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You just laid off a third of your company. And the story you told them was about AI.
Not about the hiring spree you went on 18 months ago when you thought the Series B was a lock. Not about the enterprise deal that fell through in Q4 and blew a hole in your revenue forecast. Not about the fact that your burn rate has been unsustainable since last summer and you’ve been too proud to admit it.
No. You told them AI changed the game. You told them this was about the future. You told them the company needs to be leaner, faster, more automated. You probably used the word “structural.”
And your team smiled and nodded and updated their LinkedIn profiles that night.
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If this sounds familiar, congratulations. You’re in excellent company.
In February, Jack Dorsey cut 4,000 people from Block. That’s nearly half the company. Gone. His explanation: AI tools had made them unnecessary. Block’s internal coding tool, Goose, had apparently delivered a 40% increase in production code shipped per engineer. The math worked. The narrative was clean. The stock went up.
A few weeks later, Atlassian’s Mike Cannon-Brookes announced 1,600 layoffs — 10% of the company — with more than 900 cuts coming from research and development. The reason? An AI pivot. The company needed to reallocate resources toward artificial intelligence.
Here’s the problem with that story. Five months earlier, in October 2025, Cannon-Brookes went on the 20VC podcast and said Atlassian would employ more engineers in five years, not fewer. He pledged to hire more new graduates in 2025 and 2026 than in previous years. Then he cut 900 R&D roles and called it an AI strategy.
And the narrative has gotten so thin that even Sam Altman — the person with arguably the most to gain from everyone believing AI is replacing workers — has started distancing himself from it. He said publicly that most companies blaming layoffs on AI are engaged in “AI washing.” When the guy selling the AI won’t co-sign your story, your story has a problem.
