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Zwift Announces New Layoffs Reducing 15% of Workforce

Zwift has internally announced a restructuring that is resulting in a reduction of the workforce by 15%, or approximately 80 people in total. The change is largely coming out of a “fresh look” at things with Zwift’s recently added co-CEO, Kurt Beidler. Kurt came from Amazon back three months ago in December 2022, and has taken over the bulk of day-to-day operations from existing co-founder and also co-CEO Eric Min. Zwift says these changes are largely about “investing in the fundamentals” rather than “spending on brand”. In other words, Kurt Beidler is prioritizing budget allocation on product development rather than marketing efforts.

The layoffs are almost exclusively within the marketing and so-called “people” teams, which is basically the HR and other non-product functions. The marketing teams are hit the hardest, and I’m told there will be some recognizable names in there from all levels of the company, once those names are announced publicly internally tomorrow. The impacted teams are mostly in the UK and US.

Zwift started announcing the changes at 1AM Pacific Time today (March 7th, 2023) in a company-wide e-mail from co-CEO Eric Min. That email was followed up immediately with an invitation to a virtual meeting for all impacted employees. In other words, if you didn’t get the meeting invite, you were good. In the previous round of layoffs last spring (where Zwift laid off 150 employees after shelving their smart-bike and own-designed hardware division), Zwift employees grew frustrated that they sat in limbo between the initial re-org announcement, and then hearing from their manager in 1:1 meetings that they were or weren’t impacted. Those individual meetings are still occurring this time, but are following the CEO meeting with those impacted.

Zwift says those impacted are being awarded a “generous severance package”,  as well as also being awarded their twice-annual bonus packages, as the payout period for those ran through the end of this month (March). They’ll get this past 6-month period bonus award. Further, employees will get career support, and then those in the US will get extensions of their health care packages.

Note that none of the marketing reduction is set to impact Zwift’s external community resources (which receive funding from Zwift), nor does it impact partnerships like Zwift’s sponsorship of the Women’s Tour de France.

Zwift says the intent of the restructuring is to “re-prioritize where budgets are spent”, specifically by “investing more in product development, both hardware and software”. While not good for Zwift marketing employees, this is likely to appeal to Zwift consumers/users, as it’s basically Zwift admitting that they need to focus more on the product and less on talking about the product. This is a common complaint found in almost every Zwift (or related) forum.

Zwift’s PR lead, Chris Snook, stated that: “Zwift is buoyant about the future, but mindful that we need to make smarter investments going forward”.  Again, much of this change in direction is led by new co-CEO Kurt Beidler. In the three months since coming on board, Kurt is now responsible for almost everything day-to-day. This includes operations, engineering, and the product itself. Whereas co-founder and also CEO Eric Min is responsible for investor relations, finances, future vision thinking, and the marketing teams. There’s an expectation of continued tweaking of the organizational structure based on Kurt’s revised focus on the product.

Of course, unless you’re additionally hiring more software and hardware engineers, or otherwise redirecting their efforts, then much of this is about budget reduction than purely refocusing. Granted, Zwift has shown over the past year a renewed focus on the product and new feature – even if it doesn’t hit the bucket list of every forum member (plausibly an impossible task).

Zwift’s official statement is as follows:

“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.”

Ultimately, Zwift says this is about “Letting the product speak for itself with reduced marketing support”, by “spending less on brand, and more on the product. Both software and hardware”. How exactly that’ll manifest itself remains to be seen, but it was notable that Zwift re-iterated multiple times the inclusion of a focus on hardware, and also noted that by their own criteria, the Zwift Hub smart trainer has been a huge success in terms of adoption (something the rest of the industry does seem to universally agree with, albeit if not to their liking or benefit).

As with most companies in the cycling segment, a combination of recession winds and COVID peak bubble-bursting is catching up. Unfortunately, Zwift is no different here. On the bright side, we still haven’t seen the price increase that Zwift’s CEO hinted at last month. Perhaps this move will delay that a bit longer.

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