We Invested Rs 10 Crore of Investors’ Money in an FD, Earning 8.5% Interest,’ Says 1% Club Founder Sharan Hegde

• ByStartupStory     |    November 8, 2024

Influencer and entrepreneur Sharan Hegde, founder and CEO of the financial education platform 1% Club, has announced a 15% workforce reduction as part of a cost-cutting initiative aimed at bolstering efficiency through AI-driven solutions. This marks the first layoff exercise since the company’s establishment in 2022. The move, which follows an anonymous Reddit post by an alleged employee citing the termination of around 40 employees, aligns with Hegde’s focus on streamlining operations and enhancing profitability.

In a recent LinkedIn post, Hegde clarified the motivation behind the layoffs while affirming the company’s strong financial health and growth trajectory. He emphasized that 1% Club’s expansion, including the opening of a 5,000-square-foot office in Mumbai, was fully funded by company profits, and that ₹10 crore in investor capital remains untouched in a fixed deposit account.

“I just laid off 15% of my workforce and I received a lot of messages from my friends and media if I’m going bankrupt. As a finance influencer who built his career around financial education, the irony isn’t lost on me 🙂 So let me give you guys an update- it’s been a while,” Hegde said.

Hegde shared an update on the company’s current performance, stating, “We are currently doing around $8Mn of annualised revenue with a 35-40% EBITDA. And yes, we have a fancy 5000 sqft office in Mumbai but all of this was done with the company’s profits. Our investor’s money of ₹10 Crores is currently invested in an FD earning 8.5% 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.”

Reflecting on the company’s rapid growth and the reasoning behind the layoffs, Hegde stated, “I started this company from my bedroom with just 5 interns 2 years back and fast forward to today we have almost 200 employees. Needless to say, when you grow at such 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.”

Hegde co-founded the company with Raghav Gupta, emphasizing their commitment to financial discipline and transparency. “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.”

Recognizing the impact on laid-off employees, Hegde expressed empathy and support, stating, “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.”

Hegde, who has built a following of over 2.7 million on Instagram, leverages his platform to promote financial literacy, and 1% Club currently serves nearly 85,000 active paying customers. The company’s new focus on AI-driven efficiencies marks a strategic shift intended to optimize operations and support further growth.

Follow Startup Story