Cloudflare's CEO on Driving Growth Through Layoffs

Cloudflare CEO Matthew Prince shares his reasoning behind the company’s most recent round of layoffs – which are set to impact 20% of staff. 

In an op-ed published in the Wall Street Journal, Matthew writes that the “vast majority” of these layoffs were “measurers” – which he defines as people in middle management or finance, legal and internal auditing functions. 

The company is the latest in a long line of tech companies to announce layoffs attributed to AI, with the technology listed as the leading cause for job cuts in the US for both March and April. 

In a joint statement with Michelle Zatlyn, COO of Cloudflare, Matthew shares that the workforce cuts were made “not as a cost-cutting exercise,” but rather were about how the company is “defining how a world-class, high-growth company operates and creates value in the agentic AI era”.

Cutting out management layers 

As Cloudflare cuts down on measurers, Matthew says the company is retaining and hiring what he calls “builders,” such as engineers and “sellers” – roles he sees as less vulnerable to AI. 

This could help shift the nature of work, Matthew notes, as the company has high numbers of open roles in “areas that drive growth,”. 

But Cloudflare isn’t the only company looking to reduce management layers. 

Recent layoffs at Coinbase, which saw 14% of jobs cut, involved a strategic flattening of management structures. 

CEO Brian Armstrong shared in an email to staff that the company was “fundamentally changing,” its organisational structure, so there are just five layers below the CEO position. 

This, he suggested, ensures everyone in the company is a “strong and active contributor.”

“Managers should be like player-coaches, getting their hands dirty alongside their teams,” he argued.

Ryan Breslow, CEO of Bolt, has also shared that his company is reducing its organisational structures. 

At the Fortune Workforce Innovation Summit, Ryan shared that the company had made the decision to cut its entire HR department, as part of efforts to return to a more agile, startup-style model. 

“We’re back in startup mode again, and those HR professionals have really important insights when you’re in a peacetime and when you’re at a larger company,” he told attendees at the Workforce Innovation Summit.

AI could overtake ‘even the best employees’

As AI capabilities improve, Matthew suggests that the technology could begin to overtake more people in the workplace. 

“Tireless, independent, efficient and available, AI systems can now measure an organisation with a level of objective detail and precision that was previously impossible even for the best employees,” he says.

Amrita Ahuja, CFO and COO of Block, agrees.

Following the company’s decision to cut around 40% of its workforce in February, she shared at the WSJ CEO Council Summit that “It feels like the acceleration is actually only quickening and we are seeing, really, an inevitability at this point around productivity gains and what that means for us as a business.”

When asked if she believes other companies will follow a similar path, Amrita said: “I think it’s an inevitability. As a CFO, I think it’s better to be a little bit early than to be too late here.”