In addition, Uber will be closing 45 offices. As part of the layoffs, Uber will be paying up to $145 million to employees in severance, and the shuttering of offices will cost them about $80 million. This means that since the COVID-19 pandemic started, the company has had to retrench about a quarter of its full-time staff.
“I knew that I had to make a hard decision, not because we are a public company, or to protect or stock price, or to please our Board or investors,” Uber CEO Dara Khosrowshahi wrote to employees. “I had to make this decision because our very future as an essential service for the cities of the world — our being there for millions of people and businesses who rely on us — demands it. We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding, and innovating.”
According to Uber, the pandemic has decreased rides by more than 80%, cutting the lifeblood of the revenue stream. On the other hand, its food delivery service, Uber Eats, has been doing well. Bookings on the food delivery app increased by more than 50% from the same period last year.
In order to rebuild the business around its core services, they are reconsidering their approach in freight and autonomous vehicles. It has also closed down the Uber Incubator, which was created to develop new products and services.
The Uber drivers aren’t classified as employees, but independent contractors. It is unclear how many of them are now unable to make a living due to the lowered demand around the world, but it will be a sizable number of their approximately 3 million.
As the pandemic and lockdowns continue to affect the world economy, this type of story won’t be few or far between. Tech unicorns aren’t immune, unfortunately.