Twitter co-founder Jack Dorsey is cutting the workforce of his new technology firm Block by almost half because of the impact of artificial intelligence.
The US FinTech, which owns Square, Cash App and Tidal, is cutting the number of staff from just over 10,000 to under 6,000.
The company’s share price spiked by more than 20 per cent on the back of the announcement
Dorsey predicted ‘the majority of companies will reach the same conclusion and make similar structural changes’ in the next year.
In a letter to shareholders, he said: “Intelligence tools have changed what it means to build and run a company. We’re already seeing it internally.
“A significantly smaller team, using the tools we’re building, can do more and do it better. And intelligence tool capabilities are compounding faster every week.
“I don’t think we’re early to this realisation. I think most companies are late.
“I’d rather get there honestly and on our own terms than be forced into it reactively. And this isn’t just about efficiency.”
The billionaire added: “A company of our new size has no excuse for being slow. We will decide faster, ship faster, and learn faster. The structure we’re building is designed for that.
“We believe Block will be significantly more valuable as a smaller, faster, intelligence-native company. Everything we do from here is in service of that.”
Dorsey told Block’s workforce it was ‘one of the hardest decisions in the history of our company’.
He wrote in a post: “I’ll be straight about what’s happening, why, and what it means for everyone.
“First off, if you’re one of the people affected, you’ll receive your salary for 20 weeks + one week per year of tenure, equity vested through the end of May, six months of health care, your corporate devices, and $5,000 to put toward whatever you need to help you in this transition.
“We’re not making this decision because we’re in trouble. our business is strong, gross profit continues to grow, we continue to serve more and more customers, and profitability is improving.
“But something has changed. we’re already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company and that’s accelerating rapidly.
“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.
“Repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead.
“I’d rather take a hard, clear action now and build from a position we believe in than manage a slow reduction of people toward the same outcome.
“A smaller company also gives us the space to grow our business the right way, on our own terms, instead of constantly reacting to market pressures. A decision at this scale carries risk but so does standing still.”