Zwift Announces New Layoffs Reducing 15% of Workforce

Zwift has internally announced a restructuring that is resulting in a reduction of the workforce by 15%, or approximately 80 people in total. The change is largely coming out of a “fresh look” at things with Zwift’s recently added Co-CEO, Kurt Beidler. Kurt came from Amazon back three months ago in December 2022, and has taken over the bulk of day-to-day operations from existing co-founder, and also Co-CEO, Eric Min. Zwift says these changes are largely about “investing in the fundamentals” rather than “spending on brand”. In other words, Kurt Beidler is prioritizing budget allocation on product development rather than marketing efforts.

The layoffs impact all teams, but the bulk are hitting the marketing and so-called “people” teams the deepest. The “people” teams are basically the HR and other non-product functions. The marketing teams are hit the hardest, and I’m told there will be some recognizable names in there from all levels of the company, once those names are announced publicly internally tomorrow. The impacted teams are mostly in the UK and US.

Zwift started announcing the changes at 1AM Pacific Time today (March 7th, 2023) in a company-wide e-mail from co-CEO Eric Min. That email was followed up immediately with an invitation to a virtual meeting for all impacted employees. In other words, if you didn’t get the meeting invite, you were good. In the previous round of layoffs last spring (where Zwift laid off 150 employees after shelving their smart-bike and own-designed hardware division), Zwift employees grew frustrated that they sat in limbo between the initial re-org announcement, and then hearing from their manager in 1:1 meetings that they were or weren’t impacted. Those individual meetings are still occurring this time, but are following the CEO meeting with those impacted.

Zwift says those impacted are being awarded a “generous severance package”,  as well as also being awarded their twice-annual bonus packages, as the payout period for those ran through the end of this month (March). They’ll get this past 6-month period bonus award. Further, employees will get career support, and then those in the US will get extensions of their health care packages.

Note that none of the marketing reduction is set to impact Zwift’s external community resources (which receive funding from Zwift), nor does it impact partnerships like Zwift’s sponsorship of the Women’s Tour de France.

Zwift says the intent of the restructuring is to “re-prioritize where budgets are spent”, specifically by “investing more in product development, both hardware and software”. While not good for Zwift marketing employees, this is likely to appeal to Zwift consumers/users, as it’s basically Zwift admitting that they need to focus more on the product and less on talking about the product. This is a common complaint found in almost every Zwift (or related) forum.

Zwift’s PR lead, Chris Snook, stated that: “Zwift is buoyant about the future, but mindful that we need to make smarter investments going forward”.  Again, much of this change in direction is led by new Co-CEO Kurt Beidler. In the three months since coming on board, Kurt is now responsible for almost everything day-to-day. This includes operations, engineering, and the product itself. Whereas co-founder, and also Co-CEO, Eric Min is responsible for investor relations, finances, future vision thinking, and the marketing teams. There’s an expectation of continued tweaking of the organizational structure based on Kurt’s revised focus on the product.

Of course, unless you’re additionally hiring more software and hardware engineers, or otherwise redirecting their efforts, then much of this is about budget reduction than purely refocusing. Granted, Zwift has shown over the past year a renewed focus on the product and new feature – even if it doesn’t hit the bucket list of every forum member (plausibly an impossible task).

Zwift’s official statement is as follows:

“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.”

Ultimately, Zwift says this is about “Letting the product speak for itself with reduced marketing support”, by “spending less on brand, and more on the product. Both software and hardware”. How exactly that’ll manifest itself remains to be seen, but it was notable that Zwift re-iterated multiple times the inclusion of a focus on hardware, and also noted that by their own criteria, the Zwift Hub smart trainer has been a huge success in terms of adoption (something the rest of the industry does seem to universally agree with, albeit if not to their liking or benefit).

As with most companies in the cycling segment, a combination of recession winds and COVID peak bubble-bursting is catching up. Unfortunately, Zwift is no different here. On the bright side, we still haven’t seen the price increase that Zwift’s CEO hinted at last month. Perhaps this move will delay that a bit longer.

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40 Comments

  1. AD

    This time don’t want to be #i1 responder, my thoughts are purely those who are laid off today.

  2. Alex

    Always sucks when people are terminated but I’m sure I wasn’t the only one wondering what 600 people at Zwift did exactly.

    • Dave Lusty

      In theory, marketing aka sales. They originally were selling ad space in game, in addition to bringing on brands for in game sales. I think they lost their way a while ago and monetised through user subs instead so it makes sense to get rid of the unsuccessful in game monetisation.
      Whether this works long term or not we’ll have to see. I’m not aware of any other platform succeeding with charging users as the income source, and gaming is almost exclusively ad funded or in game purchases these days. I think they need to focus as a business and decide their future. hopefully this is the start of that

  3. Martin

    Please keep sponsoring women’s cycling. This investment will continue to reap rewards.

  4. MichaelP

    I feel bad for the folks who have been impacted. It’s not a great time to be employed in the tech industry. Almost every company has been implementing personnel reductions such as this and 15% seems to be the magic number. In light of what is going on in the tech world this is not shocking news, but it is still sad to hear.

    • Luciano

      15% laid off, still two Co-CEOs though…
      The “redundancy” definition is something relative at Zeift

    • Alex

      Probably doesn’t make a huge difference if they keep Eric Min on for a little longer or pay him off now.

      He’s CEO in name only anyway.

    • JaJa

      Tell us you don’t know what a CEO does without telling us you don’t know what a CEO does

  5. Peter

    Finally. I’m tired of being bombarded by ads of software/game, that’s 20 years behind current gaming standards. Just look at car racing sulimulators these days. Now imagine how much improving zwift has to do to get anywhere close to that. Invest in that. Good call.

    • Antti

      I can sort of understand the frustration from gamers, but most Zwift users are running the game on basic laptops or old iPads. J. Mayfield from Zwift has pointed this out several times on r/Zwift. Their focus is rightfully on how well it supports and runs on very basic hardware.

      And even as a gamer, and running Zwift on a gaming PC, I feel like it looks good enough for this purpose. If they would make it look even better for the small minority, it wouldn’t win them many more customers.

      Zwift has massive problems on the UX side of things, including the abysmal in-game UI, the website and the Companion App. The HUD is absolutely shit, bordering on useless. And in general it makes no sense where you need to go to find something.

    • usr

      What they need to pick up from the game industry is not peak fidelity, but the cost to get there. Even the largest open world game environments were made with budgets smaller than Zwift. But Watopia and friends are an absolute joke in terms of size and creativity compared to something like 2077 or any but the most ancient GTA. And those can presumably only put a very small part of their budget in the design of their virtual environment because so much would have to go into voice acting and so on. Zwift either lacks efficient authoring tools, or they lack the skill to efficiently use what they have (presumably something from the unity offerings?)

    • Aaron

      This is correct. Their core product is buggy and getting buggier as time goes on. The core UI isn’t good and is getting progressively worse as it ages and bugs add up from release after release.

      I don’t care so much about better graphics. I want what is there to work correctly each time, every time. I want the UI to be useable, customizable, and clean cut.

      They should be focusing on the core product before they go try to sell it big, add new routes, sponsor races, etc. They relied on third party tools for far too long.

    • Matt Haigh

      Spot on comment, you said it for me!

  6. zBike

    They’re out of touch searching for a CEO executive assistant the same week 15% of the workforce was eliminated. Do you own laundry.

    • Ryan

      Hard disagree.

      A good CEO should delegate virtually everything they can, so they can focus on what they can’t delegate. A CEO having to book meeting rooms and send out meeting invites is going to slow things down way too much and lead to a worse result.

      Could they allow laid-off folks priority in the application process? Sure, if they have that focus. Otherwise, this is the kind of normal and rational business decision that only looks bad to people who aren’t contemplating the specialized needs of a specialized executive assistant contrasted against the skills of those being let go.

      Lay-offs aren’t fun, but they’re there to help ensure business continuity. Hiring a new admin is part of that process.

  7. usr

    Repeat that until 15% of peak are left, then staff size will fit the size to the market they serve.

    Sucks for the ones sacked, but they were virtually out of a job the day they started because 500+ employee Zwift has never been a viable company. And neither was the 100+ employee version. They got their share of investor money and perhaps they had a good time receiving it, but a company that made single-digit millions in revenue while at the winner side of a pandemic wouldn’t be able to feed hundreds of employees even if their server demands could be run on a cluster of Raspis hiding in a drawer of Min’s office desk.

  8. ArT

    I prefer the reliability of the game to the number of pixels. Zwift works fine on most hardware. It also works fairly with 1,000 bikes riding at the same time. However, the leap in development is too slow. The basic 3 missions have been undeveloped for many years. California, Ilats and Everesting. There are so many dead zones. No use of a stronger Apple tv 2022, etc. Watopia as a world is big enough, but other worlds like France, London, are downright tiny. Why is there no ostarted Scotland.

  9. EJ Fuentes

    Did Min just finished atching The Consultant?

  10. mpulsiv

    It’s amusing that users still complain about Zwift. It’s far from perfect. What is your vision for a racing/training platform? Full immersive video game experience?

    What’s on your mind when you push 4w/kg on a climb or in a breakaway? Repetitive background noise of the nature? Trees in the background are unrealistic? Your jersey doesn’t flap naturally? You are overlapping other riders as overtake? HUD is bothering you because graphics are more important to you than keeping an eye on the power meter?

    • Aaron

      I’d like things to actually work. I don’t care about new routes, better graphics, or even new features if what exists doesn’t work.

      I’d like to be able to make U-turns on the Alp without having to complete a segment.
      I’d like the workout prompts to appear at the right time with full, grammatically correct, sentences and thoughts.
      I’d like the render of the glowing arches to not bug out.
      I’d like not having to fear loosing progress on workouts, drops, or challenges ever time they push an update.
      I’d like my ERG mode to work consistently with Zwift.
      I’d like not to have random crashes on the UI when I’m riding in a group.
      I’d like not to see people riding six inches above the pavement.
      I’d like to be able to see the UI elements without having to have a screen 6 inches from my face.
      I’d like to be able to type in my username and password on the phone app instead of having the boxes obscured by the keyboard.
      I’d like not to have to mute my workouts because the seagulls are screaming so loud I can’t hear the audio prompts.

      I’d like the basic functionality of the system to work as advertised, like it used to. At this point, there is something buggy every single ride. I’d like that to stop.

    • Hum

      You can make U turns anywhere, including Alpe De Zwift, you don’t have to wait to complete a segment. However you do have to be going at least 5 kph, the u turn won’t happen until you speed up to that speed. Since the course flattens out at each bend a little that is where it would likely happen. Next time just increase your speed a little.

    • Dave

      By sheer coincidence, this is my general rule for improving my fitness on the bike, in Zwift or in real life: just go a little faster!

    • Adam

      This, like so many other responses here, are absolutely what is needed – and therefore to me basically any new CEO has to be better than Min. It is truly appalling that the core functionality of this service is broken, let alone what would/should and could have been done with the right focus and discipline.

      One only has to look at RGT to see what, with some respectable product managers and developers, can achieve on what I understand is a substantially smaller development team.

  11. Roberto

    Let’s run a bit of financial math:
    – Revenues: 1 Mln user max (probably 800k) who pays let’s say 6 month/year max –> 90 Mln USD revenues
    – Costs
    600 people in expensive locations and expensive jobs : 120K company cost minumum (much more for SW developers, etc.. but I averaged down with sales and marketing general staff, accountants, etc) –> 72 Mln
    Then operating costs, rental, servers cost, sponsoring, etc

    Clearly they are in deep red and they are trying to become a viable business without chasing unrealistic (at this moment in time) revenue boom

  12. Chris

    …and still Zwift Run is free.

  13. Darrell Kazbikelab

    1st new CEO is cut jobs. The operating cost is jobs. CEO will get a big bonus bigger returns to share holders. Kurt is a typical over paid under qualified CEO that needs to prove hims self also which happens to be in the Penis board members club. Hope Zwift does not loose quality. Then we can vote the useless CEO Kurt out.

  14. Xabbar

    Too much money, too much problems. Ive helped now the company, cancelled my subsciption.

  15. Oleg

    When I read a title I thought about Twitter

  16. Peter Blair

    I think this article is pretty on the nose – link to businessinsider.com

    If they do invest in product it is great news – would be great to see faster implementation of things like M1/M2 Max support, and crazy features like being able to select red as a color for your bike…

    • Xavier

      I always wonder how Zwift is still up and running -they received at least $600M in funding, and I doubt their revenue from subscriptions is more than $70/$80M year… the platform hasn’t changed in 5 years -losing the edge; to top that: they wasted ridiculous $$$ in marketing expenses… that’s why of the new CEO. I doubt there is golden parachute for Min 😉

    • Adam

      I would add an extra dimension to this, yes they are copycatting each other, however the reason why they have done so is an appalling lack of expectation and performance management by almost all of the big tech companies out there.

      I know a number of people personally who work at those places and have observed the largesse and level of waste, and the corresponding malaise (reluctance) to have performance conversations and to do the work that leaders and managers need to do – set reasonable and stretch targets for their teams, people, programs, and if they’re not met they get managed out.

      Oh, and to be clear, the layoffs suck – it sucks for everyone involve, particularly those without a job, because these cuts, while absolutely necessary for viability are on the back of decisions that could and should have been made many moons ago to ensure that their organizations deliver results. Those underperforming very likely never even realized they weren’t meeting the bar (or worse yet, they told they were)

      Context: I live and work in SV in a leadership role in tech (no, not at one of the companies doing layoffs)

  17. I came to see the would be CEOs and software developers heap criticism on Zwift. I was not disappointed. For less than USD 20.00/month I have 24/7 access to a fitness and entertainment platform that has health benefits rather than ego massaging first person shooter games with high end graphics. Sure I’m frustrated with incomprehensible UI at times…once I’m riding those frustrations go away. Just my opinion YMMV.

  18. Xavier

    On top of everything, I would be shocked if the latest bad news for tech startups doesn’t affect Zwift negatively as well -Silicon Valley Bank went under last Friday. SVB used to sponsor rides in Zwift… most probably, the linkage was larger than just rides… 🙁

    • Adam

      Indeed, it’s a scary proposition. By some extraordinary luck my closest friends, all who seem to work on the smaller side of startups have not been impacted. I genuinely feel for those who will go to work on Monday and find they effectively have no job 🙁