Content creators at start-up firms are vulnerable to layoff, true or false?
Written by Tentry Yudvi | Read in Indonesian
The wave of layoffs continues to occur at Indonesian start-up firms since May. Zenius Education, LinkAja, TaniHub, SiCepat, Line, JD.id and Pahamify are some of at least 10 start-up companies in Indonesia that have slashed their workforce since June.
Many companies around the world are making a similar move. Yuswohady, a business expert from Inventure, said this phenomenon shows that start-up firms have entered start-up winter, where many investors withdraw their funds. The cause? The global crisis.
“Investors are the lifeline of start-up firms. The global crisis has prompted investors to withdraw their funds. That is because start-ups are a high risk investment for now and for the next 3 years," he told TFR on Monday (25 July).
Then, what caused this crisis to attack start-up firms so fiercely?
Yuswohady explained that there were two factors causing the collapse of start-up firms. First, the COVID-19 pandemic. Second, the war between Russia and Ukraine which leads to a rise in inflation globally. These two countries are the world’s major energy and food suppliers. High demand causes supply to be limited and the US dollar exchange rate to surge.
"Pandemic recovery is quick; it is estimated that conditions will be better by year-end. However, for the war between Russia and Ukraine, there is no telling when it will end. Maybe in the next few years there will be inflation. So the situation and condition are uncertain," he said.
Of course, inflation is unavoidable. Katadata’s DataBox found that European countries experience an average inflation rate of 8.8%, while the United States (US) sees inflation rate rising to 8.6%, the highest in its history.
What about Indonesia?
Albeit still low, Indonesia’s inflation rate has reached 4.39% as it still needs imported energy and food. CNN Indonesia reported that Bank Indonesia predicted Indonesia will see an inflation rate of 4,5%-4.6% at the end of 2022.
Recession is also inevitable. People’s purchasing power decreases, and in the end layoffs are also unavoidable, especially at start-up companies.
Yuswohady said, “Now, venture capitalists or investors are being selective in making investment in a company. The originally long-term investments could be cancelled and investors withdraw their funds abruptly. Because venture capital is not an individual; they are a combination of many investors who come from everywhere."
This economic struggle is not only felt by start-up firms, but also public companies that have been in business for decades, like Mayora and Indofood. However, their business is more stable as they do not rely on investors, but on product sales.
Content creators are vulnerable to layoff
This start-up winter has caused many people to lose their job, especially content creators. The talent list of Ecommerce & Tech Meme Factory, Ecommurz shows that around 1,989 people have been laid off; more than 200 of whom are content creators, such as writers, illustrators and animators.
Why are content creators vulnerable to layoff?
“Actually, the need for content creators is high; it's different for strategic positions such as marketing communication. Companies don't need a lot of employees, but the need for creative jobs is high," said Yuswohady.
It takes a village to produce good content consistently. As a result, high number of content creators drives up production costs. Moreover, content creators do not directly generate sales, unlike their colleagues in the sales department. It takes a while to reap the benefits of having good content. This is what makes them vulnerable to layoff.
When a company is going through financial crisis, sales are being prioritised while marketing budget has to be adjusted. Content usually falls under marketing department.
“Start-up firms, especially the new ones, need awareness, but now there are definitely many who need sales. Meanwhile, content creators do not make money, because it is not their job. This is marketing’s job. That’s why to cut production costs, they probably lay off content creators," he said.
Of course, not all companies reduce the number of their content creators. Some companies actually need a lot of content creators. In TikTok, this position is still secure.
Therefore, Yuswohady suggested that start-up firms learn more about the creative industry and evaluate their needs, because content creators are responsible for increasing brand awareness, not boosting sales.