In a bid to prioritise profitability over growth ahead of a potential initial public offering (IPO) in two years, edtech unicorn Unacademy has taken steps such as paycuts for founders and management, put travel restrictions on employees and stopped complimentary meals and snacks at their offices.
Employees, including CXOs (top management) will not be provided business class treatment for travel and anyone who wants an upgrade can pay from their own pocket, Gaurav Munjal, Unacademy's co-founder and chief executive officer, said in an internal note to employees, a copy of which was viewed by Moneycontrol.
Munjal further said that certain privileges such as dedicated drivers for CXOs will also be removed. Founders have already taken a salary cut and management will also take a salary cut, he added.
"We will be shutting down certain businesses that have failed to find PMF (product market fit) like Global Test Prep," Munjal said.
Munjal also said that the company should embrace 'frugality' as a core value from now.
"Until now we have never had frugality as one of our core values. Honestly, since we were focused on growth and the fact that we had raised millions of dollars of capital it (frugality) wasn’t a priority," Munjal said in the internal note.
"But now the goal has changed. We have to do an IPO (initial public offering) in the next two years. And we have to turn cashflow positive. For that we must embrace frugality as a core value," Munjal added.
Munjal further said that Unacademy is 'not efficient' at all, as it spends crores on travel for employees and educators. Munjal claimed that the company had more than Rs 2,800 crore in the bank as of this morning.
"Sometimes it’s (travel is) needed, sometimes it’s not. There are a lot of unnecessary expenses that we do. We must cut all these expenses. We have a strong core business. We must turn profitable asap," Munjal said.
Unacademy declined to comment.
This is Munjal's second message to employees in the last two months. In May, Munjal had warned employees of a potential 'funding winter' and had asked them to work under 'constraints.'
“We are looking at a time where funding will dry up for at least 12-18 months. Some people are predicting that this might last 24 months,” Munjal had said on May 26.
“We have a different Iconic Goal this time. The Goal is of Profitability. The Goal is of generating FCF (free cashflow),” he added.
Slowing demand for online edtech solutions, coupled with a drop in funding has forced edtech companies to lay off thousands of employees, go slow on expansion, reduce advertising and marketing spends.
Since the start of 2022, Unacademy has shut down its K-12 (kindergarten to class 12) segment and has laid off over 750 employees to cut costs. However, Unacademy is going aggressive with its offline forays. Moneycontrol had reported that the SoftBank-backed firm spent Rs 100 crore to hire 30 employees in Kota.
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