Sirin, maker of the Solarin $14K smartphone, cuts 30 staff and pivots

So much for super-private, high-end phones for the super-rich? Sirin Labs, the startup that makes the Solarin, an Android-based smartphone released last May with a $14,000 price tag and promise of extreme security for its owner, is laying off one-third, or 30, of its staff after seeing just $10 million in sales since launch. The startup is now weighing up a pivot of the business to “new computing devices” according to its CEO.

The news of the layoffs was confirmed to us directly by Sirin after Israeli paper Calcalist reported the layoffs (accurately) and that the Solarin was getting discontinued (not so accurate, says Sirin).

“Nearly a year after launching Solarin, Sirin Labs is pursuing new directions to a new product line and therefore restructuring its staff,” a spokesperson said. “One third of the staff will be let go and the company will concentrate on new hires that will fit into the new company vision. Sirin Labs is still manufacturing Solarin and provides full support on its regular channels – online and offline.”

For now, Sirin will continue to support and make the current model (including in new colors, one of which is illustrated here), but at the same time it is looking to pivot to “a new kind of computing device,” according to Sirin’s founder and CEO Moshe Hogeg. Speaking to TechCrunch, he added that as part of the pivot, it is also considering shelving future models of the Solarin, as it has only around $20 million left in the bank and is not planning to raise more for the phone venture.

It’s a significant turn of events for the startup and more evidence of just how hard it is to break into the smartphone market with a new device, and one that is aiming at a specific niche in the market at that.

Other privacy-first phone efforts that have stumbled include the Blackphone, and BlackBerry, once the premiere secure enterprise brand of choice, now outsources development of its phones. On the high-end phone front, just earlier this week, the high-end phone maker Vertu, once a part of Nokia, sold for just $60 million.

Sirin, notably, had raised $72 million in ‘seed’ funding to build the Solarin, which it launched with a lot of fanfare and endorsements from celebs like Leonardo DiCaprio and Tom Hardy. Backers in that round included Hogeg himself; Kazakh businessman Kenges Rakishev, and the Chinese social networking service Renren. Hogeg, as you might already know, had also started the now-defunct app Mobli (also backed by DiCaprio and other big names) and the one-word wonder Yo. He also runs a fund called Singulariteam.

Sirin doesn’t disclose the number of Solarin devices that have been sold since it launched less than a year ago except to say that it’s the top-selling phone at Harrods, a high-end department store in London. Hogeg however did tell me that the company has has sales of just under $10 million. Doing the math on this, it would work out to between 700 and 750 devices sold — a number that does not fit into the economy of scale that is the basis of the hardware industry today.

(Achieving profitable economies of scale is just one of the problems that Sirin may have faced: others that we outlined when covered its launch included questions of just how secure the device really was, and whether that could justify the price tag, even for an ultra-rich clientele.)

Hogeg himself has been involved in other ventures that have definitely had a lot of buzz, but (so far) have not managed to sustain that to develop viable long-term businesses. Mobli, which once nipped at the heels of Instagram as a top photo-based social app and raised a ton of money to capitalise on that, has completely shut down its app. The business itself continues to exist (and has tried to spin out other apps). Hogeg hints that it’s planning to release another new app soon.

Another surprise hit was an app called Yo. Initially created as a way for Hogeg to alert an assistant with that one word as the message, the app was a surprise viral hit that ended up achieving a $10 million valuation before also fizzling out.

More recently, Hogeg has attracted $18 million in funding from investors that include Alibaba for one of his latest efforts, an augmented reality eyewear company called InfinityAR, audaciously created by buying the previous company that held that name and populating it with a staff to build the new hardware.

I did ask Hogeg if InfinityAR would be involved with Sirin’s future computing pivot, and he declined to comment except to say that “we will announce partnerships with one of our portfolio companies.”