Layoffs should be the last resort, not first: Crayon Data founder

Cost Control is a series where we talk to founders to suss out cost optimization methods.

“We’ve probably saved ourselves about US$100,000 to US$200,000 over the course of a year,” Suresh Shankar, founder and CEO of data analytics firm Crayon Data, tells Tech in Asia.

Suresh Shankar, founder and CEO, Crayon Data / Source: Crayon Data

Combining two or three initiatives that it put together, he says that the Singapore-based firm has reduced nearly 1% of its total costs.

But Shankar insists that the best cost optimization strategy for an entrepreneur is revenue, calling it a company’s “first line of defense.” He adds that growing the business’ revenue leads to less worries about the costs.

“The purpose of building a business is to create something that adds value to customers who are willing to pay you money for it,” he says.

Don’t go for the default option ⏸️

Shankar urges founders to think beyond what he says has become the “default options” to cost reduction: cutting projects and doing mass layoffs.

“The default option in life is generally called so because it’s just an easy way out and saves me from the trouble of thinking. We don’t believe layoff is the solution. It should be the last resort but it cannot be the first one,” the CEO says.

Image credit: Giphy

In April 2020, Crayon Data opted for salary cuts when the firm was impacted by the Covid-19 lockdowns. At that time, the company was in troubled waters as its business is based on helping clients – which mainly consist of financial institutions and fintech firms – understand and drive discretionary spending.

With spends only focusing on essentials during the initial days of the lockdown, the company was faced with the fact that its business might not generate any revenue.

The pay cuts were based on the level of earnings, with the founders taking the highest pay cut of up to 40% and the junior employees taking the lowest at 3%, Shankar shares. It was also done in a staggered manner, with the senior executives facing the pay cuts first and the junior employees experiencing it two months later.

The CEO says the company saved about US$800,000 to US$850,000 following this exercise, which was “enough money for them not to worry immediately.”

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