"AI Made Me Do It!"

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.

It’s about you.

Not you specifically, maybe. But the version of you that sits in a room at 11 PM, staring at a spreadsheet, knowing you need to cut headcount, and reaching for the most comfortable explanation instead of the true one.

I worked with a founder last year who had to let go of eight people. Good people. People who’d been there since the early days. The real reason was straightforward: he’d hired too aggressively based on a revenue projection that didn’t materialize. The pipeline he’d been counting on went soft in Q3, two major renewals churned in Q4, and by January the math didn’t work anymore. He had 14 months of runway and needed 24.

That’s a hard thing to say out loud. It means admitting you were wrong about the forecast. It means standing in front of people you care about and telling them that your mistake cost them their job.

So instead, he told them the company was “restructuring around AI capabilities.” He talked about automation, efficiency, the need to stay competitive. He framed it as forward-looking. He made a deck.

The eight people who got cut saw right through it. So did the 20 who stayed.

This is the part that founders don’t think about, because the lie feels so much better in the moment. You get through the hard day. People leave without yelling. The remaining team nods along. And you think you pulled it off.

You didn’t.

Your remaining team now knows you won’t tell them the truth when it matters. That’s not a small thing. Every future decision you make gets filtered through “is this real or is this another story?” When you announce a new initiative, they’ll wonder if it’s genuine or if you’re setting up the next round of cuts. When you tell them the company is strong, they’ll check the job boards that night. Trust compounds, but so does distrust. And you just made a deposit in the wrong account.

Your best people leave next. Not immediately. But soon. The people who are good enough to have options are also good enough to read a room. They don’t want to work for someone who treats them like they can’t handle the truth. They especially don’t want to work for someone who thinks a slide deck about AI is a substitute for honesty. You’ll lose them quietly, over the next two to six months, and you’ll tell yourself it was the market.

You lose the ability to fix the actual problem. If you tell your team — and yourself — that AI forced this restructuring, you never have to confront the overhiring, the bad forecast, the pipeline assumptions that were wrong. The cover story becomes the diagnosis. You treat the wrong disease. And 12 months from now, when the same underlying problem resurfaces, you’ll be reaching for the next convenient narrative to explain the next round of cuts.

The market figures it out. Bloomberg ran a piece in March titled “Jack Dorsey’s 4,000 Job Cuts Arouse Suspicions of AI-Washing.” If the market can spot the pattern at Block, your investors and board members and future hires can spot it at your company. The narrative that was supposed to make you look forward-thinking ends up making you look evasive.

I’m not trying to be self-righteous about it. I understand the impulse.

Telling your team “I made a mistake and it cost you your job” is one of the hardest sentences a founder will ever say. There’s no clean version of it. There’s no framing that makes it feel good. You will stand in a room and watch people’s faces fall, and you will know that you did this, and there is no story sophisticated enough to make that feeling go away.

So the AI narrative is seductive because it gives you someone else to blame. Not someone, actually — something. A force of nature. An inevitability. “This wasn’t my call. This was the future arriving on schedule.” It absolves you and positions you as a visionary in the same sentence. That’s a hell of a deal.

Except it’s not real. And the people in the room know it’s not real. And now you’ve added dishonesty to the list of things you have to live with.

Tell the truth, even when it’s ugly. “We hired too fast. The revenue didn’t come in the way I expected. I need to fix that, and it means some of you are losing your jobs because of a mistake I made.” That sentence will cost you the worst 48 hours of your professional life. It will also earn you something that no AI narrative ever will: the respect of the people who stay. They’ll know they work for someone who can own a hard call. That’s the kind of leader people run through walls for.

Separate the AI investment from the headcount decision. If you genuinely are investing in AI — and you should be, if it makes sense for your product and your customers — great. Talk about that as a separate, forward-looking initiative. But don’t use it as camouflage for a financial restructuring that has nothing to do with artificial intelligence. Your team can hold two ideas at once. Give them credit for that.

Get ahead of the narrative. If your investors or board members are expecting the AI spin, push back. Tell them you’d rather be honest with the team and take the short-term discomfort than build a culture where hard truths get dressed up in trend language. If they can’t respect that, you have a different problem, and it’s not about AI.

Accept that this is part of the job. Nobody told you that founding a company would involve standing in front of people you like and telling them something that hurts. Actually, someone probably did tell you, and you thought you’d handle it differently. You thought you’d be the founder who never had to do this. And now you are doing this, and the only question is whether you do it with honesty or with a slide deck.

That founder I mentioned — the one who restructured around “AI capabilities” instead of telling his team the truth? Six months later, he had to do another round of cuts. Same underlying problem. Different narrative. This time it was “market conditions.”

His best engineer had already left by then. So had his head of customer success. Good people can absorb hard news. They do it all the time. What they can’t absorb is the feeling that the person delivering the news is performing instead of leveling with them.

The hardest conversation you’ll ever have as a founder is the one where you admit you were wrong. It’s also the only one that actually fixes anything.

AI didn’t take your team’s jobs. Your forecast did. And the sooner you can say that out loud, the sooner you can start rebuilding the thing that actually holds a company together when everything else gets hard — your credibility.