The company’s shares rose by as much as 27% after Dorsey’s announcement, as investors welcomed the prospect of radical cost savings.
Dorsey said: “A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.”
The Block boss, who founded Twitter in 2006 and posted the first ever tweet, said he had opted for an immediate cull because “repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead”.
He said: “I’d rather take a hard, clear action now and build from a position we believe in than manage a slow reduction of people toward the same outcome.”
While admitting the business had over-hired during Covid – when its headcount swelled from 3900 to 12,500 in three years – the Block boss rejected suggestions of managerial incompetence on social media.
He wrote on X: “We have and do run an efficient company … better than most.”
Although the overall number of people axed by Block has often been surpassed on Wall Street, the proportion of the job losses is unprecedented.
Citigroup announced it was cutting around 13% of its entire workforce in 2008, equivalent to 50,000 people, while Meta announced a 13% reduction in its headcount – around 11,000 people – in 2022.
Lehman Brothers is the only company to have vanished overnight from the S&P 500 when it collapsed during the Global Financial Crisis, with the loss of around 25,000 jobs.
The sudden redundancies have followed a week in which Wall Street was rocked by concerns about AI’s impact on the broader economy.
A note from Citrini Research warned that AI deployment could hollow out middle-class incomes, crush consumer demand and tip advanced economies into a deflationary spiral.
The main US stock markets were all down in pre-market trading on Friday (local time).
Other high-profile companies have also announced job losses this year. Amazon laid off 16,000 employees in January, having already cut 14,000 roles a few months earlier. It employs about 1.5 million people worldwide.
Stephen Innes of SPI Asset Management said Dorsey “just did what most chief executives have only whispered about in boardrooms”.
He said: “For years, we’ve debated whether AI would dent jobs at the margin.
“Now we have a public case study where the CEO explicitly says intelligence tools have changed what it means to build and run a company.”
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