Co-founder Jason Smith says future layoffs could affect up to 50% of the company.Nelson Moulelic/Supply
Vancouver software company Klue Labs Inc. They are preparing to lay off half of that workforce, or about 100 people, to relocate themselves to the age of artificial intelligence.
Co-founder and CEO Jason Smith informed Globe and Mail about last week's restructuring, saying Klue has finalized plans for the layoffs to be implemented this Wednesday.
“We need to do this because it awakens companies that are not AI natives to start thinking that way,” he said.
The number of layoffs could change, but Smith said it could affect 40% to 50% of the company.
Smith said Klue, which makes AI-powered business intelligence tools for sales experts to gather information about their competitors, will need to be rebooted as a result of AI. Since ChatGPT was released in late 2022, generative AI tools have become more proficient, he said, forcing operations to dramatically rethink Software-as-a-Service (SaaS) companies established prior to that date.
Your brain of AI
Klue already employs AI largely internally, but Smith felt the company wasn't moving fast enough. After the help writing employee recently left Klue, Smith realized that AI can handle much of the work before the company needs to hire a replacement.
“It was a vital moment for me to think we need to do something more dramatic than marking the path to improving AI,” he said. “My belief is that you need to shock the company.”
Klue was founded in 2015 and raised US$80 million in funding, including service customers such as Tiger Global Management, Autodesk and Salesforce. Its platform uses AI to analyse millions of data points, including news articles and websites, and provide insights to its customers about the competition.
The impact of AI on the labor market is heated and uncertain. Some executives, such as Anthropic's Dario Amodei, have argued that AI can replace large-scale jobs in entry-level offices. Others argue that AI can change the nature of work, but also allow people to focus on more valuable tasks while also creating new roles.
It was unusual for employees to announce layoffs in advance, but he said they did so to process the news, ask questions, and decide whether they wanted to leave voluntarily. The company offers a voluntary exit package for all employees who have retired with unwilling layoffs.
Smith said downsizing is not about directly replacing employees, but about equipping small teams to work faster and more efficiently, especially with agents. “This is about creating reductions, so we can't look at auto-employment. We need to see if AI agents are useful first,” he said.
Smith, a veteran high-tech executive and entrepreneur, said if he started Klue today, he started by using AI agents to grow from there.
Klue is the latest Canadian company to consider the impact of AI. Shopify CEO TobiLütke told employees in April that using AI is a “basic expectation” and that employees need to justify why they can't work with AI before they seek more people and resources.
Open Text Corp. also employs an AI-first approach. “We only hire new talent that AI can't do the job,” CEO Mark Barrenechea said in a revenue call in May.
In the US, Amazon CEO Andy Jassy said in a memo on Tuesday that recruiting generated AI and agents over the next few years would “reduce the total workforce of corporate workers.”
But at least one company is backtracking. Klarna, a Sweden-based and buy-payment service, made headlines last year in an attempt to cut its workforce in half, carry out employment freezes and replace customer support agents with AI. The company is hiring again.
Smith said it could be a potential Klue. “We can back up if necessary,” he said. “I want my company to be on the edge of what it can and knows what it can and can't. If you don't live on that edge, you're not moving fast enough.”
Report from Shaun Silkov
