Dorsey's radical workforce reset may embolden CEOs
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It was only a matter of time before a future-thinking CEO took the leap and replaced thousands of workers with AI.
- Block's Jack Dorsey did just that Thursday, and Wall Street's standing ovation gives other CEOs permission, or even an incentive, to consider the same thing.
What he's saying: Dorsey, an iconoclast who co-founded and once led Twitter, was blunt in announcing via X that Block will say goodbye to 40% of its 10,000-person workforce:
- "Something has changed. We're already seeing that the intelligence tools we're creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company," he wrote.
- "I had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. i chose the latter."
Zoom in: The fintech's stock rallied as much as 25% on the news, after having been down more than 16% over the past year and 76% over the past five years.
- Block's declining stock price put Dorsey under pressure to make changes, although he denied that the layoffs were related to Block's financial performance.
The big picture: Wall Street was recently captivated by a viral doomsday report predicting AI would wipe out jobs, although stated reasons for most other AI-related layoffs so far have been much less explicit than what Dorsey did.
- Many AI executives and investors insist that the tech will lead to temporary labor dislocations rather than net job loss, echoing the industrial revolution.
The bottom line: It's one thing to replace people with machines. It's quite another to prove that it makes business sense.
- If Block can grow its top line with a much smaller headcount, the rest of Corporate America will take notice.
