Inside Block's AI push that ended in pink slips

• Seven former Block workers say they used AI to varying degrees and weren't convinced it would replace them.
• CEO Jack Dorsey's decision to cut the workforce in half came as a shock.
• AI-driven layoffs are raising fears among white-collar workers about job security in tech.

In the months before Block CEO Jack Dorsey laid off 40% of staff on Thursday, workers were embracing AI tools in what one called an almost "celebratory" way.

Dorsey and other company leaders had made no secret of their interest in AI, but the company was profitable, and some workers couldn't imagine the technology fully replacing humans at scale any time soon, they told Business Insider.

Still, there were pockets of unease. Block, the parent company of financial tech firms including Cash App and Square, had executed a series of smaller performance-based cuts in previous months. At least one employee said he'd had a nagging feeling that the AI tools he was using had gotten really good.

"I had a hunch that, at some point, the company would cut people because of AI. I just didn't think it would be right now," Ivan Ureña-Valdes, a data analyst who was laid off after four years at Block, told Business Insider.

When Dorsey dropped the hammer via a memo posted on X, he said AI was the reason 4,000 workers were losing their jobs.

"A significantly smaller team using the tools we're building can do more and do it better," Dorsey told analysts on Block's earnings call on Thursday following the news.

Two hours after the layoff announcement, Dorsey logged onto a video call with the calendar title "gratitude," sporting a baseball cap that said "love" to address the staff.

As he spoke with employees about Block's layoffs and his reasoning for the deep cuts, some sent comments thanking him for the opportunity to work at the company. One asked if his hat was appropriate given the context. Dorsey answered that it was about gratitude.

Throughout the meeting, he was flooded with waves of emojis from muted participants, three attendees told Business Insider. Popular reactions were the thumbs-down, thinking face, and crying-laughing emojis, two people said. Dorsey explained the cuts in his trademark monotone and said he was doing what's best for the company.

Business Insider spoke to seven former Block employees about the internal push to use AI in the last year; many said they were happy to oblige. Some were laid off on Thursday; others lost their jobs in recent performance-based cuts. Though they adopted AI tools to varying degrees, they view the technology as unable, at the moment, to do all the jobs of the thousands of workers who were let go. So it came as a shock to see half the company chopped in one fell swoop.

While some in the tech world expressed skepticism that AI was the true impetus for the cuts, suggesting that Dorsey had bloated Block's ranks, others saw it as the first wave in a coming tsunami of job cuts across the industry. The alarm over a potential white-collar jobs apocalypse has gotten louder in recent months. Amazon CEO Andy Jassy has signaled that AI could lead to white-collar job cuts at the company. Last year, Salesforce made cuts to its customer support team, thanks to the use of AI agents, CEO Marc Benioff said.

Block's layoffs are so large in scope and more pointedly attributed to AI than most that they added fuel to a fear sweeping the white-collar world: AI is coming for your job, and learning to use it isn't enough to save you.

"I've seen a lot of public commentary about this layoff and how workers need to be using AI to protect our jobs," said one nontechnical worker laid off on Thursday. "I was actively building with AI and know that many of my impacted colleagues were doing the same."

Jack Dorsey 'loves AI'

Dorsey has planted a flag in painting Block as an AI-forward company. He said on Thursday's earnings call that Block was "one of the first to harness agentic capabilities." And in July, Dorsey made headlines for using an internal coding tool called Goose to vibecode a "weekend project" that led to the messaging app Bitchat.

Investors appeared to favor Dorsey's narrative of cutting costs with AI: After being down roughly 16% year to date before the layoffs, Block's stock ended Friday up nearly 17% on the day.

"Jack loves AI and was constantly pushing us to use it," Ureña-Valdes said. "I got to use these tools as much as possible every single day."

He said he'd "felt the rumblings of AI disruption for a while" because he was using it in his work and noticed the tools were getting better.

One former software engineer said that Block had many internal AI demos and that her coworkers' feelings about AI were "mostly celebratory."

Another former software engineer let go during performance cuts earlier in February said the company had warned that output expectations for engineers would increase. He said the company's head of engineering voiced productivity expectations that left them worried quality would suffer. After this week's layoffs, his team shrank from eight engineers to one.

One employee laid off on Thursday said she had embraced AI at Block, but saw that it required human oversight. The day before the layoffs, she said, she caught errors in a company chatbot. She said the cuts surprised her manager, who was spared from the layoffs. The two sat together and cried it out.

AI is not 'layoff insurance'

Several researchers and former Block employees say they're skeptical about AI's actual role in the layoffs.

"Block must have uncovered a secret sauce, perhaps within the software development process, to claim all of these jobs are AI-related," said Jason Schloetzer, a business professor at Georgetown's McDonough School of Business. "From the dozens of executives across industries that I've spoken with about AI deployment, they certainly aren't seeing these types of gains outside of the software development process."

On Thursday's earnings call, Dorsey said there has been a marked improvement in AI's capabilities and that "Block wanted to get ahead of this shift rather than be forced into it reactively."

"The models just got an order of magnitude more capable and more intelligent," Dorsey said. "And it's really shown a path forward in terms of us being able to apply it to nearly every single thing that we do."

Some former Block employees, as well as others in the industry, said pandemic overhiring, rather than AI, spurred the layoffs — a common refrain for Big Tech in recent years.

"Over the course of my time at Block, leadership did repeatedly signal the need for a 'smaller Block,'" the laid-off nontechnical worker, who worked at Block for two years, said.

Companies like Block are conducting layoffs "with a chainsaw, not a scalpel," said Chris Kaufman, a leadership consultant in Detroit.

"They're not conducting audits of who took an AI course," Kaufman said. "They're making macro decisions about cost structure and organizational design. That's usually just looking at headcount and salary across the board."

Being AI savvy, Kaufman said, "can increase productivity, but I don't think it is any way layoff insurance."

Danielle Bell, a business communications professor at Northwestern University, said it's obvious the workforce — both inside Block and out — is worried about AI. "If this is the new reality that we're in, executives need to be more honest with themselves, with stakeholders, with the board, Wall Street, and particularly employees about what AI is here to do."

Whatever the reason, one of the engineers cut on Thursday said there was a feeling in the air that something was coming. This engineer said she noticed that performance reviews were moved up from their February start. She thought she was safe after the earlier performance-based cuts — until she was laid off on Thursday.

"People were tense, even after good news would come through," she said. "Lots of rumors flying around the office in person."