31 ms·
Lyft lays off 17% of workforce, furloughs hundreds more
- sna1l 6y agoAlso: "Lyft's other cost-cutting measures include furloughing 288 employees and base pay reductions of 30% for executive leadership, 20% for VPs, and 10% for all other exempt employees. Board directors will give up 30% of their cash compensation during Q2."
- user5994461 6y ago>>> base pay reductions of 30% for executive leadership Aren't executives mostly paid in stock and bonus?
- CydeWeys 6y agoAnd the value of those is probably going down by more than 30%, seeing as how they're shares, and often linked to stock performance as well.
- dodobirdlord 6y agoPaying people in stock and performance bonuses is ideal during a downturn. It doesn't cost the company anything to pay people in stock, since it just siphons off value from all existing stock, and nobody's getting their performance bonus!
- MiroF 6y ago> anything to pay people in stock, since it just siphons off value from all existing stock wait what?
- edmundsauto 6y agoIt doesn't cost cash, I think they meant.
- MiroF 6y agoYeah, sorry it was unclear but I was more confused by the "siphoning" value part.
- edmundsauto 6y ago"Dilutes" stock value (per share) would possibly be more accurate? Keep throwing shares at execs; if the company is successfully, it's a dilution. If it fails, then at least they didn't waste real money.
- zifnab06 6y agoLet’s say I have 1000 outstanding shares all worth $10. I need to pay someone a $5000 bonus. I’ll just issue 500 shares of stock to them instead because, well, that’s about $5000. Hypothetically the per share price goes down by 1/3 here and is now worth $6.67 (but the company’s still worth $10,000 total it’s just 1500 * $6.67 instead of $1000 * $10). Generally though bonuses like this come out of a pool that’s already been allocated years ago and there’s no change to stock price
- richardwhiuk 6y agoEven if the pool is allocated years ago, it's still effectively dilution (as before shareholders effectively owned a fraction of the unallocated sharepool).
- three_seagrass 6y agoCreating new shares dilutes the existing share value. Paying employees in shares means you're diluting the stock value every time. Of course, for most publicly traded companies there are so many outstanding shares that this is negligible.
- MiroF 6y agoI thought most executive compensation was paid out of pre-allocated shares.
- three_seagrass 6y agoMost employees are not executives.
- MiroF 6y agoIf you scroll up, the question was "Aren't executives mostly paid in stock and bonus?"
- formercoder 6y agoThere really is a cost to paying people in stock. That's why SBC is on the income statement. Additionally, analysts will often not add SBC back to cash flows.
- trimbo 6y agoWith GAAP reporting, stock comp goes on the income statement and affects the bottom line. So it has a visible effect for investors, but no one cares about P/E anymore so...
- vecter 6y agoCan someone explain to me how stock comp costs the company money, if it does? AFAICT it just creates equity dilution, but I might be missing something.
- njoubert 6y agoThere are two ways to compensate with stock: purchasing stock on the open market with cash, or, hand out stock from a pool of withheld shares. The pool of shares might be periodically increased through creating new shares (and diluting) but this must be reported to the SEC and is only done infrequently. GAAP reporting requires that stock compensation is written off as an expense. It does not reduce the company’s cash, but it does reduce the company’s earnings. Hence it changes the price to earnings figure.
- vecter 6y ago> It does not reduce the company’s cash, but it does reduce the company’s earnings. If it doesn't cost the company any money, why is it defined to affect the company's earnings?
- samfisher83 6y agoIts from Accounting assets = liabilities + equity. So equity = a-l. If you pay cash your assets go down so your equity goes down. If you give away equity your equity goes down. In either case you equity goes down.
- klodolph 6y agoThe amount of stock may be based on a much higher valuation at this point.
- jessriedel 6y agoAren't bonuses usually tied to base pay?
- minimaxir 6y ago> Lyft is laying off 17 percent of its workforce and furloughing 5 percent. This is after an employment lawyer at the company accidentally invited much of the workforce to a weekend meeting called "Jetty" in what workers took to be a reference to jettisoning jobs. https://twitter.com/kateconger/status/1255526352813535232 https://twitter.com/kateconger/status/1255526352813535232
- draw_down 6y agoThere's always some related piece of news about the way the company went about the layoffs. This one seems especially reaching. Really, a meeting invite?!
- qqssccfftt 6y agoJust FYI, you're shadowbanned.
- hckr_news 6y agoWhat does this mean?
- saagarjha 6y agoIt means their comments show up as [dead] until they’re vouched by others.
- SilasX 6y agoThanks. I keep [dead] comments turned on and I thought that one was pretty reasonable so I was going to vouch for it but wasn't sure if there was some context I was missing. Your comment provides it.
- qqssccfftt 6y ago[dead] by itself is a shadowban. [flagged] [dead] is not.
- otfc123 6y agoHope all you liberals are happy now.
- bdcravens 6y agoAs a company, is there reason to believe that Uber can better weather the storm? Does Lyft do anything other than rides?
- cultus 6y agoConsidering they somehow couldn't make a profit before this, I'd be surprised.
- bearjaws 6y agoUber eats is the biggest delta between the two companies, I suspect they still will need to cut staff though.
- vvladymyrov 6y agoThere is also Uber Freight business that was ground rapidly recently
- jonknee 6y agoAnd international exposure, Lyft is just in the US and a little in Canada.
- cik2e 6y agoNah, that’s not it. I drove for both in a major city in the months before the virus and outside of peak hours Lyft always has substantially longer pickup times. This is based on a few hundred rides for each company. This means that they have fewer passenger per driver, so the biggest delta is a smaller user base. Once the lockdown began Lyft rides basically evaporated overnight, while Uber was still going strong at certain times and certain places, catering to essential workers. But both are worthless as a way to make money right now.
- kccqzy 6y agoI believe Lyft generally has a slightly wealthier clientele: more middle-class people choosing not to drive. Uber has more reach in the lower ends of the market. So when the stay-at-home orders flooded in, these middle-class people all stayed at home, while Uber was still serving essential workers.
- JMTQp8lwXL 6y agoLyft is up 5% today, but the market (S&P 500) is generally up 2.94%.
- asdff 6y agoBoth uber and lyft are flying today. Most people see cutting jobs as a bad thing, market probably sees it as a cost savings and great business decision.
- peder 6y agoLyft and Uber are disproportionately impacted by coronavirus news, and the remdesivir drug trial seems to have been a success, so Lyft and Uber are up more than the rest of the market.
- asdff 6y agoSo many companies are disproportionately affected to varying degrees. Not all up. If you are referring to this news (1), take it with a grain of salt. Look at the % recovery, look at those N's, look at those p values. Gilead is pumping today, but imo this isn't a smoking gun study. The drug needs to be administered to more patients to get more statistical power and draw meaningful conclusions on efficacy. Then again, wall street doesn't know their N's and p's. Gilead could have put out anything today and the stock would be flying on speculation due to none of the hungover 24 year olds moving millions at goldman sachs actually reading the study, much less interpreting it. Of course, this is just my take. Maybe you are right and this does explain the pump, I guess we will read about it this evening. 1. https://www.gilead.com/news-and-press/press-room/press-releases/2020/4/gilead-announces-results-from-phase-3-trial-of-investigational-antiviral-remdesivir-in-patients-with-severe-covid-19 https://www.gilead.com/news-and-press/press-room/press-relea...
- empath75 6y ago> and the remdesivir drug trial seems to have been a success, it's what now? I haven't seen any data, including the report today, that it made a significant impact.
- stephencoyner 6y agoThis seems like a great time for Amazon or Google to buy Lyft. Amazon could bundle rides with package deliveries and get the pre-existing driver and passenger network from Lyft. Lyft was actually telling drivers to work with Amazon when the pandemic started (1). Waymo could take Lyft’s aggregated rider demand. They already have a partnership to transfer autonomous rides from Waymo to Lyft during bad weather situations and refer Lyft riders to Waymo vehicles (2). Edit - links below. (1) Amazon - https://www.theverge.com/2020/3/27/21197699/lyft-amazon-coronavirus-ridership-decline-job-referral-warehouse-grocery-delivery https://www.theverge.com/2020/3/27/21197699/lyft-amazon-coro... (2) Waymo - https://www.fool.com/investing/2019/05/08/waymo-lyft-partner-self-driving-vehicles-phoenix.aspx https://www.fool.com/investing/2019/05/08/waymo-lyft-partner...
- saagarjha 6y agoGoogle had (still has, I believe) a fair investment in Lyft. Perhaps they could expand that.
- caogecym 6y agoAgreed, though the stock went up after this news, Google and Amazon could have acted faster.
- vmception 6y agoThat's because there is at least 17% less share dilution than there was a day before, let alone the runway being marginally extended. So speculators don't get dumped on by employees with RSUs all day every day, and the business prospects are not adversely impacted any more than they already were. Thats when you pay more for shares. Layoffs are proactive for investors, not an omen for investors, don't get that confused.
- pavlov 6y agoThe distribution of RSUs at all major tech companies is very uneven. Most job titles don't get any, or just a token amount. Only executives and software engineers can negotiate for the large grants. I'd guess less than 10% of employees probably hold more than 90% of RSUs everywhere (not that different from the stock market as a whole, where 10% of Americans own over 80% of the market). So a 17% layoff might not touch the RSU-rich employees very much at all.
- deleted 6y ago[deleted]
- saagarjha 6y agoThere was a person in the Uber thread yesterday who predicted this. I wonder if they’ll go back to hiring if this is over or they’re using as an opportunity to get rid of people they shouldn’t have hired in the first place.
- sjtindell 6y agoMy guess is both, they’re doing some cleanup and will go back to hiring.
- saagarjha 6y agoPossible. I remember going a Lyft event in mid-2018 and they were telling me that they had just doubled their team size and were looking to double again by the end of the year, so they were certainly hiring fairly quickly then.
- vmception 6y agoSome companies should be billion dollar companies with 30 employees, like when Instagram was bought out in 2012. Headcount is mutually exclusive from how much the enterprise makes and can return to shareholders. If headcount is not directly helping that then it should not be an indefinite relationship. Also, I'm available for hire as a CFO or board member if you think your company has challenges with adopting this market-relevant predilection and needs to make "the hard decisions".
- redisman 6y agoYou should look in to private equity firms if you're so eager to lay people off.
- johntiger1 6y agoCrap, I was scheduled to go on internship with them this summer, but I feel like that might quickly no longer be an option..
- samename 6y agoI would reach out to them to verify, and simultaneously begin looking for a backup (which will be difficult in the current market, but there definitely are still companies hiring).
- rchaud 6y agoI feel for you. Back in '08, I did my summer internship at a big energy company that had massive exposure to Lehman Bros' coal + gas trading arm. Job offer was rescinded the day AIG collapsed, and about 24 hours before Lehman went down.
- 2OEH8eoCRo0 6y agoI quit a job in defense software in October, took a couple months off, and now this shit. Many companies took down their job boards entirely and some don't even render correctly with no items listed. Many in-progress interviews I had got put on hold, and now the job market is about to be flooded with out of work talent, raising competition and lowering the salary I'd probably get. Many places I've applied to have since announced massive layoffs (Toast, TripAdvisor, etc), some mere days after I've applied. I'm fortunate to have a lot of liquid saved but I'm feeling for engineers with families and not as much saved. Stay positive!
- csmiller 6y agoYeah Boston area hit pretty hard
- 2OEH8eoCRo0 6y agoHow did you doxx me?
- 6y ago
- fyp 6y agoUber/airbnb/lyft were considered in the same tier as facebook/google before corona. With google also slowing hiring, are the engineers laid off all going to be absorbed by facebook?
- jccooper 6y agoFacebook is surely in a similar ad dollars crunch as Google. I can't imagine they're full speed.
- twblalock 6y agoThey are also seeing record traffic so they might be doing alright. We'll find out when they report earnings later today.
- stu2b50 6y agoI mean record traffic means record server usage with record low ad spend from their customers. However, that's just a short-term hit. FB and Google may very well increase their own spending so they can capture the huge amount of people who are now using their platforms.
- pthomas551 6y agoBased on what we've heard from Google yesterday, and FB's Q1 results just now, it looks like the much heralded ad crunch is turning into not much more than a speed bump.
- wuunderbar 6y agoBut we need to wait for Q2 results to know the full impact, right?
- pthomas551 6y agoYeah, but in Google's earnings call yesterday they said that the situation is stabilizing.
- ar_lan 6y agoI recall Lyft being the highest paying company with respect to rank, according to levels.fyi. I guess I'm glad I don't work there right now.
- Der_Einzige 6y agoAt what level? Oracle OCI was paying the most in average to new devs a few short months ago according to levels.fyi so maybe you mean at the senior level or higher?
- corporateslave5 6y agoTech companies pay a lot in stock when their business is at risk.
- beefalo 6y agoLyft was paying higher in base salary than everyone else at the time as well
- silentsea90 6y agoLyft SWE here. Can confirm. My Lyft offer was significantly greater than Google, Uber etc. That said, with 20/20 hindsight, Google would have been a safer choice.
- Waterluvian 6y agoIs Lyft a sensible work week in exchange for their positively mental salaries?
- silentsea90 6y agoI like working at Lyft, and if not for the stock more than halving since the IPO and now the Covid storm, I wouldn't question my decision. There are a ton of interesting problems to solve and lots of smart people (ex-fb, google etc if that is a measure). The leadership is ethical and supportive. We're generally not coasting and it is easier to advance your career faster than Google, while not having the threat of a PIP all the time like Facebook and Amazon (apparently). We don't work on fluff or building tech in house just for the heck of it because we've historically been conservative in entering businesses and focused on rideshare, and we've not been as awash with $ and people to spend on experimental projects. Prioritization is key here.
- SamuelAdams 6y agoSource that is linked in the article: https://www.sec.gov/ix?doc=/Archives/edgar/data/1759509/000119312520125193/d848949d8k.htm https://www.sec.gov/ix?doc=/Archives/edgar/data/1759509/0001...
- reminddit 6y agois there existing analysis of effect of layoff on future stock price?
- deleted 6y ago[deleted]
- Digit-Al 6y agoDoes anyone else find the headline really weird? Having "17%" next to "hundreds more" makes the "hundreds more" look like the important figure, whereas in actuality the "17%" is really the important figure.
- subsubzero 6y ago- The tech companies having issues during covid-19 are all heavily invested in travel/transportation(Uber/Lyft/Airbnb etc). - They also are in industries that entirely use gig workers with personal contact in 90% of their services(airbnb the least of these). - I don't see other tech companies getting hit this hard(the sky is not falling!). - I really, really hope these laid off engineers find other jobs quickly and land on their feet.
- buboard 6y agoThey deal with real, physical stuff. The virtual world has no externalities (except maybe a solar storm).
- 0xDEEPFAC 6y agoMaybe we should consider a higher level? For example, with our interconnected highly computerized trading systems and with every megacorp these days heavily invested in financials (think stock buy-backs) who knows? Definitely not the FED Reserve.
- peter_mcrae 6y agoThe tech companies you identified are getting hit 1st. I expect to eventually see fallout in Fintech, Realestate, Advertising, anyone selling B2B SaaS (particularly to marketing/HR/ sales departments, SMB), etc. It will take time to feel the 2nd and 3rd order impacts. Hopefully, we bounce back quickly, but it's hard to not be a little concerned.
- KeepTalking 6y agoWhile the short to medium-term impact of this is terrible, I am optimistic that a few of these individuals (not the usual high profile stars) will kick start the next big idea. Do we have a list of affected individuals listed to work on interesting projects? Wish HN can curate a Database of individuals open to working on special projects that could lead to a YC submission
- wonderwonder 6y agoLayoffs are mounting, alternative work is limited, and the unemployment systems in many states are either broken or running out of funding. Add the federal governments indicated desire to let blue states go bankrupt and we are looking at a good combination to enter a depression. Its a pretty sobering time.
- 0xDEEPFAC 6y agoPerhaps its time to go back to basics. A focus on health, store-able foods, alternative investments which might survive bond/stock market issues, and family would be imperative in such a "new normal." Vaccination certificates and debt forgiveness incoming? Who knows anymore - what harm is there in being ready?
- Loughla 6y agoReal questions. I'm not a history buff. Has there ever been a time in US history that the federal government has been so openly antagonistic and overtly willing to attack opposite-party state governments? If so, what were the outcomes? If not, is there anything even close? Current question - what is the endgame for those who what blue states to go bankrupt? What do they get if that happens, outside of talking points? I assume they profit off of it (because that's the reason anyone does anything that I can tell), but how?
- empath75 6y agoYeah, the civil war.
- eropple 6y agoThe federal government was attacked to touch off the Civil War. Like, by men with guns. That's a rather critical distinction.
- wonderwonder 6y agoSure, but look at the recent protests. Armed men protesting state level governments openly egged on by the whitehouse and organized by rich political dark money.
- graphememes 6y agoShould have done lyft eats
- ivankirigin 6y agoLyft alum here, and other alumni are working to try to help out here. See here: https://twitter.com/haddartha/status/1255559084012699650 https://twitter.com/haddartha/status/1255559084012699650 Also, there are alumni facebook groups and slack channels. If those are for you, email me: ivan.kirigin@gmail.com
- adaisadais 6y agoIn the long term I think this will be a solid move for both Uber & Lyft. The apparent economics of both businesses are relatively dire but the long term value prop is still as important as ever: they are generating the consumer data that will ultimately be used for self driving vehicles. This will allow both companies to trim the fat and (hopefully) regain the move fast mentality that is necessary for a startup. This can be Uber and Lyfts time to shine.
- hnhg 6y agoDo they fully instrument their drivers vehicles? I'd imagine a lot of sensor data is needed for self-driving cars.
- adaisadais 6y agoNo, but they have a good understanding on routes and areas with high traffic. That data is going to be worth a fortune for the first fully autonomous taxi service.
- luckydata 6y agoI don't think so tbh. Time will tell.
- bagacrap 6y agoAll that routing data (and much more) is also funnelled to Google via Maps/Waze and, to a lesser extent, Apple or other companies with map apps. So I don't think Lyft or Uber have a competitive advantage here, even if the routing data is useful absent full instrumentation. Plus, full self driving seems a bit like a nuclear bomb, by which I mean second place in that race might be worth nothing.
- bfrog 6y agoIf they are really letting go of their hard found engineering talent its a serious signal that they don't believe this to be a short term issue. Assuming the highly paid engineers around the bay took a good deal of effort, and significant cost to hire.
- afterburner 6y agoMaybe they're scared and taking rash actions.
- silentsea90 6y agoDo note that laid off engineers are typically from teams that have overhired and where we don't have plans to grow, as well as engineers who did not get a good rating and are less promising. It is sad nevertheless.
- vikiomega9 6y agoThat's not quite true, they let go of multiple strong performers.
- silentsea90 6y agoI stand corrected. They did let go of strong performers too.
- bagacrap 6y agoNo doubt they're preferentially laying off the under performers.
- startupinmotion 6y agowelp
- samfisher83 6y ago$36mil/1000 employees works out about 36k in severance. What happens to people who got stock grants that vest over 4 years?
- rodonn 6y agoRSUs for rank and file employees usually vest over time (e.g. quarterly), so you keep any that have vested but lose the rest.
- adelHBN 6y agoOk, I seriously don't get this. How is the stock market doing so well? This article about Lyft is just but one glimpse of what's happening to the economy. And it ain't going to get better any time soon. I've been waiting to invest in the stock market, but am totally whiplashed by the rise of stock market. It's completely disconnected from the real economy.
- youeseh 6y ago"The stock market is not the economy" As a result of the 2008 crisis, the US Government / Fed started pumping money. The market bottomed out just before they started pumping money in March of 2009 and then started recovering. Someone in June of 2009 would have experienced the same emotions that you're experiencing now because foreclosures continued to mount, maxing out in the second half of 2009 with a significant number of foreclosures occurring in 2010 as well. I read somewhere that the economy didn't fully recover until 2015. By then, stocks were already quite expensive. This is probably what has been driving many people to buy stocks now. That and being bored at home.
- amykyta 6y agoThere is someone more informed to comment on this but the reason is the Fed. They are buying corporate debt. That’s a pretty drastic thing to be doing. This recent commentary by the Fed chairman describes the scene, the money tap is wide open. https://www.bloomberg.com/news/articles/2020-04-29/powell-voices-worry-about-long-term-economic-damage-from-virus https://www.bloomberg.com/news/articles/2020-04-29/powell-vo...
- bamboozled 6y agoWhat I don't understand is, what are the consequences are? If there is no, why didn't this just always happen and we'd all be rich? I've read other articles which say that essentially we're losing the ability to really valuate equities because of all this free money being injected into junk bonds etc hides the true valuation. As far as I can tell, stocks are more valuable, but only numerically, they're actually more worthless than before because the company and the economy as a whole has stopped.