In the months before Block CEO Jack Dorsey laid off 40% of his workforce on Thursday, employees had embraced AI tools in what could be described as an almost celebratory manner.
Dorsey and other company executives have made no secret of their interest in AI, but they told Business Insider that the company was profitable and some employees couldn’t imagine that the technology would soon fully replace humans at scale.
Still, my anxiety remained. Block, the parent company of financial technology companies such as Cash App and Square, had made a series of smaller, performance-based cuts in recent months. At least one employee said he was uncomfortable with how good the AI tools he was using were.
“At some point, I had a hunch that companies were going to cut jobs because of AI, but I just didn’t think it would be now,” Ivan Ureña Valdez, a data analyst at Block who was laid off after four years, told Business Insider.
When Dorsey brought down the hammer through a memo posted on X, he blamed AI for 4,000 workers losing their jobs.
“With the tools that we’re building, even fairly small teams can do more and do better,” Dorsey told analysts on Block’s earnings call Thursday after the news.
Two hours after announcing the layoffs, Dorsey logged into a video call with the calendar title “Thank You” and addressed his staff while wearing a baseball cap with the word “Love” written on it.
As he spoke with employees about the reasons for Mr. Block’s layoffs and significant staff reductions, some of them commented thanking Mr. Block for the opportunity to work for the company. One person asked if his hat was appropriate given the context. Dorsey replied that it was an act of gratitude.
Throughout the meeting, he was inundated with waves of emojis from muted attendees, three attendees told Business Insider. According to two sources, popular responses included thumbs down, thoughtful faces and crying-laughing emojis. Dorsey explained his trademark monochrome cut and said he was doing what was best for the company.
Business Insider spoke to seven former Block employees about the company’s push to use AI at the company over the last year. Many people said they would be happy to do so. Some were laid off Thursday. Some have lost their jobs due to recent performance-based layoffs. Although they have introduced AI tools to varying degrees, they do not currently believe the technology can do all the jobs of the thousands of workers who have been laid off. So it was a shock to see half the company chopped off in one fell swoop.
Some in the tech industry have expressed skepticism, suggesting that AI is the real driver of layoffs and that Mr. Dorsey has bloated Mr. Bullock’s position, while others see this as the first wave of a tsunami of layoffs that will sweep across the industry. Alarms about the potential collapse of white-collar employment have grown louder in recent months. Amazon CEO Andy Jassy has suggested that AI could lead to the company’s white-collar job cuts. CEO Marc Benioff said last year Salesforce reduced headcount on its customer support team thanks to the use of AI agents.
Bullock’s firing was so broad in scope and more clearly attributed to AI than many other layoffs that it added to the fear that spread throughout the white-collar world. AI is coming for your job, and learning how to use it isn’t enough to save you.
“We’ve seen a lot of public opinion about these layoffs and how workers need to leverage AI to protect their jobs,” said one non-technical worker who was laid off Thursday. “I was actively building with AI, and I know many of my impacted colleagues were doing the same.”
Jack Dorsey: “I love AI”
Dorsey planted a flag in portraying Block as an AI-advanced company. On Thursday’s earnings call, he said Mr. Block was “one of the first to leverage the power of agents.” And in July, Dorsey made headlines for using an in-house coding tool called Goose to vibe-code a “weekend project” connected to the messaging app Bitchat.
Investors appear to support Dorsey’s claims that AI will reduce costs. Block stock had fallen about 16% since the beginning of the year before the layoffs, but ended Friday up nearly 17% on the day.
“Jack loves AI and has always encouraged us to use it,” Ureña Valdez said. “I needed to use these tools as much as possible every day.”
“I’ve been feeling the buzz of AI disruption for a while,” he said, because he uses AI in his work and has noticed that the tools are getting better.
One former software engineer said Mr. Block had done numerous AI demos within the company and that his colleagues’ sentiment toward AI was “almost celebratory.”
Another former software engineer, who was laid off during performance cuts in early February, said the company had warned engineers of increased production expectations. He said the company’s engineering chiefs expressed expectations for productivity and were concerned that quality would suffer. After this week’s layoffs, his team is down from eight engineers to one.
One of the employees who was fired on Thursday said that Block had adopted AI, but felt it needed human oversight. She said she discovered an error in the company’s chatbot the day before she was laid off. She said the layoffs surprised managers who were spared layoffs. They sat together and cried out.
AI is not “retrenchment insurance”
Several researchers and former Block employees said they were skeptical about AI’s actual role in layoffs.
“Block must have discovered a secret sauce, probably within the software development process, that claims all these jobs are AI-related,” said Jason Schretzer, a professor at Georgetown’s McDonough School of Management. “According to dozens of industry executives I spoke to about AI adoption, they were not reliably seeing these benefits outside of the software development process.”
Dorsey said on Thursday’s earnings call that there have been significant improvements in AI capabilities and that “Brock wanted to be proactive about this change rather than being forced into it after the fact.”
“The functionality and intelligence of the model has increased by orders of magnitude,” Dorsey said. “And it really points the way forward in that we can apply it to almost everything we do.”
Some former Block employees and industry insiders say overemployment caused by the pandemic, rather than artificial intelligence, is spurring layoffs, a common occurrence at Big Tech companies in recent years.
“While I worked at Block, management repeatedly suggested the need for a ‘smaller block,'” said a laid-off non-technical worker who worked at Block for two years.
Chris Kaufman, a leadership consultant in Detroit, said companies like Block are cutting jobs “with a chainsaw, not a scalpel.”
“They haven’t done an audit of who took the AI course,” Kaufman said. “They’re making macro decisions about cost structure and organizational design. It’s usually just looking at overall headcount and payroll.”
“It will improve productivity, but I don’t think it will ever provide layoff insurance,” said Kaufman, who is familiar with AI.
Daniel Bell, a business communications professor at Northwestern University, said it’s clear that employees inside and outside Block are concerned about AI. “If this is the new reality we find ourselves in, executives need to be more honest with themselves, with their stakeholders, with their boards of directors, with Wall Street, and especially with their employees, about what AI is there to do.”
Whatever the reason, one of the engineers cut Thursday said he had a feeling something was about to happen. The engineer said he noticed that performance evaluations had been brought forward from the start of February. She thought she was safe after previous performance-based cuts until she was laid off Thursday.
“Even after the good news, people were nervous,” she says. “There are a lot of rumors going around directly within the company.”
