Block, the financial technology company behind Square and Cash App, will lay off more than 40% of its workforce, CEO and co-founder Jack Dorsey announced on Thursday. In a company-wide memo, Dorsey stated the cuts were driven by the adoption of "intelligence tools" enabling "a new way of working," not by poor business performance.
The announcement triggered a surge in Block's share price in after-hours trading. Dorsey's communication, which struck a notably empathetic tone, has become a focal point of discussion on social media platform X, with some users praising his leadership approach.
Generous Exit Package and Departure Process
Dorsey outlined a severance package described by experts as relatively generous. Departing employees will receive 20 weeks of base salary plus one additional week for every full year of tenure. Their equity will vest through the end of May, and they will be provided with six months of healthcare coverage.
Additionally, employees will keep their corporate devices and receive a one-time payment of $5,000. Dorsey also stated that laid-off staff would not be immediately cut off from company communication channels, being given several hours to say goodbye on Slack and email.
A Decision to Act Now, Not in Stages
In his memo, Dorsey explained his rationale for the deep, immediate cuts. "I had two options: cut gradually over months or years as this shift plays out, or be honest about where we are and act on it now. I chose the latter," he wrote.
He argued that "repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead." Dorsey directly addressed those leaving: "To those of you leaving…I'm grateful for you, and I'm sorry to put you through this. You built what this company is today. That's a fact that I'll honor forever. This decision is not a reflection of what you contributed."
Contrast with Other Tech Layoffs and Expert Analysis
The tone and substance of Dorsey's announcement stand in contrast to other recent corporate layoff memos. For comparison, Amazon's severance package in January tied to layoffs included pay for 90 days and healthcare benefits ending on the final day of employment.
Brooks Holtom, a professor of management at Georgetown University, told Business Insider that Dorsey's memo aligned with recommendations from management research. Holtom highlighted the opening line—"Today we're making one of the hardest decisions in the history of our company"—as "a good way to start," because it signals difficulty.
"The tone of the message," Holtom concluded, "Is empathetic." He noted the company "cut right to the chase, which is best practice with bad news," before explaining the strategic rationale for the cuts.
Strong Business Amid a Tense Internal Reaction
Dorsey emphasised that the decision was strategic, not reactive. "We're not making this decision because we're in trouble. Our business is strong. Gross profit continues to grow," he wrote. This assertion may sharpen questions for departing employees about the necessity of the cuts.
Internally, the announcement was met with tension. Following the memo, Dorsey held an all-hands video call where, according to The New York Times, staff added dozens of "thumbs down" emojis to the screen. The Times reported that an employee questioned Dorsey's choice to wear a black hat emblazoned with the word "LOVE" during the meeting where he announced cuts affecting nearly half the company.
Context of Repeated Cuts and AI Displacement Fears
Block's layoffs occur amidst a tough job market for white-collar workers and growing fears over AI-driven job displacement. A viral report by Citrini Research recently projected a 2028 scenario where rapid AI adoption triggers a widespread recession.
The company itself has executed several smaller rounds of staff reductions in recent years. Other major tech firms, including Amazon and Meta, have also conducted multiple layoff rounds since 2022, with Amazon cutting around 27,000 corporate positions in 2023 alone.