Dropbox laid off 500 employees on Thursday, or 16% of its workforce, as growth slowed and its online storage business turned to AI.
CEO Drew Houston said in a formulaic statement that the layoffs were the result of an economic recession following the peak of the work-from-home cloud craze due to the pandemic, ushering in the “AI era of computing.” “AI is our new superpower.” But that doesn’t seem to be the job.
This is the boss who accuses the economy and customers of closing their wallets.
And pivot:
As Dropbox shifts gears to focus on artificial intelligence, it wants to retain and hire people with machine learning expertise and experience developing and shipping early-stage products. The goal seems to be to develop AI-driven features and catch up to similar ones announced by rivals. Meanwhile, employees working on projects outside of these areas have paid a heavy price.
Houston said his organization will combine core and document workflow businesses to streamline critical file, sync and share products and build new AI-powered capabilities. A staff member fired from Dropbox will receive a severance and stock package that includes at least 16 weeks of his salary and a stock best for the second quarter.
The San Francisco company will spend approximately $37 million to $42 million later this year in restructuring charges that will impact second-quarter earnings, according to SEC filings.
In Q4 2022, Dropbox posted $600 million in revenue, up 6% year-over-year, and more than doubled its profit in Q4 2021 to $330 million. 65 percent. Sounds like a lot of money, but if Dropbox were to pivot to ML, it would cost a lot to get it right.
Generative AI, especially large-scale language models that can process and generate text, is already impacting the way people work. Employees are turning to software like ChatGPT to create emails, documents, and code across all kinds of roles, from HR and marketing to engineering. Now, companies like Dropbox are rushing to build AI-powered productivity tools to capitalize on the hype.
They believe AI models can help automate mundane, repetitive tasks and improve productivity. Jobs will be taken away as technology takes over some roles. But it’s not clear how disruptive this change will be, and it’s likely that technology will eventually bring people opportunities and new roles. As well as need to master this next generation of semi-automated and automated apps. Experts predict that AI will have the greatest impact on white-collar jobs and knowledge workers, but not necessarily eliminate them entirely.
“Change is constant in our business, and the technology shifts over the past few decades have been beneficial,” Houston waxes lyrically.
“As the world transitioned from physical film to digital photography, from landlines to wireless communications, or from DVD rentals to streaming, opportunities and disruptions arose at the same time. Companies have succeeded, companies that held onto the past or tried to take it all did not.”
“These transitions are never easy, but just as Dropbox was at the forefront of the transition to mobile and cloud, we are determined to ensure that Dropbox is at the forefront of the AI era. provides the tools to reimagine existing businesses and invent new ones.I am committed to doing everything in my power to best position myself for the future and realize its full potential. We promise.”®
