Lyft assured no layoffs were coming — now employees are scrambling for their next gig – TechCrunch

The day before Lyft shut down its in-house rental service and laid off nearly 60 employees, the team overseeing the program was overwhelmed by what they believed to be a much bigger problem.

Throughout June, the rentals team had been trying unsuccessfully to get the service up and running in New York. The launch was delayed repeatedly and for a variety of reasons, including the need to find a new insurance provider in the state. But even after the new insurance policy began July 1, Lyft still hadn’t opened its rental business in New York, leaving the team with questions, according to sources who spoke to TechCrunch on condition of anonymity.

Ultimately, leadership told the team that it was going all-in on New York, instead shifting operations to opening its in-house rental program in Austin, where there are fewer regulatory hurdles.

Within three weeks, Lyft executives ended the entire hiring program, leaving workers scrambling to find other positions within the company or risking losing their employment status altogether. Lyft also announced that it would lay off around 60 employees.

The layoff announcements came just ahead of Lyft’s second-quarter results, which will be released on Thursday. The earnings call could provide more clarity on the company’s direction and whether further cuts are to be expected.

July surprise

During the failed launch attempt in New York, alarm bells went off for at least one employee who spoke to TechCrunch on condition of anonymity. The employee, seeking some peace of mind, echoed the comments of Lyft co-founder and president John Zimmer during a company-wide meeting in May, when he discussed reprioritization, slower hiring and budget cuts, assuring everyone layoffs would not be considered.

What happened next surprised many employees. Employees received an email from Cal Lankton, VP of Fleet and Global Operations — seen by TechCrunch — on July 19, informing them that Lyft had completed and resolved its reprioritization following the first-quarter earnings call to discontinue its in-house rental program and continue offering a similar service through its partnerships with Hertz and Sixt.

The email also said Lyft would consolidate some regions into global operations and centralize its market operations team — these are primarily on-premises operations like driver assistance and vehicle service centers. Lankton said two locations — the vehicle service center in San Francisco and the Detroit hub — would be closed.

“We’ve been working hard to place as many team members as possible in other roles across the organization,” Lankton wrote in the email sent to employees. “However, there will not be a role for everyone in this new structure. Following this news, impacted team members across the central Lyft Rentals and Global Operations teams will receive a calendar invite by 10:45am PST to see what this means for their roles.”

Most of the 60 affected employees found out through a memo. Meanwhile, hourly employees working on-site at local service centers were told when they came into work and told to go home, according to a source.

Ten minutes after employees received the first memo, they received a follow-up email from Henry Imber, head of Lyft Rentals, explaining a bit what the settlement process would be like and inviting the team to a video conference became .

Stunned and shaky, the team answered the call and were told they had 30 days to find a new role at Lyft or they would part ways. Human resources said they would offer recruitment help but gave no details on what that would look like until they were turned down by staff.

Team members wanted to know if they would be promoted to new roles or at least receive preferential and expedited treatment. Human resources said the laid-off employees would not be moved to new roles, but their resumes would make it to the recruiter’s desk.

The laid-off employees were offered a 10-week severance package, which will be issued as a lump sum on August 19, their last day of work.

Lyft did not respond to a request for comment. TechCrunch will update the article when the company does so.

What’s next for Lyft?

Since news of the layoffs, Lyft has helped the team with resume polishing, interview preparation and LinkedIn consultations, and expedited interviews for roles within the company. But disappointment remains with employees who think they should just be pushed into new roles instead of having to compete with outsiders.

“Sentiment is pretty bad,” said a Lyft employee. “It’s quite solemn, but everyone was professional.”

According to Lyft’s jobs page, the ride-hailing company is hiring across departments, primarily in marketing, operations, and product.

It’s not clear where the freed-up resources will go, but they will likely flow back into Lyft’s core ridesharing business. In times of plenty, companies often feel motivated to start new, perhaps risky lines of business. But when business or the economy or both take a nosedive, it’s common for the same companies to return to their original mission. Lyft began its rental business in December 2019, just after Uber shut down a similar company and just before the pandemic swept the world and Lyft’s balance sheet, which still hasn’t fully recovered.

A Lyft employee who spoke to TechCrunch said the company’s first-quarter earnings announcement “started this whole kind of panicked, reactionary decision-making.”

In the first quarter of 2022, Lyft saw strong gains in active drivers and revenue per driver compared to the lows of the first COVID wave, but the company also reported a notable decline in revenue per driver compared to fourth quarter 2021 levels, as well as a second quarter sequential declines in active ridership.

Investors were spooked by an unclear near-term growth path. Shares of the company fell more than 12% in after-hours trading that day and have continued to fall.

At the time of writing, Lyft shares are trading at $16.71, compared to $21.56 on May 4 when Lyft reported its Q1 earnings. The weaker price development also affects the laid-off employees, who were given shares in the company as part of their remuneration. They received a special stock grant because of the stock decline, but that doesn’t mean much if the company’s stock continues to fall. Lyft assured no layoffs were coming — now employees are scrambling for their next gig – TechCrunch

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