Shutters Down At Koo: Employees Say Closure Could Have Been Handled Better

In their LinkedIn post announcing the decision, co-founders Aprameya Radhakrishna and Mayank Bidawatka said they had been trying to salvage the company for the last year, frantically looking for a buyer or an investor. 

“Most of them didn’t want to deal with user generated content and the wild nature of a social media company,” they said to explain why no once came forward to invest or buy in KOO.

Though launched in 2019, KOO shot to prominence in 2021 after the Indian government clashed with X over its refusal to block certain accounts linked to the farmers’ protests. In a tit-for-tat move, many cabinet ministers, ministers of state and prominent celebrities queued up to join KOO, as did several media houses.

But for its employees, KOO had shut down many months ago. “Things at KOO have been tumultuous since the last six months. We were told the company is in losses but we were also repeatedly given false hope that things will align soon,” Manish (name changed for anonymity), who resigned the day the co-founders announced the closure, told The Secretariat.

With no formal channels of communication within the remaining team to announce the company's closure, Manish and his colleagues came to know of it on LinkedIn.

Since April 2024, Manish, a content moderator at KOO, and other employees, who were still on the payroll, had not got their salaries. The circumstances of Manish’s resignation also raised concerns. He said he and a group of employees were given an ultimatum: resign voluntarily or risk having their ‘experience certificate’ withheld by the company.

An experience certificate lists the number of years and months an employee worked in a company and generally includes a testimony of their professional character, something Manish would need to furnish to his future employers.

“I wish they had fired me earlier, at least then I would have got my severance package,” said Manish. There are still a handful of people at KOO who haven’t resigned.

Such closures are not uncommon. Many cash-strapped companies ask employees to resign so that they don’t have to pay them severance–which includes pay of several months and benefits. Severance is not mandatory, and applies only if you are laid off.

The Secretariat spoke to a former Team Lead KOO employee, Mukesh (name changed), who was laid off in November 2023. He was one of the first employees of the Hindi team at KOO.

“At the time, there were only 70-80 users of Hindi on the app,” Mukesh told The Secretariat. “I was promoted shortly after joining, and over the years, I witnessed KOO's growth multiply significantly.”

The app’s user base grew to 4.5 million in early 2021 and at their peak, they had about just under 10 million monthly active users. The company raised US$4 million in series A round in February 2021 and subsequently US$30 million in May 2021.

“I didn’t leave the company on a happy note. They pushed me out citing money problems,” added Mukesh, who received a severance package which included salary of two months, privilege leaves and other earned benefits.

Moneycontrol.com reported that similarly, KOO laid off 300 employees in April 2023. The company dismissed approximately 30 per cent of its workforce due to rising losses, a decline in active users, and weak global sentiment.

“Withholding experience letter, withholding F&F, making employees’ provident fund transfer difficult and making them run around for reimbursements are all soft pressure tactics done by the employer to push people out,” said a labour law specialist, who has advised employers in similar cases.

In India, workers’ rights come under the Industrial Disputes (ID) Act, 1947, a central law which addresses the resolution of industrial disputes, and the regulation of working conditions.

“There is a common misconception that the ID Act doesn’t apply to Information Technology companies, but that is not so,” added the labour law specialist.

Specifically in Karnataka, where KOO is based, there is also the Karnataka Shops and Commercial Establishments (S & E) Act of 1961 which states any employee who has worked at a company for six months or more cannot be terminated without reasonable cause. The closure of a company is considered a reasonable cause, explained the labour law specialist.

When a company shuts down and lays off employees, and to avoid State Labour Department involvement, firms often ask employees to resign instead.

“Most employers don’t want to do that because there is a risk that the department will ask: ‘what is your balance sheet?’, ‘why don’t you have money?’, ‘how can you lay off without compensation?’” added the labour law specialist. “A lot of (transactions) also happen under the table because the Labour Department is corrupt and has a lot of discretionary power.”

“There is also concern regarding media attention and that the company documents could become public if the Labour Department becomes involved,” the specialist added.

When a company lets go of its employees, it's a sad situation for everyone involved. Yes, the founders and investors face a significant loss, but it's the employees who bear the brunt of the uncertainty and financial hardship.

Manish remembers the meaningful work he did, which he found fulfilling despite the company's challenges. “A lot of people maybe don’t necessarily like the work they do, but I loved my work. I had a critical job as a moderator. I was responsible for moderating the content on the app. It was important work. That’s something I will miss about KOO,” he said.

Meanwhile, Bidawatka announced on July 8 that he is building a “consumer tech product,” and has asked engineers to apply for jobs at the new startup.

The Secretariat has reached out to Radhakrishna and Bidawatka for comment. This story will be updated as and when we get their response.