Jack Dorsey Just Fired 4,000 People and Wall Street Cheered. Here Is the Memo Every Developer Should Read.
February 27, 2026
Block, the company behind Square, Cash App, and Afterpay, cut 40% of its workforce yesterday. 4,000 people. Gone in a single announcement.
The stock jumped 24%.
Jack Dorsey did not pretend this was about performance or restructuring. He said exactly what it was. "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."
Then he said the part that should make every developer pay attention.
"Within the next year, I believe the majority of companies will reach the same conclusion and make similar structural changes. I'd rather get there honestly and on our own terms than be forced into it reactively."
He is not talking about Block. He is talking about every company.
What the Numbers Say
Block's gross profit grew 24% year over year. The business is not struggling. Dorsey said explicitly: "We're not making this decision because we're in trouble. Our business is strong."
A profitable, growing company cut nearly half its workforce because the work those people were doing can now be done by smaller teams using AI tools.
Wall Street's response was not sympathy. It was a 24% stock surge. The market did not punish Dorsey for the cuts. It rewarded him. That reward is a signal to every other public company CEO watching.
The Axios headline put it plainly: "Dorsey's Block layoffs may embolden CEOs."
This is how it spreads. One CEO does it, the stock goes up, other CEOs take note, their boards ask questions, the pressure builds. Dorsey did not just restructure Block. He gave permission.
The AI Washing Debate
Not everyone accepts the framing at face value.
Wharton professor Ethan Mollick pointed out that effective AI tools are very new and we have little sense of how to organize work around them. A sudden 40% efficiency gain is hard to attribute cleanly to AI tools that have only been production-ready for months.
Critics on X were more direct. Block tripled its headcount between 2019 and 2022, growing from 3,835 to over 10,000 employees during the pandemic tech boom. The argument: unwinding a COVID overhiring binge has more to do with financial reality than AI efficiency. Block's stock had dropped more than 75% over the past five years before Thursday's announcement.
The honest read is probably somewhere in the middle. AI tools genuinely do enable smaller teams to do more. The pandemic headcount was genuinely bloated. Both things are true and Dorsey gets credit for being transparent about the direction even if the pure AI framing is simplified.
What matters for the broader picture is not whether AI caused 100% of Block's layoffs. What matters is that the story is now established. AI as justification for workforce reduction has a high-profile, profitable, growing company behind it. That precedent is set regardless of the nuance.
The Indian IT Parallel
We have written about this before on TheQuery. The Indian IT industry built a $250 billion business on repeatable, well-defined tasks: code maintenance, testing, documentation, support, data processing. Those tasks have stable demand, clear specifications, and predictable outputs.
That description is also a perfect profile for what large language models and AI agents are trained to handle first.
Dorsey's letter describes Block's restructuring as a move toward "intelligence-native" operations with agentic AI infrastructure handling internal orchestration. The tasks being automated at Block, coding support, compliance checking, customer operations, data analysis, are the same categories that employ millions of people in the Indian IT pipeline.
This is not a future concern. Dorsey explicitly said most companies will reach the same conclusion within a year. A year is not a long time when you are building a career.
What Dorsey Actually Built
The detail buried under the layoff headlines is what Block was building internally before making this decision.
Goose, Block's open source AI agent, handles coding tasks autonomously. Moneybot anticipates customer financial needs before they ask. An internal AI orchestration model manages decision-making and risk assessment. Block was not using off-the-shelf AI tools. It was building intelligence infrastructure and then restructuring around what that infrastructure could replace.
This is the pattern. Companies that build serious internal AI capability eventually reach the same conclusion: the org chart designed for human labor does not map onto a team working with AI tools. You do not need the same number of managers when AI handles coordination. You do not need the same number of analysts when AI handles data synthesis.
Dorsey had two options. Cut gradually over months or years as the shift played out, or act now. He chose to act now. The stock market agreed with the choice.
The Week That Explained Itself
This is the eighth article TheQuery has published this week. We did not plan a theme. The news provided one.
Ryze showed what happens when a foundation model absorbs a startup's product overnight. OpenClaw showed what happens when open source builds something a foundation model company decides to ship natively. Apple's deal with Google showed what happens when even the most vertically integrated company in tech cannot keep up with AI development on its own. PageIndex showed what happens when an open source project challenges the infrastructure assumption that an entire market is built on.
The Block story is all of those stories at once, at human scale. Not a startup going under. Not a product being deprecated. 4,000 people losing their jobs because the productivity math changed.
Dorsey was honest about what happened. He was honest about what comes next. Most companies are late, he said. The majority will reach the same conclusion within a year.
What Developers Should Actually Do
The instinct is to panic. The instinct is wrong.
Dorsey's restructuring is not an argument against being a developer. It is an argument against being a developer who does not use AI tools. Block is cutting the roles that AI can replace. It is keeping and building the roles that direct AI.
Claude Code writing 80% of Anthropic's own codebase is not replacing developers. It is replacing the part of development that was always the least interesting, the mechanical translation of a clear specification into working code. The part that remains is the judgment: what to build, why to build it, how to structure it, what to prioritize.
That judgment does not get automated. It gets more valuable as everything around it does.
The developers who will look back on 2026 as the year things got better are the ones who spent it learning to direct AI systems rather than compete with them. The ones who will look back on it as the year things got worse are the ones who waited to see what happened.
Dorsey told you what is going to happen. He was unusually honest about it. The only question is what you do with the information.
The full week of coverage: Claude Code Security, Claude Killed My Startup, OpenClaw, Gemini 3.1 Pro, Nano Banana and Apple, PageIndex.