E-commerce platform Meesho announced on Friday that it would be laying off 15% of its workforce, affecting 251 employees. The company cited organizational restructuring as the reason for the layoffs, as it looks to turn profitable in a dwindling startup funding environment.
In an email to employees, Meesho CEO and co-founder Vidit Aatrey said that the company had grown 10-fold from 2020 to 2022, supported by Covid tailwinds and aggressive investments. However, he noted that the macro climate has undeniably and considerably changed, and that Meesho needs to “accelerate its timeline to profitability” by tempering its growth targets and staying highly prudent when it comes to costs.
Aatrey also admitted that the company made some judgment errors in terms of hiring staff. “At the same time, we could have run our org structure in a more effective and lean manner overall,” he said.
Meesho is not the only startup that has been forced to lay off employees in recent months. A number of other Indian startups, including Byju’s, Unacademy, and Cars24, have also announced layoffs in recent months. The layoffs are a sign of the challenging economic environment that startups are facing, as investors become more cautious about funding new ventures.
Meesho is offering severance packages to the employees who are being laid off. The packages will vary depending on the employee’s tenure and job designation, but they will include a one-time severance payment, continued insurance benefits, assistance in job placement, and expedited vesting of employee stock ownership plans (ESOPs).
The layoffs are a setback for Meesho, which has been one of the most successful Indian startups in recent years. The company has raised over $1 billion in funding and is valued at over $4 billion. However, the changing economic environment is making it more difficult for Meesho to grow at the same pace as it did during the pandemic.
The layoffs are a reminder that even the most successful startups are not immune to the challenges of the business world. As the economy continues to slow, it is likely that we will see more layoffs from startups in the coming months.