Block's AI Bet Drives Mass Layoffs
Block's CFO revealed that major leaps in AI productivity, including a custom LLM, gave the company confidence to slash nearly half its workforce. The 18-month plan is framed as a strategic shift, using AI tools to maintain output with smaller teams, rather than a simple cost-cutting measure.
The custom AI tool at the center of the strategy is an internal agentic AI platform codenamed "goose," which Block has also made open-source. It's designed to go beyond code suggestions to install, execute, edit, and test, integrating with any Large Language Model to accelerate engineering workflows. This move will slash Block's workforce from over 10,000 to just under 6,000 employees. The 4,000-person cut follows a period of massive expansion, where the company's headcount ballooned from 3,835 at the end of 2019 to roughly 13,000 by the third quarter of 2023. Skeptics have framed the announcement as "AI-washing," suggesting the technology is a convenient excuse for what are actually traditional cost-cutting measures. CEO Jack Dorsey acknowledged the company over-hired during the pandemic, creating redundant structures for Square and Cash App, an issue he claims was corrected in mid-2024. To justify the decision, leadership pointed to concrete productivity gains already realized through AI. CFO Amrita Ahuja stated that Block has seen a greater than 40% increase in production code shipped per engineer since September, with small teams now completing work in a fraction of the time. The strategy is part of Jack Dorsey's vision for "atomic teams," where significantly smaller groups armed with AI can achieve more than larger, traditional organizations. Dorsey has predicted that the majority of companies will be forced to make similar structural changes within the next year. Investors immediately rewarded the plan, sending Block's stock surging over 20%. The move comes as Block's profitability and gross margins lag behind payment industry peers like Visa and Mastercard, adding a layer of financial pressure to the strategic pivot.
