Finfluencer Sharan Hegde's 1% Club, a company that promotes financial literacy, has recently laid off 15% of its workforce. This move has sparked controversy, with some questioning the company's financial management.
"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.
Mr Hegde, the company's CEO, attributed the layoffs to "redundant expenses" and "mistakes in hiring." However, a former employee, who chose to remain anonymous, has accused the company of poor financial planning and excessive spending. The ex-employee on Reddit claimed that the company hired over 150 people and set up a high-end office in Mumbai 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, Mr Hegde remains optimistic about the company's future. He highlighted the company's strong revenue and profitability, as well as its ongoing efforts to develop new financial products and services.
However, the timing of the layoffs, which came immediately after Diwali holidays, has drawn criticism. The ex-employee expressed frustration and disappointment, particularly as many employees had recently relocated for the job.
"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."
The former employee also accused 1% Club of financial mismanagement, remarking, "Let's hope they learn 'financial literacy' on their own, as they seem to need it more than their clients."
In response, Hegde emphasized that he and co-founder Gupta have personally funded the company's growth, stating, "We've been running this company bootstrapped, without investor capital, because we're very strict about financial planning and diligence."
Hegde acknowledged some "redundant expenses" and hiring mistakes. "I started this company from my bedroom with just five interns two years ago, and today we have nearly 200 employees. Growing at such a rapid pace inevitably led to some hiring errors and redundant expenses," he said.
He added that the company had identified AI-driven cost-saving strategies aimed at improving "profitability" and "efficiency." "This is our first cost-cutting exercise since the company began," he noted.
Hegde expressed an understanding of the psychological impact on those laid off, adding that a generous severance package based on tenure was provided to each affected employee. He pledged to help the laid-off employees find new roles by connecting them with others in the industry.
A mechanical engineering graduate from a college in Bengaluru and a Columbia MBA dropout, Hegde previously worked at KPMG and PwC, two of the Big 4 firms. In January 2021, he launched his YouTube channel, "Finance With Sharan," to promote "financial literacy." The channel now features over 500 videos and has 3.29 million subscribers.
