Block employees were told this week that job cuts are on the way.
In a note to staff sent Thursday and viewed by Insider, Jack Dorsey, the CEO and founder of Block, said the company's growth has not matched its number of employees.
"It's not sustainable," Dorsey wrote. Block operates Square, the popular platform for business payments, as well as Cash App and Tidal.
Staff were told in a separate internal company announcement that headcount would shrink in the coming months by about 10%, bringing the number of employees down to around 12,000 by sometime next year, according to a person familiar with the company.
As of the end of 2022, Block had just over 12,400 employees, according to a filing with the Securities and Exchange Commission. Thursday on Block's third quarter earnings call, CFO Amrita Ahuja said headcount is currently just over 13,000 people. The company continued hiring this year, particularly for roles in engineering. The person familiar with the company expects around 1,000 people to lose their jobs. The source asked not to be identified discussing sensitive matters.
A hiring cap
As part of this downsizing, Block is also implementing "an absolute cap" on hiring going forward, according to the company's third quarter letter to investors released on Thursday. Headcount will not go above 12,000 people "until we feel the growth of the business has meaningfully outpaced the growth of the company," the letter said.
Block previously enacted such a cap in 2014, a year before its IPO. "It was very effective at driving performance, scoping our work through better prioritization, and looking critically at the number of products we offered against our strategy," Block said in its letter. "We are going to do that again now."
See the full note Dorsey sent to staff:
As I said in my note to Block, the growth of our company has far outpaced the growth of our business and revenue.
It's not sustainable. And Square's number of people has far outpaced our growth and performance. In fact, I believe it's slowing us down and frustrating everyone. Which is not fair to you all, or our customers.
So, Square is going to be smaller than we are today by the end of next year. We are going to do so through performance management, scoping our work, and restructuring to remove duplication and redundancy. Therefore we will not take a single action, but rather look critically at everything we're doing and act thoughtfully.
I also believe it's important to be upfront and transparent about all this, so you all can make your own decisions if you need to. You may not be up for the uncertainty or shrinking our team, and want to leave. That's perfectly reasonable. But I'd rather us provide the information than to work secretly in the dark.
Everything square-core and I do will be done with transparency and straightforward reasoning you'll have access to. You may not agree with our decisions, but we'll do our best to explain why we believe they are right.
Thank you all,
jack
