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Jack Dorsey, founder and former CEO of Twitter (now X) and current CEO of Block, just published an essay arguing that AI has quietly made middle management unnecessary. And he didn't just write it, he already acted on it.

Let's get into it.

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In February 2026, Block cut roughly 4,000 employees, about 40% of its total workforce. Dorsey was quick to say this wasn't a distress move.

"We're not making this decision because we're in trouble," he posted on X the same day. Block reported a gross profit of $2.87 billion in Q4 2025, up 24% year over year. The business was fine. The point was something else.

Then, on March 31, Dorsey co-authored a lengthy essay titled From Hierarchy to Intelligence with Roelof Botha, Sequoia Capital's managing partner and Block's lead independent director.

The piece laid out the full reasoning. Hierarchy, Dorsey and Botha argued, was never a design philosophy. It was a workaround. Organizations got too big for any one person to see everything, so they created layers of managers to move information up and down the chain. That was the entire job. And AI, they argued, can now do it better.

The Trigger

Dorsey said that the cuts were set in motion by something he observed in December 2025. He said tools including Anthropic's Claude Opus 4.6 and OpenAI's Codex 5.3 had crossed a threshold, becoming capable of operating effectively across large, complex codebases. That shift, in his view, changed the math on how many people a company actually needs.

Not everyone inside Block agrees with that read. Current and former employees told The Guardian that roughly 95% of AI-generated code changes still require human modification, and that AI tools cannot yet operate reliably in regulated areas like banking and money transfers.

Block's own public position acknowledges it is in the "early stages" of this transition.

The Architecture

The essay proposes replacing the traditional org chart with two AI-driven systems. The first is an internal world model that continuously aggregates data from code, decisions, workflows, and performance metrics to give a real-time picture of how the company is running.

The second tracks customer and merchant behavior using transaction data from Cash App and Square. Together, these feed what Block calls an intelligence layer that is meant to absorb the coordination work that managers traditionally performed.

The logic for why this works specifically at Block comes down to remote-first structure. Because nearly all of Block's work already exists as digital records, decisions, plans, designs, communications, the raw material for an AI world model is already there. The data was always being generated. The technology just needed to catch up to the point where it could use it meaningfully.

Rather than building from fixed product roadmaps, the essay proposes breaking Block's business into modular capabilities: payments, lending, card issuance, payroll.

When the intelligence layer identifies a market need, the idea is that it assembles a solution from those building blocks rather than waiting on managers to pull reports, convene meetings, and translate priorities down the chain.

The New Roles

The remaining 6,000 or so employees at Block fit into three categories under this model.

Individual contributors build and maintain the intelligence systems themselves. Directly responsible individuals own specific customer outcomes and have the freedom to pull whatever resources they need to solve them. Player-coaches mentor and develop people but also continue to write code and build, keeping them connected to the actual work rather than sitting above it.

Dorsey has also described his own goal as having every employee report to him with just two or three layers in between, down from five currently. He acknowledged this sounds "ridiculous" under a traditional hierarchy. His counter is that it only sounds ridiculous because we're still assuming humans have to be the coordination mechanism. Block's bet is that they don't.

The Reality Check

The essay had its intended effect. Block shares rose about 3% immediately after publication. But the story has some texture worth noting.

In March, some employees who were let go in February were quietly brought back. Block hasn't commented on that directly, but it adds a complicated footnote to the clean narrative of a deliberate, AI-enabled restructuring.

There is also the question of what AI genuinely cannot replace. Dorsey and Botha acknowledge this in the essay itself. They describe humans as operating at the edge of the organization, handling intuition, cultural context, trust dynamics, ethical judgment, and high-stakes calls where the cost of being wrong is serious.

The essay is clear that people make the decisions the model shouldn't make alone. But the honest tension is that middle managers often did precisely those things too, in quieter, harder-to-quantify ways.

Amazon cut 14,000 corporate employees in late 2025, also citing a desire to reduce bureaucracy and remove organizational layers. The pattern is consistent across tech. Flatter teams, fewer intermediaries, and AI handling more of the connective tissue. Block is just being the most explicit about the theory behind it.

The Bottom Line

Dorsey's argument is coherent, and Block's remote-first structure does give it an unusual advantage in making it work.

The hard test is whether the intelligence layer actually performs in practice, or whether it turns out that middle managers were doing more than routing information. The companies running this experiment right now are going to have answers in a year or two that no essay can provide.

Category: Organizational Strategy

"I'm evaluating the management structure of my team. Here is a description of how work currently flows: [describe your team's communication and decision-making process]. Identify which parts of this process are primarily about routing information or coordinating status updates versus which require genuine human judgment. Then suggest which coordination tasks could be handled by AI tools or automated systems, and which should stay with people."

The most interesting line in Dorsey's essay isn't about AI. It's this: "The question was never whether you needed layers. The question was whether humans were the only option for what those layers do."

That framing shifts the entire debate. It's no longer AI versus jobs. It's a question about what the job actually was. And a lot of organizations are about to find out they never had a clear answer.

Hit reply, I read every response.

See you in the next one.

— Vivek

P.S. If you know someone rethinking how their team is structured in the AI era, forward this their way. They can subscribe at https://savvymonk.beehiiv.com/