Brief:
- Ride-hailing giant Uber cut 400 marketing jobs, or about one-third of the team, on Monday amid efforts to reduce costs and simplify its operations after going public in May. The cuts affect Uber offices throughout the world, although most of its 25,000 employees work in the U.S., The New York Times reported.
- Uber's new marketing organization will have two senior leaders. Mike Strickman, VP of performance marketing, will lead CRM and analytics. Uber is planning to hire a VP of global marketing to oversee heads of product, branding, Uber Eats, business-to-business operations, research, operations and creative work, according to CNBC.
- Meanwhile, Uber rival Lyft announced that COO John McNeill is leaving the company, about 18 months after joining from electric carmaker Tesla, Bloomberg reported. Lyft, which went public in March, doesn't have plans to replace McNeill in filling the role.
Insight:
Uber's significant cuts to its marketing team come as the company faces greater pressure to turn a profit since its $82 billion public offering in May. It's been a banner year for tech companies going public, with Lyft, Pinterest, Zoom, Uber, Fiverr and Slack all debuting in the stock market so far in 2019. While the sheer number of tech IPOs points to the importance of digital solutions for driving business growth, it's unclear how long some will take to be profitable, as the Uber news highlights. Speculation of an impending recessions could further dampen short-term prospects.
That Uber's marketing department numbered around 1,200 employees before this week's cuts suggests messaging around the ride-hailing platform's benefits played a significant role in advance of the company's IPO. Uber's bets on marketing this year include a 100-second video ad for Uber Elevate, an air taxi service that doesn't yet exist, that was entirely computer generated and debuted after the IPO. Now that Uber is public, it's under pressure to turn a profit for investors and could see marketing as a easy way to reduce costs, given the size of the department.
The job cuts follow last month's restructuring that led former CMO Rebecca Messina to resign. At that time, CEO Dara Khosrowshahi said he decided to merge the company's marketing, communications and policy teams. Uber reorganized marketing under Jill Hazelbaker, SVP of communications and public policy.
The company's marketing organization had become bloated, while decision-making was unclear, according to an email that Hazelbaker sent to Uber staff. The marketing team's organizational charts were 388 pages long, she said in the email reviewed by The New York Times.
"Many of our teams are too big, which creates overlapping work, makes for unclear decision owners and can lead to mediocre results," she said.
Uber last quarter reported a loss of more than $1 billion. The company's cost-cutting efforts have included reduced fares and fewer bonus payments to drivers, which risks upsetting the 3 million people who provide service to riders. It's also not clear whether self-driving cars will put ride-hailing companies on the path to profitability, per research from MIT.
