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 inevitable—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 — 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 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 case—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.
