Jack Dorsey, the co-founder and CEO of Block, has taken responsibility for what he described as significant overhiring, following the announcement that the financial technology company is cutting its workforce from over 10,000 to under 6,000 employees. The sweeping layoffs, which constitute one of the most dramatic single-round job cuts in recent tech history, were announced on Thursday.
In a post on the social media platform X on Friday, Dorsey stated, "Yes we over-hired during COVID." He attributed part of the problem to a structural misstep, having built "2 separate company structures (square & cash app) rather than 1," a setup the company corrected in mid-2024. This duplication contributed to an inflated headcount during the pandemic's aggressive expansion.
Operational Complexity and a New Efficiency Target
Dorsey pushed back against critics who framed the layoffs as simple managerial incompetence. He detailed that Block had taken on significant operational complexity in recent years, expanding into new areas like lending, banking, and buy-now, pay-later products.
The company is now targeting a new efficiency benchmark of more than $2 million in gross profit per employee. Dorsey noted that this figure would be roughly four times the pre-COVID efficiency, which he said remained flat at about $500,000 per person from 2019 through 2024. "We have and do run an efficient company… better than most," he wrote.
Market Reaction and a Shift in 'How Companies Operate'
The layoff announcement appears poised to boost Block's stock, with premarket trading on Friday suggesting a surge to $64 at the open, up from Thursday's close of roughly $54. The stock had previously spiked from less than $75 pre-pandemic to over $275 in early 2021, before falling sharply and trading below $100 per share since early 2022.
In his original memo, Dorsey defended the decision to make one large reduction instead of repeated rounds of layoffs, which he called "destructive to morale." He stated the business itself remains strong, with growing gross profit and improving profitability.
Instead, he pointed to a fundamental shift in operations, citing intelligence tools and smaller, flatter teams enabling "a new way of working." This rationale aligns with recent announcements from other tech firms like Amazon, eBay, Meta, and Workday, which have also cited AI-driven efficiency gains for workforce reductions.
Industry Trend Towards 'AI-First' Models
The move reflects a broader industry trend. Last September, Micha Kaufman, CEO and founder of Fiverr, announced a 30% workforce cut to transform the company into a leaner, faster "AI-first company." Kaufman previously told Business Insider, "If you don't ensure that you sharpen your knives, you're going to be left behind. It's that simple."
Dorsey's admission and the scale of Block's layoffs underscore the ongoing recalibration within the tech sector as companies adjust post-pandemic strategies and integrate new technologies to reshape their operational models.