ShareChat laid off 101 employees on Wednesday, or about a fourth of the workforce, as the regional social media firm expects the advertising market to be unpredictable this year.
The Twitter-backed firm sent an email to employees on early morning Wednesday informing them about the various cost-cutting measures. The five-year-old company had started monetizing the platform through advertising only in October last year. However, the Covid-19 pandemic led economic slowdown has severely hurt the advertising market.
“We have to focus on our core product and feed recommendation driven growth levers while scaling back on the others. We need to go back to our fundamentals in terms of only picking bets that move the needle for growth,” said Ankush Sachdeva, Co-founder & CEO, ShareChat in the email. “We believe the Ad Market would remain unpredictable this year. We are streamlining our revenue teams to these new expectations…”
ET has seen a copy of the email. Sachdeva added that while the company was fortunate to raise capital last year, it is compelled to take a relook at the business.
“ShareChat is built through the relentless hard work and sincerity that our people bring to work every day. This is a very tough call for us. I hope you understand that we had to do it for the organization to sustain and see it through to the other side of this pandemic,” said Sachdeva in the email.
Read: Flood of pink slips coming, warn startups
ShareChat raised $100 million from microblogging site Twitter and some other investors in August last year. It also counts TrustBridge Partners, Shunwei Capital, Lightspeed Venture Partners, and SAIF Capital among its investors. It has about 60 million monthly active users in India.
A ShareChat spokesperson confirmed the development and said that the global pandemic along with various local market uncertainties have had an impact on its business plans, which has pushed us towards certain tough decisions including a revised leaner structure.
The laid-off employees will have the option of taking a ‘garden leave’ of two months or half the salary for four months. Garden leave is a practice when a terminated employee stays away from work during the notice period, while still remaining on the payroll. Apart from this, laid-off employees will get one month ex-gratia for every year that they have worked for the company.
Sachdeva said the impacted employees will continue to be covered by ShareChat’s health insurance policy until the end of the year, and added that the company will extend the timeline for the stocks employees own till the end of the year. This would mean the options that vest by the end of the year will continue to be retained by the employees. Additionally, it would waive off the first-year cliff.
He said the company will assist all the impacted employees with finding relevant openings available in the market and connect them across other organisations, recruiters, and agencies. It has also tied up a professional resume builder to help the employees build their resume and LinkedIn profile for free.
“While I understand that no amount of benefits can assuage what you will go through; we are committed to handling this as respectfully as we can,” Sachdeva said. “Lastly, I want to thank all of you who will be leaving us for your commitment to the company’s vision during these growing years. Please accept my apologies as we haven’t been able to ensure that every one of you continued on this journey.”