Peloton Rival Zwift Lays Off 15% Of Workforce, Plans To Focus On Products

Virtual cycling brand Zwift is the latest in the list of companies that announced layoffs in recent weeks. Zwift is reportedly downsizing its workforce by 15% – affecting 80 people – in a restructuring bid.

Zwift's recently-appointed Co-CEO, Kurt Beidler, said the decision was taken as part of the company's approach of taking a "fresh look" at things. He added they were focusing on "investing in the fundamentals" rather than "spending on brand," DC Rainmaker reported.

A Zwift spokesperson said the layoffs will particularly impact employees in human resources and marketing departments, apart from other non-product functions, as the company was focusing on investing more heavily in its products. The teams targeted in the latest round of layoffs are mostly from the U.S. and the U.K.

"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," the company said in a statement to BRAIN. "All departing colleagues will receive a generous severance and career support to help them in their transition."

Beidler joined the company last December. Chris Snook, Zwift's PR lead, said much of the changes brought into the company were led by the former Amazon executive. In just three months since he'd taken office, Beidler took charge of almost all the operations, including engineering and production.

"There's an expectation of continued tweaking of the organizational structure based on Kurt's revised focus on the product," Snook said.

The company previously reduced its workforce last May and November. In May, it laid off 63 workers at its Long Beach facility and also pause its hardware development program. Zwift sacked another 150 employees in November as it eliminated its smart bike and hardware division. They were reportedly given a "generous severance package" and twice-annual bonus packages.

"We had scaled our business to support a significant expansion into hardware," the company said at the time.

A number of companies in the cycling segment are struggling to overcome recession headwinds and COVID-19's impact on the economy. Last year, Zwift's rival Peloton went on a layoff spree as it cut about 500 jobs. The maker of high-end hardware exercise-equipment was left with roughly 3,800 employees globally, less than half the number of staff the company had at its peak last year.

Zwift co-founder Eric Min told Bloomberg that though the company is not making profits yet, it has raised $620 million in funding from investors such as Amazon's Alex Fund, KKR and Co and Permira Holdings. The funding raised Zwift's market value to more than $1 billion, as the company continues to target immersive virtual exercise experiences for competitive users.

Peloton's market cap dropped to $4.8 billion in 2023 from over $44 billion in 2020. The New York-based company witnessed a massive rise of over 400% in its share due to lockdowns in 2020, which resulted in a surge in the sale of its bikes and treadmills. However, in 2021, the company faced challenges in expanding its subscriber base due to the rise in gym chains and other fitness companies.