Four words sum up the Silicon Valley hype machine at the end of 2016: "squirrels and sea monkeys."

That was the repeated response from Magic Leap founder Rony Abovitz when Reed Albergotti of The Information asked about the technology behind the startup's augmented-reality glasses.

For months, as Albergotti recently reported, Magic Leap has wooed investors and journalists by strapping them into a bulky helmet that augments their world with Star Wars-like spaceships and other digital creations. But this helmet is too big and too expensive for the mass market, so the company is working to squeeze its technology into a sleek pair of wire-rim glasses. The rub, according to ex-employees speaking with The Information, is that the company is having trouble actually making that happen. Abovitz wouldn't let Albergotti try the glasses on, and when asked how they work, all he would say was: "Squirrels and sea monkeys."

Magic Leap, which WIRED featured in our May cover story about the history of virtual reality, declined requests for an interview with Abovitz and told us that its technology is progressing just fine. "Magic Leap has built many prototypes to test and develop key design and technical requirements for our first shipping product," the company said in a canned statement. But the tale unloaded by The Information isn't all that unusual. It's merely another example of tech hype exceeding tech reality.

Frank X. Shaw, Microsoft's head of communications, responded to Albergotti's exposé by crowing that Microsoft's AR headset, Hololens, is actually real. But when you consider that Microsoft pulled its own AR bait-and-switch after the Hololens appeared on the cover of WIRED, this was nearly as amusing as the squirrels and the sea monkeys. The reality is that after two years of hype, AR doesn't do what you think it can do.

Magic Leap is in Florida. And Microsoft is in Washington. But these are Silicon Valley companies. You can tell because they've mastered the Valley's quintessential skill: using hype, misdirection, and obfuscation to promise what they can't yet deliver.

This was the Valley's dominant theme in 2016, the year when virtual reality, chatbots, delivery drones, autonomous cars, and blockchains were going to change everything. None of them did. Especially the chatbots. Granted, technology needs time to effect real change. And some of these technologies, particularly self-driving vehicles, showed real progress over the last twelve months. But 2016 was the year the hype became too much to bear, and at least one company buckled under the weight of it all.

That company, of course, was Theranos, which promised to revolutionize medicine with Edison, a machine that could diagnose hundreds of ailments with a single drop of blood. In 2015, a Wall Street Journal investigation showed that the tech didn't work as advertised. In 2016, the Centers for Medicare & Medicaid Services banned the company from operating a lab for two years, and Theranos laid off 40 percent of its employees. Almost as entertaining as "squirrels and sea monkeys": the bit in this fall's Vanity Fair article where, after Journal reporter John Carreyrou uncovers the company's deceptions, Theranos employees gather for an all-hands meeting and start chatting "Fuck you, Carreyrou" as if they're singing "La Marseillaise" in Casablanca.

Now, hype is as much a part of the Silicon Valley ethos as hoodies, stock options, and dog-friendly offices. But in the past, the extreme hype was largely limited to apps or online services or other ephemeral things. When such things fail to materialize or perform as promised, companies lose face and investors lose some money. So be it. What's different now is that companies are applying the same kind of ridiculous hype to extremely complex, extremely unfinished hardware, including medical hardware. It's one thing if an app doesn't work as advertised. It's quite another if a medical device or autonomous car doesn't.

Here at the end of 2016, we'll cut delivery drones and autonomous cars some slack. These technologies are enormously complicated, and no one honestly expected them to work as promised anytime soon. That said, if Jeff Bezos pulls another Christmastime delivery drone marketing stunt, someone ought to whack him upside the head with a Google Wing. Right now, that's all a Google Wing is good for.

This was the year that at least one company collapsed under the weight of its own hype.

Even things that worked were overhyped. The blockchain is proven technology—we like proven technology!—but most of the people hyping it had no idea what they wanted to do with it. And those who did left the back door open—literally. The DAO, the self-seriously named Decentralized Autonomous Organization, was supposed change the future of venture capital but ended up getting hacked to the tune of $50 million.

Which brings us to chatbots, the biggest trend that didn't deliver in 2016. These wonders of modern technology were going to seamlessly dovetail with apps like Facebook Messenger and Skype, booking our plane flights, making our plane reservations, even talking to us. It would be like China, everyone said, where chatbots are all the rage on messaging apps like WeChat and Microsoft's Xiaoice chatbot is now chatting with 20 million people. But here at the end of 2016, it's clear that legitimate chatbots aren't what drives interactions on WeChat and that Xiaoice is flawed technology. When Microsoft unleashed a version of this chatbot here in the US, it listened to what the people said and immediately turned into a Nazi-loving racist.

Though today's AI technology can't actually deliver a bot that carries on a conversation, we will say that AI gave the world lots of other stuff in 2016, like better machine translation and AlphaGo, the Google creation that topped a grandmaster at the ancient game of Go. But the real stuff was nearly eclipsed by all the AI that isn't, all the stuff that's merely hype. Google's DeepMind lab saved its parent company tens of millions of dollars using AI to control the fans, windows, and chillers in its data centers. But that figure almost seems small compared to the number of emails I received trumpeting artificial intelligence that runs on squirrels and sea monkeys.

This is all good for a laugh, but it's also serious stuff. Companies and their investors are pouring untold millions into over-hyped technologies that promise to radically remake healthcare, transportation, even money itself. In the short term, investors, and occasionally consumers, get burned when these things fail to materialize. In the long-run, this can undermine markets, even bring them down. It may even destroy our ability to discern the real from the fake. And if 2016 showed us anything, it showed us just how dangerous that can be.