Uber’s stock price has fallen more than 30% since its IPO, catalyzing a “tightening of the belt” at the company that has caused office perks – and employee morale – to disappear, according to the Washington Post.
Employees have said they’ve noticed cuts across the board, even to the brand of coffee that’s offered at the office.
The company is making the changes, including laying off 800 workers over the summer, as it loses investor confidence. Uber’s valuation was once supposedly going to be as high as $120 billion. Today, the company is valued at less than half of that, trading at $54 billion.
This means that employee stock units are valued at a fraction of what employees were led to believe. At the same time, executives are trying to impose workflow changes to improve the company’s efficiency. Some workers view this is as “stifling innovation”.
Uber CEO Dara Khosrowshahi said in a recent company email: “We need to ship more quickly and operate more effectively and efficiently than we are today. We are not doing this for Wall Street. We are doing this for Uber. It’s critical we get our edge back and continually push ourselves to do better.”
Uber and its peer Lyft were the two companies that unofficially kicked off a string of ugly IPOs, including companies like Slack, which is trading at a fraction of its post-IPO highs, Peloton, which fell on the day of its IPO and WeWork, which yesterday pulled its IPO entirely.
“The wave of 2018 and 2019 IPOs largely driven by the tech sector have been among the worst performing since the dot-com bubble in 1999,” the article notes, citing a Goldman Sachs report.
The report continued: “In terms of profitability, IPOs from the current cycle look more like Tech boom IPOs than offerings completed during the 2001-2009 period.”
As a result of the company’s plunge since its IPO, one former senior employee said that Uber was “turning [into] an operations company — not a product/tech company.”
Executives have said they are going to devote less capital to user experience and research, and more to testing of in-app features for riders and drivers.
Uber’s chief of product, Manik Gupta wrote to employees: “We will deliberately rely less on user research for tactical features and instead rely more on experimentation. We will focus on fewer projects with more direct business impact.”
This new strategy reared its head Thursday when, at a product event in San Francisco, the company announced a redesign of its app that will place the menus of food delivery and mobility together. The company will test out the re-design on some, while maintaining the classic version, to “beta test” how users will respond.
Khosrowshahi said it’s a move to try and make Uber the “operating system for your everyday life.”
Along the way, Gupta has also acknowledged the bumps in the road that the company has faced: “From my standpoint the important thing is we’re all focused on execution. What people who are really motivated, what they really want, is a set of problems to work on which are very exciting, they are world changing. I think we have a lot of them and we just have to make sure that we continue to build incredible products.”
Meanwhile, workers have been paying close attention to the scrutiny the company has gotten since its IPO. Employees are becoming “agitated” that top-down changes have “stripped away their autonomy”. All-hands meetings have reportedly been contentious, with tensions growing between workers and management.
Jill Hazelbaker, Uber’s senior vice president of marketing and public affairs, was asked at an all-hands meeting about a new book written about the company. “I think we need to put our heads down and execute. I’d just say we’ve got to get a bit thicker skin about this stuff,” she responded.
Executives at the company have also reportedly become overly concerned with its reputation, which hasn’t improved much since the #DeleteUber scandal.
Khosrowshahi was pressed on job cuts at an all-hands meeting this month. “I have asked every single [executive] team member to take a look at their particular teams and their particular structures. I do think that the worst is behind us,” she responded.
But morale has already been seriously damaged: employees are no longer allowed to ask anonymous questions at meetings, craft coffee from a specialized roaster in Portland has been replaced with the now-commoditized Starbucks and office supplies, like giant sticky notes, have gone away. The company no longer hands out “Uberversary” balloons to staff, either.
Employees are also upset by some of the new business strategies employed by the company, like considering giving drivers loans. One former employee said, “We have morals.”
Many former employees who have racked up stock options are being told by people close to them that they should sell. One former employee hoped to buy a house with his nest egg of stock. He now says he’ll be lucky to “buy a bike or two”.
Mike Maples Jr., founding partner of venture capital firm Floodgate Fund, an early investor in Lyft said: “The early employees want to change the rules and be aggressive and make things happen. The later employees may be attracted more to the security of the job and more the conventional trappings of having a job. That’s going to obviously slow down a company’s willingness to take risks and do new things.”
Uber declined to state whether or not more layoffs were coming. Khosrowshahi is still encouraging department managers to review ways to cut costs.
Since Uber has gone public, it has slashed its staff of 27,000 by more than 3% and announced a restructuring in June. It also let go a third of its marketing department in July and imposed a hiring freeze on some U.S. and Canadian engineers.
Nothing like being a “growth” company.