Jack Dorsey warns Block employees of coming job cuts: ‘The growth of our company has far outpaced the growth of our business.’

• Block was co-founded by Jack Dorsey while he was still CEO of Twitter.
• The company operates the Square payment service and Cash App.
• Employees were told to expect cuts in the coming months as Block’s business has not grown enough.

Employees at the Block were informed this week that job cuts are on the way.

In a note to employees sent Wednesday and obtained by Insider, Block’s CEO and founder, Jack Dorsey, stated that the company’s growth has not kept pace with its employee base.

“It’s not sustainable,” wrote Dorsey. Block owns Square, a popular business payment platform, as well as Cash App and Tidal.

According to a person familiar with the company, employees were told in a separate internal company announcement on Wednesday that headcount would be reduced by about 10% in the coming months, bringing the total number of employees down to around 12,000 by sometime next year.

According to a filing with the Securities and Exchange Commission, Block had just over 12,400 employees as of the end of 2022. However, the company continued to hire this year, particularly for engineering positions. According to a source close to the company, around 1,000 people will be laid off. The source requested anonymity because they were discussing sensitive issues.

A hiring quota

According to the company’s third quarter letter to investors, released on Thursday, Block is also implementing “an absolute cap” on hiring going forward as part of this downsizing. The company’s headcount will not exceed 12,000 people “until we feel the growth of the business has meaningfully outpaced the growth of the company,” according to the letter.

Block implemented a similar 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 wrote in its letter to the editor. “We are going to do that again now.”

Read the entire note Dorsey sent to staff here:

As I stated in my note to Block, our company’s growth has far outpaced the growth of our business and revenue.

It cannot be sustained. And Square’s growth and performance have far outpaced our own. In fact, I believe it is stifling our progress and frustrating everyone. That is not fair to you or to our customers.So, by the end of next year, Square will be smaller than it is now. We will accomplish this through performance management, work scoping, and restructuring to eliminate duplication and redundancy. As a result, rather than taking a single action, we will examine everything we do critically and act thoughtfully.

I also believe it is critical to be upfront and transparent about all of this so that you can all make your own decisions if necessary. You may be unhappy with the uncertainty or the shrinking of our team and wish to leave. That is entirely reasonable. But I’d rather we provide the information than work in the dark in secret.

Everything square-core and I do will be done with transparency and clear reasoning that you will be able to access. You may disagree with our decisions, but we will make every effort to explain why we believe they are correct.

Thank you very much.

jack