Google and Temasek-backed Mohalla Tech Pvt. Ltd, which runs social media platform ShareChat and short video platform Moj, said on Monday that it had laid off around 20% of its employees due to "external macro factors" impacting cost and availability of capital.
This will affect 500 to 600 employees, a person familiar with the development said, asking to remain anonymous.
Sharechat employees received an email on early Monday morning about impending layoffs.
"We are sharing this note along with other relevant details on the personal email IDs of our colleagues who are impacted by this. Those of us reading this on our personal mail IDs would find Slack and company email inaccessible. I realize that this sudden revoking of access is not the ideal experience. We debated a lot about it but this was the only practical solution,” chief executive officer and cofounder Ankush Sachdeva said in the email reviewed by Mint.
Impacted employees lost access to Slack by 6 am and received an email from Sachdeva on their personal email IDs around 8 AM, a (now) former employee said. The company took the call to cut off access abruptly to protect sensitive information, the email said.
Sachdeva said that ShareChat was one of the first startups to take proactive measures by ‘sharply reducing’ user acquisition, marketing and server spends, while raising additional funding. It ‘put in a guardrail of flat headcount in May’ and executed its annual operating plan ‘with much lesser than planned bandwidth’.
“However, this was clearly not enough. There is a growing market consensus that the current global economic downturn would be a much more sustained one,” the note to employees said, “In hindsight, we overestimated the market growth in the highs of 2021 and underestimated the duration and intensity of the global liquidity squeeze,” the email added.
Sachdeva said the company had evaluated and arrived at a smaller list of projects for 2023, which were “high ROI” or a high return on investment projects.
“The smaller list meant we had to shut down some of our running workstreams while investing more in others. This led to several existing roles becoming redundant,” the email to employees said.
“We need to prepare the company to sustain through these headwinds,” the company spokesperson said in a statement.
ShareChat will provide financial packages such as two weeks’ pay as ex gratia for every year served with the company in addition to notice period salary; impacted employees will retain their laptops and other health insurance benefits for the impacted employees (till June 2023) as part of the exit.
Employees can expect their variable pay till December end, the email to employees said. Further, impacted employee stock options that vest till April-30, 2023 will be retained by the employee.
Last month, Ajit Varghese, chief commercial officer at ShareChat, stepped down after his two-year stint.
ShareChat was founded in 2015 by Farid Ahsan, Sachdeva and Bhanu Pratap Singh. The firm launched Jeet11 in February 2020 to take on the popular gaming fantasy gaming platform Dream11, allowing users to bet on cricket and football matches. In June, secured $78 million (about Rs 633 crore) as part of its Series H funding round at a valuation of about $4.9 billion from Google’s parent Alphabet and Temasek Holdings.
India has over 350 million online video users, and the user base growing nearly twice as fast as markets such as China and Indonesia, according to an October 2021 report by Bain and Co.