“Now all of these changes might make it seem that we are in a bad state. Trust me. We are not. We are in a great state. This is the final frontier that we have to conquer. Profitability. And once we do, it will change the game for us,” he said
Unacademy chief executive Gaurav Munjal told employees in an internal note on Monday that the edtech firm’s founders and top management will take pay cuts and that the company will shut its global test preparation business.
The steps are aimed at reducing costs significantly and hitting profitability, even as the SoftBank-backed company has Rs 2,800 crore in the bank, Munjal, who is also one of its founders, said in the note.
“Even though we have more than Rs 2,800 crore in the bank (as of this morning), we are not efficient at all. We spend crores on travel for employees and educators. Sometimes it’s needed, sometimes it’s not. There are a lot of unnecessary expenses that we do. We must cut all these expenses,” he wrote in the note, adding: “We have a strong core business. We must turn profitable asap (as soon as possible).”
According to him, the founders have already taken a pay cut and the same will be implemented for the top management. Besides Munjal, Roman Saini and Hemesh Singh are the cofounders at the Bengaluru-based startup, which was valued at $3.4 billion last year after a $440 million funding led by Singapore’s Temasek.
“We will be shutting down certain businesses that have failed to find the product-market fit, like the Global Test Prep,” Munjal said. This is the second note from Munjal to his team in recent months. In May, he had said a funding winter was here and that the company must change its ways. That was sent by Munjal after Unacademy fired around 1,000 employees across the group in April.
“Focus is on cutting costs clearly. It will focus on the core test preparation business and the job-tech vertical of Relevel,” a person aware of the matter said on Monday. Munjal had also told media the same in April.
“We have to do an initial public offering in the next two years. And, we have (to) turn cash flow positive. For that, we must embrace frugality as a core value,” Munjal wrote in his latest note.
According to the note, meals and snacks will no longer be complimentary across its offices and it will put “strong guidelines” for travel, including no ‘business class’ travel for anyone including its senior-most executives. Founders, employees, and educators can pay from their own pocket if they want an upgrade, he said in his note, adding certain privileges like dedicated drivers for CXOs will be removed as well.
“Now all of these changes might make it seem that we are in a bad state. Trust me. We are not. We are in a great state. This is the final frontier that we have to conquer. Profitability. And once we do, it will change the game for us,” he said, repeating that the company remained well-capitalized. “…but still we want our businesses to be profitable. And it will take Unacademy Group to a different league,” the CEO added.
Unacademy counts SoftBank, General Atlantic, and Meta among its investors. Media had reported in April that it was estimated to have posted Rs 1,000 crore in revenue for the last calendar year and was aiming to grow it by 70% to Rs 1,700 crore by December 2022.
The cost-cutting measures are not unique to Unacademy. Rival Byju’s and its group companies have fired employees recently, as well as the likes of Vedantu.
Edtech startups received a major boost in business aided by the Covid-19 pandemic. With the pandemic receding and offline centers opening, these platforms are also building their offline presence.
Media reported on July 4 that there had been a 37% drop in venture funding for startups in the quarter ended June 30, compared with the previous three months.
