Blocks layoffs weren't AI driven - but they're coming
Atlassian and Meta are the tip of the iceberg
I don’t know Jack
But his “AI layoffs” narrative was executive Aikido of the highest order. He turned the conversation everyone was having privately into a concrete benchmark - 40% of the team. And suddenly everyone else is getting a call from the board asking if they could expect similar cuts in their headcount budget in FY26.
It seems that a more accurate narrative would be a correction for over-hiring during the pandemic (when they ballooned from 4,000 to almost 13,000 people) and profitability problems, but as a CEO, that narrative gets you fired. Ushering in a new age of agentic productivity positions you as a visionary. Nicely played.
The Upcoming Cuts
We’re already starting to see some early signals. Atlassian (who are highly exposed to any potential SaaSpocalypse) are cutting 10% of their team and it was just reported that Meta is planning to cut up to 20% of their org.
What are CTOs saying?
Even back in October of last year people were talking about RIFs of 15% in engineering to cover token costs in 2026
A number of companies are holding off backfilling roles in engineering to keep more budget for tokens and AI specific engineering roles.
Some companies see this as an opportunity to double down on engineers and are hiring extensively for AI enabled roles.
Other companies are revisiting the engineering org structure and piloting smaller tiger teams and discussing compressed reporting structures to see if they can deliver against backlog more efficiently
Many larger companies have already locked in headcount budget for 2026. They’re planning on scaling experiments and revisiting the headcount conversation in Q4 for their 2027 budgets.