The day before Lyft shut down its in-house rental service and laid off close to 60 employees, the team in charge of the program was consumed by what they thought was a much bigger problem.

Throughout June, the rentals team had attempted to get the service up and running in New York without success. The launch was delayed repeatedly and for a variety of reasons, including the need to get a new insurance provider in the state. But even after the new insurance policy began July 1, Lyft had still not opened up its rental business in New York, leaving the team with questions, according to sources who spoke with TechCrunch on condition of anonymity.

Leadership eventually told the team it was punting on New York altogether and would instead shift operations to opening the in-house rental program in Austin where there are fewer regulatory hurdles.

Within three weeks, Lyft executives would shutter the entire rental program, leaving workers scrambling to find other positions within the company or risk losing their employment status altogether. Lyft also announced that around 60 employees would be laid off.

The layoff announcements came just ahead of Lyft's second-quarter earnings, which will be released Thursday. The earnings call could provide more clarity on the direction of the company and whether further cuts are expected.

July surprise

Throughout the failed attempt to launch in New York, alarm bells went off for at least one staffer, who spoke to TechCrunch on the condition of anonymity. The employee, seeking some peace of mind, held on to Lyft co-founder and president John Zimmer's comments during a company-wide meeting in May when he spoke about reprioritization, slowing hiring and budget cuts and assured everyone that layoffs were not being considered.

What happened next took many employees by surprise. Employees received an email July 19 from Cal Lankton, VP of fleet and global operations — which TechCrunch has viewed — informing them that Lyft had finished its reprioritization after the first-quarter earnings call and decided to shut down its in-house rentals program and continue to provide a similar service through its partnerships with Hertz and Sixt.