Since the pandemic began, Lyft employees have been able to work remotely, logging in to videoconferences from their homes and dispersing across the country like many other tech workers. Last year, the company made that policy official, telling staff that work would be “fully flexible” and subleasing floors of its offices in San Francisco and elsewhere.
No longer. On Friday, David Risher, the company’s new CEO, told employees in an all-hands meeting that they would be required to come back into the office at least three days a week, starting this fall. It was one of the first major changes he has made at the struggling ride-hailing company since starting this month, and it came just a day after he laid off 26% of Lyft’s workforce.
“Things just move faster when you’re face-to-face,” Risher said in an interview. Remote work in the tech industry, he said, had come at a cost, leading to isolation and eroding culture. “There’s a real satisfaction that comes from working together at a whiteboard on a problem.”
The decision, combined with the layoffs and other changes, signals the beginning of a new chapter at Lyft. It could also be an indication that some tech companies – particularly firms that are struggling – may be changing their minds on flexibility about where employees work. Nudges toward working in the office could soon turn into demands, as they have at companies such as Disney and Apple.
Bob Sutton, an organizational psychologist and a professor at Stanford, said that although in-person collaboration could help with creativity and some other parts of work, companies pushing for a return to the office might be doing so to have greater oversight of their workers.
“When top executives feel financial stress, the classic ‘threat-rigidity’ effect kicks in, and beyond possible benefits for communication, collaboration and creativity, they feel compelled to increase their own illusion of control,” Sutton said.
After lagging its rival, Uber, in the race to emerge from the pandemic doldrums, Lyft posted worrisome financial results in February. Its co-founders, Logan Green and John Zimmer, said the following month that they would step down.
Risher, a veteran of Microsoft and Amazon who also served on Lyft’s board of directors has laid out a plan to streamline the business, cut costs and focus on improving the quality and lowering the price of Lyft’s core product: rides for customers.
Lyft employees have complained that divisions outside the ride-hailing business, such as units that offer rental cars to its gig drivers and rent bikes and scooters to consumers, seemed to be disproportionately affected by the layoffs. Risher said the cuts were across the board.
He said the cost savings from the layoffs would go toward lower prices for riders and higher earnings for drivers.
The next phase of his plan, he said, is to remind riders that Lyft is a viable alternative to Uber. In the summer, Risher said he would gradually introduce products to increase interest in the platform. That may include teaming up with companies to offer Lyft rides to their employees who are commuting to offices, he said.
The next steps for the company will be difficult. Many Lyft employees have gotten used to working from home, and some were already bristling at the possibility of returning to the office. Lyft continues to trail Uber, which has a global ride-hailing business and also offers food delivery.
Lyft’s stock price is trading at $10 a share, down from $78 at its peak, and some have speculated that it could be an acquisition target. The company will report financial results for its most recent quarter next week and expects $975 million in revenue, lower than the $1.1 billion investors had hoped for earlier this year. It is not yet profitable.
Risher announced a handful of other changes Thursday. He ended products focused on car rentals, as well as shared rides and luxury rides, and he promoted Kristin Sverchek, the head of business affairs, to the president.
Lyft also planned to tell employees that it would reduce their stock grants this year, according to a person familiar with the decision.
The return-to-office plan, Risher said, would require workers to come in Mondays, Wednesdays and Thursdays, with Tuesdays recommended, beginning after Labor Day. People will be allowed to work remotely for one month each year, and those living far from offices would not be required to come in.
Risher said he saw the moment as an opportunity to have a “cultural reset, particularly around decision-making.”
He said Lyft was successful with its early ride-hailing business but that Green’s and Zimmer’s idea to build a transportation network, with products focused on scooters, bikes, parking and rental cars, “didn’t really resonate with people.” The company has pared back those offerings but does still have bikes and scooters.