Yesterday, Zwift internally announced a 15% reduction in workforce, with a view toward focusing the business on core product development.
It’s never easy to write, or even read, about people losing their jobs. And we’ve all been reading a lot about this sort of thing lately, haven’t we? In the cycling space, in the indoor fitness space, and in the tech space as a whole, job cuts and financial challenges have become everyday news. The rumblings began with layoffs and restructurings a year ago, but in just the past few months we’ve seen Wahoo’s layoffs and debt troubles, layoffs at Specialized, and 15% reductions at giants like Facebook, Microsoft, and Alphabet (Google).
It would be easy to paint Zwift’s fresh round of layoffs with the industry’s broad brush, but conversations with key leaders in the company indicate that may not be entirely accurate.
To be sure, the post-Covid economic downturn has created a challenging business environment. And yes, the economic outlook for the next 1-2 years is challenging at best. But let’s look at Zwift a bit closer…
About the Reduction
Zwift’s official statement for yesterday’s announcement says:
“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.”
Our internal contacts tell us the reduction included approximately 80 employees. (Doing the math, this means prior to these layoffs Zwift had ~533 total employees. May’s 150-worker, 20% reduction reduced Zwift’s workforce to ~600 employees, so the company has slimmed down a bit in the past 9 months, apart from announced cuts.)
Contrary to what has been reported by other media outlets, the cuts didn’t largely come from the Marketing team – in fact, around half the number of confirmed cuts are from the Marketing, Creative, and People Teams.
The remaining cuts came from a variety of teams, but we don’t have specifics on those numbers. We were sad that longtime Zwift customer support leader Eric Chon was among those cuts. Eric has been with Zwift since early days, and has undoubtedly helped thousands of Zwifters to enjoy the platform better. He’ll be missed!
New Hires
Zwift says, “Scaling back in some areas will allow us to invest more heavily in our product”, and that’s already begun with a few key product-related C-suite hires in recent months. Not long after Co-CEO Kurt Beidler (ex-Amazon) was announced, Mike Lusthaus (also ex-Amazon) was brought on as CTO. And we just learned Zwift has hired former Director of Product at Meta, Manlio Lo Conte, as Chief Product Officer.
Beidler brought a fresh set of eyes into Zwift HQ and has largely taken over the internal, day-to-day oversight of Zwift while co-founder and co-CEO Eric Min continues to oversee Zwift’s external interactions with investors, partners, etc.
In bringing on new hires from Amazon and Meta, Zwift’s board is clearly working to assemble a fresh team of leaders with proven experience driving teams at industry-leading businesses. Expectations are that they’ll move fast. Once these executive-level managers get settled in and Zwift’s budget cycle wraps up, expect fresh Product Team postings on Zwift’s careers page.
Our sources tell us this 15% reduction will allow Zwift to scale up its product management and engineering teams, both on the software and hardware sides. We guess Zwift will be looking to make those hires in the off-season (Q2/3), so teams are in place by that crucial August/September window.
Health of the Business
Multiple conversations with key Zwift leadership over the past two days have emphasized that the business is healthy. Although Zwift didn’t hit their growth targets this season, they’re still growing.
Anecdotally, we can’t disagree. We’ve interacted with many new Zwifters coming on board in the past few months. Clearly, many have arrived thanks to the Zwift Hub trainer whose industry-leading price point makes an engaging Zwift experience more accessible than ever.
While other companies in the space are struggling with debt and even bankruptcy, Zwift assures us their balance sheet is very healthy. They still have a sizeable war chest still available from their last investment round, and sources tell us Zwift’s board is managing the company with an eye toward not needing any further private funding.
What’s Next
Zwift hasn’t shared specifics about planned game improvements in the coming months, although it sounds like a bit of a “roadmap” will be announced soon. The question on the minds of many Zwifters may be: should we get our hopes up?
In past years, Zwift became a bit notorious for their slow rollouts of product improvements and lack of new maps. By their own admission, “zoon” became a fitting Zwift meme. But since the summer of 2022, which followed Zwift’s major restructuring in May, we’ve seen a steady list of new features roll out on schedule (read our 2022 Zwift Year In Review for details).
Today’s Zwift isn’t the “fat and happy industry leader” Zwift of pre-Covid days, and it’s certainly not the “trying to keep our head above water” Zwift of lockdown times. The organization is trending leaner and meaner, and if the C-suite hires are any indication, Zwifters will be benefiting from a stronger focus on product and customer experience in the coming months.
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