Recognised as a rising star in January 2019, laid off ten months later. That is the story of a former Paytm* employee The Ken spoke with. His story has parallels with thousands of other startup foot soldiers across the country, who have all been laid off from fast-growing startups. Often, with little to no warning.
The ex-Paytm employee joined the payments company’s Smart Retail team in October 2018 as an entry-level manager. He was part of a fledgling team of 80 people that sold point of sale machines to merchants, and was in charge of onboarding merchants. “We were onboarding close to 300-400 merchants every week on average,” said the employee, who asked not to be named fearing repercussions.
Six months into the job, he was promoted. When he was asked to leave, he claims, it wasn’t because of the quality of his work, but because his role was no longer relevant to the company. He was one of 600 Paytm employees who were laid off by the company in 2019.
Over the past few months, layoffs like these have become increasingly common among India’s unicorn brigade—startups valued at or above $1 billion—or those aspiring to join the club. The reported number of layoffs in late-stage startups in 2019 stack up like this: food tech giant Zomato laid off 540 people, ride-hailing company Ola let go of 300, intercity cargo service company Rivigo retrenched 100, and furniture retailer Urban Ladder cut 246 employees from its payroll.
The most recent and high-profile firings, however, have been at OYO. The budget hotel chain has already sacked 1,200 of its staff across functions and geographies, with more layoffs expected shortly. And even while OYO has dominated headlines, e-pharmacy 1mg has quietly let 300 employees go.
Most of these layoffs have been at entry- and mid-level positions, and have been in companies that have a large offline component.
This sort of churn isn’t new in India’s startup landscape. The last such was in 2017 when companies like homestay aggregator Stayzilla were shutting down, while others like real-estate portal Housing.com and e-commerce retailer Snapdeal were scaling down to stay afloat.
The similarities are glaring. Indeed, this cycle seems almost like a rite of passage among startups—hire-to-grow, fire-to-sustain.
“Companies grew in whichever way it brought them growth. When companies hire people to grow, those people don’t change the capabilities of a company… That doesn’t set up an organisation in a good way,” said the founder of a unicorn.
Now, the cost chickens have come home to roost. Co-working unicorn WeWork’s catastrophic attempts to go public and cab aggregator Uber’s sub-par initial public offering (IPO) showed that public markets aren’t sold on the growth-over-profit mentality that has ruled the startup space.