[ad_1]
When the circuit breaker measurements are lifted, David Lim *, 29, will return to his office. You will have to learn new skills, to cover some of your colleagues who were fired. He will work longer hours, even though his salary was cut, to keep his job. You will wonder if the startup where you have spent the last two and a half years will fail. David’s office, while still “hot” with its ping pong table, Nespresso machines, and idea boards, will never feel the same again.
Startup employees are bearing the brunt of the strain of Covid-19’s impact on the risky industry, and the industry mindset of going big or going home isn’t improving it. Standards that were tolerable during boom times (long work hours, high turnover rates, and below-market wages) perhaps even brandished as a badge of honor and part of the unicorn’s dream. Now that the crisis has come, harsh realities have been established and employees are feeling the heat.
The coronavirus pandemic has demolished sources of income and slowed funding activity, but fixed costs remain. Companies that were struggling to strike even before now now face an uphill battle as losses continue to widen and cracks in business models begin to become more apparent. Without an abundance of new venture funds to fill in, this crisis is forcing many startups to either grow or go home.
About 74 percent of startups saw their revenues decrease since the start of the virus outbreak, a global survey by research firm Startup Genome shows. Although most startups experienced a “relatively modest decline in revenue,” the survey noted that up to 16 percent of startups still saw their revenue drop sharply by more than 80 percent.
With the exception of superapps, startups often only have one main engine of growth. As such, they are likely to be more susceptible to economic shocks than large companies with a diversified portfolio, industry players say.
The pandemic is exposing the toughest and fiercest side of startup world: the need to run thin, cut fast and adapt quickly, or fail. For many startups, this will mean having to cut payroll, cut marketing budgets, negotiate extended payment terms with suppliers, and seek additional capital to overcome this storm, which will likely last until 2021.
That’s bad news for the 20,000 people employed by 3,800 startups in Singapore, according to the latest December 2018 figures from the Department of Statistics.
It’s time for truth
Start-ups will have to abandon employees they were hired to grow, which has stagnated, left unpaid staff on leave, or implemented cut wages to reduce the impact of the pandemic on cash flow from the company, industry players say.
Indonesian unicorn Traveloka, for example, in April was forced to cut about 100 people, or 10 percent of staff, after travel cancellations and demands for reimbursement hit the company, the Nikkei Asian Review reported. Some employees were fired just days after starting their new position at the company, BT reported.
Several employees at different startups say they are generally the last to know about such cost-cutting measures.
Jeslyn Lee *, 32, who had been working at an e-commerce company for almost two years, received a notification on her computer to attend a Zoom conference call with her bosses and assumed it was for the usual Monday of equipment. meeting. But during that call, he was asked to sign a termination agreement the same day, or to risk having his compensation reduced. Other colleagues went through a similar process.
There was no warning, much less compassion, says the marketing executive. “I felt like all the hard work and long hours I had put into the company before this didn’t even matter.”
With declining revenues and an uncertain sales trajectory, new employees whom companies have hired in advance to fulfill the roles necessary for growth will be laid off in the current economic climate. Keeping them on the payroll would bring an unwarranted cost to a company’s cash flow even with a government subsidy of 75 percent on wages, says Adrian Choo, executive director of human resources consultancy Career Agility International.
That said, the startup world is no stranger to layoffs. Pivots come at a cost, and most of the time, transitions require some roles to become redundant.
For example, coexistence operator Hmlet laid off about 10 percent of its employees, according to Tech reports in Asia in February. The layoffs came after the startup moved to a “lighter asset model” in an attempt to improve its bottom line. The startup, which generally rents, renovates and operates properties, is now in talks to partner with more owners to help manage Hmlet-branded properties on a profit-sharing basis and management contract.
Telecom startup Circles.Life, with some 500 employees in its Singapore, Taiwan and Australia offices, has been cutting staff since November last year, BT reported. “This is nothing out of the ordinary given the accelerated nature of the organization. There are likely to be some changes along the way as we expand,” Rohan Talwar, head of corporate development at Circles.Life, told BT in February. .
Many other startups in the region, including budget hotel chains OYO and RedDoorz, startup CXA Group and online fashion platform Zilingo, have also downsized during the reorganization exercises.
Many threats
Layoffs, pay cuts, and voided job offers are not the only threats new employees face. As the Covid-19 storm progresses, the disadvantages of working in the startup industry begin to accumulate.
Several new employees BT spoke to expressed deep and almost guilty resentment towards some parts of the culture, citing reasons such as burnout.
“The startup culture seems to suggest that if we work tirelessly and network 24 hours a day, 7 days a week, we could change the world with our ideas,” says Lim, 29, an employee of an established e-commerce startup in Singapore.
“They wouldn’t see you as a sufficient team player if you choose to go home instead of solving the problem with the team about a new project. But there are always new projects,” he adds.
Employees are expected to spend extra hours, especially when a major milestone is approaching, when the company secures a new project, or when new problems arise, says Yvonne Tan *, who works at a fintech startup in Singapore.
“You don’t join a startup to work from 9:00 am to 5:00 pm. That’s weird. Most will expect that, in addition to the work required, you stay to help your colleagues as much as you can, take on other responsibilities that if necessary, it is not within the scope of your work and take the initiative to solve problems with the team.
“Startups work very fast to solve problems. When there is a system error or a red flag, we would have to spend additional hours immediately to solve it … The balance between work and personal life is practically non-existent since it is generally , they remain in the office until 9 at night, “he adds.
Now, Mr. Lim says that chores are piling up and work hours are increasing, under the guise of flexible work hours.
“This was expected. Some of my colleagues were fired, and it makes sense that we have to shoulder their responsibilities, at least until they hire someone new,” he says.
Catherine Yeow, group business leader for the Singapore, Bangkok and Seoul offices for recruiting firm HRnetOne, says: “Start-ups are still hiring during this period, but this hiring is limited to critical hiring, backed by the justification of the return on investments.
“At the same time, hiring of staff counts due to attrition is limited due to the slowdown in the economy. Many roles and functions are being distributed and shared among the existing team to keep payroll cost down and increase value. of each employee through greater efficiency. “
Beginning from zero
Being a team player counts a lot in the fast and furious world of startups, and employees can be asked to play roles that are not in their area of expertise, especially early stage startups.
“I joined a technology startup at an early stage a year ago to contribute as a mechanical engineer. Instead, the company made me work on data analysis, establishing infrastructure, writing marketing arguments, and running social media channels, which was a far cry from my experience and scope of work. I had to learn a lot of things almost from scratch, “says Renee Yong *.
Ms. Yong, who has joined another startup, added that this gave her a broader perspective and more experience, but “she was doing too much on the surface level without any depth on the matter.”
For start-up companies struggling with fundraising, staff will have to bite the bullet and wear multiple hats, Ms. Yong says. She adds that founders could also be in charge of a wide range of roles including human resources, marketing, finance, and sales.
All this, in the hope that its start is not part of the 90 percent that fails.
Right now, startups, especially early-stage startups, have started re-forecasting projections, revenue, and cash flow to get a better idea of how much they need to cut to survive or reach their next milestone. . Then, companies would consider whether an individual can contribute to the process, says Adrian Goh, co-founder of the Nodeflair tech career platform.
“Those who have a strong cultural fit and share the company’s goals would tend to deserve further consideration, even if their roles might not be fully relevant in a new direction,” he adds.
On top of this, startups tend to have a smaller budget compared to large corporations due to limited funds, making it difficult for them to provide larger compensation packages and pay relocation specialists, says Adrian Tan, practice lead at PeopleStrong HR and technology company solutions.
Relocation services, to help laid-off employees re-enter the workforce as soon as possible, range from a few hundred dollars to several thousand dollars per employee, according to a Randstad RiseSmart publication, depending on the services offered.
However, startup founders can link former employees to the founders of the community they are hiring, as the skill sets are quite transferable for those in the industry, says Zenos Schmickrath, who was co-founder and CXO of the co- Hmlet operator before it. He left the company in January to seek other opportunities.
“While measures such as layoffs may be necessary and often the last resort, the founders will do everything possible to mitigate the impact of the layoff in a way that affects the company’s employee base as little as possible. It is our responsibility as manager or boss learn how to do it in the best possible way, “says Mr. Schmickrath.
Rishi Israni, co-founder of Zimplistic, who invented an automatic flatbread maker called Rotimatic, says the company has been transparent with its employees since it struggled in February when its supply chain in China was disrupted.
“There were many conversations before implementing it (the salary cuts). We knew what was coming and discussed with our employees what was the best option to move forward … The team considered the background of the employees, whether they were single, they had to provide for many children, or had other important financial commitments, “Israni says.
The agenda was not personal, and people are more understanding when there is more communication, mutual respect and a close community, he adds.
But startups should refrain from immediate reactions, such as immediately cutting marketing expenses or R&D funding, so they don’t end up irreparably damaging the business, Chua Joo Hock, managing partner at Vertex Ventures said in an interview in March.
Chua has warned Vertex portfolio companies to cut their staff size carefully, if necessary. “New companies may face the need to hire similar positions again in 12-15 months, which could be even more difficult.”
Employee reluctance to take on multiple roles can also be managed. Ms. Yong says that at her new workplace at a renewable energy startup, employees are encouraged to explore other roles on their team, but these are not too far from the main roles.
“This encourages employees to expand their skills in complementary areas, which I really liked.”
What is the deal?
Despite the toxic working conditions, most startup employees BT spoke to said that if they had the opportunity, they would rejoin a new one.
Some found that the nearby community, with a shared mission and greater responsibilities, is one of the main attractions of working at a startup.
“Founders often leave time to meet employees personally, whether through coffee sessions or team meetings. This creates a strong relationship with the team and keeps employees excited to contribute to the shared vision of the business.” says Kevin Yu *, an employee of an online market startup in Singapore.
“It really is about throwing your hands, getting your hands dirty, and developing something that supports a cause or an interest close to your heart. In a startup, both employees and founders can put their own stamp on its impact and contribute to its development. as well as sharing their success, which is special in itself, “says Nisha Paramjothi, senior vice president of investment and strategy at fintech startup MatchMove, who joined the company after more than a decade at CIMB.
“What a startup gives employees is the opportunity to be more than a cog on the wheel. It’s a challenge, where they have greater responsibility, they can learn valuable skills and lead teams earlier in their careers, as well as having more control over your learning experience, “says Mr. Schmickrath of Hmlet.
Since start-up startups often cannot offer competitive salaries compared to large corporations, they often entice employees with an employee stock option plan (ESOP). Through this scheme, new companies can grant stock purchase options to employees, officers, directors, advisors and consultants, allowing these people to buy common shares of the company when they exercise the option.
Companies generally set aside around 10 to 20 percent of their share capital for this scheme.
Many startups in Silicon Valley and China have become millionaires through stock options, making these options attractive to those looking to join startups and work for the company’s long-term success. .
“Startups are looking for candidates who are aligned with their business goals and show passion for being part of their company. Potential candidates are often willing to join even at a low salary from their previous jobs in view of the great advantage of their participation. in the capital if successful, “says Ms. Yeow of recruiting firm HRnetOne.
“We see their profiles as young professionals with few financial liabilities or as those who have achieved financial independence and are now looking for new challenges in their careers,” he adds.
* Names have been changed to protect identities.
[ad_2]
