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Edtech giant Unacademy has announced that it is undertaking certain cost-cutting measures and shutting down certain businesses like Global Test Prep to employ 'frugality' as a core value.
This move comes a month after co-founder and CEO Gaurav Munjal said that a 'funding winter' was imminent, one that could last as long as 18 months. The company laid off 1000 employees at the time and announced that it would be cutting costs wherever necessary to weather the dry spell and be profitable. He also asked employees to improve profitability, travel only when necessary, and conduct meetings via Zoom if possible.
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The company, which is valued at over $3.4 billion, has introduced cost-cutting measures like the removal of drivers for top execs, no business class travel for any employee, reduced management salaries including the founders & removing complimentary meals and snacks.
"Until now we never had frugality as one of our core values...but now the goal has changed. We have to do an IPO in the next two years. And we have turned cash-flow positive. For that, we must embrace frugality as a core value. Even though we have more than Rs 2,800 crore in the bank, we are not efficient at all. There are a lot of unnecessary expenses that we do. We must cut all these expenses," the CEO said.
The company also announced the cessation of its Global Test Prep and all businesses like it which failed to find their product-market fit. Moreover, the company has also announced that it will be withdrawing its sponsorship of the Indian Premier League (IPL), citing a change in focus.
However, the company has also assured that even though these measures tend to show that the company is in a poor state, it isn't. The CEO said that the company is well-capitalized but turning profitable is important and that it would be a game-changer for them.
These steps are essential to building sustainable businesses which are profitable. The economic downturn has affected the valuations of startups all over the world as investors are exercising caution. The Ed-tech sector has been particularly affected as several companies have been firing people.
Vedantu fired 624 full-time and contractual staff in a week, Byju's has reportedly laid off 2,500 employees, WhiteHat Jr. fired around 300 employees & Udayy fired all its employees and shut down its business in June 2022!!
Some suggest that the craze of Ed-tech, which grew wildly during the pandemic, was dying down as offline studies were resuming. Offline centers, where teachers are physically in front of you & factors like the internet connection would not hamper learning, are considered to be more popular, thereby driving students away from online classes.
Physical classrooms provide a better learning atmosphere, which is why PhysicsWallah, Byjus, Unacademy, and Akash have set up their own brick-and-mortar centers to improve their respective student bases.
Article by Aman Agarwal.
This news piece is brought to you in association with jobaaj.com
