Block Slashes Workforce with AI

Block's strategic pivot was underpinned by a significant organizational restructuring, moving from siloed business units to a single, functional structure where all engineers report to one leader. This change, described by CTO Dhanji R. Prasanna as a "boring" but crucial move, was designed to create a unified technology strategy and accelerate the adoption of AI across the company. The goal was to treat all of Block's capabilities as interconnected systems that AI could orchestrate. The technological enabler for this shift is "Goose," an open-source AI agent developed in-house. Goose connects to Block's internal systems and popular platforms like GitHub and Google Drive, allowing both technical and non-technical employees to automate tasks and even build their own software tools using natural language. The company reported that engineers using Goose were saving 8 to 10 hours per week, with a goal of saving 25% of manual hours across the entire company. In his communication, CEO Jack Dorsey framed the layoffs as a proactive and necessary step to avoid the "destructive" morale impact of repeated, smaller cuts. He chose one decisive action to, in his words, "be honest about where we are and act on it now," a move that was rewarded by a significant surge in Block's stock price. The company also set a new benchmark for severance packages, which included a minimum of 20 weeks of salary and extended healthcare coverage. However, some critics have described Block's framing of the layoffs as "AI-washing," suggesting that the focus on artificial intelligence masks more traditional corporate restructuring and corrections for over-hiring during the pandemic. In a post on X, Dorsey himself acknowledged that he had "incorrectly built 2 separate company structures (Square & Cash App) rather than 1," a mistake that contributed to the need for restructuring. The company's leadership, including Dorsey and CTO Dhanji R. Prasanna, have been vocal about their belief that AI will fundamentally change how companies operate. Prasanna's promotion to CTO was reportedly sparked by an "AI manifesto" he wrote to Dorsey, outlining the potential for an AI-native company. This vision of an "Intelligence-Native Company" is at the core of Block's public messaging about its future. For affected employees, the company kept communication channels open for a period to allow for goodbyes and scheduled a live video session with Dorsey to personally thank them. Despite this, some former employees expressed shock at the scale of the cuts and were not convinced that AI was advanced enough to fully replace their roles. This move by Block is part of a broader trend in the tech industry, with companies like IBM and HP also signaling a shift towards smaller workforces augmented by AI. The core idea is that AI-driven efficiency will decouple revenue growth from headcount growth, a significant structural change for the sector. Block's public strategy is to not only use AI internally but to also empower its customers with these tools, enabling them to create their own functions based on Block's capabilities. The company has stated its future is as a "smaller, faster, intelligence-native company" and that it will continue to hire for senior engineering and AI-related roles.