Go big or go home. If that’s not the motto for upscale mobile phone firm Sirin Labs, well damn it, it should be
After breaking records with their $25 million seed round back in October 2014, they announced today the close of their Series A round, pulling in a whopping $72 million in new funding to help bring their “Rolls Royce” of cell phones to market.
Co-founded in 2013 by President Moshe Hogeg, CEO Tal Cohen, and Chairman Kenges Rakishev out of Kazakhstan, the company is registered in Schaffhausen, Switzerland where they enjoy significantly stronger privacy laws, a key factor that they claim for their device’s security.
The new deluge of capital comes from Chinese social networking platform Renren, joining seed round funders Hogeg’s Singulariteam and Rakishev to put together this massive round. Combined with their seed, the young company’s coffers nearly reach the $100 million mark.
Rakishev has invested with Hogeg in the past, joining the star studded list of backers for the photo and video sharing platform Mobli that attracted backers like Leonardo DiCaprio, Serena Williams, and Carlos Slim.
When Sirin Labs first opened up shop in November 2013, it was in Tel Aviv’s hi-tech center in Ramat HaChayal. They now have offices in London, Schaffhausen, and the Swedish city of Lund.
Along with the news of the funding, Sirin Labs has declared that they are officially launching their product in Q2 and that this funding round will help them meet that timeline for production. Seeing as how we are nearly a third through the second quarter, this means that we are likely to see this first offering make its way on stage some time in the coming month.
With their flagship store gearing up to begin sales in London, Hogeg cites the European, American, and Chinese markets as prime targets for his high-end devices.
“China is an extremely important market that holds great potential,” he says, perhaps recognizing the that rise in wealth there presents a very viable opportunity for high-end products like Sirin Labs’ phone, a fact not lost on his new partner Renren.
The company tells Geektime that the devices will be manufactured in Sweden. In the lead up to that launch, the company is being very tight lipped regarding the features of the phone.
Is there a market for high-end, luxury smartphones?
My first impression of this project is that it is super niche and probably won’t register on the radar for the rest of us that would never think to spend a small fortune – or approximately, $10,000 – on a phone.
All this is not to say that Sirin Labs is on the wrong course. Unlike with mass market phones, which must reach enormous scale and tens of millions of sales to be successful, Sirin and their luxury competitors should be judged by completely different metrics.
The luxury phone market is a tricky business at best. In an age when many people upgrade their device every year or so, it is difficult to comprehend the appeal of this particular market.
Take competitor Vertu, who has gone through their own ups and downs.
With their ruby-studded, ostrich skin covered phones, the Vertus can easily run at $10,000 a pop. In an effort to tone it down a bit, they launched their Aster line of phones, which retail for a paltry $7,000. Along with the gaudy accoutrements of the device, they offer added services like a concierge that they say can open doors to exclusive events and locations.
Originally a subsection of Nokia, they were sold in 2012 to the private equity group EQT for $253 million, before then being handed off to an unnamed group of private Asian investors.
While they have managed to survive and possibly turn a profit, it is not clear that this is a great business to be in.
Company sources have reported to the press that they are increasing sales, posting in 2014 that Vertu had sold around 400,000 phones over the course of a decade.
By Apple or Samsung’s standards, that’s a bad Tuesday for them. However if you think about the number of people who apparently can throw down thousands of dollars for a souped up phone at a minimum of $10,000 per device, then they can make back their investment after 10,000 units sold, a goal which is a surprisingly reasonable projection.
There is clearly a market out there for high-end products: Just look at the handbag and car markets.
Tesla’s Model S retails for $76,500, which is considerably less than say a Maserati that can be above $100,000, or a Rolls Royce that can reach almost $500,000.
But even Tesla understands the value in going after the middle market, offering the Model 3 for a very reasonable $35,000.
Whether or not Sirin Labs chooses to reach out to the middle is another question, and one that is totally up to their leadership.
The silver lining from this endeavor that should interest the rest of us is that some of the developments that come out of this project could then trickle down into more average consumer level devices.
Reimagining the smartphone
Two names on Sirin Lab’s Special Advisory Board roster that stand out, and possibly point to elements of the project that the company wants to be recognized as having market authority on, are Patrick Albaladejo and Rami Efrati.
Before coming to Sirin, Albaladejo was the former deputy managing director at the luxury brand Hermès International. Teamed up with the esteemed Karim Rashid heading up their design, Sirin is clearly looking to establish itself as a status brand and has made the hires to achieve this.
Efrati arrived at his post with a rich career in cybersecurity, another selling point for the device. According to Sirin Lab’s mythology, the idea for the project came after Rakishev’s phone was hacked, kicking off their hunt to create the dream phone without pesky concerns like costs getting in the way of perfection.
While still mum on the details, the company promises some beefed up security features that should whet the appetites of more than a few security nerds out there.
Hogeg tells Geektime that, “We have a holistic approach which integrates hardware and software solutions to ensure the best security and encryption.”
In setting out to build the Sirin project in an industry awash in mobile device manufacturers, Hogeg tells Geektime that, “There wasn’t any solution up until now – the market is in a vacuum – Blackberry for security and [Samsung’s] Galaxy presents great technology, however none of these nor the other brands provide a high-end solution for all components.”
According to Hogeg, one of the key spaces where he expects to stand out from the others in the high-end market is by working only with the best components.
As with all types of manufacturing and design, there are trade-offs. One type of component, say for the battery, may be the best fit, but is too expensive to scale.
If you’re Apple, then scalability and costs are crucial for staying competitive. But if you are Hogeg and co., then cost is not an issue and every problem seems solvable. This appears to be the guiding principle behind Sirin Labs and should be a fun ride to follow.
As for me, I’m happy with my iPhone 6. At least until I get a peek at the 7.