Candice Lee also worked on this story.
Kumu, a livestreaming app headquartered in the Philippines, has seen its headcount reduced by over half after three rounds of layoffs, multiple sources tell Tech in Asia. While two rounds of retrenchment took place last year, a third happened in March.
Before the most recent round of layoffs, Kumu founder and CEO Roland Ros told employees on March 7 that “things could get worse” and asked them if they were “still up for the challenge.”
If not, the leadership’s lines were open to discussing a “soft landing” to help them find a new home. “There is no shame in taking this option,” said Ros. Tech in Asia has reviewed this email.
Source: deadburnett / 123RF
The company has confirmed with Tech in Asia that it has reduced its headcount to 280 employees from a little over 500 at the start of 2022. Kumu says this was a result of both layoffs and voluntary resignations.
While it is true that some staff members have resigned, a large number of employees were dismissed as per our sources. The cuts affected departments and offices in China and the Philippines.
Tech in Asia spoke with 10 sources on the condition of anonymity.
Kumu has also restructured its departments following the layoffs and has brought on board “consultant partners” who have worked in the livestreaming industry, according to another email sent by the company to its staff that was reviewed by Tech in Asia.
Many of these consultant partners are from China, where the livestreaming industry is more mature than in the Philippines.
At least seven top executives, including six vice presidents and a chief revenue officer, have exited the company.
So what went wrong at Kumu to merit several rounds of layoffs?
Bets that didn’t pay off
“The company made a lot of big bets that didn’t pan out and left them vulnerable,” says Kaysha (name changed), an ex-employee of Kumu.
In 2020 and 2021, the company spent on content partnerships to create premium intellectual properties such as Pinoy Big Brother: Kumunity, where it tied up with local media firm ABS-CBN. It also paid out huge sums to top livestreaming influencers during this period to acquire users.
Kumu’s co-founders, Ros and Rexy Dorado, say that when the lockdowns ended in 2022, the company’s paid revenue drivers – such as contracting influencers and producing premium content – attracted fewer users who spent little money on the platform. This led to a rise in customer acquisition costs and ultimately translated into a negative return on investment.
The Kumu team / Photo credit: Kumu
For Lynda (name changed), a former Kumu employee, one of the company’s biggest mistakes was focusing too much on acquiring more users and not retaining them. “I guess with the number of people that we brought in, it was really impossible to funnel everyone [into our customer base] and make them stay,” the person explains.
Since 2022, the firm has cut almost all of its paid user acquisitions and premium content spends “in pursuit of smaller but higher quality and sustainable user engagement,” say the co-founders. They expected to get this by focusing on organic, non-contracted livestreamers.
Besides this, some sources allege that Kumu had spent excessively on its staff.
For instance, Bill (name changed) says that earlier this year, the company had organized a “party” for employees at The Island, which is among Manila’s most expensive clubs. One Tripadvisor reviewer describes it as a “high-class bar [that] needs to prepare your wallets.”
This “party” was held in January – just a few months after the second round of layoffs in October 2022.
When asked about this event, Ros and Dorado tell Tech in Asia in an email interview that it was actually a town hall meeting. Kumu was able to secure a major discount for using the club and it was the cheapest of multiple options that the firm vetted.
A kick-off party held for Kumu employees at the start of 2023 / Source: Kumu LinkedIn page
“When we got the invite from our HR team, we thought are we really having a party? I thought we were saving up on some coins. Why are we having this big party at this big venue?” says Bill.
“We were joking at that time saying, ‘We’re gonna party today but we’re gonna get laid off tomorrow, maybe.’ Sure enough, it happened just a few months later,” Bill adds.
Travis (name changed), another ex-employee, alleges a similar town hall took place at a “very fancy hotel” in the middle of last year. While welcoming the new hires, the company executives informed them during this meeting that they had laid off multiple people just prior to hiring them.
“What I don’t understand is: why did you hold such an extravagant, lavish, or elaborate event to welcome new hires and have a town hall meeting just to say that, ‘Hey, we laid off a lot of people, welcome new hires’? Why did you hire me if you knew your company was unstable?” Travis says.
The company shares that for employee events, it looks for the most cost-effective place in a convenient location that can fit everyone. It considers bids from at least three vendors before finalizing a venue. That said, venue options for such events are limited considering Kumu has hundreds of employees, it adds.
Another former employee, Ned (name changed), confirms with Tech in Asia that many of these hotel or club bookings were through connections of the founders or top executives. These friends and family members were able to offer these locations at a “considerable discount.”
But for many ex-employees, holding gatherings at fancy places wasn’t a good look for the firm after having done layoffs under the mandate of cost cutting.
Course correction issues
Former employees also say that Kumu “spent a lot” on gifting and monthly offsite budgets for individual staff members, including interns.
For instance, Bill recalls the company giving its employees giant piñatas delivered in huge boxes with balloons during Kumu’s anniversary in 2020. “It was something that they needed to transport in vans because they were big heavy packages,” the person adds.
The company says that employee gift hampers were stopped mid-2022 and that the last one it held used excess merchandise and products that it already had on hand. “For Christmas, we only had a cheap voucher instead of our usual boxes,” it adds.
Kumu founder and CEO Roland Ros / Source: Kumu’s LinkedIn page
Sources say that Kumu’s monthly offsite budget was cut earlier this year from about 3,000 pesos (US$54) to 1,500 pesos (US$27) per person.
The company shares that the budget is less than US$10 per head per month, which it says is equivalent to “one mid-priced meal per head.”
“The budget for this is very small and necessary considering that we don’t have most people in the office most of the time,” say Ros and Dorado. “Our ‘office’ is two tables at the workplace of our investor Summit Media, which fit 20 people, and over 90% of the team is remote on any given day. So it’s important for us to invest (a very small amount) in culture building.”
“One of the things missing in Kumu was transparency,” says Kaysha, adding that there was a lack of communication from the leadership about business plans and that teams worked in silos.
Another former employee, Jamal (name changed), says that each team has its own direction and the company ended up spending too much at the team level.
Jamal recounts that around the middle of last year, the company’s leadership got a wake-up call after the lockdown ended due to a drop in users. With the team now discussing what the app was supposed to do, everybody was confused about the direction of the platform, recounts the ex-employee.
However, Kumu says that it had made a drastic call to pivot to a sustainable business model in early 2022, which led it to focus on organic user growth.
This may have led to the confusion about the company’s direction that the employees experienced.
Alleged gaps in communication and spending concerns aside, former employees do mention they received a generous severance package. While some from the earlier rounds of layoffs in 2022 got three months’ worth of salary, those affected by the most recent round received one month’s worth of salary for every year spent at the firm plus another month’s worth of salary on top of that.
In addition, the affected staff and their dependents were given extended health insurance and access to mental wellness app Mind You. Laid off employees have also been onboarded with recruitment platform Lanhdao to create an alumni portal to help them find new jobs.
The company admits that in hindsight, it shouldn’t have hired as many people. “We’ve lost many great people because we hired them at the wrong time,” it says.
That said, Kumu has yet to address two of the problems that impacted its growth: changing user behavior and increasing competition, which have played a role in its declining number of users.
See also: Kumu grapples with declining users, rising competition
Stay tuned for part two of our deep dive on Kumu.