rabbit went out of business.
• It is fairly clear to me that Limitless has suffered with similar issues, as there have been shipping delays (implying working capital problems), hallucinations damaging the user experience, and the fact that Meta has immediately shut its products down makes it fairly clear what the real story is.
• Hence, the only credible comment that Limitless makes in its acquisition statement is the shared belief in AI-powered devices offering a new digital experience outside of the smartphone.
• AI engineers are in pretty short supply at the moment and so any talent that exists within Limitless will be rapidly deployed elsewhere.
• However, I suspect that there is some overlap with what Limitless was trying to accomplish and the Meta AI glasses, and so I suspect that the assets will be redeployed in this area.
• Given that the product has been immediately terminated, I don’t think it will be a pin, but it is a sign that Meta will be testing to see if its success in smart glasses can be replicated elsewhere.
• This reinforces the view that the nature of this market has changed from being derived from VR to a product that is a smartphone accessory that gradually gets better until it can stand on its own two feet.
• Hence, I think this does not affect the trajectory of Meta’s strategy to be a major player in the next ecosystem, but it may accelerate the diversification into other areas.
• Alternatively, it could simply be an opportunity to acquire some AI talent on the cheap, which further increases my scepticism about the device that OpenAI is working on.
• This is also looking somewhat questionable given the sudden refocusing on ChatGPT to keep Google in check.
• Of the two, Google remains by far the most attractive if one were looking for a large-cap technology play on AI.