At the end of 2025, Dorsey and fellow Block leaders headed home for the holidays and tinkered with AI tools. And straight away, they recognized models like Anthropic’s Opus 4.6 and OpenAI’s Codex 5.3 were more powerful than before; reconvening with his team after the break, they agreed the company would not look the same, or be the same size, moving forward in the era of AI.

“We just did this exercise of, ‘Okay, so what is the minimal number of people that we would need to keep the service up 100%?’” Dorsey said recently on Sequoia Capital’s Long Strange Trip podcast.

“Next, ‘What is the minimal number of people that we would need to be to fully be in compliance with our regulators?’” he continued. “Then third, ‘What is the minimal set of folks that we need in order to grow to fulfill our commitments we’ve made to the Street, but also rebuild the company as an intelligence?’”

When they questioned how many humans would need to stay on board if the company was built today with the latest AI tools, Dorsey said, he and fellow leaders at the $41 billion fintech company landed on a headcount reduction of 40% as the magic number going forward. More than 4,000 of Block’s 10,000 employees would be affected. 

Cutting two in five employees is a big transition for any business—so Dorsey said they even left some headcount buffer in case they made “mistakes” in their calculations. “Which we did,” Dorsey admitted.  

But ultimately, the chief executive believes operating will be much easier, and he is more confident progressing as a business enabled by AI. 

Dorsey believes cutting staffers sooner rather than later has more ‘integrity’

Ultimately, Dorsey said the choice went from “expiration to execution” within a matter of three weeks. And if Block had chosen to stick its head in the sand about AI job displacement, it might be worse off, the CEO reasoned. 

In a note from Dorsey and Roelof Botha, Sequoia partner and Block board member, the pair referenced AI as prompting a huge organizational shift from the conventional management hierarchy pioneered by the Roman army.

He also believes that it’s more responsible to cut staffers loose now rather than prolong the inevitable; and it’s a shared vision of AI-driven job displacement that has left many workers hand-wringing over the fate of their jobs. 

“I wanted to make sure that if we knew that this was what our company was going to be in the future, I didn’t want to have to do it with our backs against a wall,” Dorsey explained on the podcast.

“I want to be ahead of it, because then we can do it with a lot more integrity,” he continued. “We can do it with a lot more generosity for the people that we’re asking to leave, and even for the people that we’re asking to stay.”

Dorsey wrote out a detailed note to the board breaking down the decision, who were ultimately receptive to move forward with the plan. When Block’s layoff hit the airwaves, it joined a slew of other businesses linking AI to their job cuts, raising conversations about how quickly automation could reshape the workforce. However, Dorsey said the business is only responding to a new era of AI-enabled success. 

“We’re not just reacting into something mediocre,” Dorsey said. “We’re acting towards excellence.”