It could be the first of many canaries in this coal mine, but Block, which operates the ubiquitous Square point-of-sale systems as well as CashApp and other enterprises, announced a mass layoff on Thursday. And CEO Jack Dorsey is making no secret that this is about AI supplanting the need for human workers.

Block announced a layoff of 40% of its staff, or around 4,000 of its 10,000 workers, with CEO Jack Dorsey promising investors an even leaner and more profitable company.

"The core thesis is simple. Intelligence tools have changed what it means to build and run a company,” said Dorsey said in a letter to Block shareholders Thursday. “A significantly smaller team, using the tools we’re building, can do more and do it better."

In characteristic all lower case type, Dorsey posted his full message — and apology to laid-off employees — on Xitter, calling it "one of the hardest decisions in the history of our company."

He adds, "we're not making this decision because we're in trouble. our business is strong. gross profit continues to grow, we continue to serve more and more customers, and profitability is improving. but something has changed. we're already seeing that the intelligence tools we’re creating and using, paired with smaller and flatter teams, are enabling a new way of working which fundamentally changes what it means to build and run a company. and that's accelerating rapidly."

Dorsey further explained that he could have chosen to make staffing cuts gradually, but he chose to rip the Band-Aid off now. "repeated rounds of cuts are destructive to morale, to focus, and to the trust that customers and shareholders place in our ability to lead," Dorsey writes. "i'd rather take a hard, clear action now and build from a position we believe in than manage a slow reduction of people toward the same outcome."

This bold and, for 4,000 employees, devastating decision is terrific news for investors, and shares of Block rose 5% Thursday, to $54.53. They went to nearly $69 in after-hours trading, and are sitting at $62.80 as of Friday morning.

Stephen Innes of SPI Asset Management gave some commentary after the Block announcement, per the Associated Press, and noted that while other companies are laying off thousands and downplaying the link to AI, Dorsey just came out and said it.

"For years, we have debated whether AI would dent jobs at the margin. Now we have a public case study in which the CEO explicitly says that intelligence tools have changed what it means to build and run a company," Innes says.

In response to some criticism on X Friday, Dorsey responded saying, "yes we over-hired during covid because i incorrectly built 2 separate company structures (square & cash app) rather than 1, which we corrected mid 2024." But, he adds,  "this misses all the complexity we took on through lending, banking, and [Buy Now, Pay Later loans]."

A recent trend of doomsaying by AI industry insiders, suggesting that a massive wave of layoffs is on the horizon sooner rather than later, could be seen as coming true here at Block. Advances in AI, particularly when it comes to writing code and building applications, is quickly being felt across the tech industry.

As OtherSideAI founder Matt Shumer wrote in a viral tweet earlier this month, "the next two to five years are going to be disorienting in ways most people aren't prepared for."

Top image: Jack Dorsey creator, co-founder, and Chairman of Twitter and co-founder & CEO of Square arrives on stage at the Bitcoin 2021 Convention, a crypto-currency conference held at the Mana Convention Center in Wynwood on June 04, 2021 in Miami, Florida. The crypto conference is expected to draw 50,000 people and runs from Friday, June 4 through June 6th. (Photo by Joe Raedle/Getty Images)