Major layoffs at online tutoring platform Vipkid in preparation for growth

2 min read
Vipkid founder Mi Wenjuan. (Image credit: TechNode / Zhao Runhua)

Vipkid, the online teaching platform that connects English teachers to Chinese students, may be slashing a sizable portion of its employees across business departments, according to people familiar with the matter.

Why it matters: News of the layoffs follow shortly after the company announced that it had closed a Series E for an undisclosed amount led by Tencent. Despite the fresh funding, the Beijing-based company continues to grapple with high user acquisition costs and fierce competition in the sector.

  • Vipkid competes against a host of Chinese rivals such as 51Talk, Hitalkkids, and Dada ABC to attract English speakers to power their live tutoring programs.

Details: The company is laying off around 30% of its employee in the sales, operations, and research and development (R & D) units, a person close to the matter told TechNode on Friday.

  • The online education platform will be shutting down one of their main product lines and restructuring in December, according to the person.
  • “Lots of people in the R&D department got their notice on Thursday and Nov. 30 will be their last day,” the person said.
  • A Maimai user who is a verified Vipkid employee in the R & D department commented on a Nov. 20 post, confirming the layoffs on the professional networking platform.
  • Another Vipkid employee verified on Maimai said that in addition to the layoffs, the company is also slashing employee benefits while switching from a base salary structure to a performance-based pay mechanism.
  • News of the cuts began circulating on Chinese media beginning last week, and the company refuted the rumor to Chinese media.
  • A Maimai user going by “Xiyangyang” said in September that the company would cut its costs by 18% as a condition of its latest funding round, and predicted that around 10% of total headcount would be laid off after the October national holiday.
  • In a response late Saturday, the company told TechNode that the “limited staffing corrections in some divisions” were a result of optimizing to create greater efficiency.
  • “We are actively growing in [other divisions] and will be hiring thousands of new employees in the months and years ahead,” a spokeswoman said to TechNode.

Context: Vipkid founder Mi Wenjuan announced in an internal letter that the platform had 712,00 currently enrolled students as of September, up from 500,000 in June 2018.

Tencent leads E-round funding in Chinese online educator Vipkid

Update: added a statement from the company, which had initially denied any layoffs.