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.
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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.
Your Thoughts
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Doubling down on what you do well is good strategically and yes, listening to your community will defo keep everyone engaged. The hardware play, while I get it, could take their eye off the wheel. I am still waiting for a Mario cart version of Zwift, see what happens.
Whoa? Me first? Those is sad news for the Watopians. But, for me as a happy Zwifter, this is the best news, of 2022, so far. Zwift: focus on software. Focus on new worlds, and routes and Events!
Great summary Eric. I especially like the focus on the Watopians. It’s the people that sit behind the game and avatars that makes Zwifty so much fun, I sincerely hope this continues.
New content rather than new hardware is a no brainer. More expansive training features and new roads similar to the alpe, replicating other famous roads and routes around the world. This will be sure to keep a lot of zwifters
I’ll be curious over time about the specific issue of roads based on real-life settings.
This is an area where Wahoo’s new RGT acquisition is in outline out ahead of Zwift — albeit without the larger fictional world that stitches together “Magic Roads” with the rest of the application. RGT had loads of those real-life mimicking roads, but they’re one-offs, isolated from one another. That’s one way RGT strikes people as more isolating than Zwift.
So does Zwift direct its attention to competing with those RGT features, starting from its decent foundation knowing how to provide them within the fictional Watopia? Does RGT use their existing mechanism for bringing in those real roads, fleshing them out with nicer and more varied terrain and giving them a common foundation that ties the product together better, now that Wahoo has invested in it? I think it’s an area of potential competition.
so we are back from no feature pace to it’s very much zwoon when it’s in the next three years pace
Whaaaaaaaaat?!?!
best of luck to the displaced employees.
Can’t argue with any of that. There was a certain amount of hubris in Zwift’s foray into this sector. There’ll be a certain amount of humble pie as well in realigning the product’s new features to work first and foremost with the current smart trainers.
The move of Mayfield back to his core role seems a sound move. As mentioned in the article dedicated / long-term Zwifters have a real concern over the lack of development in the core product, in particular expansion of core Worlds such as Watopia and London.
Hopefully this will result in a leaner start-up and a stronger future for the company.
There’s a chance it will still be around in 5yrs.
S
DC said that Wes Salomon is out from Zwift. was he wrong?
“One major loss within the reorganization is Lead Game Designer Wes Salmon”
He’s correct – Wes’ last day was yesterday. His leaving is a big surprise… he’ll be missed!
Hardware was a mistake. Zwift would never complete with Wahoo and Tacx. Never. Better to accept that and move on than carry on.
However, of it is 20% of staff that have gone (and I wish them well) and having to state they are in a strong financial position I’d say the opposite is probably true (just a hunch)
Zwift needs to develop. New roads whilst welcome don’t drive the same excitement as they used to do. After 5 years on the platform it’s starting to grow stale. Zwift need to bring out some new features..Jon Mayfield is exactly the right person to do this.
Fingers crossed we see some exciting stuff soon.
Everyone has their own subjective opinion but mine personally is the gamification and ‘game’ like feel of Zwift is it’s USP. I’m less interested in new routes and modelling real-life as I am in new game features. I’m not even joking when I say the next level would be more fantastical stuff like weapons or mini-games etc
That would be an amazing way to lure in new users, particularly traditional gamers interested in boosting their health/fitness. Most Zwift users probably start the same way I did – as a current cyclist who wanted something interactive to make indoor rides more bearable. Now that I’m a few years into using Zwift and have almost every route badge, as well as all the equipment I could really need, having something more “gamey” is more appealing to me than ever before.
Add ebikes to the mix playable with a keyboard/mouse, including hidden motor ones race eligible with high point purchases (make points for purchase option). Make tuning garage available to increase wattage and gearing options. Offer super high priced team car option to virtually drive on the roads, allowing to draft real riders or mow them down.
The pivot to hardware never made sense. There was already great trainers and smart bikes out there and for some time. The margin and competitive advantage was in the software which has been allowed to grow stale. I have to guess the Wahoo acquisition of RGT and Sufferfest served as a wakeup call. Maybe they will start listening to the end users.
Strategically, this seems like the right move. It’s always a bummer to hear about people losing their jobs (hope this market means they’re not looking too long), but a re-focus on software (especially with Wahoo buying RGT) seems the right move for the company – if they implement it well. It all comes down to how they implement the re-focus.
I know I just said that re-focusing on their core mission is what they need to do, but I also wonder if, given the feeling that they’re nearing saturation with all the interested cyclists having tried it, if it’s time to put more emphasis on running or even take another look at how hard it would be to implement what they’ve already built for rowing in order to broaden the customer base/increase their revenue streams. I don’t do either of those, but, if it’s low hanging fruit that will increase the base or increase engagement from the current base, it might be worthwhile while still staying close to the core mission of esports software.
I’ve seen this movie before. Losing staff isn’t a good sign for us racers given the already low resources put into it. I look forward to a new hat or hairstyle at the end of the year though…
They are spinning this as only hardware focused, but with the loss of Wes and so many others it’s not about that. They let go so many people who only focused on the core game they want to say is their new focus, staff who have been there for years not working on a trainer.
People who knew things about the game, bugs and community, pre smart bike, that no one else can replace. The people who actually listened to the users who built Zwift and advocated for what Zwift now claims is their focus everyday and didn’t care about an expensive smart bike. Many things that made Zwift special no longer exist in their staff and thinking otherwise is foolish.
Better to focus on software…. (*cause wahoo seems to be creeping towards the forefront)
There has been needed attention to Quality and Assurance for some time now. Launches appear to have been pushed too soon with not enough QA behind them. A beta group should be considered if it’s not in place to work out the kinks before mass launches. Glad to see the more hyper-focus on the software side. Don’t lose your bread and butter while trying to make jam. Hopefully, the Watopians will land somewhere where their skillsets can be maximized. #businessdevelopment #marketingagencyowner
It was a stupid idea in the first place. Would need to sell tens of thousands for it to be worthwhile, which it isn’t, as other companies already do it, probably better too.
I wonder if the talks with TrainerRoad have stalled/stopped or this right sizing is to make a gap for another organisation to fill??
I’ve heard elsewhere that the TrainerRoad deal isn’t happening… but that’s all just rumors.
I feel like the RGT deal maybe had an impact on speeding this along. Let’s face it, as many times as some of us might complain about this, that or the other thing, we probably were not going anywhere because there was not really a competitor that was on the same level; Trainerroad and sufferfest are great products, but they are not really the same as Zwift, and all the virtual world riding apps did not have the user base to support a community. I think Zwift realizes that in 6 months to a year there is going to be somewhere to go if a user gets tired of Zwift and so the time is now to get lean, make a plan and get to work on the core business.
Zwift is up for sale — make no mistake about it. Eric Min is looking to get out and they trimmed the employee fat to make the company more attractive for a buyer. Every single time there is a global economic downturn, regardless of the industry, you see massive consolidation — especially in software/ tech sector. By this time next year, albeit likely much sooner, Zwift will be owned by another company.
That could be and wouldn’t surprise me. But I live near Amgen’s HQ and they do this every few years or so.
They took in a lot of investor money justified to some extent by prospects for hardware business. They may have trouble meeting those expectations. Fortunately RGT and other competition may deter price hikes somewhat.
Whether they sell or don’t sell, the cost of money to fund development has probably gone up a lot in recent months. That’s also a reason to cut development of things that won’t yield quick returns.
Completely agree here. The only reasons you cut staff is to make you more attractive to a sale or you are in trouble. Zwift have taken a lot of cash. Investors are probably wanting to see a return. The hardware gamble failed. I can’t see how any of this will speed up game development.
It’s funny to see all the opinions of people on what is really going on, when they have no clue. Stupid ideas based on no evidence.
Exactly. The most hilarious is that “investors probably want to see a return”. Probably? Many laughing emojis.
Of course they do, but the real question is when.
I read somewhere that YC (the fairly recently hired new head of product) is gone as well. I don’t see much of his influence in the product itself yet but there have certainly been some recent positive developments in terms of process and communication. I wonder if this will be a major setback as well.
I really enjoy what Zwift has to offer, and this seems like the correct move. The bicycle boom as a whole is starting to dissipate. I feel bad for those employees let got, and hope they’re able to quickly become re-employed.
Sorry to hear about the layoffs. That’s never easy. But going forward I have two words for Mr. Min: virtual reality.
If they can get a lightweight VR headset to market them they’ve got an incredible USP over fitness competitors. They’d still need to add new game modes to attract the fitness crowd though,
As it is, Zwift is still a niche within a niche.
Zoon???
How many years do you think it’ll be before somebody get their hands on one of the prototypes? I’m going to guess at least a decade.
Perhaps they’re making way for the Trainerroad employees who will join in a merger of the 2 companies.
Sadly I think deciding to focus on Software may be a case of too late.
I always felt that Zwift developing Hardware was like biting the hands of the trainer companies whom without their R and D and investments Zwift couldn’t have developed.
Sadly this ‘new focus’ appears to have resulted in much of the workforce being laid off and there is much speculation that this may well signal a move to revalue the company ahead of more drastic measures.
Without a doubt before it is launched rockstar games are going to realize they have built 98% of Zwift (worlds/physics engines/steering!/support/hosting infrastructure) to a quality far higher than zwift could ever afford to develop. Plug in the input from a turbo trainer as the accelerator button on a dedicated cycling server and you are not a million miles away from something with a post money valuation north of 1bln – too compelling not to happen. No idea what zwift could do to develop to that standard between now and GTA6 launch. Maybe Eric really is evaluating his options.
I looked over the list of bikes in upcoming GTA 6.
I don’t see any pedal kind of bikes.
https://omggamer.com/gta-6-cars-bikes-characters-grand-theft-auto-6/
They are already in GTA5, integration is built via. standalone mod from nestor matas who CURRENTLY! works at garmin
I dream of pedaling around Los Santos and shooting at faster people
its already here GTBike V – GTA V cycling mod official site. In GTA 6 this will a much more integrated part of the game..
“wahoo kickr and tacx neo series powertrainer need ZWIFT to have the best in-door cycling experience.” — that’s what i thought in those years, but is that really so? After bought tacx neo2 in May 2019, I subscribed to ZWIFT with little knowledge.
https://www.theguardian.com/business/2022/may/10/peloton-share-price-losses-sales-cut
Smart move! (Pun intended)
The hardware market is saturated.
damn, i was thinking about breaking open the piggy bank to get one of those sweet sweet IRL tron bikes. prolly decided it was too expensive to be worth it, what with the current cost of living crisis etc. and instead want to focus on countering wahoo’s recent acquisiton.
Wahoo’s purchase of RGT and ZWIFT’s still awarding XP points to Level 50 riders IMHO are examples that ZWIFT needed to refocus.
I feel bad for everyone involved, especially people in hardware who at hiring were convinced they wouldn’t be working on a suicide mission.
If the focus is back on software and game development, why did they let Wes go? Not worried for him, he’ll be fine, but that’s a curious decision at this very moment.
Je crains pour le futur de Zwift….
Zwift est un tres bon produit. J’espere qu’il continuera a se développer avec de la creativité
I always questioned the pursuit by Zwift toward hardware development. In tight times focus on what you do best. So while I’m happy for the greater focus on software, I really think they might also want to focus on what separates/ gives advantages over RGT and that is improving the community experience/ camaraderie.Brand loyalty is a hard thing to overcome but once you do……
Why do levels even stop at 50?!? Why don’t the powerups that are supposed to be in races work as planned? Why can’t ANYONE create a race/event? Why are the avatars still not representative of sooooo many different body types and hair colors?
Work on Software Zwift…good riddance to the hardware.
Any chance of finally getting new levels past 50…???
Shutting down hardware R&D is not a big surprise if you consider that Peloton stopped hardware production in Jan 2022. When they did that, I noticed Wahoo and Saris hardware on sale too. Watopian economists surely did not miss these red flags. Given this, maybe it is a surprise they waited this long to announce. I am inclined to think that if I saw a McDonald’s closing, I wouldn’t build a Wendy’s across the street next month. Smart move Zwift. I wonder what Garmin is thinking right now?
I think, You can find a lot of bike races every hour in events, it’s fine, but also I would like to see more friendly rides, with more relaxed paces and maybe more new routes. Thanks