Snapdeal to lay off 600; founders forego salary
Jasper Infotech Pvt. Ltd, which runs Snapdeal, has decided to lay off 500-600 employees across the e-commerce marketplace and its subsidiaries, mobile wallet Freecharge and logistics wing Vulcan Express, a person aware of the development told Techcircle.
The person added that the process of lay-offs has already started and will continue for "the next few weeks."
The Times of India had reported on Wednesday that the final number of layoffs could run up to 1,500.
In an internal mail to the employees, which was accessed by Techcircle, Snapdeal founders Kunal Bahl and Rohit Bansal said: "The formula to revive the company is uncannily similar for almost all of them [successful companies]—focus on only your core, stop all non-core activities, reduce costs drastically, turn profitable as soon as you can, and use those profits to spur further growth and new projects. We must do the same..."
The founders also declared that they have decided to forego their salary, without specifying the period.
"We believe that every resource of the company should be deployed for driving us towards profitable growth...both Rohit (Bansal) and I (Bahl) are taking a 100% salary cut. Many of our leaders have also stepped up proactively and offered to take a significant cut in their compensation, which is an excellent sign of how galvanised the team feels in this shared quest for profitability," the email read.
Notably, both Bahl and Bansal drew Rs 46.5 crore each in total executive compensation for the year ended 31 March 2015, pitchforking them to become the joint seventh-highest paid executives in the country. To be fair, their pay packet was bumped up due to stock options that comprised some Rs 45 crore of the total for each of them.
Towards the end of the mail, the duo said: "Let's remember â€“ GMV is vanity, Profit is sanity."
In a separate press statement from the company, Snapdeal said it was getting "leaner on path to profits"—a clear indication of layoffs happening at the firm. The statement said that the company was rationalising part of its workforce on its journey to become India's first profitable e-commerce company in two years.
Earlier in the day, Snapdeal announced that Freecharge's CEO Govind Rajan had resigned, after nine months of becoming the chief executive at the mobile wallet company, which was bought by Snapdeal in 2015.
The reasons behind Rajan's departure are unclear, but Snapdeal has been struggling to raise anywhere between $150 million and $200 million for FreeCharge at a valuation of over $1 billion.
"Govind (Rajan) has brought incredible energy and focus in growing FreeCharge. I am sure he will bring the same level of passion and resolve to whatever he chooses next," Bahl had said in a statement.
Recent media reports suggest that Snapdeal is in talks with its main investor SoftBank Group to raise fresh funds at a lower valuation, ranging between $3 billion and $4 billion.
Losses at Snapdeal more than doubled to Rs 2,960 crore (around $436 million) for the financial year ended March 2016. The firm's consolidated loss widened to Rs 3,315 crore from Rs 1,328 crore in 2014-15.
Here is the email that Snapdeal founders Kunal Bahl and Rohit Bansal wrote to staff.
Over the last few years, we've had a phenomenal journey, with many well-timed pivots and a constant drive to work towards our core mission of building India's most reliable and frictionless commerce ecosystem. We've succeeded in many aspects of our journey, and also failed in a few. But that never stopped us from getting up and trying harder again. We probably hold the record for the company that got written off the most number of times by Internet pundits.
"When obstacles arise, you change your direction to reach your goal, you do not change your decision to get there." ~ Zig Ziglar
At Snapdeal, we find ourselves at an important point in our journey - we know where we want to go and now is the time to make the choices of how we will get there.
Has our company and industry been going through a troubled time? Absolutely. Did we make errors in our execution? No doubt about that. Over the last 2-3 years, with all the capital coming into this market, our entire industry, including ourselves, started making mistakes. We started growing our business much before the right economic model and market fit was figured out. We also started diversifying and starting new projects while we still hadn't perfected the first or made it profitable. We started building our team and capabilities for a much larger size of business than what was required with the present scale.
Ambition is critical, because that's what motivates us to give our very best every single day â€“ to achieve the undoable. However, a large amount of capital with ambition can be a potent mix that drives a company to defocus from its core. We feel that happened to us. We started doing too many things, and all of us starting with myself and Rohit, are to blame for it.
That said, there is almost no successful company on the planet, which hasn't gone through this phase in their lifetime - Apple, Amazon, Netflix, Tesla, Lego, Spicejet, you name it! Each one of them had painted themselves into a corner many times over before they became as wildly successful as they are today. A quick look at their stock prices over the last 15 years will show you what we're talking about. The formula to revive the company is uncannily similar for almost all of them - focus on only your core, stop all non-core activities, reduce costs drastically, turn profitable as soon as you can, and use those profits to spur further growth and new projects. We must do the same, and there is no doubt that with the really smart folks we have in the company, we will make it something that we are all very proud of.
This also comes with some tough decisions in the short term. As part of our overall path to profitability plan that is currently in full swing, we will be reorganizing the company into a lean, focused, and entrepreneurial one. We are combining teams, reducing layers, eliminating non-core projects and strengthening the focus on profitable growth. Sadly, we will also be saying really painful goodbyes to some of our colleagues in this process. This is by far the hardest decision that we have ever taken in our lives. Our colleagues are our friends before they are co-workers, and I feel a deep sense of disappointment that we won't be able to have them continue on this journey with us. We will do what we can to help them with their transition to their next opportunity. We take this time to express our sincere gratitude to all those who are leaving us - your contributions have helped build Snapdeal in ways big and small. With time, I am confident, that we will be able to welcome back some of our colleagues who will be leaving us at this point. And that point, we will be a self sufficient, profitable company.
Daunting as it may appear in the moment, it is important that we do this now, so that we can continue on our overall mission of building a successful, profitable business that provides incredible opportunities to our customers, sellers and partners. This also means more responsibility for the team members continuing on this journey with us.
We believe that every resource of the company should be deployed for driving us towards profitable growth and with this announcement, both Rohit and I are taking a 100% salary cut. Many of our leaders have also stepped up proactively and offered to take a significant cut in their compensation, which is an excellent sign of how galvanised the team feels in this shared quest for profitability.
These are tough times, no doubt. But, I am supremely confident, that like we have done before as a team, we will prevail. The greatest companies in the world got built in many interesting patterns â€“ we just can't tell the pattern while are in the midst of it. For now, we need to keep our heads down, focus all our energy on execution that delivers on our two focus areas - best customer and seller experience, and profitable growth. This will mean tough choices and a conscious departure from a me-too race to the edge of the cliff. Let's remember â€“ GMV is vanity, Profit is sanity.
I have seen that whenever we put our minds to a well-defined plan, which we believe in unequivocally, we make progress like nobody else can. I am glad that we have picked our path clearly - of building a profitable business over the next two years.
With fierce passion and purpose, let's blaze a trail like leaders do.
Kunal & Rohit