Coronavirus: Cure.fit founders write open letter to employees to 'set the record straight'

Health and fitness startup Cure.fit recently downsized operations and laid off trainers at gyms in Tier II markets in India, Delhi, and the United Arab Emirates, citing the impact of the coronavirus pandemic.

“We have downsized our employee base across markets where we have shut operations and have initiated pay cuts across levels. The founders have taken a 100 percent pay cut, the management team 50 percent, and the rest of the staff, depending on seniority, have a reduction of 20-30 percent,” Cure.fit said in a statement.

Founded in 2016 by Mukesh Bansal, Co-founder of fashion retailer Myntra, and Ankit Nagori, former Chief Business Officer of Flipkart, the startup has come in for flak for the way it is handling the crisis.

The co-founders have now sent out an open letter to all employees, assuring them of their best interests and seeking to debunk the “massive misinformation about how we have treated our employees”.

The letter is reproduced here:

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 the lockdown, 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 thousands 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 six 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 five 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 Rs 70 crore 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 three 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 three months no matter what, and we’ve stood by that while we processed the larger macro-economic condition.

As we talked to economists, policymakers 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:

• Founders are foregoing 100 percent of their salary for one year. All senior management is taking 50 percent cuts.

• All central teams which are working more than full time will take 20-30 percent cut starting June.

These two measures will save the company over Rs 8 crore per month during the crisis. We have also reduced our marketing significantly, saving the company another Rs 10 crore 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 minimise their risk.

We have a trainer base of over 2,500 trainers who have been on the bench since March as we are not able to open our centres 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 are on the 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 percent 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 Rs 2 crore that they can apply for in case of personal emergencies

• Promise to rehire when we ramp up our hiring

For the remaining 90 percent 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 per 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 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 Rs 5 crore per month to trainers. This is more than what most companies will be able to afford. We are seeing many large global fitness chains file for bankruptcy.

Eighty percent of our cost savings come from cost reduction among central staff, marketing costs reduction, and only 20 percent 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 as a pillar of strength. We have seen overwhelming support from 80 percent 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 criticised for donating Rs 5 crore to PM Cares and ACT Grants. Half of these funds are contributed by founders and management and the other half by the company. These funds wouldn't cover even 14 days of trainer salaries and less than five days of the wage bill of the entire company. We have paid two-three full months of salary for everyone despite no business, provided two months of severance, and are continuing employment of 90 percent of our full-time staff.

The public contrasts between charity and salaries is a pure gimmick designed to sensationalise 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 Rs 1 crore per month, which is barely one day of our entire wage bill and less than three 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 the 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 minimising 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 and abusive language and serious threats to them and their families. This is due to 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 ends 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.  A 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 on 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 an 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 and Ankit

(YourStory has reached out to the founders for further inputs. We invite you to join an online conversation with YourStory's Shradha Sharma and Mukesh Bansal and Ankit Nagori today at 5 pm to know more on the developments at Cure.fit.

You can register here: https://us02web.zoom.us/webinar/register/WN_Y1HLikhCTcCnIeBCHQOzOw)

(Edited by Teja Lele Desai)