Sharan Hegde, founder and CEO of finance platform 1% Club is recently in the public eye after laying off 15 percent of the workforce. Though he clarified that firing was necessary as part of the “cost-cutting exercise" and to amend “mistakes in hiring", netizens backlashed him soon after the news came out.
Hegde's LinkedIn post
He clarified on LinkedIn, “This is our first cost cutting excercise since inception. We have identified significant AI driven cost savings that can boost profitability and efficiency which can be reinvested in the business growth. Raghav Gupta and I have been running this company bootstrapped without ever using investor capital because we are super strict with our financial planning and diligence.”
Incidentally, The 1% Club was formed as a community to help people achieve financial independence. Co-founded by Sharan Hegde (aka Finance with Sharan) and Raghav Gupta (co-founder and CEO at Futurense Technology), the platform has over 60,000+ lifetime members.
The 1% Club secured investment from Zerodha co-founder Nikhil Kamath and aims to transform the education space for money management and personal finance. However, the “₹10 Cr of investor money” was put in an FD” that earned the company an “8.5% interest” as disclosed by Hegde. He explained the layoffs in a lengthy LinkedIn post after an ex-employee called out the company for failing to manage its own finances. He elaborated on starting the company from his bedroom with just 5 interns 2 years ago which increased to around 200 employees. Further, Hegde added that in the process they made some "mistakes" with hiring and bore unnecessary expenses.
"This is our first cost cutting excercise since inception," he remarked. "We have identified significant AI driven cost savings that can boost profitability and efficiency which can be reinvested in the business growth."
Currently, the company is earning $8Mn of annualized revenue with a 35-40% EBITDA. Moreover, the invested money is also drawing a significant interest. This is the reason, netizens have criticized the company belonging to the finance sector itself and not knowing the right way to utilize the invested money.
A person commented, "Surprised no one's asked you about putting that money in FD yet!"
Another asked, "FD me paisa q lagaya bhai Sharan Hegde."
The former employee anonymously expressed his frustration online, recalling the excitement of joining the company that stood for “financial literacy" and “responsibility". “Day before yesterday, they blindsided me with a layoff email. Turns out, around 40 of us are getting cut, including people who literally moved cities for this job," he wrote on Reddit.
You can check Hegde's LinkedIn post here
Although Hegde said he realized the “psychological impact on the laid-off employees”, he concluded by saying that terminated employees were offered a “healthy severance package depending on the tenure.”
Netizens have criticized him nonetheless because the dismissal of employees was done during the festive season. Many have commented that a company promoting financial literacy should have managed its finances properly to not see this day.
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