After announcing that 4,000 workers would be “asked to leave” or “enter into consultation” in his annual letter to shareholders on Thursday — nearly half of the company’s over 10,000 employees at his Oakland-based firm behind Square and Cash App — Block CEO Jack Dorsey warned that more companies will do the same “within the next year.”
“Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes,” he wrote, adding that he would “rather get there honestly and on our own terms than be forced into it reactively.”
According to SFGate, the massive layoff comes despite Block posting a US$1.3 billion (S$1.64 billion) profit in what Mr Dorsey described as a “strong year”. It also follows the company’s 931 job cuts in March last year.
Explaining the role of artificial intelligence (AI) in this decision, Mr Dorsey said, “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.”
He also shared plans to push AI across more Block products, adding that the company will be “significantly more valuable as a smaller, faster, intelligence-native company.”
While the layoffs may mean bad news for tech workers, the news made Block’s share price jump by around 23% in after-hours trading.
Block’s massive layoffs, attributed to the compounding capability of intelligence tools, may once again have proven that employees’ fears of being replaceable are not entirely unfounded.
However, analysts said earlier this month that corporate leaders have been “AI-washing” job cuts in the US, citing AI as the reason some roles are no longer needed, even though the real drivers are tariffs, overhiring and cost-cutting to maximise profits.
Critics of Block’s plan to lay off nearly half of its workforce shared similar sentiments: instead of Mr Dorsey’s move being a ‘deliberate and bold’ embrace of AI, they pointed to a “tripled headcount during a once-in-a-century demand spike” in the pandemic time.
Responding to critics of his “managerial incompetence” on X, Mr Dorsey wrote, “Yes we over-hired during COVID because I incorrectly built 2 separate company structures (Square & Cash App) rather than 1, which we corrected mid 2024. 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.” /TISG
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