The 1% Club, a fast-growing financial education platform co-founded by influencers Sharan Hegde and Raghav Gupta, has laid off around 15% of its workforce, citing the growing role of artificial intelligence (AI) in its operations. Backed by Nikhil Kamath, co-founder of Zerodha, The 1% Club has achieved rapid growth in recent years but is now making adjustments to improve efficiency.
Sharan Hedge and 1% club
Sharan Hegde, co-founder of The 1% Club, is a prominent financial influencer who has built a strong following through his content on personal finance and investment strategies. With a background in finance and a knack for simplifying complex financial concepts, Hegde has been instrumental in shaping The 1% Club into a community-driven platform aimed at improving financial literacy in India. Starting the company from his bedroom with just five interns, Hegde has led its rapid growth to nearly 200 employees. His transparent communication and leadership, especially during challenging times like the recent layoffs, have earned him respect within the industry.
Layoffs for Operational Efficiency
The layoffs have impacted about 28 employees, less than 15% of the company’s total staff, Raghav Gupta told *Moneycontrol*. “We’ve laid off employees to streamline our operations, mainly due to AI automations. While we grew from 12 employees a year ago to a headcount of 197, redundancies emerged, and we now have around 163 employees after the layoffs,” said Gupta.
These job cuts primarily affected employees in the content, research, and marketing teams, sectors where AI-driven processes have become more prevalent. Gupta explained that content creation and research functions, which previously required manual effort, have seen significant advancements with the introduction of AI tools like Perplexity AI, making some roles redundant. A small number of employees in the marketing vertical were also affected.
AI’s Role in the Layoffs
AI technology has transformed many aspects of the company’s operations, particularly in content creation and research. Gupta highlighted that AI has helped speed up content production and research processes, which led to the decision to reduce the workforce in those departments. “With AI tools, research has become faster, and many tasks that required more manpower are now automated. In some areas, performance issues also played a part in the layoffs,” Gupta explained.
While content and research saw the highest impact, the company’s core teams in finance, technology, sales, and B2B (business-to-business) operations remained unaffected by the downsizing. Gupta added that AI is helping to create operational efficiencies, with fewer people now able to achieve much more.
Rapid Growth and First Cost-Cutting Exercise
In a LinkedIn post, addressed the reasons behind the layoffs, calling it the company’s first cost-cutting measure since its inception. Hegde revealed that The 1% Club started just two years ago with only five interns. “Fast forward to today, we have almost 200 employees, and rapid growth often leads to hiring mistakes and redundant expenses. This is our first cost-cutting exercise, and we’ve identified significant AI-driven savings that will improve profitability,” he wrote.
Hegde emphasized that The 1% Club has been bootstrapped since its beginning, with no reliance on investor funds. Both he and Gupta have maintained strict financial planning to run the business efficiently. “While I continue to focus on growing the company, I’m mindful of the impact on employees. We’ve offered a fair severance package to those laid off and are helping them find jobs in my peers’ companies,” Hegde added.
Performance of The 1% Club
The 1% Club raised ₹10 crore in a pre-series A funding round last year from Gruhas, a venture capital firm founded by Nikhil Kamath. However, Gupta clarified that the investor’s funds have been securely invested in a fixed deposit earning 8.5% interest. The company has instead used its profits to fuel its expansion, including a new 5,000-square-foot office in Mumbai.
Gupta disclosed that the company is currently generating around $8 million in annualized revenue with a strong EBITDA margin of 35-40%. The 1% Club has approximately 85,000 active paying customers and has launched new financial products, achieving profitability in the process. “We estimate that we’re generating business worth ₹6 crore monthly, with our lifetime membership plan priced at around ₹22,000,” said Gupta.
He further added that The 1% Club has around four lakh customers who have made some payment to the platform, with 73,000 opting for lifetime membership. Gupta expressed confidence in the company’s future, predicting compounding growth in subscribers as financial literacy continues to grow in India.
The Role of AI in Business Efficiency
AI has been a game-changer for The 1% Club across multiple verticals, according to Gupta. From marketing and content creation to customer support and data analysis, AI has enhanced productivity while reducing the need for manual intervention. “In content, we previously needed copywriters, graphic designers, and videographers, but AI has drastically reduced the need for large teams,” Gupta explained.
Additionally, AI has transformed customer support, allowing a smaller team to manage more tasks through automation. Data analysis has also been significantly improved by AI tools, enabling the company to derive insights from vast amounts of data with minimal manual effort.
Citing OpenAI CEO Sam Altman, Gupta stated, “We’re in the age of abundance. With AI, we can achieve much more, and that’s why businesses must adapt and become more efficient.” He emphasized that while AI was a major factor in the layoffs, it wasn’t the only one, with operational efficiency being a broader goal.
The Future of The 1% Club
The founders see The 1% Club as a socio-finance community that helps people become more financially literate. The platform offers a Finance Academy, hosts events, and provides an app where users can find accountability partners, network, and even look for jobs. The company also offers financial tools to assist with planning goals and making investments.
As AI continues to drive efficiencies in many of its verticals, The 1% Club is poised for further growth. With a clear focus on profitability and efficiency, Gupta and Hegde aim to maintain the company’s upward trajectory while adapting to the evolving landscape of financial technology.
