Uber is cutting an estimated 3,300 jobswhich is roughly 10 per cent of its global staffin a radical reset that CEO Dara Khosrowshahi believes will make Uber ‘simpler, faster and better prepared for the next era of our growth.’ Under an internal email on Wednesday, the ride-hailing monster let go of the news that it is currently doing well on all counts, but is feeling the burden of its own boom. Khosrowshahi, felt the structure he inherited was simply not appropriate for a rapidly expanding organization. Rising above the management layers, teams, and coordination hassleswhich he says halt decisions, divide ownership, and made sense when the business was smallerbecame a key focus of the current CEO since the company has almost tripled revenues.
Currently the company serves over 200 million clients. It’s all about reducing bureaucracyso people can spend less time on alignment, and more time on building, shipping, and serving riders, drivers and merchants. Beyond flattening out the organization, the organizational restructuring was also extensive, and I am not sure to what degree it is temporary.
Management levels are being reduced by roughly 20 percent. And of those managers who are not exiting, several will simply be reassigned to individual contributor roles. Many very small teams of 1-2 folk will be eliminated, providing they are not already eliminated through a headcount reduction in the existing state. Employees seven or more levels below the CEO will be reduced by 20 percent. Delivery function groups were formerly broken out by restaurants versus retail versus other verticals. The tables are now being joined under single-threaded ownership. The engineering, science, and delivery groups are starting to be pulled closer together.
Remote work is also shrinking. Salaries for fully remote jobs will be capped at one percent of the workforce, and nearly all remaining employees will be brought back to hub cities like New York and San Francisco under the current hybrid policy of three days in the office. The company is focusing all collaboration and speed efforts in places where it considers them most valuable. These steps free capitalcapital Uber intends to pump aggressively.
It has already allocated over $10 billion to build out its robotaxi network and is planning to run driverless cars in a minimum of 15 cities during 2023. Rivalry is fierce as Waymo, Tesla and competitors rush to put self-driving cars into commerce. Meanwhile the food-delivery division is struggling in major markets, most Worth noting America, where DoorDash has surged ahead.
Uber’s Boss Khosrowshahi believes its size, brand and strength financially will enable him to succeed if Uber can operate with more focus and reduced deadweight. For thousands of people, the news is crushing and comes without warning. Many of those impacted will be given parachutes, but the human toll of large-scale streamlining remains very real.
Engineers, support staff for drivers, back-office individualspeople who shaped the product, supported the drivers, kept the whole operation movingwill hope to quickly find a new job while the entity carries on. Khosrowshahi realized how hard this is, but employees will simply have to be honest about how hard it is: Uber’s shares increased on the announcement, showing that the syetem is not unwelcome by investors. Uber will come out of the process with under 30,000 employees more than by the time it started, even though the company is a much bigger one.
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