More Zwift Layoffs

DC Rainmaker reports that Zwift has announced that it will be reducing its workforce as part of a restructuring effort.

The company has not disclosed the exact number of layoffs, but it is expected to affect 15% of the company’s staff. The move comes after Zwift raised $450 million in funding and hinted at plans to go public in 2020. The reasons behind the layoffs are unclear, but the company states that it is part of a plan to streamline operations and increase focus on core business priorities.

After very careful consideration, we have taken the decision to make important changes to the organization. These changes mean we will regretfully be parting ways with a number of very talented colleagues. We are grateful for their contributions to Zwift and will do our best to support them in their transition.

The changes made today impact teams across the business but some have been impacted more than others. Scaling back in some areas will allow us to invest more heavily in our product. The changes we have made will allow us to further increase the speed of development, adding greater value to our customers through new experiences and more engaging content. [Zwift]

Background

Zwift has been growing rapidly in recent years, with the company’s valuation reaching over $1 billion following its latest funding round. The company has also been expanding its services, including adding virtual racing events and partnering with major cycling races like the Tour de France and events like Ride London.

However, despite this growth, Zwift has faced some challenges in recent months. In December 2021, the company faced backlash from users over changes to its pricing structure, which some felt were unfair. In addition, Zwift has faced increased competition from other online training platforms, such as Peloton and TrainerRoad.

The company’s decision to reduce its workforce is part of a broader restructuring effort aimed at improving the company’s focus and efficiency. Zwift CEO Eric Min stated in a blog post that the company remains committed to its long-term growth strategy and that the layoffs are a necessary step to ensure that the company is well-positioned for the future.

Thoughts

This is more bad news for the cycling industry and only comes as a surprise in that it is a second round of redundancies.

Given the probable state of the company, the cycling industry, and current tech market flotations, it is likely that Zwift is preparing for a period of consolidation that may last for a couple of years. However, they probably have enough cash in reserve to weather the storm.