Takahito Iguchi, CEO of Telepathy Inc., holds a mock-up of the company's Telepathy One wearable device.

Despite Telepathy’s speaking slot at SXSW, appearance on CNN, TEDx talk, $5 million in venture capital funding, Sunnyvale office, and team of qualified engineers, the Telepathy One device is still at about the same stage as it was when the company launched a year ago.

With Telepathy One, the vision goes, people would be able to instantly share their perspectives. They would read instant translations while speaking to someone in another language or get directions to a stadium beamed to a screen above their eyes, all while avoiding the nerdy frames of Google Glass.

According to a recent study by Harvard Business School, about 75 percent of venture-funded startups never return investors’ capital. Ignoring this reality is an entrepreneurial prerequisite.

An employee demonstrates wearing a mock-up of Telepathy Inc.'s Telepathy One.

A press event brought reporters from Fast Company, CNN, Gigaom, The Wall Street Journal, Reuters, Mashable, Cnet, Bloomberg, Business Insider, and Pandodaily. Iguchi wore a track shirt to match the aqua hue of the Telepathy logo. His translator, an actress named Mari Mori, wore a scarf of the same color.

Almost overnight, Telepathy--a startup that at the time had no funding--was named a competitor to a product from a company that had $55.5 billion in revenues last year and has 50,000 employees.

The tech world wanted a Google Glass competitor, and Iguchi was one of the few entrepreneurs optimistic enough to paint a picture of one. “You’re selling the dream,” says Chris Grayson, a former advertising executive, who took the title “Minister of Propaganda” at Telepathy.

The dream is not yet dead: Iguchi recently told the press that the device will be available “this year” and will “expand to global distribution in 2015.”

No Product? No Problem. How Telepathy Hyped Its Way Into Your Heart

In Silicon Valley, vision often trumps reality. That helped one mysterious startup become an overnight "Google Glass competitor."

It’s raining, and commuting to Austin’s Hyatt Regency from the main stage at South by Southwest requires a half-mile walk over a busy overpass. But the topic of a panel assembling on its second floor is enticing enough that every chair in the conference room is full, and latecomers stand in the back. “Next Evolution in Communication: What Will Happen,” the sign in front says. No question mark. This panel implies answers.

Telepathy has assembled an unlikely cast of characters to provide them. In addition to its own “Entrepreneur, Visionary, CEO” (as the panel summary describes him), Takahito Iguchi, there’s a cyber illusionist and MIT Media Lab Director’s Fellow named Marco Tempest, who has prepared a magic show, as well as the founder of a soon-to-be launched startup that makes smart jewelry. The moderator works for an advertising agency Telepathy is friendly with in Japan, where the startup was founded.

And what, exactly, is Telepathy?

When it comes time to introduce himself, Iguchi looks toward a large projector screen above him, where a video his company first published one year ago begins to play. Two smiling young women scoop up bits of chocolate cake, and an animated white line of magic twinkles between them as they turn to each other and smile. A parade of feel-good staples follow, including twin toddlers, young lovers holding hands for the first time, an older couple sharing tea, and a mother with her baby. Every pair is connected by the same cartoon magic that sparkled over the cake. The video ends with its only dialogue, “Wear your love: Telepathy,” and is then replaced with a photo of Iguchi with a cartoon thought bubble doodled above him. “No glass,” it says.

Iguchi himself is slouching into a leather chair onstage in crop pants and a black beanie. “Thank you for your patience,” he begins, his translator perched on a stool above him. “We established our company last year.” His final sentence isn’t clear, and most people in the audience probably feel they’ve missed the explanation of the device that appeared only briefly in the video.

What they don’t know is that many of the company’s own employees aren’t quite sure what this device will look like.

Despite Telepathy’s speaking slot at SXSW, appearance on CNN, TEDx talk, $5 million in venture capital funding, Sunnyvale office, and team of qualified engineers, the Telepathy One device is at about the same stage as it was when the company launched a year ago. Which is to say, it is a sparsely functional prototype paired with a big vision: To make “social communication as fast, easy, and natural as listening to music on a portable device,” as one of the company’s first press releases promised, with a small screen hovering discretely over one eye so that “the user is able to wear Telepathy One everywhere, truly making it indispensable for the new generation of social communication scenarios.” With Telepathy One, the vision goes, people would be able to instantly share their perspectives. They would read instant translations while speaking to someone in another language or get directions to a stadium beamed to a screen above their eyes, all while avoiding the nerdy frames of Google Glass.

Telepathy One

How Telepathy would actually manufacture its vision was a question that had not been answered. Or, for that matter, even really asked.

According to a recent study by Harvard Business School, about 75% of venture-funded startups never return investors’ capital. Ignoring this reality is an entrepreneurial prerequisite. “A founder is somebody who sees things that other people don’t,” says Steve Blank, a serial entrepreneur and author who is credited with helping to launch the Lean Startup movement. “Most of the time you’re thinking you’re a visionary, but the facts on the table say that about 90% of the time, you’re actually hallucinating.”

This relentless pursuit of a vision is arguably both the worst and best aspect of startup culture. It is what allowed Color, based on little more than its founder’s reputation, to raise $41 million for an app before it launched; It allowed Clinkle, a startup promising to “start a revolution” with its payment app, to raise $30 million without a product; and it's what powers not one, but more than 10 startups that offer to collect and deliver your laundry. It often results in vaporware. But that same vision also enables a sexy makeover for a gadget as seemingly boring as a thermostat or another stab at virtual reality after the concept has repeatedly failed in the past. Sometimes, as was the case with both Nest and Oculus, it can net stakeholders billions of dollars.

As venture capital funds creak back to their pre-2008 levels and crowdfunding platforms like Kickstarter and Indiegogo open new floodgates of funding for projects still in progress, it is this optimism against odds that keeps visionaries in demand. Whether or not they can execute on that vision is, in some cases, still an afterthought.


An employee demonstrates wearing a mock-up of Telepathy Inc.'s Telepathy One.Photo by Tomohiro Ohsumi, Bloomberg, Getty Images

The most important thing to understand about how Telepathy became a Google Glass competitor is that it did nothing particularly unusual.

Startups so frequently drum up press and buzz before they actually produce a product that a whole genre of startups like LaunchRock, Prefinery, and KickoffLabs have built services, for other startups, that sign-up users before launch. Equivalent services for hardware, like Celery, manage preorders for devices that aren’t yet ready to be shipped. It’s still somewhat unclear if Google Glass itself is a product or an experiment.

The tech world isn’t just willing to play ball with products that haven’t been fully developed. Startups are encouraged to work this way. In the highly evangelized “lean startup” strategy, the goal is to introduce unfinished minimum viable products (MVPs) so that user feedback can be incorporated into the development process. It’s a strategy that saves new companies the work of perfecting details if their main idea is flawed, and it has worked for Iguchi in the past.

“Let’s take a walk with my SekaiCamera!” he told the crowd at TechCrunch 50 (now TechCrunch Disrupt) in 2008, before debuting his software startup Tonchidot. The presentation is now available on YouTube.

Though the conference doesn’t usually allow for video demos, it has made an exception for his language barrier. Iguchi narrates a video of an app that seems to magically tag anything a cell phone camera points at—buildings, a phone display, restaurants—with an augmented reality overlay that provides information about it. As the demo ends, he points both index fingers in the air and flashes a peace sign as the audience applauds.

The judges are smitten. “I think we have a crowd favorite,” narrates the MC. But there is just one thing. “We’ve all been imaging this or fantasizing about it for years,” one judge asks. “The question is, can you build it? And the question is, are you building it the right way? You have to tell us how you’re going to build it.” Would the app use a database? Or would it rely on users to build a database? How, exactly, would this work?

Iguchi doesn’t hesitate. “Please imagine,” he says. “Please join us. It is a frontier . . . please don’t forget imagination.”

The audience finds this response hilarious, and Iguchi is in on the joke as he proceeds to answer the remaining questions in the same tone. By the time the session is over, even the judges are laughing so hard they have difficulty speaking into their microphones. TechCrunch posted the video, entitled the video “Super-funny, hilarious Q&A with tonchidot,” and noted that “it is [sic] captures how Iguchi had the audience, and even the skeptical judges, eating out of his hand, despite a limited grasp of English.”

Tochnidot went on to raise $16 million. It had, according to Iguchi, 3 million downloads before it realized that Japan wasn’t quite ready for AR. The company hired a new CEO and shut the app down in January 2014.

It didn’t end with a wild success. But it was a preview of how far Iguchi could go with some charisma and a big vision—even before all the answers were quite figured out yet—and a demonstration of what it takes to become a technology personality. Which, at least in Japan, is what Iguchi became. “He doesn’t really fit in with the typical Japanese businessman mold where he wears a suit and tie,” says Brendan Pierce, who worked at Telepathy as a product designer. “He’s got long hair, and he’s very fashionable.” A philosopher by degree, Iguchi often points out the deeper human impact of his technology products. Seiki Camera, for instance, wouldn’t just give its users a convenient way to see data about buildings nearby, but “a new interface between the real world and the virtual world.” And when he launched his first hardware startup, just as Seiki Camera was shutting down, it wouldn’t just be a tiny video screen that hovered over one eye, but a device that could “strengthen personal bonds and [help us] interact more closely with one another.”

Iguchi began working with design firms on the first prototype of Telepathy’s device, Telepathy One, in December 2013. By January he had launched a company. And by March, he was preparing to debut early versions of the product at SXSW.

Japan Edition of Forbes cover

The first prototype, which attached to its wearer’s head only by its ear buds, looked like a slim shining halo. Created by Japanese design shop “the design labo,” it was the model that would later show up on the cover of the Japanese edition of Forbes and be shown on stage at a TEDx event. But it had no technical capabilities. The second prototype was a bulkier version of the first, created by another Japanese firm called YUKAI Engineering. It had a small screen extending over one eye that played video from a Bluetooth-connected phone. It was possible, if you balanced the device in your ear canals just right, to see the video, but there was no functioning sound, camera, or controls.

In a public letter to the science fiction writer Bruce Sterling, Iguchi announced his plans. “At last, in 2013,” he wrote, “real mankind has made a first step to the fantasy world you have dreamed of. At the SXSW 2013 Interactive, in Austin, next digital age would [sic] start with the monumental presentation.”


According to a press release on the Telepathy website, the company’s demo booth at SXSW had started “to send shock waves around the world.”

In reality, Iguchi was hoping that those waves might be a bit bigger.

So he contacted Chris Grayson, a former advertising executive he had met at a wearable device conference a few years prior, and asked him to set up a press conference in New York City. Grayson had no experience with public relations, but he wanted to work with wearable devices. “An opportunity presented itself, and I jumped all over it,” he says. “I knew we basically had a display and an idea. But if we got funded, I was in 110%. And that’s the only way you ever build anything.“

By searching LinkedIn, Grayson came up with a list of about 80 reporters who might be interested in Telepathy. A few Google searches produced an email address for someone, anyone, at their respective outlets—the blueprints for turning their names into email addresses—and a few emails later, Grayson had a respectable press attendance that included Fast Company, CNN, Gigaom, the Wall Street Journal, Mashable, CNET, Entrepreneur Magazine, the Harvard Business Review, Business Insider, and PandoDaily.

Iguchi wore a track shirt to match the aqua hue of the Telepathy logo. His translator, an actress and model named Mari Mori, wore a scarf of the same color, and Grayson wore a shirt with matching pinstripes. Everywhere there were cameras: both those that the press brought to capture the demo and those that Grayson had asked to capture the press capturing the demo. “Have you ever wished that you had a Telepathy?” Iguchi began in broken English. “I think people can better understand each other if we had Telepathy. With Telepathy, you get to know when someone needs love, help, and encouragement. With Telepathy, we can make people happier. Wear your love. This is exactly what we want to bring to you with the Telepathy One.”

Iguchi and his translator, Mari Mori, at the press conference in New York City.

Neither the video nor Iguchi’s speech had given much indication of what the device was like, and naturally there were questions.

How would the device be controlled? Were there buttons? Hand gestures? Verbal cues?

That was still in development.

Would there be an app to accompany it?

Maybe.

How would Telepathy deal with privacy issues?

Maybe you all could write positive articles to help with that.

How much would it cost?

Less than Google glass.

When would it be available?

Before Google Glass. Christmas 2013.

Never mind that Telepathy’s prototypes were still an empty piece of plastic and an awkwardly situated Bluetooth-connected video screen that displayed content from one app (Manga Camera, a popular app in Japan that transforms photos into cartoons). Never mind that it had little hope of beating Glass to market. Almost overnight, Telepathy—a startup that at the time had announced no funding—was named a competitor to a product from a company that had $55.5 billion in revenues last year and has 50,000 employees. “A Google Glass Rival Emerges from an Upstart in Japan,” Gigaom announced. "Telepathy One Aims to Compete with Google Glass," CNET echoed. “Google Glass Competitor ‘Telepathy’ Aims to Get to Market First,” wrote Mashable.

“Usually we have the product and then we get the hype and media attention, but in this case, it was before that,” says Albin Takami, who was a system architect and design engineer for Telepathy at the time. “Anything that was similar to Google Glass got a lot of attention. If this was something else, then we probably wouldn’t have gotten so much media attention.”

It wasn’t that these media outlets didn’t realize that there were more questions than answers about Telepathy. “Details about cost and streaming services are scant (there's not yet a concrete method of turning the streaming on and off),” Mashable wrote. “They’re still sourcing suppliers for the components, and haven’t advanced enough to be able to give an estimated price on it (other than it’ll be cheaper than what Google is charging developers for Google Glass) or battery life time yet,” Gigaom cautioned, adding, “There’s also a lot of planned functionality in the device that the team talked about but wasn’t even remotely there yet, like planned interfaces using audio, gesture, and touch (difficult things that are hard to get right).”

Still, this burst of coverage gave Telepathy a sheen of legitimacy that would snowball into major media outlets. Bloomberg TV ran a segment about Telepathy in May. Then CNN and Reuters both posted them in June.

The tech world wanted a Google Glass competitor, and Iguchi was one of the few entrepreneurs optimistic enough to paint a picture of one. “You’re selling the dream,” says Grayson, who shortly after the event took the title “Minister of Propaganda” at Telepathy. “That’s what you do. Then you have to turn that into some sort of reality.”


For a while, it seemed like Telepathy might just pull it off.

Even though the device was in its early stages, some investors believed in its vision. “I think he’s a visionary,” says Dennis Paul, a co-founder of the THYRA Global Technology Fund, about Iguchi. “I think that what he’s envisioning, in terms of a device and where it sits, and how you view it when you want to view it and turn away from it when you don’t want to view it, I think there’s something really powerful.” Paul didn’t invest, but he gave the team positive feedback.

In July, the company incorporated in Sunnyvale (it already had offices in Tokyo), and in August, it announced Firsthand Technology Value Fund had invested $5 million. When I called the fund’s president, Kevin Landis, in August, he didn’t seem to have any more answers about the product than Iguchi had given at the press event three months earlier. But Telepathy now theoretically had the money to find those answers (even on what passes for pocket change in venture capital), and the anticipated launch date had gotten slightly more realistic. Instead of planning to go to market by Christmas 2013, Iguchi now promised “we will be launching a product in 2014, by hook or by crook.”

Landis did not respond to requests to comment for this article, but Paul says as an investor he was impressed with a partnership Telepathy had with Hitachi to develop the camera module. “It seemed to me to be entirely feasible to produce,” he said.

As additional press rolled out around the funding, filling the Sunnyvale office with a first-class team also looked within reach. “Boom!” Grayson says of the funding announcement, “Suddenly people were throwing resumes at us.”

New team members got to work designing circuit boards and an interface. An event planner named Judith Currin was dispatched to Austin to scout locations for a launch party. She signed a contract for office space where Telepathy could host demos, lined up a local artist to make the space visually interesting and found multiple potential venues for the big evening bash. A developer began creating a reservation system that would blast SMS messages to conference attendees on a waiting list as slots for demos opened up.

When vendors asked for specifics, Currin explained the device as “like Google Glass without the glasses.”

But what the device would look like was a work in progress. Prototypes based on the original design concepts weren't getting stellar feedback, and Telepathy had hired two American design firms and one Japanese design firm to propose alternate designs.

Meanwhile, Iguchi kept showing the original design concepts to press. In October, the Guardian ran an article headlined, “Takahito Iguchi: the visionary who sees beyond Google Glass” based on them. And in September, Iguchi took the stage at TEDx Kyoto with the completely non-functional plastic prototype perched on a pillar beside him. “You can understand and communicate each others’ stories, instantly,” He told the audience, after asking them to imagine the Olympics coming to Japan. “Find your favorite soccer players’ fans in Tokyo. You can be a friend very easily. And the direction to the stadium will be easy. The navigation will pop up in front of your eye. All the games, soccer players’ profile will be popping up. You can watch the game from the viewpoint of athlete, coach, referee or anyone in the stadium. The scene you will be looking at and the sound from the game, you can share them with your intimate persons in real time. Walking in the Tokyo subway, you give people high-five. Just by a wink. And give them hug. These kinds of miracle moments will happen even if you don’t know them but you can understand. You can share—you can share your inspiration at that moment. We are developing the telepathy one right now. That device can offer same moments like these.”

“This is the Telepathy One,” he said, delicately lifting the thin, shiny prototype off of its black plush pillow and plugging it into his ears. “You wear it like this.”

The device was not one of the functional prototypes the Telepathy team had been working on in Sunnyvale, but the plastic halo model debuted at Telepathy’s first press event. It still had none of the capabilities Iguchi had outlined moments before.

Just as Telepathy was not unusual in seeking buzz before it had a product, Telepathy was not unusual in being behind schedule. According to a recent study from the Wharton School of Business, 75% of Kickstarter projects deliver their projects to backers later than expected. Pebble, Oculus Rift and Twine are just a few technology endeavors that missed their deadlines only to eventually deliver successful products. So even though, at times, Telepathy’s employees didn’t know exactly what they were supposed to be working on, even though the Japanese and Sunnyvale teams sometimes clashed in their expectations about how to develop a product, Telepathy was starting to feel like a startup. There were bonding events with go carts. Team dinners. And all the drama of being a small team up against a giant company. “Let’s celebrate next year’s Christmas with huge smiles on our faces,” Iguchi told his employees in a blog post at the end of the year, “with a glorious cheer and toast to our success having surpassed Glass.”


It looked like, in one former employee’s description of it, “a proctologist’s endoscope.” Instead of a halo that could be worn over the head, it was made from the type of metal tube that makes a desk lamp adjustable and wrapped around the back of the neck. On one end, there was a video and camera module that could be lifted to the eye for a sharing experience. The whole thing could be warn around the neck like a necklace when not in use. Iguchi argued that it was easier to store. But it also didn't seem plausible. “There was nothing to hold it onto your head,” Pierce explains. “We could have made an ugly looking earpiece to hold it on or made a loop that sits on your head, kind of like an earphone loop, and clip on, but it would completely destroy the look of the product.”

To the dismay of many of his employees, this was the new design Iguchi introduced in December. Referred to internally as “Snake,” it looked nothing like what he had worn on the cover of Forbes Japan. Some voiced their concerns about its feasibility, but Iguchi wouldn’t budge. He was, after all, the visionary. And this was his vision.

Instead of arriving at SXSW with working prototypes that could be demoed to the public at a large event, an ambitious goal to begin with, the company fired its party planner and showed up at the offices they had rented with a rough working prototype, more slick design prototypes, and an app that shared photos to show a few potential investors. “I feel that this design creation process was like Don Quixote’s reckless adventure or swimming in the dark with no shore in sight.” Iguchi wrote in a Medium post about the switch. “Telepathy has been able to push past this darkness and the feeling of success is now palpable.”

Several members of his team were not registering the same feeling.

“There was a lot of build up of the company before there was an actual concrete idea or a concrete product to build it around,” Pierce says. “The vision was to have something that was a wearable camera that you could share your experience with your friends. It was the architecture that was causing the challenges.”

While the marketing team was at SXSW, Pierce and a few others stayed behind in Sunnyvale to deal with the less sunny side of a system that allows a product to seem successful before it exists. They needed to figure out how to make the vision of Telepathy One that had gotten so many people excited into a reality they would actually buy.

Every audacious Silicon Valley promise gets to this point. Sometimes, it results in an “iPod of thermostats” called Nest or an affordable VR headset. Sometimes it changes the world. Other times, the enticing vision ends up creating something more like Instacube, a widely heralded Kickstarter project that promised to change the nature of the photograph, but ultimately only ever produced a SXSW session entitled “I Ran an Extremely Successful Crowdfunding Scam.”

At the time a new idea is introduced, it can be hard to tell into which category it will ultimately fall. Even if it fails. Especially, sometimes, if it fails. “It’s not possible for pessimists to build a startup,” Blank says. “It turns out, that unlike the popular literature, startups don’t go from success to success executing the plan. Startups are actually a series of connected failures and disasters. And the great entrepreneurs recover quickly from each one of them learning every bit.” You haven’t “failed” in startup world until you have either run out of money or given up.

Maybe, Pierce thought, there was a way to add a rigid module to Snake that would sit on the back of your head and support the camera and video unit. Or maybe a segmented version that opened and closed to fit on the back of your head would work. He never got to find out.

Iguchi returned from South by Southwest slightly more amenable to new ideas about the product design after having spoken with his investors, but Pierce was let go, he says bluntly, “because I make too much money.” Amidst continuing conflict about which design to pursue, the Sunnyvale office shut down in early June, and nearly all of the employees who worked there have been let go. Eric Gould, who is finishing a contract as the company's president and COO, says that operations are consolidating in Japan. "Mr. Iguchi had a very clear vision of what he wanted in terms of design and feature set," Gould says. "He would have not been able to raise money without having a strong and complete vision. Did things change? Yes."

After the design switch, the tone of Iguchi’s public commentary became a little more defensive. “Tremendous courage is necessary to keep thriving with the limited resources, assets, and myriad of constraints,” he wrote in a January Medium post. “Dangerous risks are not easily accepted or approved within the team.”

But it was no less optimistic. Now, Iguchi recently told the press, the device would be available “this year” and will “expand to global distribution in 2015.”

According to Gould, Telepathy has a positive cash balance, "several months of runway," and a plan to announce a new product, with paying customers, in less than two weeks. But a source close to Telepathy says the team in Japan is no longer working on a magic-like device that allows consumers to better understand each others' worlds, but rather a new design for use by factories like Hitachi. Iguchi is no longer the CEO, this person says (Gould says Iguchi is still with the company, but he stopped responding to my questions after I asked if Iguchi were still the CEO).

Needless to say, no matter how strong the vision, putting a Telepathy One product on global shelves by next year, as Iguchi once promised, has always seemed unrealistic. And yet in Silicon Valley, more than perhaps anywhere else, vision seems capable of trumping reality.

Here nothing is possible without a vision and the optimism to believe in it. But a whole lot, in terms of achieving the public milestones that mark a member of this world, is possible without specifics. Someday, Iguchi mused in one of his Medium updates, he’d like to explain the exact process behind the Telepathy design. “Of course, by that time,” he added, “Telepathy would have accomplished an incredible success.”

[Photo by Tomohiro Ohsumi, Bloomberg, Getty Images]

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