[daxfohl]

We'll see how much the AI aspect is true by whether they're thinning out teams equally, or just axing whole initiatives. My impression of Block was that it was mostly a one-trick pony (okay, two if you include CashApp) with a bunch of side initiatives that never seemed to pan out, so I'm expecting it to be more of the latter, with this being more of an admission that they're now in "maintenance mode".

Either way, I think this is how it's gonna be. Regardless of whether AI significantly increases productivity (40%? come on), layoffs will be preemptory. Executives will see the lack of productivity boost as being due to lack of pressure, and imagine engineers are just using the AI to make their own lives easier rather than to work more efficiently. You can't really double output velocity because your users will see it as too much churn, so the only choice is to lay off half the workforce and double the workload for those who stay. "Necessity is the mother of invention." They'll overlook the fact that the work AI tools provide only encompasses 10% of your job even if they're 100% efficient.

[tombert]

I'm convinced that these "AI Layoffs" are these companies trying to save face from the absurd overhiring that they did in 2022 and 2023 because apparently they thought that these no-interest loans/free money would just last forever.

No one really "knows" how to grow businesses so the easiest way to spend a lot of money quickly is hiring lots of people, whether or not they are "necessary". Then this free money dries up, interest rates go back up, and now they're stuck with all these employees that they didn't actually need.

Some companies like Google and Microsoft just accepted that assholes like me will call their CEOs incompetent and fired lots of people in 2023, but I think other CEOs were kind of embarrassed and held off. Now they can use AI as a scapegoat and people won't act like they were idiots for hiring twice as many people as they needed.

Also, I got declined by Block a year ago. Glad I was now.

[pjmlp]

Having been through a couple of layoffs and merges, as I approach mid-century, the MBA powered managers are always to blame, because the stupid way to manage every year has to be x% exponential increase over the previous year, always forgetting that it is physically impossible when everyone goes for the same goal.

And then when targets aren't met, it is the employees that get shown the door while management gets their bonus.

The companies that are happy getting what they need to keep the lights on, seldom go through such layoff rounds.

Ah but the shareholders can sue the CEO, well this seems to be an US approach to how companies are run.

[DebtDeflation]

> the absurd overhiring that they did in 2022 and 2023

The overhiring took place from mid 2020 through mid 2022. The reversal into layoffs started in late 2022 and was in full swing in 2023. While the overhiring problem was real, the correction was largely complete over a year ago. The layoffs we're seeing today have nothing to do with overhiring and everything to do with managing earnings to sustain equity valuations.

[georgeecollins]

Regardless of the reasoning I think it is worth keeping in mind that the times when companies are letting talented experienced people go is also a great time to start the next new big thing. Talent that might have been unobtanium during a hiring frenzy could now be the building blocks of a new venture. A lot of these companies were started or really built themselves up during a tech slow down.

[salviati]

It might actually be that they mean what they say.

If you look at the numbers, this doesn’t resemble a company cutting because it’s in trouble. Block is profitable, gross profit has been growing double-digits year over year, and they’re guiding roughly ~18% gross profit growth into 2026 with strong expected expansion in adjusted operating income and EPS. That’s not a balance-sheet emergency.

You can argue they overhired in 2020–2022 and are normalizing. That’s plausible. But the financials don’t suggest a company scrambling to survive. Cutting that aggressively while guiding strong forward growth is unusual if the only goal were short-term margin repair.

So while “it’s AI” can sound like PR, the numbers at least make it credible that this is a structural efficiency move rather than a distress signal.

[SanjayMehta]

Re: over hiring

I haven't worked for a large company for a long time but the last place I was my VP pushed us to hire 1000 people in one year. Turns out he was an acting VP, and needed to have that number for his formal promotion. Our division got penalised at the end of the year for falling short. By 30+ people.

I left before it collapsed and was sold for parts.

[beAbU]

My take is that if AI really improved productivity, then that makes labour effectively cheaper. Usually, when labour is cheap, then you buy lots and lots of it so that you can get a lot of things done.

I think it's called the Law of Demand?

Companies over-hired during COVID because the money was free thus making the labour cheap. Why are they not over-hiring now, during a time when workforce productivity is supposed to be at an all-time high?

Instead we are seeing layoffs, blaming AI, because the free-money chickens have come home to roost. These CEOs want to save face and not admit they were short-sighted during COVID.

[johnnyanmac]

>I'm convinced that these "AI Layoffs" are these companies trying to save face from the absurd overhiring that they did in 2022 and 2023

This keeps coming up, but the numbers at these companies don't add up. Any given FAANG you can think of (outside of maybe Apple) has had at least 5 rounds of layoffs over the years. But can you point to any of them having a lower headcount? I doubt all those engineers are being redirected towards AI development.

And despite that similar hearcount, it seems all have decrease initiatives over the years too. Meta stepped back from the verse it re-branded under, for instance.

I'm fairly convinced that what's happening is outsourcing initiatives disguides as layoffs for AI efficiencies.

[notatoad]

it's all just saying stuff the shareholders want to hear. when the shareholders want to hear "we're staffing up aggressively" the companies hire. when the shareholders want to hear "we're moving workloads to AI" the companies fire.

it's not using AI as a scapegoat. they're doing this because they're quite literally being rewarded for it. they could care less what the employees who are getting fired think, as long as the investors are happy.

[alephnerd]

> I'm convinced that these "AI Layoffs" are these companies trying to save face from the absurd overhiring that they did in 2022 and 2023 because apparently they thought that these no-interest loans/free money would just last forever.

Partially.

The first nail in the coffin was the change in assumptions around output. Before 2023, there was an assumption that more bodies means more output. After the massive X/Twitter layoffs (60-70% headcount culled) with X/Twitter still standing, this assumption was clearly proven false.

The second nail was the change in operational metrics. Before 2023, ARR growth was a good enough metric to target. After 2023, FCF positivity became the name of the game. Especially because us investors are demanding this because most funds are reaching the 10 year mark where we need to make our LPs whole, so a path to exit (be it IPO, M&A, or a continuation fund) needs to be communicated.

And finally, COVID proved to a large number of companies and industries that 100% WFH and Async for white collar roles does work. But wait, if I can hire Joe in Cary to work async, why can't I hire Jan in Karlin, Prague or Jagmeet in Koramangla, Bangalore? This means I can also enhance FCF positivity while not impacting delivery.

Add to that some very, very, very bad hires (most bootcamp grads just can't cut it) at absurdly high salaries and that's why you're seeing the culling that is occurring today.

That said, AI tools are powerful, and if you are working on rightsizing an organization, using Claude or Enterprise GPT in workflows helps one person do multiple jobs at once. We now expect PMs to also work as junior program managers, designers, product marketers, customer success managers, and sales engineers and we now expect SWEs to also work as junior program managers, designers, docs writers, and architects. Now I can lay off 10-20% of my GTM, Designers, SWEs, Program Managers, and Docs Writers and still get good enough output.

---

IMO, if you want to survive in the tech industry in this world, doing the following will probably help maintain your longevity:

1. Move to a Tier 1 tech hub like the Bay and NYC. If you get laid off, you will probably find another job in a couple of weeks due to the density of employers.

2. Start coming into the office 2-3 days a week. It's harder to layoff someone you have had beers or coffee with. Worst case, they can refer you to their friends companies if you get laid off

3. Upskill technically. Learn the fundamentals of AI/ML and MLOPs. Agents are basically a semi-nondeterministic SaaS. Understanding how AI/ML works and understanding their benefits and pitfalls make you a much more valuable hire.

4. Upskill professionally. We're not hiring code monkeys for $200K-400K TC. We want Engineers who can communicate business problems into technical requirements. This means also understanding the industry your company is in, how to manage up to leadership, and what are the revenue drivers and cost centers of your employer. Learn how to make a business case for technical issues. If you cannot communicate why refactoring your codebase from Python to Golang would positively impact topline metrics, no one will prioritize it.

5. Live lean, save for a rainy day, and keep your family and friends close. If you're not in a financial position to say "f##k you" you will get f##ked, and strong relationships help you build the support system you need for independence.

The reality is the current set of layoffs and work stresses were the norm in the tech industry until 2015-22. We live in a competitive world and complaining on HN does nothing to help your material condition.

[hintymad]

> save face from the absurd overhiring that they did in 2022 and 2023

I wonder how we all of sudden got so many candidates back from 2020 to 2022

[taneq]

Never let a crisis go to waste, right?

[dakolli]

Stoping trying to cope that AI/LLM augmented automation isn't to blame here. equities and profits are at all time highs, rates are still really low!! This has nothing to do with the cost of money.

It doesn't matter if AI is effective at reducing head count, it only matters that decision makers believe it will! If they go on twitter and see "SWE is dead" "4th industrial revolution is here" ect ect, they will eventually fall for the psyop and give half of their payroll to an AI company (or someone claiming they can do this)..

It will all backfire, probably, but in the meantime 400k SWEs have been laid off in the last 16 months while profits and equities are at all time highs. You can try to say its not AI, but I really think that's cope.

Go have lunch with a C-suite / decision maker in tech, they won't shut up about how all the jobs are going to be bots in the near future (and how rich it will make them). They are sincerly stupid but until then lives/families are going to get crushed and Dalio and Altman or similar people are going to continue to convince these people to give your salary to them..

Props to block for letting people keep their devices, and helping people out, its more than most companies but this absolutely has to do with AI BS. They've been itching to cut human labor out of the equation since slavery was crushed. They yearn for labor that doesn't demand a paycheck (slaves).

[malfist]

That might have been true three years ago. But not now

[rco8786]

> My impression of Block was that it was mostly a one-trick pony (okay, two if you include CashApp) with a bunch of side initiatives that never seemed to pan out,

I worked at Block for ~6.5 years up until 2024. This is mostly correct.

They were the first to market for portable CC readers, and segued that into "high tech" POS systems which, to be fair, were significantly better than the available alternatives at the time. But flashy hardware design and iPads isn't really a moat, and the company never developed a great muscle for launching other initiatives. The strategy was "omnibus" - trying to do everything for everyone and win on the ecosystem efficiencies...but when none of your products are particularly standout it's hard to get and keep customers.

CashApp being the notable exception, because they gave the founder carte blanche. It was effectively 2 different companies operating under the $SQ ticker. They even had their own interview process for internal transfers. Although ironically the engineering standards on the CashApp side of the fence were significantly sloppier than on the Square side...to the point where I stopped using CashApp and stopped recommending it to friends once I transferred to that org and saw how the sausage was made.

[paxys]

Exactly. Square was the first great checkout system, but now a decade and a half later every other system is good enough that retailers aren't going to pay extra for a flashier app.

[simonw]

Did any of the blockchain initiatives ever go anywhere? I understood that's why they renamed the company to Block, but did that end up a similar rebrand to Facebook -> Meta?

[vineyardmike]

> layoffs will be preemptory. Executives will see the lack of productivity boost as being due to lack of pressure,

Look I don’t like layoffs and I don’t want to come off as an apologist. I’ve been laid off from a wildly profitable company and I get that pain.

But I think at some point we do need to be honest that businesses want to give up on failed projects, and the lazy ones will do that through layoffs because tech has so much churn anyways. It’s in vogue to blame AI for these things. I doubt most of these CxOs think actually that AI will transform their business in the next few years, and I question how many even care about applying pressure to employees.

I don’t want to come off as an apologist for bad corporate behavior, because I think it’s bad, but sometimes I think they’re just taking the easy way out on corporate messaging for a not-crazy decision (of ending failed or bloated projects). As you alluded to, “maintenance mode” for a business just doesn’t need as many employees. 40% at once seems high, I’ll concede though.

[mathattack]

40% actually seems reasonable for a flip into maintenance mode. That’s what PE firms do when then buy cash cow businesses. Dramatically cut engineering on new functionality, cut back on sales and marketing, remove all redundancy in operations.

Anyone who has counted on a vendor that went private or was bought by a rollup firm has felt this pain.

Better to do it all at once than repeated declines.

[hn_throwaway_99]

I think this is pretty spot on. It's already been mentioned a ton before how many of these "we're having layoffs to better utilize AI" stories are really just cover for axing lots of unprofitable projects that were birthed during the ZIRP/early pandemic era.

I think the additional wrinkle with AI is that it's having an impact, just not really in the way these execs are saying. Before ChatGPT, there was lots of speculative investment into SaaS-type products as companies looked for another hit. Now, though, I think there is a general sense that, except for AI, Internet tech (and lots of other tech) is fully mature. This huge amount of investment in "the next big tech" thing (again, ex-AI) is just over, and the transition happened pretty fast. Blockchain, NFTs, the metaverse, Alexa and other voice assistants, yada yada, were all ventures looking for something as big as, say, the rise of mobile, and they all failed and are getting killed basically simultaneously.

I think the scary thing going forward is that, over the past 25-30 years or so, tech provided a huge amount of the average wage growth, at least in the US. Even if AI doesn't result in huge employment reductions due to productivity gains, the number of high quality jobs in the AI space is just a lot smaller than, say, the overall Internet space. Lots of people have commented here how so many of these AI startups are just wrappers around the big models, and even previous hits are looking dicey now than the big model providers are pulling more stuff in house (and I say this as a previous Cursor subscriber who switched to Claude Code).

I'm curious what future batches of YCombinator will look like. Perhaps it's just a failure of my imagination, but it's really hard for me to think of a speculative tech startup that I think could be a big hit, and that's a huge change for me from, say, the 2005-2020 timeframe. Yeah, I can think of some AI ideas, but it's hard for me to think of things beyond "wrapper" projects on one hand and hugely capital intensive projects for training models on the other.

[marcus_holmes]

We've seen hackathons where attendees build a SaaS business in a weekend. More than just Startup Weekend validation and a shitty MVP. A pretty-much complete SaaS product. It's a step change.

But this means the market for SaaS products is going to get hit hugely. If you can vibecode up a specific service for your specific requirement in a few days, why bother buying a SaaS product?

And, of course, if you can build a me-too SaaS product that imitates a successful competitor over a weekend, and then price it at 10% of their price, that's going to hit business models.

I think the SaaS startup gravy train is definitely over and done.

Personally, my sense is that there's a lot left to do in batteries + motors + LLMs. The drones in Ukraine could be smarter. Robot companions that can hold a conversation. Voice interfaces for robots generally [0]. Unfortunately, the people making all the batteries, motors, and increasingly the LLMs, are in China. So those of us stuck with idiot governments protecting their fossil-fuel donors are going to miss out on it.

[0] the sketch of two scots in a voice-controlled lift still resonates, though. There's probably still work to do here.

[nradov]

There's still enormous potential for technology solutions in the healthcare space. The population in every developed country is getting older and sicker. AI can help a little bit with building those solutions but there are no magic bullets: we still need lots of people grinding away on hard problems.

[johnny_canuck]

> I think the scary thing going forward is that, over the past 25-30 years or so, tech provided a huge amount of the average wage growth, at least in the US.

This is the thing that keeps me up at night. Tech has allowed a very solid middle class lifestyle for a lot of people. I can't think of another good paying job where someone is self-taught, or went to a 12-month certificate program at their local community college and now has a very good career.

If those jobs disappear, or wage growth is non-existent, I don't know where the next generation will find those jobs.

[rswail]

Prompt companies are already evolving, establishing specific contexts to become business facilitators. That might be a "wrapper" project, but I bet there will be copyright litigation between these companies for "prompt piracy".

There are still (always?) business opportunites to leverage technology, in what we used to think was a virtuous loop of positive feedback.

If corporates are going to build AIs to attempt to sell things to people, there's going to be an opportunity for AIs that work for an individual, a "de-enshittifier" for example.

The "big model providers" right now aren't necessarily the actual ones that will persist. We're in another dotcom-type boom and when the tide goes out, some of them will have been swimming naked.

[sethev]

Folks at Jack's level are just as susceptible to flawed reasoning and trend following as anyone else. Sometimes it feels like more so, possibly because they have so much buffer to absorb the consequences of bad ideas (see how Twitter ended up). A person living paycheck to paycheck has less leeway to veer too far away from reality.

All of this to say. I suspect a lot 10k person companies made up of white collar workers could significantly cut their staff and still survive. By the time you get to that size, there's a large middle management that is constantly looking for reasons to increase their 30 person org to 40, and who will be overbooked whether they have 20 people or 100.

[softwaredoug]

Before people jump into existential despair here about the software field, do we know the breakdown of roles? How many were tech vs support, operations, HR, and other roles?

[tootie]

During the massive post-pandemic hiring spree, there were a lot of threads in the vein of "why does [MATURE STARTUP] requires X,000 developers?" and I think those questions were maybe prescient. These companies have been spending free venture funds on whatever and acquiring headcount for the sake of headcount. A lot of them have tried to and failed to be "everything apps" and now they are really sitting on mature, stable and profitable platforms that don't need to move fast and break things. They just need to not crash. And the result is they need far fewer people.

[n2d4]

In what sense did CashApp not pan out? $16b revenue. Too early to say whether Afterpay will work out but looking good so far

[toomuchtodo]

CashApp was launched in 2013, long before Zelle and other instant payment rails arrived, which closed wallet providers solved for (Venmo too, owned by...Paypal). There is little growth to be had when these customers can get free deposit accounts with access to Zelle or FedNow to move value for free instantly. It's success to be sure to accumulate the cashflow from the customer base built, but it isn't lasting.

[daxfohl]

Updated to two tricks. And you could argue three if you call banking its own trick. Afterpay was an acquisition (and much smaller) so IDK if that counts.

Still, all the bitcoin stuff, music, other side ventures, most of the international expansion, attempts to appeal to bigger businesses, the recent "focus local" vision, all hardly made a dent in the respective markets and I wouldn't be surprised if they lost money or are still losing money on most of those things.

[ceejayoz]

> $16b revenue

I can make a lot of revenue selling $100 bills for $10. I'm not sure it'd "pan out".

[morelandjs]

You took the words out of my mouth. In a megacorp, AI multiplies into about 10% of my work and 10x’s it making me roughly 10% more efficient. When I use AI for side projects and don’t have to work with a bunch of stakeholders, dependency owners, and opinionated management, that 10x multiplies into my full effort and the project moves 10x faster.

[SecretDreams]

Yep. I find it helps best when I'm off script/going rogue doing something that I think will help, rather than working with 10 other people all with different opinions and knowledge that just absolutely bogs something down.

[leoqa]

I’m in big tech and use AI extensively, namely to do the same amount of output but in 1-2 hours a day. Been spending a ton of time on my side projects though.

[orphea]

Yep. I don't understand "Look at me! With AI I can do 10x work now". Like congrats, your prize is 10x work and new baseline expectations.

[rlt]

Enjoy it while it lasts.

[KaiserPro]

If its run anything like twitter then there are loads of teams running around trying random shit, along lots of duplication.

Its the same for meta, literally you could remove 2/3 of the head count and not have a problem with productivity (assuming you could not impact morale)

[jagged-chisel]

> … using the AI to make their own lives easier rather than to work more efficiently.

These are not mutually exclusive. How does making my “own [work life] easier” not translate into “work more efficiently.”

[compiler-guy]

I think it is a question of who is getting the benefit of these efficiencies. If it is the worker—ie they are doing the same amount of work in less time but not making that extra time available to the company—then from the company’s perspective they aren’t being more efficient. Or at least the additional efficiency doesn’t affect it.

[Flatterer3544]

Seeing the >20% stock increase by just mentioning the "Replacing workers for AI", makes me wonder if there isn't a huge pressure from the shareholders to get on the trend no matter what. Short-term baby, rules the world.

But will be interesting how the company is in 2 years, if quality falls and innovation stalls, or if it is as you say that they hit their ceiling and is already in "maintenance mode".

[Xeronate]

I think your final sentence is more accurate than your churn argument. AI doesn't double output, but actually writing the code is only a small part of the job.

[anukin]

This is a very interesting take unlike the usual doom and gloom narrative or jevons paradox optimists. Are there any data points which made you reach these conclusions?

[daxfohl]

To be fair I've been all over the map on this. But lately neither of these scenarios seemed quite right. Reflecting on my own experience, I find that sometimes AI is great, but sometimes it feels like a return of https://xkcd.com/303/. So, putting 2 and 2 together and picturing it from C-level perspective, this is where I landed.

No data points yet, except now this one.

[pllbnk]

Yeah, the narratives diverge. He said "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." So, if these tools actually deliver this 90% productivity improvement? Will he let another 5k or then start cutting gradually over months?

We can all read stock market charts - the business isn't doing well.

[egorfine]

> how much the AI aspect is true

You should try to seriously vibe code and see for yourself.

It really helped me overcome my anxiety that programmers will be out of job soon.

Ah, and yes, you absolutely should repeat that exercise with every new model to reinforce your confidence.

[brightball]

I hear about CashApp but I don’t know anybody who uses it. What’s the selling point?

[hn_throwaway_99]

It's of course an exaggeration to say white people use Venmo and black people use CashApp, but it's not too far off the mark: https://www.pewresearch.org/short-reads/2022/09/08/payment-a...

[rswail]

It provides a facility that FedNow and Zelle will replace. It's a US specific solution for instant settlement payment rails that other nations have had for a while.

FedNow is the underlying infra, Zelle will end up being the consumer brand wrapper around it.

In Australia, the equivalent is the New Payments Platform (NPP) and the consumer "brand" is PayID. I can associate an email address or a mobile number to a bank account. Anyone can transfer money from their bank account to mine using that ID, without knowing what account or what bank.

There are other things being built on top, like "PayTo" where businesses can set up the equivalent of direct debit agreements, like utilities billing, but the consumer can also control it without having to go through the bank paperwork.

[kelvinjps10]

Jack Dorsey likes to do side quests it seems, I see him in many things

[Snuggly73]

Just to nitpick the math. If you are going to fire 50% of the company, the AI tools should actually make the remaining people 100% more efficient, not 50% :)

[sublimefire]

And if you kept everyone and used AI you could expand the business. Oh wait, they are out of ideas.

[nimonian]

> 40%

More to your point, to get from 6,000 back up to 10,000 requires a 67% increase in productivity on the remaining 6,000!

[FpUser]

>"(40%? come on)"

I think this is entirely possible. I have cases right in front of me when one developer can do a job of 2 and still have some time to spare. The developers in question are very senior, architect type.

[hedora]

Option 1) You’re right. They’re screwed because they won’t be able to keep the lights on and these layoffs make it worse.

Option 2) AI can just vibe code what block needs now, or maybe in a few years. Laying off talent makes sure there are people on the market to do the vibe coding, and that block will not be able to respond to widespread competitive pressure. They’re screwed and these layoffs make it worse.

Of course, they could realize they magically have 2-10x the engineering and organizational capabilities they used to and improve the product. They won’t because late stage capitalism only cares about weekly stock swings and graft so it can’t plan all the way to end of quarter anymore.

[themafia]

> towards a future where they can build their own features directly, composed of our capabilities and served through our interfaces. that's what i'm focused on now. expect a note from me tomorrow.

These people are deranged or are flat out liars. Customers building "features directly." Yet somehow still trapped inside their walled garden? I wonder why they imagine they can cannibalize their legs but pretend they can save their arms in the long run.

They either believe they can have it both ways or they're simply milking a hot market right now and know one shoe or the other has to drop.