Image source: Kaikeba official website
Mustard Duiwen On June 29, Kaikeba founder and CEO Fang Yechang issued a letter to all employees, stating that Kaikeba had layoffs, unpaid wages, suspension of employee social security payments, slow refunds for students, and They responded to questions such as how the company will proceed next.
In the letter to all employees, Fang Yechang mentioned that due to the sudden changes in the international situation around the Spring Festival this year and the domestic epidemic, the vocational education industry is experiencing strong demand but is also facing sluggish growth caused by the decline in students’ purchasing power. Let’s start courses in the past three years. The rapid development has also come to an end, and it has officially entered a new stage of "cost reduction and efficiency improvement", and has achieved obvious results.
However, due to too large and too fast adjustments, team turmoil and public opinion increased, resulting in a sudden drop in revenue and a sharp increase in short-term layoff costs. The current labor costs need to be deferred for 1-3 months before they can gradually decrease (wages are paid every month, Commission will be paid every month), so during the adjustment period in the past few months, the monthly cash flow gap has been around 100 million. This is also the main reason for the late payment of employees’ wages and the delay in refunds for some students.
Regarding the social security "interruption" incident this month, Fang Yechang said that a company account was suddenly blocked a few days ago, so all employees were first transferred out and dispersed to different subsidiaries of the company to reduce risks. The main body will be restored one after another today and tomorrow. The personal part of this month's social security was paid a few days ago, and the company part applied for late payment, but it will not be interrupted.
In addition, Fang Yechang said that the key to solving the company's current predicament is money. "And what I have to do is to find money for the company as much as possible! There are two ways to find money, one is to borrow money quickly, and the other is to raise money slowly." Starting in August 2021, he borrowed more than 1 billion through personal credit loans, personal investment mortgages and personal asset mortgages. He personally lent 400 million yuan to Kaikeba and personally repurchased the company's early shareholders. The mature old shares are about 400 million yuan and the related interest is about 200 million yuan.
In addition, he also mentioned that in the past few months, he has contacted more than 10 founders of leading companies in the same industry and related industries. Most of them declined politely, but there are still a few that are continuing to advance and even some have already started. It has to be more in-depth.
Regarding future planning, Fang Yechang said that only the product and delivery team, the channel business team, the content operation team and the production and research support team, which are mainly teaching and research, teaching assistants and class teachers, will be retained. The total team size will be controlled within 1,000 people. In the next three months, we cannot guarantee that the salaries of remaining employees will be paid in full and on time, but we will do our best to ensure everyone's basic living. For employees who are not suitable for the new position or have no confidence in the company, the back wages will be gradually paid in batches.
The following is the full text of the internal letter:
