Sharan Hegde’s The 1% Club Fires 15% Workforce

Finfluencer Sharan Hegde’s financial edtech platform, The 1% Club has laid off 15% of its total workforce as part of a cost-cutting exercise. 

In a post on LinkedIn, Hegde attributed the mass layoffs to “some mistakes with hiring and redundant expenses” while scaling up the venture. He also hinted that the employees were fired on account of AI-led automation. 

“… Needless to say, when you grow at such (a) lightening speed you are bound to make some mistakes with hiring and redundant expenses. This is our first cost cutting exercise since inception. We have identified significant AI driven cost savings that can boost profitability and efficiency which can be reinvested in the business growth,” said Hegde. 

He also claimed that the company offered a “healthy severance package” to the impacted employees “depending on the (employee’s) tenure”.

Commenting on the post, The 1% Club’s cofounder Raghav Gupta added, “… with the business landscape evolving rapidly, especially with AI advancing so quickly, we have to make choices that keep us competitive and efficient. That said, we’re confident that most, if not all, of our former team members will quickly find opportunities where they can be the perfect fit for their next ‘team’.”

In his post, Hegde also allayed fears that he was going “bankrupt”. Giving a snapshot of his business, he said that the finance-focussed edtech platform is currently clocking nearly $8 Mn in annualised revenue with an earnings before interest, taxes, depreciation, and amortisation (EBITDA) of 35-40%.

Claiming that the INR 10 Cr raised from the startup’s investors is currently invested in a fixed deposit (FD), Hegde said that The 1% Club currently has 85,000 active paying customers. He said that the company is working on new financial products and services, adding that many of its new offerings are already live and have also achieved profitability. 

Founded in 2022 by Hegde and Gupta, The 1% Club is a members-only financial education platform that offers educational resources, mentorship, entrepreneurial opportunities and networking avenues for its paid members.

The startup raised INR 10 Cr in its Pre-Series A funding round led by Zerodha cofounder Nikhil Kamath-backed venture capital (VC) firm Gruhas. 

Notably, the layoffs come at a time when the Indian startup ecosystem has been grappling with a severe capital crunch on account of the funding winter. As a result, many new-age tech companies have been cutting costs, streamlining operations and shelving expansion plans to conserve cash and extend their runway. 

With this, The 1% Club has become the latest homegrown startup to fire employees in recent months. In August, virtual event startup Airmeet conducted its third round of layoffs and fired around 80% of its tech team. 

A month later, Inc42 reported on healthtech startup Dozee handing out pink slips to 40-50 employees in a restructuring exercise to cut its losses. In August, cash-strapped Dunzo also fired 150 employees in a fresh round of layoffs, leaving the hyperlocal delivery platform with only 50 headcount.