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Report on Business Kitchener tech darling North reveals layoffs, four months after pivoting to smartglasses

North Inc., the heavily financed wearable-tech company that became one of the Kitchener-Waterloo tech scene’s biggest rising stars this decade, laid off “a number” of employees this week as the Ontario company cut costs following a massive pivot and rebrand.

Tech website the Verge reported on Friday that North laid off 150 employees on Thursday – which would represent nearly a third of its work force – but the company would not confirm that figure to The Globe and Mail. The federal government subsequently suspended payments from a $24-million investment it had announced for North last November that was contingent on job creation.

“In order to succeed long-term, we’re faced with some tough decisions,” said Stephen Lake, North’s co-founder and chief executive, in an e-mailed statement. “We decided to lay off a number of employees yesterday in order to focus our resources and ensure we have sufficient runway to execute on our upcoming milestones over the next 18-24 months.”

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Last October, the company revealed it had shifted its focus from a motion-sensor armband to “smart” glasses on the back of one of the biggest venture-capital deals in Canadian history: a nearly $160-million funding round announced in 2016 led by Intel Capital, the Amazon Alexa Fund and Fidelity Investments Canada. The funding helped the company scale up its manufacturing muscle, bringing its employee ranks to nearly 500 by last fall as it staffed up a plant to make the new smartglasses.

But Mr. Lake suggested on Friday the company had overinvested in certain parts of its growth as it shifted focus to smartglasses. "Over the past several years, we grew quickly to bring Focals to market,” he wrote. “In the leadup to their launch, we made big bets across R&D, manufacturing, retail and more. Those risks were the right choices at the time, and helped us create a product that set a new bar in our category of everyday smart glasses.”

The federal government declined to say how much of its repayable $24-million investment had already been paid out to North. It marks the first time Ottawa has suspended an investment from the year-and-a-half old Strategic Innovation Fund. “We are currently in discussions with the company to establish the best path to repayment, while protecting existing jobs," Innovation Minister Navdeep Bains said in an e-mailed statement.

Formed by three friends from the University of Waterloo in 2012, the company formerly known as Thalmic Labs became one of Waterloo Region’s most heralded success stories after BlackBerry Ltd. began falling behind in the smartphone market. Its gesture-controlled Myo armband – which used electrical activity from the wearer’s body to control other devices – was hyped as a major advancement in wearable technology earlier this decade, but it was meant to be used in conjunction with other products and never reached mass adoption.

Last year, the company stopped selling the Myo, changing directions entirely as it revealed a project it had secretly worked on for years. In October, it unveiled Focals, smartglasses that can flash messages and notifications into wearers’ sight lines that look far more like standard glasses than previous generations of smartglasses, such as Google Glass.

They initially retailed for US$999 a pair. Consumers could purchase them online, but had to visit shops in either Toronto or Brooklyn, N.Y., to have them custom fitted. It announced “pop-up” fitting showrooms in Seattle and the San Francisco Bay Area earlier this month.

The pivot was seen as bold in the tech community, given the failure of previous generations of the technology to make a dent among North’s target market of everyday consumers; most other smartglasses makers had shifted their efforts to enterprise customers, such as manufacturers. In the four months since Focals launched, their early success has been unclear. The company, though, has since lowered their price point to US$599. North would not disclose sales numbers, but a spokesperson said they had sold out this month at their Seattle pop-up location.

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In December, North also bought the technology and intellectual-property assets from Intel Corp.’s shuttered smartglasses division for an undisclosed amount.

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