1% Club, the personal finance platform backed by Nikhil Kamath and co-founded by Sharan Hegde and Raghav Gupta, has laid off 15 per cent of its workforce as part of a cost-saving initiative driven by AI to streamline operations.
The layoffs come after the company experienced rapid growth, expanding from a five-person team to nearly 200 employees in just two years. In a LinkedIn post, Hegde wrote, “I just laid off 15 per cent 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 added, "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. 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."
Hegde also assured that affected employees have been provided with a "healthy severance package" based on their tenure, along with support in finding new job opportunities. “While I don the hat of a capitalistic businessman continually growing the company 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 and continue to support them with getting employed in my peer’s companies,” he said.
"Everyone who has been part of our journey will always be family, but with the business landscape evolving rapidly, especially with AI advancing so quickly, we have to make choices that keep us competitive and efficient," Co-founder Raghav Gupta said in a reply to the post.
Meanwhile a laid-off employee took to Reddit to share his frustrations over the layoffs. The employee wrote, “I joined this edtech/fintech company, 1 per cent Club, thinking it was a solid opportunity. They’re all about promoting “financial literacy” and “responsibility,” but 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 best part? They hired over 150 people, got an office in one of the priciest parts of Mumbai (Jogeshwari), all with just Rs 10 crore funding. The “planning” here is top-notch. How does a company that’s supposed to teach financial planning not see that maybe they should wait before splurging on office space and new hires?” the employee added.