In a third round of job cuts, Indian social commerce startup Meesho has slashed 15% of its workforce to improve its financial health amid a tough macroeconomic environment. Softbank and Meta-backed
Meesho backed by giants
The startup is backed by Softbank, Fidelity, Prosus, SoftBank, Sequoia India and Meta. It had previously slashed about 150 roles in April last year, followed by around 300 roles from its grocery vertical Superstore in August 2022
“As leaders, we made Judgement errors In overhiring ahead of the curve. At the same time, we could have run our org structure in a more effective and lean manner overall. Our spans and layers were inflated, and this could have unintended consequences on our speed to execute,” Meesho’s chief executive officer Vidit Aatrey said in an email to employees on Friday.
Leaner organizational structure
The Bengaluru-based startup seeks to work with a leaner organizational structure to achieve sustained profitability.
“While we are confident that Meesho’s business will stay strong, the economic reality is here to stay. We are now faced with the hard truth of aligning our people costs with the new projections of our business. We should have done better here,” the top executive added.
Company officials said that impacted employees would be provided with a separation package that includes a one-time severance payment of 2.5 to 9 months (depending on tenure and designation), continued insurance benefits, job placement support and accelerated vesting of ESOPs.
As per media reports, the layoffs align with the startup’s strategy to trim its cash burn over the last year aggressively. It is now “nearing zero cash burn” and aims to achieve EBIDTA breakeven in 2023; its leadership team recently told brokerage firm Jefferies.
Aatrey, in his mail to employees, said that the startup grew by 10X from 2020 to 2022, helped by Covid tailwinds and aggressive investments. “Even as we tracked to our plans, the macro climate undeniably and considerably changed. As a result, we have had to accelerate our timeline to profitability as part of Project Redbull, while readjusting our GMV growth goals to 30% YoY. While our cash reserves buffer us well for these harsh circumstances, we need to stay highly prudent on the cost front.”
Social commerce platform
The seven-year-old start-up began its journey as a social commerce platform enabling individuals to start selling online. These sellers are predominantly based in smaller cities.
However, the startup changed its strategy midway to become a full-fledged e-commerce platform, directly competing with e-commerce giants Amazon and rival Flipkart. Meesho last raised $570 million in September 2021 at a valuation of $4.9 billion.