Sharan Hegde's 1% Club lays off 15% of employees as Perplexity and AI make jobs redundant

Financial influencer Sharan Hegde's company The 1% Club lays off around 15% of its workforce.

Nikhil Kamath-backed The 1% Club, which was started by financial influencers Sharan Hegde and Raghav Gupta, has laid off around 15 percent of its total workforce.

"About 28 people, that is less than 15 percent of our overall workforce, have been laid off to achieve operational efficiency and due to AI (artificial intelligence) automations," Raghav Gupta, co-founder of The 1% Club, told Moneycontrol.

He added that while a year ago they had around 12 employees, the headcount has now reached 197. "After the layoffs, we will have around 163 employees. As the business keeps growing, we see redundancies."

The layoffs come at a time when market regulator Sebi has tightened its norms against financial influencers.

Most affected roles

The layoffs are across content, research and marketing verticals. With AI driving a lot of content creation, people from the content team were given the pink slips followed by research for similar reasons, said Gupta.

"There are two to three people from the research team who have been laid off and the reason is somewhat similar. Because of Perplexity AI, research has become faster. In a lot of places, there were redundancies and in some places there were performance issues. There were some layoffs in the marketing vertical as well. On the other hand, our core financial, technology, sales and B2B (business to business) team has not been affected," he said.

In a LinkedIn post, Hegde wrote about the reasons behind the recent layoffs.

"I started this company from my bedroom with just five interns two years back and, fast forward today, we have almost 200 employees. Needless to say, when you grow at such a lightning speed, you are bound to make some mistakes with hiring and redundant expenses. This is our first cost-cutting exercise since inception. We have identified significant AI-driven cost savings that can boost profitability and efficiency which can be reinvested in the business growth. Raghav Gupta and I have been running this company bootstrapped without ever using investor capital because we are super strict with our financial planning and diligence," Hegde said.

"While I don the hat of a capitalistic businessman continually growing the company, I also realise the psychological impact on the laid-off employees. Please note that we have offered a healthy severance package depending on the tenure to all the laid off employees and continue to support them with getting employed in my peer’s companies," he said.

The 1% Club performance

The company had last year raised Rs 10 crore in a pre-series A funding from entrepreneur Nikhil Kamath's venture capital firm Gruhas. The money raised was to get mentorship from Nikhil Kamath, Gupta said.

"We are currently doing around $8 million of annualised revenue with a 35-40 percent EBITDA. And yes, we have a fancy 5000 sq ft office in Mumbai but all of this was done with the company's profits. Our investor’s money of Rs 10 crore is invested in an FD earning 8.5 percent interest. We have almost 85,000 active paying customers and are working on new financial products and services some of which are already launched and have also achieved profitability," Hegde said in his post.

The company is estimated to have clocked a business of Rs 6 crore monthly. Its lifetime membership plan costs around Rs 22,000.

Gupta noted that they have more than four lakh people who have paid something and about 73,000 are their lifetime members.

He expects compounding growth in subscribers going forward. "In India, everyone's making money but they don't know what to do with that money. People are not aware before opting for financial services like SIPs (systematic investment plan) or mutual funds. In schools and colleges, there is no financial literacy. So we are making people aware of what people can do about their money," he said.

The founders call The 1% Club a socio finance community. The firm has a Finance Academy, it organizes events, it has a community app to find accountability partners, or to find jobs, among others. It also offers financial tools for planning financial goals or to invest money.

AI impact

In a lot of its verticals, artificial intelligence is driving efficiencies, Gupta said.

"We use AI in marketing and content. For content, we need copywriters, graphic designers, videographers and this is one aspect where we are seeing the direct impact of AI. Second is the support function of client and customers which is getting automated and streamlined. Here with a limited number of people we can do much more. The third area, where we are seeing a dramatic use of AI is the use of data. Whatever data we are generating, that data's analysis is getting automated. With AI tools, we are able to build insights based on the data we generate," explained Gupta.

Citing Sam Altman, CEO of OpenAI, Gupta said: "We are in the age of abundance. With AI, we can create more." In such a scenario, he said, people need to be more efficient.

"With AI everyone will do more. Human beings start solving more complicated problems when there are better tools at their disposal. So, we are also finding and figuring out these things. Layoffs are mostly for operational efficiency where AI played a role. AI was one of the many factors that led to people being laid off," he said.