Block Slashes Headcount, Citing AI
Jack Dorsey's Block is cutting its workforce from ~10,000 to 6,000, with a memo tying the move directly to AI-driven productivity gains. The goal is to create "smaller and flatter teams" that can achieve the same output with new intelligence tools, a stark signal of AI's impact on org charts.
The move to slash 4,000 jobs wasn't a reaction to poor performance; Block reported a 24% year-over-year growth in gross profit in its latest earnings report. In a memo, Jack Dorsey stated the cuts were a proactive measure to reshape the company around AI, not a sign of the business being in trouble. This wasn't Block's first round of recent cuts. The company had already trimmed its workforce with smaller layoffs in late 2023 and early 2024. Dorsey admitted to over-hiring during the pandemic, creating separate structures for Square and Cash App, a move he corrected in mid-2024. The company has been developing its own internal AI assistant, an open-source tool named "Goose," which is already saving employees 8 to 10 hours per week. This tool is used daily by the executive team, including Dorsey, to automate tasks ranging from writing code to organizing files. Interestingly, the biggest productivity gains from AI at Block are not being seen by engineers, but by non-technical teams. Employees in legal, risk management, and operations are now building their own software tools, a task that previously would have required significant engineering resources. Dorsey's memo emphasized a choice between a slow, morale-damaging reduction of staff over years or a single, decisive action. The company is providing a generous severance package, including 20 weeks of base pay, an additional week for each year of tenure, and six months of health coverage. The market reacted positively to the AI-driven strategy, with Block's stock surging over 25% in after-hours trading following the announcement. Dorsey predicted that most companies will adopt similar AI-driven structural changes within the next year.
