Jack Dorsey Responds for the First Time on Block's Layoffs: Structural Errors Causing Over-Hiring, Targeting a Per Capita Gross Profit of Over $2 Million

In February 2026, the fintech and crypto payment sectors experienced a landmark personnel shake-up. Twitter founder Jack Dorsey’s company Block announced layoffs of nearly half its staff, about 4,000 employees. However, unlike typical downturn contractions, following this round of layoffs, Block’s stock surged over 20 in after-hours trading, with the market voting with real money in support of this “efficiency revolution.”

In response to sharp external criticism of “poor management,” Dorsey unusually provided an honest reply, blaming strategic missteps during the pandemic and setting a hard target: an average gross profit per person of over $2 million. This article will analyze the industry logic behind this event from timelines, financial data, public opinion battles, and future projections.

Honest Acknowledgment of Structural Debt: Three Truths in Dorsey’s Response

On February 27, Jack Dorsey directly addressed market comments that “Block’s layoffs stem from reckless hiring and mismanagement.” He admitted that from December 2019 to December 2022, Block’s employee count surged from 3,900 to 12,500, indicating overhiring. Dorsey attributed the root cause to strategic architecture errors—“I mistakenly built two independent company structures (Square and Cash App) instead of integrating them into a unified framework”—and clarified that this issue was corrected mid-2024.

Dorsey’s response reveals three key layers: First, acknowledging the mistake as a top-level design failure rather than a simple market misjudgment; second, emphasizing that the complexity of the business—lending, banking, BNPL—was overlooked, and these heavily regulated operations inherently require substantial staffing; third, proposing a clear corrective path—targeting an average gross profit of $2 million per person, roughly four times pre-pandemic efficiency. This quantifiable metric provides a verifiable endpoint for all subsequent structural adjustments.

From Expansion to Correction: Four Key Milestones in Block’s Five-Year Cycle

This round of layoffs is notable for its “non-crisis” nature. Financial reports show that Block achieved $10.36 billion in gross profit in 2025, with Q4 gross profit doubling Q1’s. Dorsey chose to undertake “surgical” adjustments during a period of financial strength, aiming to proactively prepare for the structural shifts he predicts most companies will be forced to make within the next year.

The Hard Constraint of $2 Million per Person: Quantitative Breakdown of Efficiency Metrics

Block’s strategic focus has shifted from mere business expansion to maximizing “unit economic efficiency.” The $2 million gross profit per person target is not just a doubling of numbers but signifies a fundamental change in operational paradigm.

Historical data shows that from 2019 to 2024, Block’s per capita gross profit remained around $500,000. Despite rapid increases in business complexity—entering lending, banking, BNPL—the duplication and internal friction of the organizational structure (independent operation of Square and Cash App) prevented scale effects from translating into efficiency gains. The separate back-office functions—legal, compliance, HR—further entrenched what Dorsey calls “structural debt.”

Reaching the new $2 million target implies leveraging existing business growth with AI tools (like the internally developed “Goose”) and a flatter team structure to achieve exponential labor productivity. Dorsey’s “100 people + AI = 1,000 people” model concretely illustrates this goal. Based on the projected gross profit of $12.2 billion in 2026, achieving $2 million per person would require approximately 6,100 employees—closely matching the post-layoff target scale—indicating this metric is not just rhetoric but a carefully calculated financial constraint.

Supporters vs. Critics: The $68 Million Party and the Trust Game

Public opinion on this large-scale layoff is sharply divided, centered on the relative weight given to “AI-driven” versus “management correction” narratives.

- Supporters: Embracing AI Transformation

Represented by Wall Street analysts and some investors, they see Block as rewriting the script for post-pandemic tech companies. Evercore analyst Adam Frisch called this “a significant moment in AI development so far.” Supporters argue Dorsey isn’t reacting passively to a crisis but proactively restructuring during a boom, ensuring agility in the AI era. The stock’s after-hours jump of over 20%, adding about $6 billion in market cap, reflects market confidence in “efficiency over scale.”

- Critics: Using AI as a Cover for Management Failures

Critics (including some social media users and labor advocates) claim that attributing layoffs to AI is “AI washing,” aimed at masking overhiring and mismanagement during the pandemic. A controversial point is that five months before the layoffs (September 2025), Block spent $68.1 million on a grand company event featuring stars like Jay-Z and Anderson .Paak—an expense roughly equivalent to the annual salary of 200 employees. This “celebration before layoffs” is seen by some as a sign of poor judgment. Social media users describe it as “madness,” conveying unsettling signals about company priorities and management judgment.

- Moderates: Different Paths to Efficiency Correction

This view holds that regardless of whether the trigger was AI or mismanagement, the outcome is a cleanup of the “bloated era.” Coinbase’s former CTO Balaji Srinivasan comments that this marks a broader shift toward AI-driven small-team productivity models. Meanwhile, Block’s severance package (including 20 weeks’ salary, 6 months’ healthcare, equity, and $5,000 transition support) is generous by industry standards, helping to mitigate external criticism of employee treatment.

Is AI an Excuse or a Tool?

• Facts: Block’s staff grew from about 3,900 to 12,500 during the pandemic; structural integration occurred in mid-2024; in February 2026, about 4,000 employees were laid off, aiming for a team under 6,000; Dorsey publicly admitted overhiring was due to the independent dual-structure mistake; the company set a $2 million per person gross profit goal; 2025 gross profit was $10.36 billion; five months before layoffs, a $68.1 million company event was held.

• Perspectives:

  • Dorsey and management: layoffs are a strategic move driven by AI’s transformation of work, making the company more agile and efficient, based on “strengthening what we already have.”
  • Critics: layoffs are a correction of Dorsey’s mismanagement, and using AI as an excuse is hypocritical; the lavish party and subsequent layoffs highlight a lack of corporate responsibility and judgment.

• Speculations:

  • True role of AI: Is AI the “cause” of layoffs or the “tool” to achieve efficiency? Logically, AI is necessary to reach the $2 million gross profit per person, but the direct trigger is correcting excessive staffing from the flawed pandemic architecture. AI provides technical and commercial rationales for this “efficiency correction.” Without AI tools, simple layoffs might impair business continuity; without layoffs, AI’s introduction would only yield marginal improvements. Both are causally linked and mutually reinforcing.
  • Corporate valuation: Block’s restructuring could pioneer a new valuation model—where tech company value is based not solely on employee count or user base but on “cash flow per unit of human capital.” The $6 billion market cap increase from layoffs essentially reflects market acceptance of this new valuation approach—each job cut adds roughly $150,000 to company value.

Four Key Lessons for Crypto and Tech Industries

Block’s “downsizing” has profound implications for the crypto and tech sectors, offering four paradigm references:

• Efficiency baseline reset: The $2 million per person gross profit could become a new efficiency standard for mature fintech firms. For crypto companies facing compliance burdens (KYC/AML) and technological innovation, maximizing human leverage in complex operations will be crucial. Dorsey’s mention of “handling complexity” (lending, banking, BNPL) highlights common challenges in crypto’s move toward regulation and mainstream adoption.
• AI-native organizational structures: Block’s case validates the feasibility of “flattened + AI tools” replacing “hierarchical + labor-intensive” models. Its self-developed AI “Goose” demonstrates that crypto and payments firms can significantly cut operational and development costs through internal intelligent tooling. This signals a future where talent competition shifts from “quantity” to “human-machine efficiency.”
• Value of transparent communication: Dorsey openly acknowledged strategic missteps, making “structural debt” transparent. Such honesty in crisis communication can build market trust and pave the way for radical reforms. In the highly transparent crypto industry, attempts to mask management errors with AI narratives will be exposed; admitting mistakes and providing quantifiable correction paths can earn respect.
• Balancing corporate culture and financial discipline: The stark contrast between the $68.1 million party and large-scale layoffs warns all tech firms: even in strong financial periods, balancing luxury spending and staffing is essential. When “celebrate first, then cut” narratives emerge, cultural trust repair will incur additional costs, even if layoffs are justified.

Three Possible Evolutionary Paths

- Scenario 1: The Efficiency Myth Realized (High Probability)

If Block hits its $12.2 billion gross profit target in 2026 and keeps team size around 6,000, per capita gross profit will approach $2 million. This could trigger a “follow the leader” wave in tech, with more firms shedding non-core units and investing heavily in AI to boost productivity. Block would transform from a payments company into an AI-driven high-efficiency tech benchmark, with its structural integration becoming a case study.

- Scenario 2: Innovation and Compliance Imbalance (Medium Probability)

Aggressive staff cuts might weaken critical risk and compliance functions. Given Block’s involvement in lending, BNPL, and Bitcoin custody, any compliance breach due to understaffing could lead to regulatory penalties, offsetting efficiency gains. High per capita gross profit might then be coupled with rising unit risks, trapping Block in “efficiency but regulatory chaos.”

- Scenario 3: Talent and Culture Loss (Low Probability)

Large layoffs and the prior lavish party could damage Block’s employer brand long-term. Attracting top AI and finance talent might require paying a “trust premium.” Talent gaps could hinder innovation, and the $2 million per person goal might become unsustainable if talent quality declines.

Conclusion

Dorsey’s “surgical” move at Block is both a proactive response to the AI wave and a thorough cleanup of the previous “structural debt.” Using the $2 million per person gross profit target, he forcibly shifts the company from a growth-at-all-costs narrative to a focus on unit efficiency.

Regardless of success, Block’s case sets a new baseline for the crypto and tech industries: exercise restraint during abundant capital periods, pursue simplicity amid complexity, and admit mistakes with dignity after bubbles burst. For practitioners, this is not just a business adjustment but a deep test of organizational resilience, strategic transparency, and efficiency limits. As the residual effects of the $68.1 million party fade and the 4,000 layoffs proceed, the real challenge begins: can the leaner Block maintain compliance and deliver on its $2 million per person efficiency promise? The answer will unfold over the next year.