“Hello All,
It has been testing times not only for the company but for the country and the world at large. We have been caught between doing our best to service our customers during lock down, trying to save as many jobs as possible while also ensuring long term viability of the business. There has been much written in the media in the last few days which underscores the effort of 1000s of people at cure.fit over the last few weeks. In this note, we would like to set the record straight and share all the facts with the extended cure.fit team so that you have accurate information about how the company is managing this crisis.
First of all, I must begin with our second core value "Blow away customer expectations". Our teams have gone out of their way in the last 6 weeks to make our digital offering happen despite numerous constraints. Our teams have been shooting classes at home with phone cameras, people risking their lives to deliver food and essential items at home and our doctors have been treating customers over video consults. Our engineering and operations teams have worked day and night to offer world class home fitness experience despite dealing with numerous personal challenges and constraints. This has enabled us to service 5 million Indians to work out at home, completely free of cost. We understand it is a tough time and we wanted to make sure cure.fit continues to play a meaningful role in people's lives during these times. We have seen "jaan hai to jahan hai" many times in the last few weeks. Healthy workout and food goes a long way to ensure that.
There has been massive misinformation about how we have treated our employees. Here are the facts. Even though our revenue went down to nearly zero from over 70 crores a month, we have paid full salaries to all employees for the months of March, April and even May for many employees who are working full-time. That is 3 months of massive burn totaling over $10M without any revenue whatsoever from customers. We have in-fact extended unlimited free pause to our members so that there is no disruption to their experience with CULT and they can be rest assured that whenever lockdown ends, they can avail of their entire unused portion of the membership without a single day of loss. We made the commitment to teams that they will be paid for these 3 months no matter what, and we’ve stood by that while we processed the larger macro-economic condition.
As we talked to economists, policy makers and got a deeper sense of the depth of the current crises; we don't see life returning to full normal until a vaccination is found and the entire globe is vaccinated. Till then, we will have a new normal with limited movement and severe restriction to mass gatherings, which include group workout formats like CULT. In such a situation, it is critical that we manage our costs for the long run viability of the business. If we maintain the exact same cost structure while revenue continues to be negligible, it will be grossly unfair to all stakeholders including employees who have done so much to build the business.
In order to ensure we are well set to ride out this winter and emerge stronger from this crisis, we have taken a large number of cost measures, some of them are:
1. Founders are forgoing 100% of the salary for one year. All senior management is taking 50% cuts.
2. All central teams which are working more than full time will take 20-30% cut starting June.
Above two measures will save the company over INR 8 crores/month during the crises. We have also reduced our marketing significantly saving the company another 10 crores a month.
For all our operations staff like food delivery and care.fit doctors that continue to serve customers risking their lives, there is no change in compensation. These folks are fighting the battle on the frontlines and we do not wish to affect them any further while they provide essential services at considerable risks.
We are of course providing PPEs and all other protective gear to minimize their risk. We have a trainer base of over 2500 Trainers who have been on the bench since March as we are not able
to open our centers to resume group classes. Although we have live classes, the skills required to perform in front of a camera and perform a live class is very different and currently less than 50 Trainers are engaged in live classes. Given such large numbers of Trainers on bench without any revenue in sight, the cost structures are simply not sustainable. We took a call to shut down our business in small towns that affect only 5% of our revenue but had a large cost base. We are letting go of these employees and excess staff in other cities which is less than 300 Trainers with following benefits:
• Nearly two months of additional salary
• Extended health insurance beyond the term of employment
• Emergency fund of INR 2 crores that can apply for in case of personal emergencies
• Promise to rehire when we ramp up our hiring
For the remaining 90% of our Trainers, we are merely changing the compensation model so that we can sustain through this crisis. Our business model works on the basis of Trainers doing 120 classes/month. We will continue to pay them compensation for minimum 50 classes a month even if they do zero classes. Once the number of actual classes they do picks up through online PT or offline group classes, their compensation will go up automatically. This is a highly equitable solution where our Trainer base is getting paid indefinitely even when there is no work, all their benefits continue, there is continuity of job and promise to return back to normal compensation. These changes will bring a benefit of 5 crores/ month to the trainers. This is more than what most companies will be able to afford. We are seeing many large global fitness chains file for bankruptcy.
80% of our cost savings come from cost reduction among central staff, marketing costs reduction and only 20% from compensation changes for Trainers. We should also mention that we have hired most of our Trainers from small towns, given extensive training ranging from skill building, communication and other life skills. We offer highly professional environments with things like monthly Nutrition packs, training gear, personal workout times, efficient Trainer lounge etc. all with the intent of providing a dignified and efficient work environment. Trainers are at the core of what we do and they stand by us a pillar of strength. We have seen overwhelming support from 80% of our Trainers despite social media nuisance by a small minority and we will be sharing their stories with the world at large shortly.
We have been criticized of donating INR 5 crore to PM Care and ACT Grants. Half of these funds are contributed by founders and management and other half by the company. These funds wouldn't cover even 14 days of Trainer salary and less than 5 days of the wage bill of the entire company. We have paid 2-3 full months of salary for everyone despite no business, provided 2 months of severance and are continuing employment of 90% of our full time staff. The public contrasts between charity and salaries is a pure gimmick designed to sensationalize what is a very sensitive situation for all involved and forced upon us by a global pandemic. We are also accused of paying celebrities. Our net monthly bill for celebrities is INR 1cr/month which is barely 1 day of our entire wage bill and less than 3 days worth of salary for the Training staff. It is ridiculous to compare the two and use this to attack the company to vilify an effort that is solely motivated by desire to bring high quality workout experience at home.
The only way we ride this out is by riding this out together and ensuring we survive this crisis in good financial health. We as a company have always stood by our customers, employees and shareholders in that order. We have been very thoughtful about balancing fiscal discipline and minimizing human impact to a large number of our workforces. We are retaining a large majority of our workforce and offering among the best in industry severance and benefits packages to those who are affected.
It has been heartbreaking that many of our senior leaders and founders have been at the receiving end of vicious & abusive language and serious threats to them and their families. This is stocked by uninformed media and vindictive trolls who love fanning a fire even when there is none. It is a travesty that a company that is committed to improving the health and well being of millions of Indians end up with serious threats to its office bearers. We will be counting on the support and goodwill from our employees and customers to share the true story with the public. Story of mutual understanding, sympathy, solidarity and commitment to ride this out together with dignity.
We have built cure.fit with a few foundational beliefs. These are centered around building an outstanding product, exceeding customer expectations, and always doing the right thing. These core values stand behind us in good times and bad. These will see us through these times as well. We stand committed to providing outstanding health experience to our customers and a great work environment to our employees no matter how the situation is.
In these times, we take solace from following timeless words from Theodore Roosevelt
“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”
Our teams are fighting this out in the arena, with sweat and blood. We will fight out the rough times together. We are CULT!
Sincerely,
Mukesh & Ankit”
