Uber’s Layoffs Continue As Cost Cutting Reigns At The Former Unicorn King

Today, while most were focused on the new iPhone keynote, Uber executed the engineering and product layoffs about which rumors had been swirling for weeks.

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According to reporting by TechCrunch, and confirmed with Uber by Crunchbase News, the ride-hailing and on-demand transportation giant laid off 435 employees from its engineering and product development teams today. TechCrunch’s report indicated that 170 people are leaving the company’s product team and 265 people were relieved of their duties on the engineering team.

The report stated that the layoffs were localized to a few markets, with more than 85 percent of the laid-off employees based in the U.S. Ten percent of the affected employees were based in the Asia-Pacific region, and the remaining five percent were based in the Middle East, Africa, and Europe.

Combined, the layoffs represent an 8 percent cull of Uber’s engineering and product organizations. Other business units, like the company’s on-demand food delivery service Uber Eats and its on-demand logistics effort Uber Freight were not affected by the layoffs.

The company said in a statement that it previously hired quickly and in a decentralized way to meet the demands of a rapidly growing startup. But CEO Dara Khosrowshahi asked members of the management team if their teams would still look that way if they were built from scratch now, and it turns out the answer was no for the product and engineering teams. Chief Product Officer Manik Gupta and Chief Technology Officer Thuan Pham looked at team size, overlapping roles and work, and individual performance when determining who was cut.

Crunchbase News spoke with a current employee who said there wasn’t a discernible pattern to the layoffs. They did not disproportionately affect junior or senior employees.

Following a challenging second quarter, Uber instituted a hiring freeze in its engineering organization and pursued more unconventional ways to cut costs.

Last month, Crunchbase News broke the news that Uber planned to end its tradition of giving balloons to employees on their work anniversaries, internally called an “Uberversary,” in a bid to save the company $200,000 per year at its San Francisco headquarters.

It should be noted that the expected cost savings on balloons was barely enough to cover the salary of one senior software engineer at the company. But while the savings were modest, the point seemed clear: employees were under a mandate to “#FindTheMoney,” e.g. places to cut costs at the company.

TechCrunch reports that, following the layoffs put in place today, the hiring freeze in the engineering department has been lifted.

Uber has historically seen its spending on research and development (R&D) rise over time. Looking back at its S-1 filings, we can see the firm’s spend on the category rose from $270 million in Q1 of 2017 to $340 million in Q1 2018. In the first quarter of 2019, that figure rose to $409 million. Due to IPO expenses, Uber’s R&D spend shot to over $3 billion.

Uber’s R&D spend has generally risen over time, it has occasionally fallen on a sequential basis. It seems that those declines are mostly driven, historically, by declines in the cost of share-based compensation from sporadic highs, instead of Uber managing to lower its cost base in any material way over time.

While Uber has spent more money on R&D over time, it has seen rising costs in nearly every area of its business, including sales, marketing, cost of revenue, and the rest. It will be notable to see what impacts the layoffs have on the company’s first full quarter that they will be included in, 2019’s fourth.

For more on Uber and its recent issues, check out some of Crunchbase News’s other reporting here.

Illustration: iStock images.