- Jack Dorsey says smaller teams and AI are more efficient than all-human teams
- 4,000 workers are at risk of losing their jobs, around 40% of the company’s workforce
- Dorsey believes that AI will increase the speed and agility of the company
Block has laid out plans to eliminate more than 4,000 jobs, marking a nearly 40% reduction from about 10,000 workers (according to its most recent quarterly report) to fewer than 6,000 employees.
The company’s CEO and co-founder of Twitter, Jack Dorsey, explained that the drastic decision does not come as an alarmed response to financial difficulties, but rather as a recognition that artificial intelligence tools could significantly increase efficiency, reducing the number of workers it needs.
And this much is clear: the company posted a healthy 24% year-on-year growth in its gross profit.
Jack Dorsey replaces 40% of workers with AI
Dorsey also reportedly decided to make a big cut, rather than announcing multiple rounds of layoffs, in a “one-and-done” approach rather than continued hits to worker morale. Although the 40% reduction has certainly not gone unnoticed.
Block expects to incur between $450 million and $500 million in costs associated with the restructuring, with severance packages including at least 20 weeks of pay, a $5,000 payout and more.
Regarding the restructuring of the company, Block is betting on agent AI. “A significantly smaller team, using the tools we are 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 decision making and risk management to product creation and customer service. His letter also highlighted the impact of AI on business speed, suggesting that leaner teams and faster AI systems could increase agility.
Removing unnecessary layers of management will certainly help with that, and it’s a measure that companies like Amazon, Google, and Microsoft have already taken.
The company’s shares rose as much as 26% in after-hours trading before falling slightly, although they are still considerably below the highs of early and mid-2021.
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