- Jack Dorsey says smaller teams and AI are more efficient than human-only teams
- 4,000 workers risk losing their jobs, around 40% of the company's headcount
- Dorsey sees AI boosting company speed and agility
Block has set out plans to cut more than 4,000 jobs, marking a near-40% reduction from around 10,000 workers (per its most recent quarterly report) to under 6,000 employees.
Company CEO and Twitter co-founder Jack Dorsey explained the drastic decision doesn't come as an alarmed response to financial struggles, but rather an acknowledgment that AI tools could significantly boost efficiency, reducing the number of workers it needs.
And this much is clear – the company posted a healthy 24% year-over-year growth in gross profit.
Jack Dorsey replaces 40% of workers with AI
Dorsey also reportedly decided to make one big cut, rather than announce multiple rounds of layoffs, in a 'one and done' approach rather than continuous blows to worker morale. Though the 40% reduction certainly hasn't gone unnoticed.
Block expects to incur around $450-500 million in costs associated with the restructuring, with severance packages including at least 20 weeks' pay, a $5,000 payment and more.
As for the company restructuring itself, Block is going all-in on agentic AI. "A significantly smaller team, using the tools we're building, can do more and do it better," Dorsey wrote in a letter to workers and shareholders.
Dorsey explained that "intelligence will be at the core of how the entire company works," from making decisions and managing risk to building products and serving customers. He also noted AI's impact on company speed in his letter, suggesting that slimmer teams and speedier AI systems could boost agility.
Removing unnecessary layers of management will certainly help with that, and it's a move that's already been taken by the likes of Amazon, Google and Microsoft.
Company shares rose as much as 26% in after-hours trading before dipping slightly, though they're still down considerably from early- and mid-2021 highs.
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