Koo layoff: Voluntary resignations forced upon employees, firm denies coercion
Former employees of Koo, the domestic microblogging platform, have revealed that the company has been compelling staff to voluntarily resign instead of direct terminations as part of its workforce reduction measures to manage costs.
As per sources interviewed by Moneycontrol, this development comes shortly after Koo, which is backed by Tiger Global, announced on April 20 that it has reduced its workforce by 30%, or approximately 80 employees out of a total of 260, over the past year. This move puts Koo in line with other companies implementing cost-cutting measures amid a challenging funding environment.
Employees from various departments, including engineering, Android, analytics, content, growth, front-end, back-end, and testing teams, were laid off during the recent workforce reduction at Koo.
Koo claims transparency and directness
Over the course of four days, Moneycontrol interviewed at least four employees to uncover how Koo implemented discreet layoffs. However, in response to the publication’s inquiries, the company stated that it has maintained transparency and directness in its communications and actions.
“Employees were informed of the global slowdown and economic environment and hence the company’s need to be cost efficient at the soonest. This was done via an open town hall attended by founders and leadership and in team communications done by the functional leads,” a spokesperson said.
The company maintained that it adhered to standard industry practices by initially informing employees about the decision and then giving them the option to resign instead of listing it as a termination, as it could be perceived as a negative mark on their resumes.
All-hands meeting in February signaled layoffs
It started during a company-wide meeting on a Monday in February this year, known as an all-hands meeting where updates about the organisation are shared with all employees.
During this meeting, Mayank Bidawatka, co-founder of Koo, informed employees that the company would be cutting jobs, as revealed by multiple employees. However, he did not provide any explanation for the decision to downsize.
Shortly after the co-founder's address, employees began receiving messages on Slack asking about their availability for a "quick call" with their manager or the head of human resources (HR). "All of us knew that if someone received a Google Meet link, it meant they were being let go from the company. The call lasted for less than one-and-a-half minutes, with no reasons or explanations given," revealed a former employee who spoke to Moneycontrol anonymously.
Another employee confirmed that they were asked to join an unplanned video meeting. "I entered the meeting and saw my team lead and an HR representative on the call. I immediately knew what was happening as the company had been laying off people at regular intervals over the past few months in the same way," shared another former employee who requested anonymity. The employee was let go around Holi, at the beginning of March.
Koo's layoff history
The startup, which is also backed by Accel, had previously laid off 15 employees in September of the previous year as part of its efforts to streamline operations, according to its statement. Additionally, in February, Koo had reportedly let go of around 30 employees, including some from the top management, as a cost-cutting measure.
As per the statement issued by Koo on April 20, the total number of layoffs, including previous rounds, is stated to be within 30 per cent of the total workforce. However, none of the employees who spoke to Moneycontrol reported receiving any written communication about their termination from the company.
“Asking someone to leave over an email without having a conversation is very cold and not our culture. Everyone was informed over calls and given the time to ask questions for any clarification either over the call or later. As indicated, this is a standard industry practice in events of this nature,” Koo said, according to the same report by Moneycontrol.
According to some employees, they were asked to sign a non-disclosure agreement (NDA) that prohibited them from discussing the layoffs at Koo. However, in its statement, the company denied this claim, stating that no employee was made to sign an NDA. The company clarified that employees are bound by the standard employee agreement, which includes clauses related to confidentiality and non-disparagement, which are commonly used in employment agreements worldwide.
“No let go exercise is easy on either side but we've done the best we could to help them transition better. Today some of the largest companies in the world are letting go of 1000s of employees in the most inhumane way by cutting access, having no prior communication, and no outplacement support. As a startup, we've done things beyond our means,” the company said.
Koo's employees were informed of their last working day and then asked to voluntarily resign on the company's employee portal. Some employees claimed that they were told that if they did not resign voluntarily, it would result in termination and their full and final (F&F) settlement would not be paid out.
The company has provided one month's salary as severance to the employees interviewed by Moneycontrol. However, contractual employees did not receive any settlement for the premature discontinuation of their agreements. Even interns from the testing team were asked to leave earlier than their scheduled end date.
Koo denies termination threat
Koo, however, maintains that it did not inform employees that failing to resign would result in termination and withholding of full and final settlement. Initially, affected employees were told they could keep the work laptops they were using. However, employees who used Apple MacBooks were later asked to return them and were given older Dell or HP laptops to retain.
“In the event of separation, most employers ask for laptops to be returned - however, we have let employees retain their laptops as a measure of goodwill. In a few instances, specialised devices had been given for company related work, which were still useful for the company and our existing employees and hence these were replaced. This is a very practical step and we disagree with the sensationalist turn,” Koo’s spokesperson added.
During calls with affected employees, the HR head conveyed that the company did not have anything personal against them and only employees deemed as 'low-performing' were being let go due to financial constraints at Koo. Some employees were even informed that they would have been retained if the company had enough funds.
Koo refutes allegations of capital constraints
Despite reports of Koo's alleged inability to raise funds, the company has denied cash runway issues and stated that it remains "well capitalised". In a statement to Moneycontrol on April 20, Koo mentioned that it is not currently looking to raise capital.
The company has reported a significant increase in losses, with a jump of 460 per cent from Rs 35 crore in FY21 to Rs 197 crore in FY22. However, its revenues have shown a year-on-year (YoY) increase of 75 per cent, rising from Rs 8 lakh in FY21 to Rs 14 lakh in FY22.
In response to the financial situation, the company stated, "We have become extremely efficient and are working towards achieving agreed-upon unit economics, including salary costs at a given scale. We recently raised funds in January, which gives us a good runway. Given the uncertain global recessionary environment, it's prudent to be more efficient and extend the existing runway."
“Koo started its monetisation experiments in September 2022 and within six months we have one of the highest ARPU (average revenue per user) per DAU (daily active users) compared to Indian social media companies and direct global competitors. With over 100 brands advertising on the platform, we will continue to experiment with monetisation to build a sustainable business,” it added.
Koo, which was founded in 2020 by Aprameya Radhakrishna and Bidawatka, has garnered over 60 million downloads and has set a target of reaching 100 million downloads in the near future.
Its rapid initial growth can be attributed to how the company positioned itself as an alternative to Twitter, specifically built for the Indian market. Notably, Koo has gained popularity among Indian celebrities such as Virat Kohli and prominent union ministers, including IT minister Ashwini Vaishnaw and commerce and industry minister Piyush Goyal, among others.