Uber-rival Lyft lays off 26% workforce, Clubhouse sacks 50% employees

Uber rival Lyft has laid off 26% of its workforce or 1,072 employees as part of a restructuring plan to reduce operating costs, the company said in an SEC (securities and exchange commission) filing on Friday. With this, the company has also decided to scale back hiring and has eliminated more than 250 open positions. 

"In connection with the plan, the company estimates that it will incur a cost of approximately $41 million to $47 million related to severance and employee benefits in the second quarter of 2023, all of which will be future cash expenditures. In the same quarter, the company also expects to incur an additional cost related to stock-based compensation and the corresponding payroll tax expense related to employees who were impacted by this restructuring," the company said in a statement on Friday.

The development comes at the heels of several big technology companies as well as startups, globally, resorting to brutal layoffs amidst funding winter and dwindling macroeconomic situations. 

Notably, social audio app Clubhouse has also decided to let go of more than 50% of its employees as part of the company’s efforts to restructure itself into a small product-focused team. In a note to employees, Clubhouse founders Paul Davison and Rohan Seth said the company is finding it hard for the team to coordinate and creative people are left underutilized. 

"Rohan and I have tried to make this work with our current team size, but we haven’t been able to do it effectively. It’s difficult for us to communicate the strategy to cross-functional teams when it’s evolving by 1% each day, or to make quick changes when each surface is owned by a different product squad. Being remote has made this especially challenging for us. The end result is that it’s hard for teams to coordinate, people feel blocked by us, and brilliant, creative people are left underutilized," Davison said. 

"In order to fix this we need to reset the company, eliminate roles and take it down to a smaller, product-focused team. We arrived at this conclusion reluctantly, as we have years of runway remaining and do not feel immediate pressure to reduce costs. But we believe that a smaller team will give us focus and speed, and help us launch the next evolution of the product," he added. 

Notably, the development comes two days after e-commerce behemoth Amazon winded off its healthcare business, Halo, in order to reduce the operating costs with effect from July 31, 2023. The company said the impacted employees in the US and Canada have been notified, whereas, in other regions, the company is following local processes that may require time and consultation with employee representative bodies. The company has also reportedly laid off 100 employees in Studio and Prime Video units. 

Last month, the e-commerce giant announced the company will be trimming 9,000 more positions in the next few weeks, mostly in AWS, PXT, Advertising, and Twitch. In January, the company announced laying off 18,000 employees.