This has been a rough year for ride-sharing platform Uber. The company has seen increasing losses every quarter, and there seems to be no slowing it down. In just the second quarter of 2019, the company reported a loss of $5 billion, or roughly the entire GDP of Barbados. A large portion of that loss is related to the company's IPO, but the company is still losing about $1 billion per quarter without those one-time losses.
Trying to stem the ebbing tide, the company laid off around 400 marketing employees in July. This week, however, the company announced a second round of layoffs, resulting in the loss of 435 engineering and product-related employees. This second round represents about 8% of the company's engineering and product team, and the two rounds together represent about 3% of the company's total workforce. In the company's email to employees, they stated,
Previously, to meet the demands of a hyper-growth startup, we hired rapidly and in a decentralized way. While this worked for Uber in the past, now that we have over 27,000 full-time employees in cities around the world, we need to shift how we design our organizations.
It is not unusual for "unicorns" to fall victim to this mentality. When you go from having no money to having more than you can comprehend, laziness and chaos reign supreme. Hiring becomes a casual affair, and you end up with more employees than you need in offices that are too spread out to effectively accomplish goals.
Unfortunately for Uber, their profit margins could be about to take a big hit, as California has passed a new law that could drive the company out of business, or at least out of the state. The state has passed a new law extending employment benefits to independent contractors.