Block, the company known for Square and Cash App, is laying off 40% of its workforce. This means over 4,000 employees will be let go, leaving around 6,000 remaining. Jack Dorsey, one of the co-founders, explained that this decision is part of a trend driven by “intelligence tools.”
Dorsey believes many companies will soon follow Block’s lead. He noted that a smaller team, equipped with AI tools, can be more productive. In fact, he stated, “intelligence tool capabilities are compounding faster every week.” Block’s CFO, Amrita Ahuja, added that this restructuring will help the company move faster.
Despite the layoffs, Dorsey assured shareholders that the business is strong, with growing profits. In his words, he wants to get ahead of the curve, rather than wait for a reactive crisis. He said, “I’d rather get there honestly and on our own terms.”
This trend aligns with what’s happening in the tech industry. Many companies, like Amazon and Meta, have made significant cuts, often citing AI as a reason. During the pandemic, these companies rapidly expanded to meet online demand. For example, Block’s staff grew from about 3,800 in 2019 to over 10,000.
Now, companies are trimming back to pre-pandemic levels. Dorsey emphasized the need for honesty, preferring immediate action over gradual cuts. Affected employees will receive severance packages, healthcare for six months, and additional support.
Investors responded positively, with Block’s stock rising by up to 24% after the announcement. This reflects a broader concern about AI’s impact on jobs, as companies like Anthropic and OpenAI roll out new tools. Just recently, Anthropic updated its Claude model to enhance performance in various job sectors, highlighting the ever-evolving role of AI in the workplace.
As the tech industry adapts, there’s a noticeable shift towards lean operations. Amazon previously described AI as the “most transformative technology we’ve seen since the internet,” indicating a new mindset in the way these companies approach staffing and productivity.
For more insights on AI and its implications for the workforce, check out McKinsey’s research.
