Jack Dorsey’s fintech outfit Block announces 40% layoffs, blames AI, gets 23% stock bump

Twitter co-founder Jack Dorsey’s financial services company Block has announced it will fire 40 percent of staff – around 4,000 people – because new "intelligence tools" the company is implementing “can do more and do it better.” The company announced the sackings in the shareholder letter [PDF] accompanying its Q4 earnings …

[Scotthva5]

FUCK YOU Jack Dorsey

That is all.

[Sorry that handle is already taken.]

Re: FUCK YOU Jack Dorsey

Yeah, AI has nothing to do with this

[TVU]

Re: FUCK YOU Jack Dorsey

Yes, Dorsey has form on sackings even when he owned Twitter, he then sold Twitter to Musk, almost certainly knowing that there would be more staff cuts and now he's back to sacking his own staff again.

If you want a medium to long term job, then do not join any of Dorsey's (misad)ventures.

[captain veg]

Re: FUCK YOU Jack Dorsey

Who, in fact, gives a fuck about Jack Dorsey?

That is all..

-A.

[BebopWeBop]

Re: FUCK YOU Jack Dorsey

His mother might have done - a long time ago.

[MachDiamond]

They all fall down

When people screw up, it's usually just one/two or a few on a team. When the AI goes to K-Town, the company is all in.

Good luck hiring replacements once you are known to treat people like cogs.

[Korev]

Re: They all fall down

In the current market, if he farts then he'd still get 500 people applying...

[MachDiamond]

Re: They all fall down

"In the current market, if he farts then he'd still get 500 people applying..."

That's all fine, but if those people are gone in 6 months when it turns out they aren't valued, that's mostly time gone into getting those people trained up. Most cost to the company for very little return.

[TReko]

Buy now pay later

Maybe paying $27 billion for the dodgy buy now pay later company "Afterpay" wasn't a great idea for Jack and Block?

[Charlie Clark]

Re: Buy now pay later

Yeah, sacking 40% certainly does sound like the problems are greater than magical productivity improvements. I don't know anything about the company, but crypto last year was a bull market with lots of money to be made selling shit to gullible investors saps. The market seems have turned since then.

[DS999]

Re: Buy now pay later

Yep zero barriers to entry to compete with them. New app, better terms, build up your audience by stealing from incumbents like Afterpay. Name/brand recognition by consumers is not worth $27 billion, or even a fraction of that.

Also read today that one benefit that more companies are starting to offer is getting paid in advance for work you've already done. i.e. rather than waiting until payday to get paid for the past two weeks, you could access half of it halfway through the work period.

That's gotta cut into payday loan companies customer base. Also, the fact this is a benefit a lot of employees are clamoring for this "benefit" at their workplace is a truly awful indicator for the current state of the US economy.

[Jimjam3]

But he is American and so are the massively rich companies Microsoft, Apple, Google and Meta. They don’t worry about making jobs for workers.

[MachDiamond]

"But he is American and so are the massively rich companies Microsoft, Apple, Google and Meta. They don’t worry about making jobs for workers."

There comes a point where big companies aren't "American" or "British" or "European". They adopt a country where they have the best tax situation and shift money around to stay technically "legal" WRT tax laws with a main office in a place with good courts (good being what benefits them the most).

The Mars trilogy by Kim Stanley Robinson is a good book for how super giant companies could behave in future. They find a country of a suitable size in relation to their revenue and take it over as a "flag of convenience". You could get away with a lot of shit if your company was married to a sovereign country with defined borders and a military.

[Jimjam3]

Very true.

[Anonymous Coward]

Microsoft, Meta and Google are basically Indian companies. Chinese when hardware is involved.

[kmorwath]

It looks it's very 'merican

USA has the worst work laws in the civilized world. In which countries you can forbid unions, actively work against them, up to the point there are specialized companaies making money from it? When there are people who believe countries like Denmark are communist - you understand how wrong it went.

Too many in the "freedom country" still regret slavery was forbidden.... and the great investments in AI happens only because those at the top hope it can be used to fire millions of workers, and concentrate even more power and money at the top.

> Let's ACTUALLY make America great again by deposing and disenfranchising the greedy and the stupid.

Starting from Trump and then going down?

[Dan 55]

"I made this decision, and I'll own it"

AKA "some of you may die, but it's a sacrifice I am willing to make".

Absolutely nothing bad is going to happen to Dorsey so his decision to fire nearly half the staff and "own it" means absolutely nothing. If this fails, which of course it will, he'll just move on to his next hairbrained SillyCon Valley scheme.

If as a reward for failing, tech bro "management" had to live under a bridge instead of being given repeated get out of jail free cards we might see some different decisions and businesses which were actually useful to employees and society instead of destructive.

[Anonymous Coward]

Coz money?

Why not just pay off all the staff other than himself, stock price will jump by 2000% since shareholder seem to love a good round of layoffs then he can just cash out and close the business.

[Paul Herber]

That picture of Jack reminds me of someone I saw a few days ago. He was a bit high on something, so probably celebrating, sitting on the wet ground next to his tent and bags of clothes in the woods down one of the back lanes, no bridge nearby, unless it's a flooded river. Here's his coat, probably smells of yak.

[Spock2]

And it's all fake. He's a corporate suit, same as all the rest.

I'm not sure whether his faux-hippy persona makes me vomit from a deeper base of my stomach than does Satya Nadella's your-best-mate-in-the-student-bar.

[Blue Screen of Bleurgh]

40 or 50 years ago, robots took over certain areas of the manufacturing sector, most noticeably vehicles, electronics and white goods. Thousands upon thousands of blue collar jobs were lost for the sake of profits and 24/7 production rollouts.

Fast-forward 50 odd years and we are with AI taking a huge axe at white collar jobs .

Current and future generations need to be worried about their career choices.

[Anonymous Coward]

I can't believe that you as a reader of this site actually believe that AI tools are doing the work of 4000 people. It's complete bullshit. Those employees made the company what it was, he now doesn't need them, or so he thinks, and it's all downhill from here. It's more that he's seen the future for AI, cryptocurrency with tighter regulation and it's grim. So pump up the stock value and jump at some point. As will the investors.

[Dan 55]

AI is not taking a huge axe at white collar jobs, it can't even get simple scripts right. It's just an excuse to reduce headcount and overwork those employees that remain.

[Guy de Loimbard]

Yet another billionaire tech bro

who thinks past performance/luck means they're ace at business and fuck the little people.

Off you go to the welfare office, while I smoke some $100 bills, as I'm that fucking rich.

Now, where's my solid gold thingumy that shows how ACE I am?

C U Next Tuesday!

[Paul Herber]

Re: Yet another billionaire tech bro

Why? What's happening on Tuesday? I've never got the hang of Tuesdays!

[s. pam]

CEOs/CFOs are now in their corners drooling

Dump 40% of your staff, receive a 27% stock price rise, who’d a’thunk it? I bet there’s quite a few CEO/CFO thinking today “hmm, would it work here” as a result of Dorsey’s move!

PS> Fuckyou Dorsey from an ex-programmer!

[PinchOfSalt]

Re: CEOs/CFOs are now in their corners drooling

For some this may represent a short term gain. For most, it's just another shift of cost from one opex line to another without any benefit in revenue or margins with a huge risk attached to it that the price for AI will skyrocket once it's been adopted and you're addicted.

As a proof point of this, if you separate the S&P500 into technology providers and technology consumers, the margins for the providers has moved from 17% in 2011 to 29% today. For their customers, they've gone from around 9.5% to 11%. So all those business cases about tech enabling margin increases is BS. What it actually does is shifts the value from the customers to the tech providers.

For others such as PS companies, marketing companies, or anyone heavily reliant on expertise or IP, you have a far worse problem. The chances are that if this AI thing is in any way good, your revenue will shrink faster than you can adapt your business model. Sadly this doesn't take a lot to do.

There are three questions we ask our clients:

Is AI good enough to allow 10% of your customers to not use you any more

Is AI good enough to allow your customers to stop giving you 10% of your work

When will it be good enough to have that effect, based on current improvements in capabilities.

10% shifts is enough to take huge percentages off your valuation, and make it far more difficult to cover loans and will eat into contribution margin that's paying the overall bills of the business.

Of course this might never happen, or might happen in two years. But I've already got clients saying to me that they're losing clients to using AI and worrying about what to do about it.

[Claude Yeller]

Re: the price of AI

"the price for AI will skyrocket once it's been adopted and you're addicted."

Enshitification in action!

All those CEO/CFOs should have learned in MBA that ALL the profit ends up in the most consolidated part of the chain. Just remember how the first railway companies set prices.

In the 1990s Microsoft "absorbed" 90+% of the productivity increase due to automatization of business processes. AI companies will do the same with any productivity increases.

That is exactly the expectation that drives this investment bubble.

If there are 5 AI suppliers and 200,000 customers, where will the bucks end up?

[trevorde]

Meanwhile at IBM

[Arvind Krishna, CEO of IBM][looks up from article] Hold my beer!

[PinchOfSalt]

Always ask about the motives

I wonder whether this is more about other investments that he has than this specific one.

As we've seen recently, it's not that difficult to make the market shift with a change in sentiment due to this sort of announcement, so this could have more to do with him trying to shift focus to the 'AI will crush everything' narrative which will boost his other investments whilst sinking this one in the medium term.

[[e-mail]]

Never trust anyone with a beard like that.

Never.

[retiredFool]

Who are they firing

I'm thinking the compliance and customer service people. They already had issues with compliance, with crims using his cash app for all sorts of illegal stuff. But under trump, I doubt anyone will care now, so fire compliance. And customer service, Let them eat cake, or in today's term's, let them talk to AI about their problems.

[coredump]

40%

"repeated rounds of cuts are destructive to morale"

Having been around several "1000 cuts" corporate death marches, some which stretched on for multiple quarters and others seemed to become an ongoing corporate ritual, I can understand the sentiment he's pretending to make with that statement.

But I daresay that a 40% cut is going to be "destructive" no matter how you do it, Jack.

And don't act like this is anything but trading headcount for short term stock price. It's hardly a new scheme/scam, you aren't the first and you won't be the last, because this sort of thing often happens in waves -- Big Bosses tend to follow and mimic each other's behavior, especially when there's a share price pump involved.

[retiredFool]

Re: 40%

Destructive is an understatement. At 50%, look to your left, look to your right, both will be gone or you will be. 40% is massive. And probably foolish. He'd get way more "pump" if he fired 10% this qtr, 10% next qtr, ... he'd get 4 bumps (albeit smaller) instead of 1. He could also (and may have set it up for this cull) establish a set sell pattern to coincide with the future layoffs. Those preset sales are required for the top owners like him.

[coredump]

Re: 40%

All true enough. Though the analysis is generally based on the notion that Jack will still own the place in 4 quarters or so. Or at least a non-trivial amount of shares.

It's not impossible he'll have sold out by then. Not a sure thing of course, but I wouldn't bet against it either.

E.g. one of the common reasons for layoffs is pumping the share price, so the Big Bosses can cash out, collect their Big Bonuses, and so on. Another frequent reason is to cut headcount costs in preparation for selling the company.

Smaller payroll, fewer encumbered expenses, etc. make it a more attractive takeover target.

[O'Reg Inalsin]

Block's bitcoin related business probably evaporated with the fall in bitcoin.

Apparently ~40% of their revenue was bitcoin related - fancy interface tools for shifting speculation money. That dried up this year.

But that bitcoin related revenue had a low profit margin - ~15% - relative to the rest of their business. So by dropping that bitcoin related work (and the employees to do it), their profit margin as a percentage of revenue does indeed actually go up.

It's quite possible that is the total explanation and AI has nothing to do with it.

[Mark 65]

Classic stock market pump and directorial dump. Just trying to arrest the share price free-fall

[tiggity]

Looking at the revenue & profit numbers, big profit margin.

If I was someone using their products I would be looking at competitors to see if a better deal could be had elsewhere.

[Anonymous Coward]

He should be careful what he wishes for. Seems to most people that the easiest jobs to AIify are in the C-suite - including the CEO. All are parasites that reduce the efficiency and profitability of the company. Please, think of the poor stock holders. They are running out of stones to squeeze.