Yesterday Zwift CEO Eric Min sent an internal email informing Zwift’s full staff of 700+ employees that a company-wide restructuring/refocus was underway. The restructuring includes a large number of layoffs, all announced yesterday. Although Zwift’s spokespeople have declined to comment on numbers, one impacted employee who reached out to me estimated Zwift was reducing its staff by ~20%.
Here’s Zwift’s official statement on the restructuring:
Given the current macroeconomic environment, we have decided to scale back our hardware offering, pausing plans to launch a smart bike. As a consequence, Zwift has implemented difficult, yet important changes to the organisation of the business. We are grateful for the contributions of all those impacted and have done our very best to support them.
We are committed to increasing the development of the core Zwift game experience, increasing the speed of new feature releases, and making the platform more accessible than ever before. We firmly believe these changes will allow us to achieve these goals and better support the continued growth of our subscription business. Further, these changes will preserve Zwift’s strong financial position as the world navigates these turbulent times.
I also had a lengthy follow-up call with a spokesperson at Zwift who helped put some flesh on the bones of their public statement. Let’s unpack what this restructuring is all about, and what it means for Zwifters.
Hardware Paused
You may recall Zwift leaking their own trainer plans back in December 2021 as part of a survey designed to discern price points and demand for Zwift’s not-yet-released smart trainers. Zwift is now saying, “we have decided to scale back our hardware offering, pausing plans to launch a smart bike.”
Perhaps the results of this survey made Zwift sit up and take notice. Perhaps they saw the industry-wide trend of hardware sales taking a post-Covid nosedive. Or does the current economic unrest have them thinking bearishly of the coming 1-2 years?
Whatever the reasons, pausing hardware feels like the right move to me, and probably to most Zwifters who are paying attention to the industry.
Zwift may need its own trainers in the future in order to streamline the experience and reach a broader market. But if team sizing decisions need to be made in order to reduce spending, hardware is the logical loser to Zwift’s software. Because the software has plenty of room to grow and improve, while the market already supplies high-quality hardware.
And this was one point made by the spokesperson I chatted with: that Zwift’s primary goal with hardware was always to “grow the pie”, not to take market share. Zwift wants to make its own hardware so it can simplify the new user experience from end to end and thus bring in more users.
Additionally, Eric Min has said in the past that he thinks trainer manufacturers won’t be able to keep up demand, hence the need for Zwift to supply their own hardware. In today’s world this doesn’t seem like a rational concern. But in the lockdown months of Covid, where trainer sales spiked 900% and fresh KICKR inventory was selling out within 24 hours, it seemed like a very real possibility.
This hardware pause is Zwift coming to grips with post-Covid realities, where most of the cyclists interested in Zwift have given it a try, and those who enjoyed it have purchased a smart trainer which will serve them well for the next 1-3 years.
Software Focus
According to Zwift, the silver lining to this restructuring raincloud is a renewed focus on Zwift’s software. Their statement says, “We are committed to increasing the development of the core Zwift game experience, increasing the speed of new feature releases, and making the platform more accessible than ever before.”
That’s exactly the thing Zwifters want to see. In fact, the #1 complaint from dedicated Zwifters is the slow pace of change/improvements/expansion. The Zwift community loves new roads and features, and we simply haven’t gotten many of those lately.
Is Zwift just telling us what we want to hear, or are they making real changes that will result in increased development of the “core Zwift game experience”? Sources within Zwift tell me that part of this restructuring includes co-founder Jon Mayfield moving out of his R&D basement and back into a lead role in Zwift development. That’s big news, and a sign that they’re serious about making some changes.
It could also be argued that “right-sizing” Zwift staff will lead to a more nimble organization overall. But whether that translates to quicker releases of new features or just quicker releases of new bugs may come down to improved QA testing combined with freshly streamlined processes.
It’s Not Just Zwift
If you’re paying much attention at all, you’ve probably already realized that this sort of restructuring isn’t just happening at Zwift. Covid made things crazy in 2020-21, but 2022 is turning into a year of reckoning for many tech companies, especially young ones. Russia’s invading, tech stocks are tanking, inflation is ballooning, interest rates are rising, and the overall economic outlook for the next few years is growing more bearish by the month.
As Erin Griffith noted in a New York Times article yesterday, “…what’s different now is a collision of troubling economic forces combined with the sense that the start-up world’s frenzied behavior of the last few years is due for a reckoning.”
Zwift’s spokesperson emphasized to me what was emphasized in their statement – that Zwift is in a strong financial position currently, and is making these moves so they can stay in a good position moving forward. If you believe what they’re saying (and I do), then Zwift is looking down the barrel of a few economically unstable coming years and taking early steps to ensure the survival and even growth of their business moving forward.
On a Personal Note
As yesterday morning turned into afternoon and then evening, I heard from more and more Watopians (that’s what Zwift calls their employees) who were being let go or had friends being let go. This includes some surprising layoffs of friends I interact with regularly in key leadership positions in the company.
All of them said the same thing: it was a tough day at Zwift.
I won’t name names here, but simply want to wish all these (now former) Watopians well. Zwift has said they’ve done their best to support impacted employees, so hopefully each of you feel well cared for and can land on your feet with a new gig as quickly as you’d like.
Wrapping It Up
Given current economic and world realities, Zwift restructuring around a refreshed set of priorities isn’t surprising. Many may even welcome the news as evidence that Zwift is thinking rightly.
But will the restructuring just enable Zwift to continue delivering what it’s already been delivering for years? Or will the leaner organization be able to refocus and take its software and the content it delivers to the next level?
It’s impossible to know that answer today, but we’ll know soon enough. Perhaps we’ll see some interesting releases this summer when traffic numbers are lower and pushing the beta envelope is a bit less risky. Or perhaps Zwift will get some major releases queued up for September/October, when foul-weather Zwifters come inside looking for all that’s new and great in our favorite virtual world.
It won’t take long to find out if Zwift is serious about “increasing the speed of new feature releases”. Speaking for all Zwifters, I’ll say I hope it happens soon… not zoon.
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