Billionaire Nikhil Kamath-backed 1% Club lays off 15% workforce
Nikhil Kamath-backed personal finance platform, 1% Club, has announced that it is laying off 15% of its workforce. The decision comes as part of an AI-led initiative to cut costs and streamline operations. The start-up's rapid growth from a five-member team to nearly 200 in two years has made this move necessary, co-founder and influencer Sharan Hegde said.
Hegde explains reasons behind layoffs
Hegde detailed the reasons for the layoffs on LinkedIn, stating "When you grow at such lightning speed, you are bound to make some mistakes with hiring and redundant expenses." He added that this is their first cost-cutting exercise since inception and they have identified significant AI-driven savings that can enhance profitability and efficiency. Hegde assured that the employees impacted by these layoffs have been offered a "healthy severance package depending on the tenure" and help in finding new job opportunities.
Need for competitiveness in evolving landscape
Co-founder Raghav Gupta echoed Hegde's sentiments in a response to the post. He stressed the company's commitment to those who have been a part of its journey, saying, "Everyone who has been part of our journey will always be family." Gupta also emphasized the need to adapt to an evolving business landscape, especially with AI advancing so rapidly. "We have to make choices that keep us competitive and efficient," Gupta said.
AI advancements render some jobs redundant
The recent layoffs at the start-up have mainly impacted roles in content, research, and marketing. This is because the advancement of AI has made some jobs redundant. "With AI driving a lot of content creation, people from the content team were given the pink slips followed by research for similar reasons," Gupta explained. Despite the layoffs, Hegde assured that their company still remains financially strong with an annualized revenue of $8 million and an EBITDA of 35-40%.
1% Club's journey and future prospects
Since its inception in 2022, the 1% Club has evolved into a leading personal finance education and social platform. It provides masterclasses and bootcamps on subjects such as personal finance, insurance, taxation, and credit management. Last year, the company raised ₹10 crore in pre-series A funding from entrepreneur Nikhil Kamath's venture capital firm Gruhas. Despite the recent layoffs, Gupta is optimistic about their subscriber growth owing to Indians's lack of financial literacy.
