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CHANGES AHEAD

Lyft lays off 90 people as it aims to achieve profitability

Lyft co-founder and president John Zimmer
REUTERS/Mike Blake
Getting there.
  • Michelle Cheng
By Michelle Cheng

Reporter

Lyft confirmed on Thursday that it will cut 90 people from its enterprise sales and marketing teams, or around 1.6% of its 5,500-person workforce, as it aims to achieve profitable growth.

“We’ve carefully evaluated the resources we need to achieve our 2020 business goals, and the restructuring of some of our teams reflects that,” says Lyft’s spokesperson Alexandra LaManna. “We are still growing rapidly and plan to hire more than 1,000 new employees this year.” According to the company, it will be focusing on organizing its marketing teams by “larger unified regions”—east and west, for example—rather than a more distributed, localized model.

The layoffs were first reported by the New York Times on Wednesday as being part of corporate restructuring. Lyft disputed the report that it was significantly modifying its finances and operations to Quartz. The company’s shares are currently down 34% from its offering price.

With a smaller market share than Uber, Lyft likes to differentiate itself from its rival by focusing on its mission-driven image. But the two are similar in the pressure they face from investors to show a path to profitability. In July, Uber had its largest layoff round, cutting more than a third of its marketing team, and before that, laid off more than 1,200 people. Both companies have said publicly that they expect their companies to be profitable by 2021.

Lyft has made progress in reducing losses. In the third quarter of 2019, the company’s adjusted net loss fell to $121.6 million, down from $245.3 million in the same period of time the year before. Its revenue grew from $585 million to $955 million over the same period, an increase of 63%.

But like many Silicon Valley giants straining to turn a profit, that hasn’t been enough to prevent workforce cuts.

Take another big loss-making unicorn, office space company WeWork. After withdrawing its IPO, it announced in November that it would slash 2,400 employees around the world, or about 20% of its workforce. And earlier this month, electric scooter company Lime announced that it will lay off 14% of its staff and pull out of a dozen markets.

Lyft’s latest cuts followed a statement in November that it would be pulling its scooters out of six markets. It also planned to lay off about 20 employees from its bikes and scooters businesses, suggesting that the scooter craze is starting to taper. With investors growing more wary of money-losing tech companies and California’s AB5 changing the gig economy, Lyft will need to continue to make difficult choices.

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