Payroll management company Pagarbook has laid off more than 80 employees due to troubles ranging from product failures to shortage of cash, sticking out like a sore thumb in the Indian startup party.
Pagarbook, a startup backed by Sequoia India and other investors that helps small businesses digitise attendance and payroll, fired nearly its entire marketing and sales team last month, said six people familiar with the matter.
The list of laid-off employees includes content writers, designers, people on the ground in small cities as well in Pagarbook’s office in Bengaluru, across junior and relatively senior levels. The layoffs are striking at a time when Indian startups are otherwise seeing an unprecedented funding and growth boom.
The founders of 1.5-year-old Pagarbook did not respond to a detailed set of questions from Moneycontrol seeking comment.
In the last week of June, these employees were told via video call that they will be sacked with immediate effect, and will be given their salary for that month in lieu of notice. Not all laid-off employees have been given their final dues yet.
All the people Moneycontrol spoke to for this article requested anonymity for fear of getting into trouble with the company or having some of their pending salaries withheld.
One former employee who was privy to the conversations that led to the layoffs said Pagarbook has been a sales-driven organisation. “They purged the sales and marketing departments because they just could not be paying so many people when the product is stumbling and marketing efforts have gone awry.”
Pagarbook has been among the most well-funded early stage startups in recent times, raising a $15 million Series A round from Sequoia and India Quotient in December 2020. In late 2019, Pagarbook was also part of Sequoia’s Surge, a rapid scale up program along the lines of US-based Y-Combinator, and was valued at $100 million last month.
A part of Pagarbook’s troubles began sometime in February, when the company launched a fingerprint scanning feature for small-business employees to register attendance and log out each day. This product received severe blowback from customers because it was riddled with glitches, according to the people cited above.
In March, founders Adarsh Kumar, Rupesh Kumar Mishra and Arya Adarsha Gautam decided to roll back this feature and launch a new series of products in the next six months or so.
The rollback happened, but there has been no new product so far. After the layoffs, a few mid-level marketing and design executives voluntarily decided to leave as well.
Employees were also told that Pagarbook’s appointment of actor Akshay Kumar as a brand ambassador in November last year was meant to turbocharge its growth and usage. But “it was useless and did not yield anything”, said one person involved in discussions.
While being laid off, employees were also told that Pagarbook is facing a cash crunch and it was expecting to raise more money from investors soon. It is trimming its employee count to extend its cash runway, they were told.
However, Pagarbook is still hiring for team leads and field sales executives across levels and has at least 30 openings according to its job postings on LinkedIn. Hence its financial situation is unclear.
The founders had earlier started GyanApp, a regional language knowledge sharing platform in 2018, and raised money from India Quotient. But they had to shut down the platform in October 2019.
“It was one of the toughest periods of our life as we had let go of 75% of our team, reduced from 16 to 4. All of the people who left have landed in good places,” Kumar wrote in a blog post.
While Pagarbook’s marketing team was let go last month, its sales team sees regular churn and has a frequent hire-and-fire policy, people from the team said.
One senior executive said as many as 150-160 people were let go out of a total workforce of about 650 people. Moneycontrol could not independently confirm this figure. Another person said the total workforce, including on-ground marketers and office staff, comes to about 350.
Before the layoffs, there was some angst building in the company, with several employees not pleased with having to work from its Bengaluru office during the pandemic. Pagarbook encouraged employees to come to office even during the second wave of the pandemic, keeping its office open for the most part, one person said.
Pagarbook offers its app in 12 Indian languages and has over 50 lakh small and medium enterprises (SMEs) registered on its platform. It claimed to manage 2.5% of the entire SME workforce’s salaries and attendance.
Pagarbook faces competition from another Sequoia-backed firm Khatabook, which rolled out Pagarkhata, to complement Khatabook’s original premise of helping small businesses digitise their book-keeping. Lightspeed and Tiger Global-backed OkCredit too launched OkStaff in November last year. OkStaff and Pagarkhata directly compete with Pagarbook.
