The layoff story at Koo: Hush-hush agreements, but nothing written, led to forced resignations

Employees from across the engineering section, Android, analytics, content, growth, front-end, back-end and testing teams were laid off.

Over the last several months, Koo, the home-grown microblogging platform, has forced employees to voluntarily resign instead of directly terminating them, as it resorted to workforce reduction to keep costs in check, former staff members told Moneycontrol.

This comes days after the Tiger Global-backed company said on April 20 that it has trimmed 30 percent of its 260-member workforce, or about 80 employees, over the past year, joining a growing list of companies taking cost-cutting measures during an ongoing funding winter.

Employees from across the engineering section, Android, analytics, content, growth, front-end, back-end, and testing teams were laid off, according to sources.

Moneycontrol spoke to at least four employees over the past four days to learn about the measures Koo took to conduct layoffs discreetly.

However, responding to Moneycontrol’s queries, Koo said that it has been transparent and direct 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 contended that it followed standard industry practices by first informing its employees about the decision and then giving them the option to resign instead of showing it as a termination — as it could be considered as a ‘blemish’ on their resumes.

When did it start?

It all began during one of the company’s all-hands meetings on a Monday in February this year. All-hands meetings are typically held to update all employees about changes within the organisation.

During the meeting, Mayank Bidawatka, co-founder of Koo, told employees that the company would begin axing jobs, multiple employees revealed. He, however, did not shed light on the reasons why the company has decided to downsize.

Discreet layoffs

Soon after the co-founder’s address, employees started getting messages on Slack. They were asked about their availability for a ‘quick call’ with their manager or the head of human resources (HR).

“All of us knew that if someone has received a Google Meet link, that means we’re gone (out of the company),” a former employee who spoke to Moneycontrol, on condition of anonymity, said.

“The call lasted for less than one-and-a-half minutes. No reasons or explanation whatsoever,” he added.

Another employee corroborated 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,” said another ex-employee who requested that his identity be kept hidden. The employee was let go around Holi, at the beginning of March.

The startup, also backed by Accel, laid off 15 employees in September last year to streamline operations, it had said. Again, in February, Koo let go of around 30 employees, including a few from the top management to keep its costs in check, Moneycontrol had reported earlier.

The Bengaluru-based Koo said in the statement on April 20 that the total number of layoffs at the startup, including the previous rounds, does not exceed 30 percent of its total workforce.

None of the employees Moneycontrol spoke to have received any written communication about being fired from the company. Many companies, across the startup ecosystem, are trying to avoid written communication while laying off, as the communication then tends to get leaked easily, according to industry experts.

“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,” Koo said.

“As indicated, this is a standard industry practice in events of this nature,” it added.

In this case, some employees claimed they were even asked to sign a non-disclosure agreement which prohibited them from talking about layoffs at Koo.

In its statement, the company, however, denied saying no employee was made to sign any NDA.

“No employee was made to sign any NDA. Everyone is bound by the standard employee agreement that includes clauses around confidentiality and non disparagement. This is a standard agreement across the world,” the company said.

“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,” it added.

Voluntary resignations or layoffs?

Koo’s employees were informed about their last working day and then made to resign on the company’s employee portal. “We were told that if we did not voluntarily resign, it would lead to a termination and that our full and final (F&F) would not be paid out,” another employee added.

The company has paid one month’s salary as severance to all employees Moneycontrol spoke to. Contractual employees, however, did not receive any settlement in return for a premature discontinuation of their agreements. Even interns from the testing team were asked to leave earlier than scheduled.

However, Koo contends that it did not tell anyone that if they didn't resign, it would lead to a termination and that the full and final settlement would not be paid.

Affected employees were initially told they could retain whichever work laptops they had. But all employees who used Apple MacBooks were asked to return that system and were instead given an old Dell or HP laptop to keep with them, employees told Moneycontrol.

“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.

Contradicting reasons behind layoffs

On calls with employees, the HR head told affected employees that the company has nothing personal against them and only ‘low-performing employees’ are being sacked due to a cash crunch at the company. Some were even told they would have been retained if Koo had the money, Moneycontrol has learnt.

Koo has, however, denied cash runway issues and said it remains “well capitalised”. In the statement to Moneycontrol earlier on April 20, the company said it is not looking to raise capital as of now. This, after reports highlighted Koo’s inability to raise funds.

Koo’s losses have jumped 460 percent from Rs 35 crore in FY21 to Rs 197 crore in FY22. Its revenues, on the other hand, increased by 75 percent year on year (YoY) from a mere Rs 8 lakh in FY21 to Rs 14 lakh in FY22.

“We have become extremely efficient and are working towards a certain agreed-upon unit economics, that includes salary costs at a given scale. We recently raised funds in January and that gives us a good runway. Given the uncertain global recessionary environment it's only prudent to be more efficient and keep extending the existing runway,” the company said.

“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’s popularity

To be sure, Koo has scaled up fast. Founded in 2020 by Aprameya Radhakrishna and Bidawatka, Koo has already seen over 60 million downloads and the founders are gunning for 100 million downloads in the near future. The rapid rise in the initial years was largely because of how the company positioned itself. Koo was touted to be Twitter’s alternative, built in India. Domestically, it boasts of celebrities like Virat Kohli and several high-profile union ministers like IT minister Ashwini Vaishnaw, commerce and industry minister Piyush Goyal, among others.

Its reach was not limited to just India. Since its launch, Koo has expanded to over 100 countries and introduced over 20 global languages. More recently, it was a rage among Brazilians after the country’s president Lula da Silva joined the platform.

But, Koo’s monthly active users (MAUs) have been on a decline, according to reports. Koo’s MAUs reportedly declined to 4.1 million in January, down sharply from around 9.4 million in July 2022.

So far, Koo has raised over $70 million from investors like Tiger Global, Accel, Blume Ventures, Kalaari Capital, 3one4 Capital, and others, valuing it over $ 250 million, according to data from Tracxn.

This story was amended to incorporate Koo's responses to Moneycontrol queries