About 600 of the staff were asked to leave last week as the Bengaluru-based company looks to cut costs amid an impending slowdown in venture funding and tightening of the overall economic environment. Unacademy was valued at $3.4 billion when it
raised $440 million led by Singapore’s Temasek last year in August.
“They (Unacademy) are looking to bring down their cash burn from each cost centre and have therefore undertaken this move,” said one of the people cited above.
Of the 1,000 fired, about 300 were educators who worked with Unacademy on a contractual basis while the rest were in sales, business and other functions.
Most of them were working in content sales and business development functions for the core Unacademy test preparation product.
Unacademy’s total staff count was at 6,000, before the layoffs, including some on contract.
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“Based on the outcome of several assessments, a small subset of employee, contractor, and educator roles were re-evaluated due to role redundancy and performance, as is common for any organization of our size and scale. The company has in good faith ensured they receive certain additional benefits and a generous severance,” said an Unacademy spokesperson, referring to the high “performance” and “transparency” that the company was building. The company added that it was aiming to turn profitable by the end of the current calendar year while investing for growth in group firms.
Until recently, Unacademy is said to have had a monthly burn rate of about $15 million, which will now be reduced as part of cost-cutting measures that are also being extended to certain marketing initiatives.
“We are extremely bullish about our core test-prep business and in the growth of our group companies Relevel, PrepLadder, and Graphy. Our test-prep business is growing over 50% year-on-year (YoY) and our ebitda percentage is also getting better,” the company said.
Employees cry foul
Some of those fired told ET they were unaware of the retrenchment exercise and that no feedback had been given to them about bad ratings and poor performance. In addition, other executives said they were terminated within two months of hiring, before even completing their probation period of roughly two months.
Some of the employees said that the internal communication channel on Slack abruptly stopped working for them on March 30-31. Following this, they received an email from the HR department asking them to join a link where they were told about being fired.
The staff told ET they were given an hour to accept the company’s offer of two months’ severance pay. The company hasn’t helped in any sort of outreach to look for new jobs, they said.
“There is a lot of pressure and toxicity in the workplace,” said one of them. “We were expected to work 12-14 hours everyday and if we didn’t, we were asked to make a decision to leave… There was no warning given to us that an exercise of this scale is being undertaken. In addition, when we asked, the HR failed to provide any reasons saying it was a management decision.”
The person said the company is expected to issue relieving letters and make the severance payout by April 20.
“Our morale has been hit since no reasons were given for firing us,” said another of those laid off. “This is interesting since we had a meeting with (cofounder) Roman (Saini) and senior leaders in mid-March where the entire team was flown down and targets and metrics were discussed, which looked steep. Saini had told us that the team was performing well then.” This person was part of the business development function at Unacademy.
Apart from this, Kush Beejal, founder of test preparation startup NeoStencil, acquired by Unacademy in December 2020, left the company in March. Beejal was also looking at business growth and onboarding of newer teachers and institutes for Unacademy’s platform business. ET couldn’t reach Beejal immediately for a response.
Unacademy was founded in 2015 by Gaurav Munjal, Roman Saini and Hemesh Singh, as a YouTube channel for imparting educational content. The Bengaluru-based edtech firm went on an acquisition spree, mirroring bigger rival Byju’s, expanding beyond its core. Its 11 purchases include online tutoring platform Swiflearn; Common Aptitude Test (CAT) preparation platform Handa ka Funda; live game streaming platform RheoTV; and test preparation platforms NeoStencil and Coursavy.
In detailed comments when Unacademy raised its $440 million financing, Munjal had told ET it wants to build new lines of businesses in segments such as jobs and hiring, where it will compete with the likes of Naukri.com and LinkedIn. It will also launch creator-led short courses and scale existing businesses such as test preparation and K-12 (kindergarten to class 12) coaching.
“We want to be a technology company with multiple consumer internet products across sectors. For example, in edtech, we will go deep into two areas — K-12 and careers. Then, there are two markets in upskilling and higher education — degrees and direct jobs — that we also want to push,” Munjal had said.
Unacademy’s cost-cutting exercise is aimed at focussing on core businesses. It therefore decided to shut Mastree, a skills programme for kids, and its K-12 businesses.
Sources briefed on company plans said it will now largely focus on two products—the core test preparation business and the job-tech vertical of Relevel.
“Unacademy closed the calendar year 2021 with a revenue of around Rs 1,000 crore,” said a person in the know. “They are internally aiming for Rs 1,700 crore for 2022.” About Rs 1,500 crore of revenue is expected to come from the core Unacademy business, the person said, adding that Munjal is ambitious about Relevel’s growth. Relevel has designed courses across tech and other jobs. Candidates take a test designed by Unacademy and are guaranteed job placement after finishing the course. There are currently over 1.8 million registered users on Relevel, and it has delivered over $2 million worth of total offers to candidates who have passed the test, a company statement said.