Jack Dorsey cuts 4,000 Block jobs citing AI, but insiders question the real story behind layoffs

Jack Dorsey Is Ready to Explain the Block Layoffs

When the bombs hit in Iran, I thought of Jack Dorsey. In 2009, he and I were both part of a contingent of technology people sent by the US State Department to Baghdad, in the wake of another questionable Middle East war. At that time Dorsey was not involved in Twitter's day-to-day operations, and he was glumly following from afar as his cofounders embarked on a media tour to celebrate the success of the product that sprang from his vision. Our survey of a city ravaged by war -- we wore flak jackets and helmets when venturing outside the protected Green Zone -- was a distraction from his obvious pain of exile. Dorsey more than recovered. Not long after our trip, he founded the fintech company Square (now called Block), and in 2015, he reclaimed leadership of Twitter. He ran both companies for several years, until 2021, when he stepped down as Twitter CEO and then sold the company to Elon Musk. Dorsey still leads Block, which made almost $3 billion in profit last quarter, has a $39 billion market cap, and employed 10,000 people -- until last week. That's when Dorsey hit the news by discharging almost half of his workforce. His explanation was that recent advances in AI tools are forcing Block to remake itself as a slimmer, more nimble entity -- and that other companies will follow suit. The move was classic Dorsey, who ignores many of the conventions of corporate mogulhood. He lives a nomadic existence, rocks a hipster beard, and advocates meditation. He is a life-long proselytizer of open source protocols and decentralization. And he's quick to embrace any technology that he perceives as the future, be it Bitcoin or AI. In our conversation, I pushed him on why he thinks corporate bosses must discard conventional management and restructure around a layer of AI, with many fewer employees. Or whether he was simply using AI as an excuse to trim a bloated workforce. And of course I asked him what he now thinks of X. Steven Levy: You just laid off almost half of your company. There seems to be some question whether it was a correction to your overhiring. Were you AI-washing the layoffs? Jack Dorsey: The most important thing for me and the company is that we stay well ahead of the technology trends that are impacting us. This comes down to one simple thing. These tools are presenting a future that entirely changes how a company is structured. I don't know what the ultimate outcome is, but I do know it's going to have a dramatic effect. I want to make sure we can be proactive about those moves, instead of reacting. If I allowed it to be drawn out, we'd be in a worse position. Did you overhire? I wonder what metric people are using for that. The metric that matters is gross profit per employee. We were exactly in line with or just ahead of all of our peers. We hired at the same rate that they all did during Covid, and we corrected around the same time as well. This was not looking at our cost and revenue per employee and fixing it, because we were already ahead of all of our peers. This was looking deeply at what the tools can do now and our own application of them.

The Curious Case of the Block 'AI Layoffs'

Last week, Block CEO and ayahuasca enthusiast Jack Dorsey announced that he was cutting 40% of his company's staff because AI tools have reduced the company's need for people. While Dorsey called it "one of the hardest decisions in the history of our company," he also said it was inevitableâ€"that the cuts could either happen slowly over the next few years or all at once, right now. Basically, AI was coming for those jobs one way or another. It turns out things might not be that simple. Naoko Takeda, a data scientist at Block, poked a pretty significant hole in Dorsey's story. She left Block, not because she was laid off, but because of how she was asked to stay. According to Takeda, she was offered a 75% pay increase, which she said was 90% with a one-time bonus included, to stay on and work with the skeleton crew that was left behind following Dorsey's sudden downsizing. "So basically, I saw my company discard half of my peers and double my pay," she wrote on LinkedIn. "That’s not an honor. It feels shameful and dehumanizing. I’d rather see my peers keep their jobs than personally profit from their trauma." Takeda said she wasn't sure what the retention package looked like for the rest of the company's remaining employees, but if it was similar to the offer she received, it seems like Block isn't going to save a whole lot on payroll. Instead, it's just shifting that money around to people who will presumably be asked to pick up the slack left by the sudden, sizable hole in the company's staff. And, as Takeda pointed out, those who took the payday are basically just enjoying a fatter check until their day under the ax comes, because Dorsey has effectively signaled that it is inevitable. A second blow to Dorsey's narrative came from Aaron Zamost, the head of communications for Dorsey's company from 2015 to 2020. In an op-ed in the New York Times, he suggested that Block's layoffs are more about Dorsey trying to "prove [his] A.I. credentials" to others than a true signal that AI is currently doing the work of 4,000 people. "Look closer at specific cuts â€" like shrinking the policy team and eliminating diversity and inclusion roles, former colleagues told me â€" and Block’s latest reorganization reads like standard prioritization and cost management, not an A.I.-driven reinvention," Zamost wrote. There's no doubt that we're in an age of AI washing, and that chalking up layoffs to AI adoption is one surefire way to please your shareholders, whether it's true or not. OpenAI CEO Sam Altman recently warned that he believes some companies are using AI as an excuse for cutting staff, and there is data to back up that idea. Last year, less than 1% of all job losses for the year were attributed to AI, and a recent paper published by the National Bureau of Economic Research found that 90% of executives surveyed said AI has had no impact on workplace employment in the last three years. Of course, there's always the possibility that Dorsey is the exception. He'd certainly like for that to be the caseâ€"or at least like for investors to believe it to be. Wired asked Dorsey straight up if the recent layoffs were AI washing, and Dorsey gave a pretty wishy-washy response, stating that AI tools are "presenting a future that entirely changes how a company is structured," while calling the layoffs "proactive." He even pinpointed when this pivot became possible, telling Wired, "Something really shifted in December in the sophistication of [AI] tools. Anthropic’s Opus 4.6 and OpenAI’s Codex 5.3 went from being really good at greenfield products to being really good at larger and larger code bases. It presented an option to dramatically change how any company is structured, and certainly ours." Later, though, when asked if he had overhired, Dorsey said, "This was not looking at our cost and revenue per employee and fixing it, because we were already ahead of all of our peers. This was looking deeply at what the tools can do now and our own application of them." Maybe Dorsey is just saying that he's looking at what AI can do now and extrapolating from there, but these seem like two different answers. It also seems to minimize his own admission on Twitter that his company "over-hired during Covid." Block has undergone three rounds of layoffs since 2024, prior to this one, including a rolling layoff that just started in February that saw 10% of the company's staff cut. Per a Wired report on those layoffs, Dorsey claimed they were being made for performance reasons, and there was “a sizable portion of our population that have been phoning it in.†AI seemingly wasn't mentioned as a reason for those cuts, despite the fact that the same tools that Dorsey credits with making the latest layoff possible were already available. Still, something certainly must have changed. To go from doing a rolling layoff of 10% of staff to an immediate cut of 40% is pretty drastic. And so, too, is Dorsey's roadmap for the future of his company. "I want the company itself to feel like a mini AGI," he told Wired. "We're moving to a world where our customers will have the ability to create their own products, experiences, and customizations." Maybe Dorsey's hunch is right. But a world where customers are basically vibe-coding their own products on top of Block sure seems like the kind of world where you're going to need a lot of customer support staff to navigate all the errors, issues, and security vulnerabilities that arise. If that happens, Dorsey will probably rest easy knowing he's not the only CEO who cut staff just to realize that people are actually good at their jobs. And just as he's receiving plenty of praise now for being so future-forward and visionary in his adoption of AI, he'll probably get praise for recognizing the need for a human-centric approach upon course-correcting. Some guys just can't lose.

Exclusive: Block's CFO explains the AI leaps over 18 months that led to the decision to slash nearly half its workforce | Fortune

New tools including its custom LLM "goose" gave leaders confidence that smaller teams can now handle "really meaningful bodies of work," says Block's CFO and COO Amrita Ahuja. Getty Images Those were the two questions whipping around the business world following Block's shocking announcement that it was slashing 4,000 jobs, or nearly half its workforce. The parent company of Square and Cash App reported Q4 gross profits of $2.9 billion, up 24% year over year. Its shares jumped almost 20% in the trading sessions on Feb. 26 following the earnings release and the announcement of a major workforce reduction. But if the company is profitable and growing, why cut jobs now? "We believe that it is actually from a position of strength that we have the ability to take an action like this with confidence and execute on it in a way that continues to deliver for our customers and stakeholders," Amrita Ahuja, CFO and COO at Block, told Fortune. The decision to cut almost half of the workforce was part of a longer transformation rather than a sudden reaction to market pressure, Ahuja said. "This is a two-year journey for us," she said. "This was not an overnight decision." Ahuja describes the move as the culmination of a push to embed AI deeply across the company. Block's internal use of AI has already made its workforce more productive and helped support the company's decision to raise its 2026 guidance even as it reduces headcount, she said. Central to that strategy is codename goose, Block's internally built AI agent that sits on top of large language models to execute actions, draft emails, and automate workflows. Goose has been in production internally for about 18 months and has been open-sourced, allowing other companies to experiment with it as well, Ahuja said. Since September, she added, developer productivity at Block has improved with a 40% increase per engineer use of AI tools to push code and features to production faster. One risk underwriting model that previously took a full quarter to build was completed in a fraction of the time with these tools, giving leaders confidence that smaller teams can now handle "really meaningful bodies of work," Ahuja said. In major strategic discussions, Ahuja said her role as CFO and COO is to rigorously debate ideas and then focus on executing them well for employees, customers, and investors. There was no top-down percentage target for reductions, Ahuja said. Instead, leaders across the company built plans from the ground up around three principles: protecting the resilience and trustworthiness of Block's platforms; maintaining compliance and risk capabilities across money movement, savings, and commerce; and preserving the ability to execute on a growth-oriented product roadmap. The company simultaneously raised its 2026 outlook, now expecting gross profit to grow 18% year over year and profits to climb 54%, reflecting expectations that AI-driven efficiency will translate into margin expansion, she said. Block's layoffs come amid a broader wave of tech-sector layoffs that have eliminated tens of thousands of jobs in recent months. Some companies have downplayed linking cuts directly to AI. Dorsey, however, explicitly tied Block's layoffs to productivity gains from the technology. In a post on X, formerly Twitter, which he co-founded, CEO Jack Dorsey addressed pushback that layoffs at Block, Inc. were mainly due to over-hiring. Dorsey said the company "over-hired during COVID," which he attributed in part to building separate organizational structures for Square and Cash App -- a setup he said was corrected in 2024. But he said, attributing layoffs solely to over-hiring, "misses all the complexity," pointing to the company's expansion into lending, banking and buy now, pay later, as well as its goal of boosting efficiency. To those who view Block's position on AI as a convenient label for classic over-hiring, then cutting cycles, Ahuja says: "Look at the data." In 2019, she noted, Block generated about $500,000 in gross profit per employee, a figure that remained roughly unchanged even as the company expanded from a few thousand workers to around 13,000 during the hyper-growth years. Over the last few years, however, that metric has climbed to roughly $750,000 in 2024 and $1 million in 2025, and if Block meets the targets it laid out last week, gross profit per employee in 2026 would reach about $2 million -- double last year's level. "I don't think this is about bloat," Ahuja said. "This is about empowering our teams with the most world-class and powerful tools that we have to help them do their work more efficiently." For companies, there's a strategy behind making large-scale layoffs, but it certainly affects the employees who remain. And U.S. employee engagement has already fallen to a 10-year low, according to Gallup. Inside Block, leaders weighed two paths: one "bold, decisive" restructuring that aligns Block with where Ahuja and Dorsey believe the world is heading, or a series of smaller, reactive cuts that would require constant rewiring of how the company operates, Ahuja said. They chose the former, in part because of its impact on morale. "It is big news for anyone to get over," Ahuja said. "We are saddened to see colleagues go. We're incredibly grateful to those folks who have helped us build Block." Ahuja acknowledged the emotional toll of losing colleagues and the reality that remaining employees will shoulder more work in the near term. But equipping those employees with "the most powerful tools in the world," investing in reskilling, and backing that with rewards and recognition positions them better for the future -- whether at Block or elsewhere, she said. Block's laid-off employees received a severance package that included 20 weeks of base salary, with an extra week for each year of tenure. They also continued to vest equity through May and received six months of healthcare coverage. Additionally, employees were given a $5,000 transition stipend and could keep their work devices. Looking ahead, Ahuja said that Block is not imposing a hard cap on headcount. She expects the company to continue hiring in targeted areas, particularly in sales and AI-focused engineering roles that are directly tied to revenue growth and product innovation. Dorsey has predicted that many other companies will come to similar conclusions and rewire their organizations around AI. "It's hard to tell the future," Ahuja said. "But based on the pace of advancement that I have seen in the technology and how powerful it is, the wow moments that get unlocked as people actually start using it, I think this is absolutely where the world is headed." It may happen at a different pace for each company, depending on how facile and experimental they've been with the technology, she said.

Jack Dorsey Isn't Telling the Real Story About Block's AI Layoffs, Insider Says

Can't-miss innovations from the bleeding edge of science and tech Twitter founder and Block Inc (formerly Square) CEO Jack Dorsey announced late last month that his fintech venture was making "one of the hardest decisions in the history of our company" by "reducing our organization by nearly half." Dorsey cited rapid improvements in AI tech as the primary reason, sending shockwaves across Wall Street. He'd previously instructed employees to embrace AI at all costs, triggering major anxiety over job security that turned out to be warranted. The culling perfectly played into ongoing fears that AI automation is coming for white-collar jobs, a major job market and economic disruption that workers are becoming increasingly worried about -- and which clearly has execs salivating. As big tech was incurring losses over ongoing fears of an AI bubble starting to burst, Block investors sent a clear signal, sending shares of Dorsey's company soaring following his announcement. "Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes," Dorsey told analysts during a call, as quoted by the Wall Street Journal. But the CEO's boasting failed to convince everybody that the AI-triggered job apocalypse is nigh. As former employee Aaron Zamost, who was head of communications at Square from 2015 to 2020, argued in an essay published by the New York Times, there are likely a litany of other factors at play apart from AI. "The question on minds everywhere: Is AI a terrifying new reality in which the work they do might no longer be viable?" he wrote. "Or is Block's announcement just a convenient and flashy new cover for typical corporate downsizing?" "The truth is, nobody knows the answer -- not even Block itself," Zamost argued. The former head of comms wrote that Dorsey had "long placed big bets based on a read of early signals" and "show a tendency to identify patterns, see enormous growth as an inevitability and go all in with conviction." But whether AI really explains the company's major downscaling instead of neatly providing a "new justification for layoffs" remains unclear at best. For one, Block had already seen major rounds of layoffs in both 2024 and 2025. Its prior history is relevant as well. Between the end of 2019 and end of 2023, the company's head count ballooned from 4,000 to almost 13,000 employees, per the WSJ, a major pandemic-era hiring spree. "Look closer at specific cuts -- like shrinking the policy team and eliminating diversity and inclusion roles, former colleagues told me -- and Block's latest reorganization reads like standard prioritization and cost management, not an AI-driven reinvention," Zamost wrote. Particularly, executives forcing their employees to adopt AI tools, often against their will, could trigger a self-fulfilling prophecy at companies claiming to be "AI first," he argued. "That future, however, is colliding with the reality of what AI can actually do," Zamost wrote, pointing to AI models generating "useless email summaries, antisemitic chatbots, and AI overviews that can't get even basic facts right." "Not all the roles I've heard that Block is eliminating can be handled by AI, yet executives are treating it as equally useful today to all disciplines," he added. Other analysts were equally unconvinced by Dorsey's argument that AI had allowed him to cut almost half his company's workforce. "The vast majority of these cuts were probably not due to AI," corporate investment bank Mizuho Americas' Dan Dolev told the WSJ. "This isn't an AI story," former Block employee Jason Karsh tweeted. "It's organizational bloat wearing an AI costume."

This CEO explains what's really behind layoffs -- and it's not AI

Last week, Block CEO Jack Dorsey shared that his fintech company would be cutting 40% of its workforce, arguing that AI would allow them to do more with smaller teams. Many observers wondered if the large-scale layoffs reflected the new reality amid rapid AI adoption, and whether it was just a matter of time before other companies followed suit. But not everyone is buying it. In a post on X, Whoop CEO Will Ahmed shared that his company -- which makes health and fitness wearables -- would be nearly doubling its 800-employee headcount this year, drawing a contrast with employers that have been slashing jobs over the last year. He then weighed in on the growing trend of companies using AI to explain their layoffs. "Investing in talent and AI tools not mutually exclusive," Ahmed wrote. "Many of these 'AI layoffs' are just companies underperforming or lacking a bigger market opportunity." In an interview with Bloomberg, Ahmed elaborated on this idea. "There's a lot of companies that are doing layoffs right now and blaming it on AI," Ahmed said. "But they're actually doing layoffs because the businesses aren't performing particularly well. And it's a convenient excuse." Amid waves of layoffs across corporate America, many leaders and CEOs have been reticent about their reasons for trimming headcount, often gesturing at AI investments when they announce layoffs. In 2025, AI was cited in nearly 55,000 layoffs, according to outplacement firm Challenger, Gray & Christmas -- and some leaders, like Dorsey, have been quite explicit about pinning job losses on AI.

Jack Dorsey Blamed AI for 4,000 Layoffs. A Former Block Exec Says That's Not the Real Story

In a letter announcing the layoffs, Dorsey told employees that AI is "enabling a new way of working which fundamentally changes what it means to build and run a company." He also conceded that some of the cuts might ultimately prove to be a mistake, a striking admission given the scale of the layoffs. "One might think a company would want to move cautiously before laying off nearly half its work force," Zamost wrote. "But that person doesn't understand Silicon Valley generally, Jack specifically and the immense pressure on established tech companies to prove their A.I. credentials." For Zamost, Dorsey's background as an engineer still shapes how he interprets industry signals. From that perspective, the rapid development of AI tools could reasonably spark fears that "AI will rip through the rest of our work as well." Dorsey has long been willing to act decisively on early technological signals. Zamost noted that the Block co-founder, who also co-founded the company once known as Twitter, has a track record of making bold bets before trends fully materialize.