Lyft employees are scrambling for their next gig – TechCrunch

Lyft had just closed its in-house rental company and laid off 60 employees the day before. The team responsible for the program was distracted by a bigger problem.

The rentals team tried to launch the service in New York throughout June but failed. Launch was repeatedly delayed due to a variety reasons, including the need for a new state insurance provider. According to TechCrunch sources, Lyft’s new insurance policy had not been in effect until July 1, leaving the company with many questions.

The team was eventually informed by leadership that they were not going to New York and that they would shift operations to Austin, where there are less regulatory hurdles.

Lyft executives will close the entire rental program within three weeks. This will leave workers scrambling for other jobs or risking losing their employment status. Lyft announced that 60 employees would be fired.

The layoff announcements came just ahead of Lyft’s second-quarter earnings, which will be released Thursday. The earnings call will provide additional information about the company’s direction and whether any further cuts are anticipated.

Surprise for July

One staff member raised alarm during the failed launch attempt in New York. He spoke on condition of anonymity to TechCrunch. The employee, seeking some peace of mind, held on to Lyft co-founder and president John Zimmer’s comments during a company-wide meeting in May when he spoke about reprioritization, slowing hiring and budget cuts and assured everyone that layoffs were not being considered.

Many employees were shocked at what happened next. Employees received an email July 19 from Cal Lankton, VP of fleet and global operations — which TechCrunch has viewed — informing them that Lyft had finished its reprioritization after the first-quarter earnings call and decided to shut down its in-house rentals program and continue to provide a similar service through its partnerships with Hertz and Sixt.

You can also email said Lyft would consolidate some regions in global operations and centralize its market operations team — this is mainly on-the-ground operations like driver support and vehicle service centers. Lankton said that two locations — the San Francisco vehicle service center and the Detroit Hub — would be closed down.

“We worked hard to place as many team members as possible in other roles across the business,” Lankton wrote in the email sent to employees. “However, there won’t be a role for everyone in this new structure. Following this message, impacted team members in the Lyft Rentals central teams and Global Operations will receive a calendar invite by 10:45 a.m. PST to learn what this means for their roles.”

Most of the 60 affected employees were notified via memo. One source claims that hourly employees working on the ground at local services centers discovered this information when they arrived at work, and were instructed to leave.

Henry Imber, Lyft’s head of rentals, sent a follow up email to the salaried employees ten minutes after they received the initial memo. He explained some details about the wind-down process and invited them to join a video conference call.

Stunned and shaky, the team joined the call and were told they’d have 30 days to find a new role within Lyft or be separated. HR said they would offer recruiting assistance, but didn’t provide any details on what that would look like until they got pushback from the staff.

Team members wanted to find out if they would be placed in new roles, or if they would receive preferential, expedited treatment. HR said the laid off staffers wouldn’t be placed in new roles, but their résumés would make it to the recruiter’s desk.

Employees laid off were offered 10 weeks of severance pay. This will be a lump-sum payment that is due August 19, the last day they work.

Lyft didn’t respond to our request for comment. TechCrunch may update the article if Lyft responds.

What’s next for Lyft?

Since the news of the layoffs, Lyft has helped the team with résumé polishing, interview prep and LinkedIn consultations, as well as expedited interviews for positions within the company. However, staffers are still disappointed that they were not given new roles and must compete with other candidates.

“The mood’s pretty sour,” said Lyft employee. “It’s pretty solemn, but everybody’s been professional.”

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

It’s not clear where the freed up resources will now be directed, but they’ll likely go back to Lyft’s core ride-sharing business. Companies often feel motivated to open new, potentially risky business lines during times of excess. But when the business or the economy, or both, takes a nosedive, it’s common to see those same companies revert back to their original mission. Lyft started its rental business in December 2019, just after Uber shut down a similar venture and just before the pandemic ripped through the world and Lyft’s balance sheet, which still hasn’t fully rebounded.

TechCrunch spoke with one Lyft employee said the company’s first-quarter earnings call “set this whole kind of panicky, reactionary decision-making in motion.”

Lyft reported strong increases in active ridership and revenue per riders in Q1 2022 compared with the lows of its first COVID wave. But, Lyft also reported a noticeable decline in perrider revenue compared Q4 2021 levels. There was also a second quarter markedly lower active ridership.

Investors were scared by the uncertain near-term growth trajectory. The company’s shares fell more than 12% in after-hours trading that day, and have only continued to decrease.

Lyft shares were trading at $16.71 on the date of writing. This is down from $21.56 May 4, when Lyft announced Q1 earnings. The company’s stock performance has also been affected by the layoff employees, who were granted a stake as part of their pay. They were given a special equity grant because of the stock drop, but that doesn’t do much if the company’s stock continues to tank.