Block just fired half its company. Dorsey says most CEOs will follow.

Jack Dorsey just cut 4,000 people from Block last week (nearly half the company), and his explanation was: ‘AI can do their jobs better.’

Following the breakout of this arguably major news, the stocks of Block, Inc., jumped 24% in after-hours trading the same day.

Everyone who has been following the company knows Block has been over-hiring since COVID. Mass layoffs were not a surprise. However, Wall Street and its rapid reward for the move is something CEOs need to pay attention to.

Block fires 4,000 employees, Wall Street cheers

On February 26th, Jack Dorsey posted a message to Block's 10,000+ employees announcing that 4,000 of them no longer had jobs.

His explanation: “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.”

Block reported gross profit of $10.36 billion for 2025, up 17% year-over-year. Revenue was $24.2 billion. The company isn't burning cash. It raised 2026 guidance to $12.2 billion in gross profit, the same day it announced the cuts. Dorsey told investors that Block's internal AI tool — called Goose — is already reshaping how teams build and operate. Smaller teams, flatter structure, and AI handling what humans used to.

Then the stock grew by 24%.

• Block thinks others will follow soon. Dorsey made the market mechanism explicit: cut headcount, attribute it to AI productivity, and watch the stock price rise. Dorsey said it in the shareholder letter: "I believe the majority of companies will reach the same conclusion within the next year."

• The COVID hiring binge has finally unwound. Block tripled its headcount between 2020 and 2022. Dorsey acknowledged this in a 2023 internal note stating, "the growth of our company has far outpaced the growth of our business." This restructuring for Block was inevitable.

• The severance package tells you this was planned. Affected employees received 20 weeks of base salary, tenure-based equity vesting through May, and six months of health coverage. Dorsey said he wanted to avoid the "prolonged uncertainty" that kills morale in the retained workforce. This was certainly not an eleventh-hour decision.

• The backlash at Block says something about implementation. Before the big cut, Dorsey had already mandated that every Block employee use generative AI tools daily, with AI fluency built into performance reviews. Employees were required to send him a weekly email listing five recent accomplishments, which he processed via an AI summary. One Block employee said, "Top-down mandates to use large language models are crazy. If the tool were good, we'd all just use it." That frustration is an implementation challenge that needs greater focus.

What This Means For You:

Here's the version of this story that matters if you're running a team right now: the Block news is hard to ignore. Boards and investors who were already asking about AI ROI are going to be asking louder this quarter. The question isn't whether your company will eventually look like a smaller, AI-augmented version of itself. It probably will. The question is whether you get to shape that transition or react to it.

The companies I've watched do this well share one thing: they didn't start with their workflows. They mapped where the bottlenecks were, identified what AI could genuinely replace versus augment, and built fluency in those specific areas before making structural changes. The companies that did it poorly went straight to the mandate: "everyone uses AI now." This only creates burnout.

Block's story is about a CEO who recalibrated after years of over-hiring. Your story doesn't have to follow the same arc. But the window to proactively shape it, rather than react to a board that just read a Dorsey shareholder letter, is shorter than it was last month.

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I've been in several conversations this week with business leaders who read the Block news and had the same first reaction: "Are we supposed to be doing that?"

My honest answer: not necessarily. Block's situation had a specific history. Years of overhiring, a stock that hadn't rewarded the company in a while, and a CEO who's made a career out of bold structural moves. That's not most companies.

What I do think everyone should be doing: auditing where your team is spending time on tasks that AI can already handle at an equal or better level. The companies I've seen do this well end up with teams that are smaller by attrition, not by choice, and whose remaining people are doing higher-leverage work.

The Block approach — cut first, figure out the AI layer second — is one way to get there. It's not the only way. And for most organizations, it's not the right way.

Haroon