Scott Galloway’s edtech startup, Section4, lays off a quarter of staff

Section4 was launched by a prominent NYU professor and has laid off a quarter of its staff. The layoffs that took place last week affected employees across all levels, but specifically targeted a majority of the product team. The startup first appeared in the scene with a goal to scale business school-quality courses in a more affordable, and entirely virtual, way.

CEO Greg Shove confirmed the layoffs in an email. Shove said that there is no hiring freeze and that the company will continue to employ people in engineering and enterprise. The startup is moving faster in serving the enterprise than individual consumers so hiring will reflect that.

Sources back it up. Section4 is having a reorganization because it is not hitting consumer growth numbers. Section4 started offering unlimited courses for a single membership price rather than selling each course for $299. The startup raised $30 million in a Series A.

Section4 wants to serve 15,000 students and 200 enterprise customers by the end of the year.

According to sources, the company's reason for the layoffs was financial mismanagement, not having a product market fit and hiring too much. Section4 has 142 employees that work there. Sources say that leadership pointed out that the main product was too expensive to produce.

Post-pandemic reset leads to wave of layoffs in tech

The startup's initial goal was to create a more affordable way for managers to upskill themselves, and that is not working as planned. The startup had taught 10,000 students as of March 2021.

We thought there was an opportunity to start an online ed concept because of the changing behaviors and the fact that graduate education wastransformational in my life.

In the past few weeks, there have been market shifts across tech. As consumer habits change, there is a correction playing out and Edtech, more specifically, enjoyed a capital injection during the early days of the Pandemic.

The Indian edtech Unacademy laid off 1,000 employees last month as part of a cost-cutting measure. The same outlet reported that Vedantu cut 200 employees. Coursera is trading at $13.89, down from a high of $46.98, and Duolingo is trading at $65.58, down from a high of $205.

Section4's layoffs, along with these cuts, all signal that edtech isn't an exception when it comes to the Great Reset in tech.

The Great Resignation, meet the Great Reset