Jack Dorsey has long admired Elon Musk and seems to have taken inspiration from him. On Thursday, Dorsey announced that Block, his payments company that runs Square, Cash App, and Tidal, is laying off more than 4,000 employees, nearly half of its global workforce, reducing it from over 10,000 workers to just under 6,000. Investors reacted positively, boosting the stock by over 24% in after-hours trading.
This isn’t a first for tech companies. In November 2022, Musk cut approximately 50% of Twitter’s staff after taking it private, a move that shook Silicon Valley and changed the perceived limits of a CEO’s power.
Dorsey was unusually positioned to observe these events, having rolled his 2.4% Twitter ownership into Musk’s takeover instead of cashing out, making him a significant outside investor in what is now X.
Dorsey and Musk have had a complex relationship with fluctuating public comments. Dorsey supported Musk’s Twitter buyout but later said Musk should have withdrawn. He also helped start Bluesky, a decentralized Twitter alternative, then left its board and referred to X as “freedom technology.” Both are keen Bitcoin supporters, with Block and Tesla holding the cryptocurrency.
Dorsey described Thursday’s layoffs as a strategic and empathetic move, not one of financial necessity. “Repeated rounds of cuts are destructive to morale,” he wrote on X. He suggested that most companies will soon reach a similar point, preferring a proactive approach. The layoffs are driven, at least officially, by AI. Block CFO Amrita Ahuja stated the cuts will help the company “move faster with smaller, highly skilled teams using AI to automate more work.” Companies like Salesforce and Amazon have made significant staffing cuts citing AI gains, but a Forrester Research report recently questioned whether these gains are real or if the layoffs are financially motivated.