Finfluencer Sharan Hegde promises no more layoffs after 1% Club sacks 15% of staff in first major cost-cutting push

Sharan Hegde, the founder of The 1% Club, said he is not looking to lay off more people after sacking employees for the first time at the fledgling startup. He added that the financial literacy startup isn’t looking for additional funding at the moment.

“We will not be asking any other employees to leave. We have asked only 28 employees to leave," Sharan said in response to queries emailed byMint.

Hegde said earlier that the employees were sacked as a cost-cutting measure. He attributed the step to having made “some mistakes" in hiring and the adoption of artificial intelligence tools to pare costs.

When you grow at such lightning speed you are bound to make some mistakes with hiring and redundant expenses, Hegde said in a LinkedIn post. This is our first cost-cutting exercise since inception, he said.

“We have identified significant AI driven cost savings that can boost profitability and efficiency which can be reinvested in the business growth," Hegde wrote, explaining why he fired 15% of his two-year-old company’s almost 200-strong workforce.

Hegde toldMint that employees continuing to work in the company are being paid adequately.

“All employees are already being paid handsomely as per their qualifications and respective roles in the company," he added.

“I just laid off 15% of my workforce and I received a lot of messages from my friends and media if I’m going bankrupt. As a finance influencer who built his career around financial education, the irony isn’t lost on me," he shared.

A fired employee from the marketing team toldMint on condition of anonymity that the outgoing employees were asked to sign a settlement letter and accept a month's pay in final compensation. Hegde said the company offered the sacked employees a healthy severance package based on their tenure in the company and in compliance with applicable laws.

Irony not lost

Hegde clarified in his LinkedIn post that the measure had nothing to do with bankruptcy. He acknowledged that as a finance influencer who built his career around financial education, the irony of the sackings wasn’t lost on him.

He said the Nikhil Kamath-backed venture that he co-founded with Raghav Gupta currently has about $8 million in annual revenue, with 35-40% EBITDA. He added that they have almost 85,000 active paying customers for their financial products.

Hegde said investor funds of ₹10 crore were placed in a fixed deposit earning 8.5% interest. He added that their fancy 5,000 square foot Mumbai office was purchased with the company’s earnings.

“We do not have any funding plans. We are self-sufficient," Hegde toldMint.

Hegde’s post came after a sacked employee narrated their termination experience anonymously on social media, garnering attention.

“They’ve terminated various VPs and AVPs, half of the video editors, all content creators and almost all the graphic designers. Don’t know how 2-3 people are going to manage all of the designs lol and who is going to create content for their page. They’ve cut down the marketing team to just 2 employees, events team down to 4 employees, when they have an event with 200 people coming up next week," read a Reddit post labelled ‘Laid off from my job at 1% Club, Sharan Hegde’s “financial planning" startup.’

“Currently most of our IG reels are AI reels which require only a team of one editor to produce 30 reels a month," Hegde toldMint. He said AI has substituted mainly editors and researchers.

Super strict

Reflecting on the company’s rapid growth, Hegde explained, “I started this company from my bedroom with just 5 interns 2 years back, and fast forward today we have almost 200 employees."

“We’ve been running this company bootstrapped without ever using investor capital because we are super strict with our financial planning and diligence," Hegde added, emphasising the company’s commitment to fiscal responsibility.

Originally from Mangaluru, Hegde worked at KPMG and PwC before shifting to content creation and moving to Mumbai.