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 ~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!
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.
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.
Questions or Comments?
Is the monthly fee going to increase?
I’m counting on that, sooner ir later
Yes, prices will go up. You can Google for “Zwift price increase” to find out what Eric Min said about that in an interview with Bloomberg last month.
One rationale for this is apparently that “The supply chain issues are real.”
This seems utterly insane for software.
Also, with regards to hardware (if that’s what the issue is), and even with Zwift potentially forecasting and executing that better, GCN and others have been predicting a glut in the market which probably means lower prices this year.
As others have mentioned, “supply chain issues” seems the result of a poorly-edited story. If the price is increased, it will likely be due to increased costs of labor, etc. over the past 5 years (the last time they increased prices).
Absolute nonsense. 2:25 of the video linked here: https://twitter.com/Quicktake/status/1621525955368951809
Zwift is a great value compared to many other activities one pays for to with others. My monthly per hour use is about a dollar or less. Compare this to a yoga, spin or other class at > $10/hr and it seems a steal. I’ve also got to meet, race with, and talk to new friends all over the globe. If I wanted anything, it would be the following: better way to locate rides/events by day/time than all the scrolling and somehow make it easier to find out about the racing and to get onboarded for that from linking up… Read more »
Already dumped it… Too costly and boring
I started a race series with a friend. We averaged The percent time gap of the last three races and the winner was on the right side of that gap. Most fun activity I’ve had on the platform since level 20. The zracing series has been enjoyable, too.
But you’re still reading Zwiftinsider. Strange…
Saw the headline and hoped it was a glitch bringing an old story back to the top.
Hopes were dashed. I feel for all those who lost jobs.
Executives are useless and collect outsize
Paychecks. Hire more programmers and graphic designers.
The last thing Zwift needs is more programmers and designers. The product badly needs a new vision.
Thanks Eric. you’ve just inspired my next Zwift Video for my response 😁
Happy to be of service, sir.
I walk in the shadows of your footsteps. Thanks for bringing us all the Zwift News
“we have made will allow us to further increase the speed of development,” Well how about QUALITY of development? How about a little less censorship of group chats? Pretty bad when you can’t poke fun at yourself without receiving an email threatening to shadow-ban you, whatever the hell that is.
I’m guessing I’m not the only one that dropped my Strava Premium subscription recently. I don’t want to speak for anyone but myself, but Zwift is worth a HELL of a lot more to me than what they’re currently charging. What do these topics have in common? Just a major heads up to those at Zwift deciding future price points and communication to VALUED customers. Personally, anything over $25/ month would be unreasonable in my opinion. I would also suggest subscription options for riders who are just starting up on Zwift – maybe with monthly total ride time options. Just… Read more »
I been through every price hike so far and if it breaks $19.99 I’m out. Been on for years lots of progress, don’t mean anything for $20. Just like Strava, dumped it as well, not worth it at all. If they would fix all the known issues, they would stand a better chance of keeping people happy at $20 than just upping the price and seeing what sticks.
For what Zwift is and offers, I think any price increase could prove detrimental to the company’s long term survival. I for one love the platform, and seeing as I don’t ride outside anymore have come to depend on in for my fitness. But there is a limit to what I’d be willing to pay for it. Considering it’s limitation and infestation of bugs, along with a failure to address issues and listen to the feedback of subscribers, I think a lot of people might start drifting off to the competition.
What are the best alternatives in the market to Zwift that offer a similar user experience?
Probably RGT, which also has a ‘free’ option that I’ve made use of on occasion, and they are now owned by Wahoo so will likely be making significant strides in the medium term
The free option is now very, very limited.
And it’s only a matter of time before the monthly cost of a subscription goes up.
Maybe they will stop building stupid stuff line turning us into dinosaurs and provide improved functionality instead.
If I were Zwift, I would have a good look at the original plans to increase the revenue by including other sports while retaining the current users. Personally, as a cyclist, I don’t need much more functionallity (since category enforcement is introduced). I think a lot of us are content with some new roads once in a while and perhaps a velodrome. Which probably does not require much resources. However, a price increase would be a serious trigger for me to check out the competition. For me, the unique selling point of Zwift is its racing, which is mainly due… Read more »
I won’t be holding my breath for Zwift to progress beyond “Coming Zoon” status given that the first posts asking for customizable HUD – with individual on/off settings at least and moveable elements with custom info at best – are now closing in on being 5-YEARS old! Add to that no Velodrome with associated events, no release of the already programmed much promised much wanted but never available Rowing mode, and no fixes/improvements to major in-event rider bug-bears (inaccurate mini-map route/elevation, incorrect timer, random wrong turns etc.) and they have a long way to go to convince me that any… Read more »
The weather has been so nice in the American southeast that I haven’t been on the trainer in almost a month. I wonder if that has affected Zwift? I hope these reductions don’t cause a drop in morale at Zwift and problems with the platform. At least Elon Musk didn’t buy it.
The weather in the American southeast may be balmy, but here in Minnesota I’m looking out the door at 3 feet of snow still on the ground after a week above freezing. These things vary. 🙂
I hope the hires from Meta don’t mean wholesale selling of customer data is around the corner. Meta has a total disregard for their ‘customers’. On price, I agree that it’s worth more than Zwift currently charges, unlike Strava which has, in my opinion, lost the plot.
I have been on Zwift quite a while (started pre Covid), the price is reaching the point where I will likely drop soon. Hiring execs shows that the leadership has lost understanding of the subscriber base, the folks they hired may understand business but likely not what or who the subscriber base is and wants. I don’t race and rarely group ride, I would like to see pricing on use (e.g. up to 10 hrs/mo, >30Hrs/mo, etc) or feature use (e.g. racing, events, pacing, training plans, etc). There are a lot of different types of Zwifters and the key to… Read more »
I think tiered pricing would be a complete annoyance. I like the simplicity of the one size fits all do what you want use anything you want approach.
One funding avenue they haven’t addressed is tapping their user base. I’m retired from Apollo Global Mgmt (private equity firm) and have been using the program for years. An equity share in exchange for reduction in monthly membership could be attractive to many.
As we have seen with Peloton-the hardware side is very prone to boom and bust cycles. Maybe a personal trainer option would work – tiered pricing.
‘Tapping their user base’ is a dangerous phrase to become common parlance. There is, I am quite sure, funding available from organisations that would like to profile and tailor offerings based on people’s physical metrics — like insurance. I’d really like Zwift to clarify it will never do this and that it complies with data protection legislation in all jurisdictions (and that it will enforce it’s ToS, unlike what it seems to be doing with Sauce.) Do we really need a Cambridge Analytica scandal? And I’m happy to pay a fair price for the product, just so long as I… Read more »
Trying to be both hardware and software has broken many companies. Sun Micro, et al.
So many white male executives. No wonder nothing changes.
It’s a great fitness product and they have established an exceptional brand – via user word of mouth and marketing. It’s become the generic brand for indoor cycling – which has material value. Clearly overpromising on new developments risks undermining the brand and the move away from core business into manufacturing / shipping turbo trainer hardware looks a misstep – distracting their people and stretching financial resources. Why did they make that hardware move – because they thought there was a better margin in it than the existing business? Without sight of financial performance info hard to be specific but,… Read more »
Check your racism, sweetheart.
The focus on the product and “customer experience” is crucial to the success of subscription based (cloud) services. Ten years in cloud services embedded that soundly in my brain. However, improvements will only be of value if the voice of the customer is listened to. It is not uncommon when technical focus goes up that voice of the customer gets less attention and tech teams build stuff they think is good because it has technical value for them. Unfortunately, their customers just don’t care about it. I have seen this happen at more than one company and fought to prevent… Read more »
Thanks for the shout out, Eric! It’s very appreciated :)Eric C
We’ll miss you, man. Zwift needs more Erics! Hope whatever comes next for you is amazing, and you still hop on Zwift to say Hi (from Ohio!) whenever possible.
Gotta keep the legs in shape somehow!
Interesting….. thanks for the info Eric.
It always strikes me when this topic comes up that a business that continues to prioritise flashy tech developments above sorting out bugs and subscriber requests deserves to lose customers.
Come on Zwift; read what it says, there, on the wall!
Some of the staff cuts weren’t to the Robo Pacers? 🙂
Just tried to join Coco and found only a couple a D Pacers on the roster. Shutdown and restarted Zwift and Yumi popped up, but still no Coco.
Oh no! Did they fire Coco?!
I noticed the C level pacers kept popping in and out while I was trying to select one today also. At one point, Yumi in Watopia was the only C level pacer.
I cringe a bit when I hear about new big hires in the C-suite. Yes, they may infuse new blood and ideas, but as a member of the healthcare industry, top admins merely collect incredibly bloated salaries without adding much to the overall picture. Hopefully that will not be the case with Zwift.
I love the platform, what it offers and it current price point. Here in the cold northeast, it keeps our fitness up until we can get outside.
Hires from Amazon and Meta? Wow. So do they even ride on Zwift?Zwift needs to be led by actual cycling enthusiasts, not devotees to the practices of huge corporations. There are too many in-groups for the rich already.
Eric Min is an actual cyclist, but people complain about him a lot!
Kurt Beidler is a cyclist, but more of a casual one than Eric Min. That’s probably a good thing, though, if Zwift is looking to get more mass appeal among riders of all types.
Not sure where the other two are at in terms of riding…
Nope, zwift needs ran ,Ike a business or it won’t be around for long.
Zwifts challenges are cultural, technical, and financial. They have done very well culturally with the cycling community and are a respected part of it. Technically, it is worth recognizing the challenges of this application. A decade ago, describing the Zwift experience would seem like science fiction. You might have found a few tech demos in university labs that had shown aspects of it, but it isn’t until it becomes something that tens of thousands of people from around the world use on a daily basis that it becomes a real (virtual) thing. Now deliver this experience at scale in the… Read more »
Zwift will die, they’ve stalled, with every update they roll out, something breaks. Even during winter season you see less and less people, some maps even <500 people in the evening CET…not a good sign….
Raising fees will not help their subscriber numbers. If they bump the subscribers up more, things such as roadside advertising billboards could help drive new revenue sources. What about value-added things that don’t exist now, such as a create your own jersey kit, bike construction kit, or something else unique from base subscription package that you do an upcharge on.
Raising a price will encourage riding on the road more, will eventually drop the subscription…I just dropped strava after more than 5 years…