Is AI About To Shrink Corporate Workforces? | Fast Five Shorts

Block, the fintech and payments company behind Square and Cash App, announced it is cutting nearly 4,000 jobs, roughly 40% of its workforce, and replacing that capacity with artificial intelligence.

According to Payments Dive CEO Jack Dorsey wrote to shareholders that Block's headcount will drop from 10,000 employees to just over 6,000, attributing the move directly to AI capabilities, not financial distress.

Dorsey wrote that intelligence tools have fundamentally changed what it means to build and run a company and that a significantly smaller team using those tools can do more and do it better.

He predicted that within the next year the majority of companies will reach the same conclusion and make similar structural changes.

Also important to note is that this move comes at a time when Block is doing well.

Q4 gross profit rose 24% year over year to $2.87 billion, fueled by cash out performance and the company increased its revenue and profit guidance for the year.

Cassie Dorsey says most companies are quite quote, late to this AI workforce transition.

Is he right?

And what does a move like this mean for retailers and the broader industry?

I think we can probably all agree that Jack Dorsey likes to be a bit provocative.

So by him saying that they're late also like I don't think he's wrong, but what is he saying late to?

What is this to displacing and reducing their headcount, that he thinks they've been too high for a while?

Is it actually at deploying the AI?

I don't think he's wrong, but maybe just overstating a bit, a little bit of extremes there.

So I think yes, from like a fintech tech perspective, they maybe might be at the point where they are ready to make these structural moves and really think about how they're structuring their workforce.

They're going to be able to have those internal capabilities a lot more and you know, benefiting from that.

So the math works a little bit better for them.

For retailers, I'm not sure that they're quite there yet.

It's a little bit more nuanced.

A lot of retailers are more still in the pilot phase of actually incorporating AI and so I don't think that this is an overarching everyone is behind.

I think it's very specific.

Companies maybe are going to be able to make a similar move.

So I think from a retail perspective there's always going to be a significant physical human need and touch points that I will never be able to displace.

I think there are a lot of opportunities too for AI to impact, you know, how we think about things.

So you know, you're always going to have the in store interactions, you're always going to need that creative mindset.

There's a lot of things that we're not going to be able to change that are going to be deeply human.

But I think there is a huge opportunity.

Just time will tell how much this will actually impact.

So when you're thinking about where are we still, you know, making decisions based on human intuition rather than data truly informing them?

So something like how much for demand forecasting, pricing and promo personalization, There's a lot of aspects that I think retailers are still very immature with actually incorporating AI.

And so give us a few years, we'll see what that happens and maybe there will be difference.

But I think the real winners here will not be people who are just making headcount changes of being able to make their workforce more productive through using AI.

And so you're using the same people to do higher value work at a larger scale.

And so I think, you know, Jack Dorsey wants to be provocative.

He wants to be able to say we're reducing 40% or that's going to make a lot of people's ears perk up.

Right.

Like that is huge right now in a lot of industries that are, you know, very thin margins.

So that might seem attractive, but I think there's still a lot, we're still very far out from a retailer perspective of when we can even be comfortable with saying that we're going to be, you know, replacing a lot of functions with AI.

Got it.

Okay, so let me, so let me press you a little bit on this.

So then, so because you know, you said at the outset, you know, transformation is kind of your specialty.

So are you seeing in the boardroom discussions that you're having with retailers, are you seeing retailers put in plans place that are this drastic in terms of like a two or three year out horizon in terms of workforce planning and organizational optimization?

Are you seeing that at all at this point?

I think we're still a few years out from this at this point.

I mean it's always being discussed, it's always a question.

But the ways of working right now at most companies are truly not involving enough of this higher capability AI that's going to make this type of impact.

I think those are ultimate goals and that they can actually be able to have their people do better work in more efficient manner.

But it's not necessarily, I think from the same angle that Dorsey was going at it from.

Right, right, yeah, because I think your point's right.

Too, it makes a lot of sense where you said a retail operation is much more diverse in terms of how it works day to day as well.

So Joanna, to that point, I mean, being the end to end operator, what do you take from this announcement?

And my question too is for the retailers observing it, is there more risk in thinking he's being too drastic or less risk, you know, or, or, or, or less risk by just sloughing it off and saying, yeah, now he's just being provocative.

Like, how do you think about that?

Yeah, it's a, it's a great question, Chris.

And I think that this is what a lot of retailers are talking about.

Whether they're talking about it in the, in the boardroom or not, they are wrestling with it at all, at all levels.

I think that, you know, starting from the announcement itself, I think that this example from digitally native companies that are owned by block like that is instructive on the impact that AI is and can have on a workforce going forward.

Much to Cassie's point, I would expect that the change in more physical goods companies to be a bit slower and more measured, partially because of the nuances that, that Cassie brought up.

But the impact will still start to be felt in areas in organizations and roles that have more analysis behind them as well as more sort of cognitive engagement like a customer service or a call center where they're handling multi step problem solving, where some of those steps can be triaged by AI as a starting point and then escalated for overly complex issues.

And so I do think that that will then increase human productivity, ultimately result in the need for a smaller human workforce in some of those, some of those functions.

The way I think about it, my advice would be very similar to what Matt Schumer put out at the beginning of February.

He had a great article called Something Big is Happening where he talks all, you know, all about this.

And I think that the idea that enterprises need to let or, or rather encourage employees to really incorporate AI into their work where they can and inviting that in, you know, the, the philosophy of sort of letting a thousand flowers bloom, you know, within reason is, is something that ought to be encouraged because there will be successes, there will be failures, it is an iterative process.

But companies that try to control sort of the contagion of AI through, you know, a centralized IT tower or something like that is likely going to end up, they'll likely end a bit left behind.

And even that approach has fed into what we've seen in some companies where they've had organizations with Kind of a subpar Microsoft copilot based experience that isn't really generating outcomes that are productive in nature.

And so I think that's where kind of it's heading.

But we are all using AI in some way in our personal lives.

And so, you know, successful retailers kind of bringing and inviting ways to incorporate that into employees, that experimentation rather into employees work, not casually, but, you know, actual work are going to see some, some good strides.

And I think the trajectory only goes one way on this, Chris.

It really does.

And so your ultimate question, I think was, is it a bigger risk to think he's being provocative or a bigger risk to, to say what was the alternative?

Yeah, is it, is the risk, is there a bigger risk in thinking he's wrong or thinking he's right?

You know, I think, oh, the bigger

risk is thinking he's wrong.

Yeah, I think the order of magnitude may not be there yet, but.

But that's definitely the bigger risk.

Yeah, I think, I think so too.

And you know, the reason I say that too is like, I think you have to look at who's saying it too.

I think, you know, Cassie brought this up.

He's a very provocative guy, but at the same time he's kind of a savant in the industry.

I mean the, the guys, the guy started two incredibly successful tech companies and he's also one of the most productive CEOs of recent memory too, because he was, he was at one point running both of them at the same time as CEO.

So this guy understands productivity and how to, how to make more, do more with less, for lack of a better way to put it.

So yeah, I mean, I, when I hear what you said, Joanna too, I think I had a big epiphany at Etail when I was out there last week.

I was sitting there listening to a gentleman talk about how he's reorganized his marketing data infrastructure around AI.

And the point that I was thinking about as he was talking was I think there's going to be two things that have come out of this and it's just a question now to Cassie's point about how fast this happens.

There's going to be less jobs.

Maybe retail doesn't get hit with the size of that impact as quickly, but over time it's going to.

And then I think there's going to be different jobs, Joanna.

And this is what you're saying with terms of like the roles, I think we're going to see less analyst roles, like data entry roles, and those jobs are going to switch into what I'm calling for lack of a better way, kind of the output approver role, where it's your job to monitor and manage the AI outputs.

And I don't know if the skill sets for that are going to be the same.

I don't know if they're going to be different, but I think that's how jobs are going to migrate over time.

So, yeah.

So with that said, I think there's just 100% more risk in dismissing this announcement than there is in trying to say, okay, what can we learn from this as an organization?