A shocking move was announced by finance influencer Sharan Hegde very recently when his startup, 1% Club, cut 15% of the workforce as it attempted to rationalize its operations and improve profitability. Social media is abuzz within hours. Hegde is known for a no-frills, down-to-earth approach to personal finances. He took to LinkedIn to post his explanation behind the move, dispelling all the rumors surrounding this decision.
Hegde said while perhaps ironically to a finance influencer, he understands that the reason for scaling down 15% of his workforce has triggered him to get many notes from friends and even the media asking if he is going broke. But he clarified that does not mean that 1% Club is financially distressed; it’s just part of correcting a few hiring inefficiencies to streamline operational costs.
Hegde declined to specify the number of employees the company had laid off, but a Reddit user said nearly 40 workers were let go. According to Hegde’s LinkedIn post, the firm is healthy financially and has been raking in about $8 million in annualized revenues while maintaining an EBITDA margin of around 35-40%. The investor’s capital for operating everyday business has also yet to be tapped in the case of the 1% Club, which is self-sustaining.
He had promised Rs 10 crore as investment capital with significant investors like Zerodha co-founder Nikhil Kamath and Abhijeet Pai from the Puzzolana Group, who were invested in a fixed deposit earning interest at 8.5% rather than funding operations.
Sharan Hegde’s 1% Club: Scaling Issues and First Cost-Cutting Exercise
Co-founded by Sharan Hegde and Raghav Gupta, 1% Club gained pace within two short years. From Hegde’s bedroom and five interns initially, it now comprises more than 200 employees, directly serving over 85,000 active, paying customers who use 1% of the Club’s resources to plan their finances, take educational courses, and achieve financial independence-one of the fastest-growing personal finance platforms in India.
However, Hegde said rapid expansion also has its downsides. Mistakes were committed in hiring and redundancies in expenses as the company scaled “at lightning speed.” The recent layoffs form part of the first cost-cutting exercise since the company’s inception, correcting the same. “This is our first cost-cutting exercise since inception,” Hegde shared, explaining the company identified several AI-driven solutions to streamline its processes. All these optimization measures will save on cost redundancy; thus, the company will invest in future growth.
Support and Severance for Laid-Off Employees
‘I know how painful it is, but at the end of the day, these layoffs have not been taken lightly,” Hegde says. He empathized with the employees and informed the news team that “1% Club will be providing severance packages based on tenure and will actively help these candidates get back to work in this industry.” Hegde conceded that the decision was harsh but stated that layoffs are painful yet sometimes indispensable for long-term stability and sustainability.
This move by Hegde highlights the tension between scale and operational efficiency as 1% Club continues growing; restructuring to optimize resources as it delivers value to customers is very much on the agenda. From savings generated from AI optimizations, the company is keen on re-investing in even newer financial products and services for its large user base.
Sharan Hegde is one of the most followed finance influencers in India. He has developed a niche for relatable financial advice for millions. As one of the influential personalities transforming into entrepreneurs, his journey will illustrate an understanding of personal finance and business growth.
