- Jack Dorsey Says Small Teams and AI Are More Effective Than All-Human Teams
- 4,000 employees risk losing their jobs, or around 40% of the company’s workforce
- Dorsey sees AI driving business speed and agility
Block planned to cut more than 4,000 jobs, a reduction of nearly 40%, going from about 10,000 workers (according to its most recent quarterly report) to fewer than 6,000 employees.
The company’s CEO and Twitter co-founder Jack Dorsey explained that the drastic move is not an alarming response to financial woes, but rather a recognition that AI tools could significantly improve efficiency, reducing the number of workers they need.
And this much is clear: the company saw a healthy 24% year-over-year gross margin growth.
Jack Dorsey replaces 40% of its workers with AI
Dorsey also reportedly decided to make a significant reduction, rather than announcing multiple rounds of layoffs, in a “one and done” approach rather than delivering continued blows to worker morale. But the 40% reduction certainly hasn’t gone unnoticed.
Block expects to incur approximately $450 million to $500 million in costs related to the restructuring, with severance packages including at least 20 weeks of salary, severance of $5,000 and more.
As for restructuring the company itself, Block is banking on agentic AI. “A significantly smaller team, using the tools we are building, can do more and do better,” Dorsey wrote in a letter to workers and shareholders.
Dorsey explained that “intelligence will be at the heart of how the entire enterprise operates,” from decision-making and risk management to creating products and serving customers. He also highlighted AI’s impact on business speed in his letter, suggesting that smaller teams and faster AI systems could boost agility.
Removing unnecessary management layers will certainly help with this, and it’s a move that has already been made by Amazon, Google, and Microsoft.
The company’s shares rose as much as 26% after hours before falling slightly, although they remain significantly down from early and mid-2021 highs.
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