[Reporter’s Notebook] The Dark Side of Rapidly Growing Unicorn Companies

Following its rise to unicorn status (a private company valued at over 1 trillion KRW) and successful large-scale fundraising, the accommodation and leisure platform company "Yanolja" is experiencing internal unrest as it announces plans for voluntary retirement. The company’s strategy is to cover the increased costs from continuous business expansion and mergers and acquisitions (M&A) through restructuring measures such as workforce reduction. However, the labor side views these actions as unfairly shifting responsibility solely onto employees, leading to widespread dissatisfaction.

In the first half of this year, Yanolja’s revenue reached 322 billion KRW, a 33% increase compared to the same period last year, but it recorded an operating loss of 28.4 billion KRW, returning to the red. After posting operating profits of 10.9 billion KRW and 57.7 billion KRW in 2020 and 2021, respectively, during the height of the COVID-19 pandemic, the company has been on a downward trend. During this time, it expanded its size through M&A deals with travel platforms and solution companies such as Interpark and Triple, investing about 300 billion KRW, and also spent over 10 billion KRW on advertising and marketing expenses.

Contrary to its bold investments, Yanolja’s recent actions have been difficult for employees to accept. In March, the company unilaterally announced the abolition of the autonomous remote work system introduced after COVID-19 and shifted to a hybrid work system requiring employees to come to the office two to three times a week, which sparked employee backlash.

At this point, the recent moves by the fashion platform Musinsa come to mind. In August, during an online town hall meeting with all employees, Musinsa publicized plans to revise some welfare programs, which met with employee opposition. The main points included the complete cancellation of plans to establish a daycare center for working mothers within the company and the abolition of the twice-weekly remote work system. Controversy grew when CFO Youngjun Choi was reported to have said that “paying fines would be cheaper” than setting up the daycare center. Ultimately, Musinsa CEO Moonil Han sent an apology email to all employees and announced that the current work arrangements would be maintained to resolve the issue.

While the turmoil surrounding these once-celebrated innovative unicorn companies could be seen as growing pains, it is more bittersweet as it reveals the limitations of neglecting internal stability in pursuit of rapid growth.

This content was produced with the assistance of AI translation services.