Laid-Off Employee Questions Sharan Hegde’s ‘Financial Literacy’, 1% Club CEO Responds – News18

Last Updated:November 07, 2024, 13:28 IST

Sharan Hegde, CEO and co-founder of 1% Club, announced that the company has laid off 15% of its workforce as part of a cost-cutting initiative, the first since its inception in 2022.

Finfluencer Sharan Hegde has laid-off 15 per cent of the 1% Club workforce as part of the “cost-cutting exercise” aimed at supporting the long-term growth of the company which he and Ragav Gupta founded. Hegde, who serves as the company’s CEO, admitted to “redundant expenses” and “mistakes in hiring”.

The 1% Club, which secured investment from Zerodha co-founder Nikhil Kamath, claims to help people achieve “financial freedom”.

Laid-off 15% of employees

“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,” Hedge wrote on LinkedIn.

He went on to explain the reasons behind the layoffs and even provided an update on the company’s business. His lengthy LinkedIn post comes after an ex-employee called out the company for failing to manage its own finances.

The ex-employee, who chose to remain anonymous, vented his frustration online,recalling the excitement of joining the company that promoted “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,” the Reddit user wrote.

Fancy office in Mumbai

The user even claimed that the company hired over 150 people and set up a high-end office in one of the “priciest parts of Mumbai (Jogeshwari)” with just Rs 10 crore funding in hand. While Hegde admitted to having a “fancy office” in Mumbai, he clarified that it was funded through the company’s profits rather than investment money. “We have a fancy 5000 sqft office in Mumbai but all of this was done with company’s profits. Our investor’s money of Rs 10 crore is currently invested in an FD earning 8.5% interest,” he revealed.

Despite the layoffs, Hegde provided a reassuring update on the company’s performance. He noted that 1% Club is currently generating $8 million in annualised revenue with a 35-40% EBITDA margin. “We have almost 85,000 active paying customers and are working on new financial products and services some of which are already launched and have also achieved profitability,” he underscored.

Layoffs happened right after Diwali

The Reddit user criticized the timing of the layoffs, which came immediately after employees returned from Diwali holidays. “I’m pretty pissed and feel for everyone else who got axed with me,” they said.

The Reddit user claimed, “They’ve terminated various VPs and AVPs, half of the video editors, all content creators and almost all the graphic designers.”

Fintech company failed to manage own expenses

The ex-employee also accused 1% Club of failing to manage its finances properly, stating, “Here’s to hoping they figure out “financial literacy” on their own, because they clearly need it more than their customers.”

Hegde emphasised that both he and co-founder Gupta had funded the company’s growth with their own resources: “We have been running this company bootstrapped without ever using investor capital because we are super strict with our financial planning and diligence.”

Mistakes in hiring, redundant expenses

Hegde admitted to “redundant expenses” and the mistakes the company made while hiring employees. “I started this company from my bedroom with just 5 interns 2 years back and fast forward today we have almost 200 employees. Needless to say, when you grow at such lightening speed you are bound to make some mistakes with hiring and redundant expenses.”

He mentioned that the company had identified AI-driven cost-saving opportunities that could improve “profitability” and “efficiency”. “This is our first cost-cutting exercise since inception,” he declared.

“I also realise the psychological impact on the laid off employees. Please note that we have offered a healthy severance package depending on the tenure to all the laid off employees,” he concluded, pledging to assist all the laid-off employees in securing employment by connecting them with peers in the industry.

Hegde, who holds a mechanical engineering degree from a college in Bengaluru, is a Columbia MBA dropout. He has worked at two Big 4 companies – KPMG and PwC. In January 2021, he started his YouTube channel “Finance With Sharan” to spread “financial literacy”. The channel has over 555 videos and 3.29 million subscribers.