Meesho, an e-commerce startup backed by SoftBank, has announced the decision to lay off 251 employees, constituting 15 per cent of its total workforce. The announcement was made during a town hall meeting held on Friday. According to the company, this move is aimed at achieving sustained profitability and establishing a more streamlined organizational structure in light of the ongoing technology industry reset.
Meesho CEO Vidit Aatrey admitted in a note to employees that the company made “judgment errors” in over-hiring and could have operated with a more effective and lean organizational structure. Aatrey stated, “Our spans and layers were inflated, and this could have unintended consequences on our speed to execute.”
The layoffs are not performance-based but rather a response to the company’s changing business reality. Aatrey expressed regret over losing talented employees, saying, “I understand this is bigger and more frustrating than any change we have braved together. For those who are leaving: I say thank you and that I truly am sorry. You were the strength that moved mountains in our mission of democratising e-commerce for everyone and you made Meesho Meesho.”
Meesho restructured its grocery business Farmiso in April 2022, resulting in the layoff of 150 employees. Reports at the time, however, suggested that around 400 employees were affected.
In an email to employees, Aatrey elaborated on the company’s changing macro climate and the need to align its people costs with new business projections. He explained, “We 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 per cent YoY.”
To support those affected by the layoffs, Meesho has provided a comprehensive separation package, which 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.
Aatrey remains confident in Meesho’s business strength despite these challenges. The decision to lay off employees comes amidst a broader industry trend towards resetting business models and achieving greater financial stability.
