Former Twitter co-founder Jack Dorsey’s new company Block – the parent of merchant payments system Square, mobile peer-to-peer payments Cash App, music streamer Tidal and open source AI agentive system Goose – is sending shock waves through the business world tonight after announcing it will lay off more than 40% of its workforce, cutting more than 4,000 people out of a total of 10,000 in its workforce, despite its latest release today. The quarterly income statement showed $2.87 billion. Gross profit increased by 24% year-on-year.
Criminal? New AI Competencies. As Dorsey wrote in a note shared on his former social network,
"We are not taking this decision because we are in trouble. Our business is strong. Gross profit continues to increase, we are serving more and more customers and profitability is improving. But something has changed. We are already seeing that the intelligence tools we are creating and using, combined with smaller and better teams, are enabling a new way of working that fundamentally changes what it means to build and run a company. And it is growing rapidly. I had two options: cut back gradually over months or years as this change came, or be honest about where we were and act on it now. I chose the latter. Repeated rounds of cutbacks are devastating to morale, focus, and the trust placed by customers and shareholders in our ability to lead. I want to take a hard, clear action now and build from a position we believe in, rather than manage the slow reduction of people towards the same outcome. A small company also gives us the opportunity to grow our business the right way, on our own terms, rather than constantly reacting to market pressures."
Technology: The "agentic" shift
The core of this restructuring is a pivot toward "intellect-native" Sample. Dorsey argues that a fairly small team, by taking advantage of the tools they are building, can provide greater value than a traditional large-scale organization. The bloc is re-engineering its entire operational stack to be orchestrated by AI, moving away from human-intensive management hierarchies that it calls "Agentic AI Infrastructure".
It includes four primary focus areas:
- Customer Capabilities: Atomic features that allow clients to build directly on top of blockchain infrastructure.
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Proactive Intelligence: Moving from responsive dashboards to tools like Moneybot that anticipate customers’ needs before they even ask.
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Intelligence Model: A system for organizing a company’s internal operations with the goal of extreme speed and product velocity.
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Operatic Orchestra: An AI model designed to manage a firm’s internal decision-making and risk-assessment processes.
Product: Increasing Strengths Through Automation
The financial strength cited in the lead is driven by deep engagement at Cash App and Square. Cash App’s gross profit rose 33% year-over-year to $1.83 billion, while Square saw its strongest year on record for newly added volume (NVA).
Specific product highlights include:
- Cash App Green: For this status program "modern earners" — a segment of 125 million people, including gig workers and freelancers — has become a cornerstone of the company’s engagement strategy.
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Square AI: Now embedded in the Square dashboard, it provides sellers with instant information about staffing and customer behavior.
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Consumer Loan: Cash App loan origination volume increased 223% year-over-year, proving to be a high-return product that manages income variability for users.
The block also surpassed the Rule of 40 for the first time in the fourth quarter – the industry benchmark where the sum of gross profit growth and adjusted operating income margin exceeds 40%.
community reactions
Not everyone was convinced by Dorsey’s letter which said AI capabilities were the primary driver of layoffs. As Will Slaughter wrote on X: "In the 3 years from December 2019 to December 2022, Block $XYZ tripled its employee count from 3,900 to 12,500. Less than half of the crazy COVID overhiring binge has more to do with Jack Dorsey’s managerial incompetence than whether AI will take your job."
Entrepreneur Marcelo P. Lima expressed a similar sentiment on X, writing in part: "Everyone will assume that Jack Dorsey is doing this because of the ‘greatest of all time’ AI. He is not. The block has bloated massively over the years. Don’t forget, Jack was the head of Twitter. When Elon took over, he fired 80% of the employees within 5 months and the product got better. This was before generative AI and cloud code."
And yet, regardless of how big a role AI plays in these layoffs in particular, the outcome on the broader enterprise landscape may ultimately be the same. With Block’s share price rising more than 24% on this news, the boards and leadership of other public companies will be forced to at least consider the idea of similar drastic cuts if they believe AI can replace human labor and drive greater organizational efficiencies.
As user @khuppy wrote on X: "By Q2, if you’re not firing a lot of employees, your board will fire you for being a dinosaur that doesn’t implement AI. This is going to happen faster now. Feudalism, here we come…"
Clearly, companies across various sectors, particularly those in technology and services, will be re-examining their headcount in light of the bloc’s latest move.
human cost
Despite strong financial performance, the human cost is very high. The reduction of more than 10,000 employees to less than 6,000 is one of the most drastic in fintech history. Dorsey’s internal note was aimed at transparency, but contained a mixture of astonishment at the technical vision and criticism of the timing.
Affected employees are receiving a severance package that includes 20 weeks of pay plus one week of tenure per year, equity vesting through May and a $5,000 transition fund.
Dorsey said communication channels will remain open until Thursday evening so the team can say goodbye properly, "I want it to feel weird and human rather than efficient and cold."
How should enterprise decision makers and leaders interpret the news
For enterprise decision makers, the move to the block represents a fundamental challenge "development at all costs" The hiring model that has defined the last decade of tech.
Leadership teams should not view this simply as a cost-cutting measure, but as a strategic reset where organizational value is measured by the ratio of output to "intellect-native" Devices instead of total number. Executives should start by auditing their own internal workflows to identify where agent AI can consolidate roles and flatten the management hierarchy before market pressures force a more reactive, less systematic contraction.
While not such drastic cuts, let alone a hiring slowdown and halt, Block’s move should at least signal the kind of policy that Shopify CEO Toby Lutke separately pitched nearly a year ago: "Teams mostly demonstrate why they can’t do what they want to do using AI, before asking for more headcount and resources."
While community reaction to Block’s layoffs highlights the potential for brand damage and morale loss, the 24% increase in Block’s stock price shows that the public market is rewarding lean, automated efficiency over human-intensive scaling.
Decision makers should evaluate their current "bloat" Contrast that with the benchmark set by Dorsey: If a company of 6,000 can make $12.20 billion in gross profit, the bar for organizational efficiency has been permanently raised.
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