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Opinion: Block's layoffs might just be the biggest story of a tumultuous week. Here's why
Block, Jack Dorsey's payments company, will cut 6,000 of its 10,000 workers as it embraces AI. CNBC's Steve Sedgwick says it's the biggest story of the week.
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Opinion: Block's layoffs might just be the biggest story of a tumultuous week. Here's why
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Key Points
- Block, Jack Dorsey's payments company, will cut 4,000 of its 10,000 workers as it embraces AI.
- CNBC's Steve Sedgwick says it's "time we got better answers" to questions about what jobs the technology is going to create.
- "The news from a medium-sized tech payments company might have longer term tremors and be a warning of societal upheaval far greater than other stories of the week."
In this article
- XYZ
[Block shares jump as CEO Jack Dorsey links major job cuts to AI]
watch now
VIDEO1:4801:48
Block shares jump as CEO Jack Dorsey links major job cuts to AI
In a week where the News Gods have given us a cornucopia of stories, it's a fool's game to pick out the biggest one.
Was it Trump's extraordinary State of The Union? The phenomenal Nvidia results that failed to answer questions over whether the enormous hyperscaler splurge will result in significant profits further down the line? The rising tensions between Iran and the U.S.?
Let me play the fool for a moment, because I think the news from a medium-sized tech payments company might have longer term tremors and be a warning of societal upheaval far greater than other stories of the week.
Block, a $33 billion company, surged in extended trading on Thursday after cofounder and CEO Jack Dorsey, best known for cofounding Twitter, told the market he is laying off nearly half his workforce.
He wrote to shareholders that 4,000 of the 10,000 were "being asked to leave or entering into consultation" to leave. Again: That is nearly half his workforce!
Block CFO Amrita Ahuja said the job cuts would position the company "for our next phase of long term growth."
"We are choosing to shift how we operate at a time when our business is accelerating and we see an opportunity to move faster with smaller, highly talented teams using AI to automate more work," Ahuja wrote.
Job cuts happen all the time, but what Dorsey had to say should be a wake-up call for everyone.
[Block shares pop more than 20%, announces plan to reduce workforce by almost half]
watch now
VIDEO1:0001:00
Block shares pop more than 20%, announces plan to reduce workforce by almost half
He said he expects other companies to similarly overhaul their workforces as they see more efficiency gains from "intelligence tools."
Let that sink in: Dorsey expects other companies to similarly overhaul their workforces as they see more efficiency gains from "intelligence tools."
"Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes," he wrote.
Do the math: 10,000 jobs to just under 6,000 replicated across industries across the nation, across the world.
So a new, growth company, not an old economy business, has just said companies will cut huge swathes of their workforces as new intelligence tools become diffuse.
I keep getting told on CNBC that AI will create new jobs to replace those being lost. I've been asking the same question for years now. "What are those jobs? Where are the mass of jobs for the millions whose roles are set to be made redundant?"
And I hear the same old trope every time – "oh those jobs haven't been created yet."
I think it's time we got a better answer, no?