In the high-risk, chaotic world of startups where employees often end up as collateral damage due to failed funding, cost-cutting, business rationalisation or simply a struggle for survival, the ecosystem tries to take care of its own.
Even as they undergo layoffs – as in the case of Zomato, Treebo, ShopClues and Urban Ladder among others this year – companies are reaching out to influential alumni, investor and human resource networks that are rallying to support exiting employees, to ensure that as many of them find new employment as possible.
When budget hotel aggregator Treebo Hotels laid off about 20% of its workforce in July, the affected people got a helping hand from the company that had let them go. Treebo reached out to leadership acquaintances and leveraged its networks to connect exiting employees with relevant job openings, resulting in about 65% of them finding new jobs in companies such as Razorpay, Bounce, Myntra, Vogo, Meesho and Zest Money.
It was a similar story in September, when Zomato laid off 540 employees across its customer, merchant and delivery partner support teams. Current and former employees came forward to help laidoff employees and the company reached out to various organisations looking to hire in these functions. These have reached out to more than half the retrenched staff, Zomato said.
Startup entrepreneurs are much closer to their employees because they’ve been through much together. They also know that at some point they will need to go back and hire afresh.
“How you handle layoffs makes a big difference,” said SandeepMurthy, partner at VC fund Lightbox Ventures. “If you’re perceived as someone who just kicks out people, it will reflect badly on you when you want them to take a chance on you in the future.”
The startup ecosystem thrives on tight-knit communities, unlike traditional companies where partnerships aren’t as strong and bureaucracy runs deep.
“The startup network is a very influential community built on strong relationships,” said Karuna Casuba, director of HR, Treebo Hotels. “We always keep an eye out for each other in good times and bad.”
The first port of call for startups that are downsizing usually tends to be investors, who may have other portfolio companies hiring. “You tell your current investors: ‘We’re downsizing. Know anyone who’s hiring?'” said Murthy.
“The great thing in this process is that no one judges the laying-off company or the talent adversely. And almost always, the talent is top notch,” said a startup cofounder who did not want to be named.
Former Zomato staff have found career opportunities with organisations such as Grofers, Fareportal, Fabhotels, iSON, MedikaBazaar, OpenText, Club Factory and Drip Capital, said Daminee Sawhney, Zomato’s vice president of HR. “It was about accountability; this was our responsibility.”
When ecommerce platform ShopClues had layoffs in July, a large chunk of the staff found employment in Moglix, Lenskart and even Droom, sources said. ShopClues did not respond to email queries but Sandeep Aggarwal, CEO of Droom, who had cofounded ShopClues, confirmed this.
Aggarwal said it was the fourth instance in which he was absorbing talent from startups that were laying off. In 2012, during his ShopClues days, he had recruited as many as 50 employees from Letsbuy after it was acquired by Flipkart. In 2013, he took on another 25-30 from etailer UrbanTouch when it shut down, and another 15 or so from online wholesale marketplace Wydr when it closed.
Some people reached out directly. In other cases, Aggarwal was approached by senior ShopClues people, referring resumes. “In a merit-based culture, referrals work great for us. Some of my best talent has come in this way,” Aggarwal said. Urban Ladder did not respond to questions.
In startups, the team is everything. It’s people who build businesses, said Revant Bhate, former partner at KStart Capital, who is now starting his own venture. “You feel personally responsible to take care of them.”