new york
—
Block, the maker of Square, Cash App and Afterpay, is cutting 40% of its workforce. The reason: “intelligence tools,” according to a letter to shareholders by co-founder Jack Dorsey.
Dorsey thinks most companies will follow suit in the near future.
The company is laying off more than 4,000 people, reducing its employee count to less than 6,000.
The cuts come as AI has reshaped jobs in the tech sector and concerns are rising about the future of the job market. Companies like Amazon, Meta, Microsoft and Verizon have made widespread AI-related cuts in the past year.
“Using the tools we’re building, a significantly smaller team can do more and do it better. And intelligence tool capabilities are growing exponentially every week,” Dorsey wrote.
Block CFO Amrita Ahuja put it more bluntly in the tech company’s financial guidance: “We see an opportunity to move faster with smaller, highly talented teams by using AI to automate more work.”
one in Post At
The Twitter co-founder believes he is ahead of the game.
He wrote, “I think most companies are late. Within the next year, I believe most companies will reach the same conclusion and make similar structural changes. I would prefer to get there honestly and on my own terms rather than be forced to react reactively.”
Many of the companies that are drastically cutting jobs — and blaming it on AI — grew in size during the pandemic years, when tech companies were meeting demand for online services. For example, block 3,835 people got employment By the end of 2019 and before Thursday’s layoffs, its workforce had grown to more than 10,000. Meta had almost doubled its employee count in about two years.
Now, tech leaders are stepping back and returning to those pre-pandemic numbers.
At X, Dorsey said he chose to be honest about the state of the company and act now rather than “making gradual cuts over months or years.”
Dorsey said affected employees will be given 20 weeks or more of leave depending on tenure, vested equity through the end of May and six months of health care, as well as any corporate equipment and an additional $5,000.
Investors have responded well to the job losses. Block’s shares rose as much as 24% after the announcement.
The cuts come amid growing concerns about how AI will impact the workforce as AI giants like Anthropic and OpenAI push new enterprise tools. Just this week, Anthropic updated its popular cloud model to perform better in office jobs in human resources, design and money management. Software stocks fell earlier this month after Anthropic launched an update to its cloud cowork tool.
Dorsey’s decision also reflects a growing sentiment among tech leaders to work more intuitively as AI evolves. Amazon said it needed fewer layers “to operate as quickly as possible,” calling AI “the most transformative technology we’ve seen since the Internet” in a memo announcing the layoffs in October.