Jack Dorsey has been an open admirer of Elon Musk for years. Now that I think about it, I think he was taking notes.
Dorsey announced Thursday that Block, the payments company he founded that operates Square, Cash App and Tidal, will cut more than 4,000 jobs, nearly half of its global workforce, from more than 10,000 to just under 6,000 employees. Investors responded enthusiastically, sending the stock up more than 24% in after-hours trading.
This isn’t the first time a major technology company has undertaken this type of initiative. In November 2022, Musk took Twitter private, then slashed roughly 50% of its workforce in one fell swoop, a move that rattled many in Silicon Valley and rewrote the unofficial rules about how much CEOs can do in one go.
Dorsey was in a unique position to watch it unfold. Rather than pay cash, he converted his roughly 2.4% ownership in Twitter into Musk’s purchase, making him one of the largest outside investors in what became X.
The two had an odd relationship in the tech world, exchanging warm words and posing for public photos, then getting back together again. Dorsey defended Musk’s acquisition of Twitter, but said Musk “should have walked away.” He helped launch Bluesky, a decentralized Twitter alternative, but later resigned from the board and called X a “freedom technology.” Both companies are also supporters of Bitcoin, with Block and Tesla each carrying the cryptocurrency on their balance sheets.
Dorsey framed Thursday’s cuts not as a fiscal emergency but as a proactive and even empathetic choice. (The 4,000 people who lost their jobs might think otherwise.) “Repeated layoffs destroy morale, focus, and the confidence our customers and shareholders have in our leadership abilities,” he wrote of X. He predicted that most companies would reach the same point within a year. “We would rather get there honestly and of our own volition than to be passively forced,” he said.
The cuts are being driven by AI, at least officially. Block CFO Amrita Ahuja said the headcount reductions will allow the company to “move faster with a smaller, better team that leverages AI and automates more work.”
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Regarding severance benefits, Dorsey said the U.S. employees targeted for the reduction will receive “20 weeks of pay, one week’s pay for each year of tenure, stock entitlements through the end of the month, six months of medical expenses, company devices, and $5,000 to cover anything else needed to support this transition.” Employees outside the United States will receive “similar support” depending on their country’s policies, he added.
Salesforce and Amazon are among a growing list of companies making significant layoffs due to increased profits from AI, but a Forrester Research report last month cast some doubt on how real those benefits are compared to the possibility that many layoffs are for economic reasons.
