---
title: "The Game on the Field Has Changed"
description: "Block cut 40% of its workforce citing AI. The productivity game has changed, and every company needs to respond."
categories: ["tech industry","employment","startups"]
keywords: ["tech layoffs 2026","Block layoffs Jack Dorsey","AI productivity gains","revenue per employee benchmark","workforce reduction AI","ARR per employee SaaS","Cursor Gamma efficiency","tech company headcount cuts"]
ai_summary: "Block cut 4,000 jobs, 40% of workforce, citing AI productivity. Revenue per employee jumped 67%. AI-native companies like Cursor hit $3.3M ARR per employee. Management teams now expect twice the productivity."
date: 2026-02-27
lastmod: 2026-07-17
canonical_url: https://www.tomtunguz.com/are-we-seeing-layoffs-from-ai/
author: "Tomasz Tunguz"
---


Could you operate your company with half the people?

Jack Dorsey's announcement yesterday[^1], reducing Block's headcount from 10,000 to 6,000, should provoke this question in every management team. The stock surged 24%. Dorsey's memo framed it as inevitable :

> Within the next year, I believe the majority of companies will reach the same conclusion & make similar structural changes. I'd rather get there honestly & on our own terms than be forced into it reactively.

Block isn't alone. Through February, tech companies have laid off 23,000 employees.[^2] Annualized, that projects to 153,000, exceeding 2023's peak.

[^1]: [CNBC](https://www.cnbc.com/2026/02/26/block-laying-off-about-4000-employees-nearly-half-of-its-workforce.html)
[^2]: Data from [layoffs.fyi](https://layoffs.fyi)

{{< email_image src="vsbwhg5ziwfjltgmfhjf" alt="Tech layoffs by year with 2026 annualized projection" width="540" height="304" >}}

What makes 2026 different is who's cutting. These aren't distressed companies. They're modestly growing businesses concluding they can operate with fewer people.

| Company | Total Employees | 2026 Layoffs | % Cut | Revenue Growth YoY |
|---------|----------------:|-------------:|------:|-------------------:|
| Amazon | 1,576,000 | 16,000 | 1% | +14% |
| Block | 10,000 | 4,000 | 40% | +12% |
| Autodesk | 15,300 | 1,000 | 7% | +12% |
| Pinterest | 4,700 | 700 | 15% | +14% |
| Workday | 20,400 | 400 | 2% | +15% |

The revenue per employee gains are tremendous.[^3] Block's jumps 67% post-layoff, from $2.4M to $4M per person. Once competitors demonstrate this efficiency, it's untenable not to match it.

[^3]: Revenue per employee measures total revenue divided by headcount. ARR per employee, used for SaaS companies, measures annual recurring revenue divided by headcount.

{{< email_image src="yil1t635evhhgc0yvpou" alt="Revenue per employee for five tech companies 2020-2026" width="540" height="304" >}}

This changes efficiency expectations for investors. Five years ago, $100K ARR per employee was standard for SaaS startups.[^4] Today, AI-native companies like Cursor & Gamma hit $2-4M. Cursor runs $3.3M. Gamma hits $2M. An order of magnitude difference.

[^4]: [SaaStr](https://www.saastr.com/the-new-rule-500k-arr-per-employee-is-the-new-200k/)

Management teams now expect twice the productivity. For employees, there's never been a better opportunity to meaningfully impact a company through the leverage of AI. The game on the field has changed.