Section 4a skills development startup launched by a renowned NYU professor Scott Gallowayfired a quarter of the staff, sources say. The layoffs that took place last week affected employees of all seniority levels and teams, but especially affected most of the product team. The startup first appeared on the scene in 2019 with the goal of scaling business school-level courses in a more accessible and fully virtual way.
CEO Greg Shov confirmed details of the firing to TechCrunch via email and said 32 people were affected. The chief executive declined to reveal details of what was offered to affected workers, but said the severance pay was “on the market or better.” Shov added that there is no suspension of hiring and that the company will continue to hire people in the engineering and corporate fields. He adds that part of this hiring focus is that the startup is moving faster in serving the enterprise than individual consumers, so the hiring will reflect that.
Sources confirm this. They say Section4 is undergoing a complete reorganization of the company because it is not meeting customer growth targets. In March 2022, Section 4 pointed to potential hidden tensions with monetization: the company began offering unlimited courses for a single membership price rather than selling each course for $995. Last raised startup Serie A worth $30 million in March 2021.
According to Shove, Section4 plans to serve 15,000 students and 200 corporate clients by the end of the year.
According to sources, the reason for layoffs at the company is largely due to financial mismanagement, product-to-market mismatch and over-hiring. According to LinkedInSection 4 has 142 employees. Sources say management also pointed out that its core product — two- to three-week courses taught by renowned professors from top schools — was too expensive to produce.
In other words, the original goal of the startup was to create a more affordable way (think $700 for a course vs $7,000) for managers to improve their skills – and it’s not working as planned. As of March 2021, the startup’s completion rate has reached 70% and it has trained 10,000 students.
“Higher education has changed my life and I love teaching and we thought there was an opportunity – due to the pandemic and changing behavior – to launch an online learning concept that tried to provide 50% to 70% of the value of learning. Elite MBA of choice for 10% cost and 1% friction,” Galloway previously told TechCrunch.
Over the past few weeks, market shifts have touched tech as layoffs rocked both unicorns and early-stage startups. Edtech, in particular, enjoyed a capital injection at the start of the pandemic – and now that consumer habits are changing, a correction is beginning.
Last month, according to Economic TimesIndian education company Unacademy has laid off 1,000 employees as part of a cost-cutting measure. The same publication reports that Vedantu, another educational technology unicorn, cut 200 employees. Shares in publicly traded edtech stocks have also fallen, with Duolingo currently trading at $65.58, sharply below its 52-week high of $205, Coursera trading at $13.89, also well below its $46 high. .99 dollars.
These cuts, along with the Section4 layoffs, signal that edtech is no exception when it comes to the Great Tech Reset.
Credit: techcrunch.com /