CEO Says AI is Main Reason For Laying Off Nearly Half of His Employees: ‘Can Do More And Do It Better’

Block CEO Jack Dorsey announced that he was laying off 40 percent of the company’s workforce, citing improved efficiency from AI as the reason.

In the post on X, Dorsey used all lowercase.

“today we’re making one of the hardest decisions in the history of our company: we’re reducing our organization by nearly half, from over 10,000 people to just under 6,000,” Dorsey wrote in a post on X.

Dorsey wrote that the company was strong and profitable, but that the move was being made because “something has changed,” noting that the “intelligence tools” the company is using and creating are creating “smaller and flatter teams.”

In a letter to shareholders, Dorsey was more explicit: “A significantly smaller team, using the tools
we’re building, can do more and do it better. And intelligence tool capabilities are
compounding faster every week.”

Dorsey stated that most companies will quickly arrive at a similar crossroads.

“I don’t think we’re early to this realization. I think most companies are late. Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes. I’d rather get there honestly and on our own terms than be forced into it reactively,” Dorsey wrote.

Not everyone was convinced that the change was because of AI technology. William Slaughter, a portfolio manager from Alabama, called Dorsey out in a post on X that led the CEO to respond directly.

Slaughter noted that Block’s headcount tripled in three years from December 2019 to December 2022, rising from 3,900 to 12,500. “Unwinding less than half an insane COVID overhiring binge has much more to do with Jack Dorsey’s managerial incompetence than whether AI is going to take your job,” Slaughter wrote.

The post garnered Dorsey’s attention and drew a response.

“yes we over-hired during covid because i incorrectly built 2 separate company structures (square & cash app),” Dorsey acknowledged. “But this misses all the complexity we took on through lending, banking, and BNPL. and that we’re now targeting $2M+ gross profit per person, 4x our pre-covid efficiency, which stayed flat at ~$500k from 2019 until 2024. we have and do run an efficient company… better than most.”

Dorsey’s layoff announcement and his citing of AI as the caused boosted Block’s stock price to 23 percent in after-hours trading, SFGATE reported.

Fast Company noted that Block’s stock had been down 16 percent year-to-date as of the close of Thursday’s market.