The new CEO of Lyft, David Risher, has announced plans to ‘significantly reduce’ the company's workforce.
“I own this decision, and understand that it comes at an enormous cost,” Risher continued. “We’re not just talking about team members; we’re talking about relationships with people who’ve worked (and played) together, sometimes for years.”
A company-wide message sent out by Lyft's new CEO David Risher on April 21 stated that the firm is contemplating another round of job cutbacks to "significantly reduce" its personnel. Lyft is a ride-hailing company based in San Francisco. This decision was made in light of Lyft's ongoing difficulties in turning a profit and keeping up with its primary competitor, Uber, which has diversified its operations to include grocery and meal delivery. According to Risher's internal message, the layoffs are being carried out to make Lyft a "faster, flatter company where everyone is closer to our riders and drivers." He went on to say that he is aware that the reductions come at a tremendous financial cost and that he is aware that these cuts would have an effect not just on the members of the team but also on the relationships with colleagues who have worked together for years.
The most recent round of job layoffs comes on the heels of a similar move by Lyft in November when the company revealed that it was eliminating 13% of its personnel due to concerns about an impending economic downturn. According to The Wall Street Journal, the latest round of cuts will eliminate at least 1,200 positions, accounting for upwards of 30 percent of the workforce. A Lyft spokesperson, on the other hand, declined to disclose specifics regarding the scope of the job losses to CNN. "David has made it abundantly clear to the company that his focus is on creating a great and affordable experience for riders and improving drivers' earnings," said the company representative. "To do so requires that we reduce our costs and structure our company so that our leaders are closer to riders and drivers. This is a hard decision and one we’re not making lightly. But the result will be a far stronger, more competitive Lyft."
Both Lyft and Risher are up against difficult obstacles. While Uber has expanded its business, Lyft has never done so. During the early stages of the pandemic, when fewer consumers were travelling but more were ordering things online, this may have been detrimental to the company. Now, Uber is demonstrating a resurgence in its strength. Uber stated in its most recent earnings report that it had its "strongest quarter ever," claiming a 49% year-over-year growth in revenue. This comes after Uber reported that it had its "strongest quarter ever."
On the other side, Lyft has had trouble turning a profit and recently published an earnings report that was unusually dismal. This was reflected in the firm's stock price, which fell significantly. During the past year, Lyft shares have experienced a decline of approximately 70%; however, during trading on Friday midday, they rose by 6%. Risher, a seasoned Amazon employee and Lyft's new CEO as of April, has a lot of work ahead of him. As the 37th employee of Amazon, a company that has long been the model for the on-demand industry, he became the first head of product and head of US retail for the e-commerce behemoth Amazon.
In a memo he sent to all Lyft employees, Risher explained that layoffs were required to make Lyft a more powerful and competitive firm and agreed that the cuts would impact him personally. It is unclear at this time whether Lyft will earn a profit or improve its ability to compete with Uber due to the employment losses. However, it is evident that Risher and his staff are committed to making the necessary difficult decisions to place the company in a position for long-term success.