Block Cuts Half Its Workforce in Sweeping Layoffs

Jack Dorsey has long openly admired Elon Musk. Now, it appears he may have been learning from him.

On Thursday, Dorsey announced that Block, the payments company he founded which operates Square, Cash App, and Tidal, is cutting over 4,000 employees—nearly half its global workforce. This reduces the company from more than 10,000 employees to just under 6,000. Investors reacted positively, driving the stock up more than 24% in after-hours trading.

This is not the first instance of a major tech company taking such drastic action. In November 2022, Musk eliminated roughly 50% of Twitter's staff in one move after taking the company private, a decision that shocked Silicon Valley and redefined how aggressively a CEO could act at once.

Dorsey was uniquely positioned to observe this firsthand. Instead of taking a cash payout, he converted his approximately 2.4% ownership stake in Twitter into equity in Musk's takeover, making him one of the largest outside investors in what is now X.

The relationship between the two men has been one of tech's more unusual dynamics, marked by shifting public praise and criticism. Dorsey initially supported Musk's acquisition of Twitter, but later stated Musk "should have walked away." He helped launch the decentralized Twitter alternative Bluesky, then left its board and referred to X as "freedom technology." Both are also outspoken Bitcoin proponents, with Block and Tesla each holding cryptocurrency on their balance sheets.

Dorsey framed Thursday's layoffs as a proactive and even considerate decision, rather than a financial necessity—a perspective the 4,000 affected employees might not share. "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 wrote on X. He predicted that most companies will find themselves in a similar position within a year. "I'd rather get there honestly and on our own terms than be forced into it reactively," he stated.

The layoffs are being attributed, at least officially, to advancements in AI. Block CFO Amrita Ahuja stated the reductions will enable the company to "move faster with smaller, highly talented teams using AI to automate more work."

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Regarding severance, Dorsey informed affected U.S. employees they will receive "your salary for 20 weeks plus one week per year of tenure, equity vested through the end of May, six months of healthcare coverage, your corporate devices, and $5,000 to assist with the transition." He added that employees outside the U.S. will receive "similar support" tailored to their local policies.

Salesforce and Amazon are among a growing number of companies citing significant efficiency gains from AI as a reason for major workforce reductions. However, a Forrester Research report last month questioned the reality of these gains, suggesting many layoffs may be financially motivated.