Building for the Future

I dislike the title because it doesn't clearly state it's a layoff. "Building for the future" gave me the impression that it's about some major new initiative with a roadmap outlining plans.

There was an recent article on X with an interesting take - it could be that companies are doing layoffs not because AI is making them more productive but because it hasn't. Their costs have gone up paying for expensive AI but haven't seen any revenue benefits to offset it.

Article https://x.com/championswimmer/status/2051807284691612099

Welp, looks like I’m affected. If anyone is looking to hire a systems engineer with distributed systems and load balancing experience, shoot me an email at <anything>@piperswe.me :/

I’ll update this with a resume link tonight…

> The packages for departing employees will include the equivalent of their full base pay through the end of 2026. Healthcare coverage is different across the globe, and if you’re in the United States, we’ll continue to provide support through the end of the year. We are also vesting equity for departing team members through August 15th, so they receive stock beyond their departure date. And, if departing team members haven’t hit their one-year cliffs, we are going to waive those and vest their pro-rated equity through August as well.

The announcement reads as pretty heartless to me, but this is a very, very nice departure package

I know it's probably automatic because of the similar titles, but hitting the bottom of the layoff announcement only to be recommended that article about hiring 1,111 interns in 2026 is a reaaal bad look

I'm going to start calling these "Canary" moments.

Assuming we take everything at face value for these sorts of cuts, it creates the following scenario:

A company finds itself with surplus labor capacity due to the efficiencies in AI while also posting substantial profit or revenue growth. The company could downsize the workforce to capitalize on short-term efficiencies and increase margins, though this will come at the cost of long-term reputational harm due to posted profits/health as well as burning out staff who must do the same (or increasingly, more) work with less headcount, leading to attrition when the market shifts in their favor. Alternatively, it could leverage this surplus labor for a period of moonshot R&D or paying down technical/process debts while they have the capacity and the profit to pay for it, which harms short-term share price relative to their competitors slashing jobs, while improving the company's capabilities in the marketplace in the long-run, potentially through mastery of these AI tools or the creation of new product lines.

The fact so many orgs opt for immediate greed over long-term growth really is its own canary that leadership and governance both has failed the marshmallow test.

Yikes, this sucks.

It is ironic that Cloudflare is letting go 1100 of employees, while roughly 6-7 months ago, they were aiming to hire 1111 interns.

Article: https://blog.cloudflare.com/cloudflare-1111-intern-program/

This really sucks. I loved this job. I'm an EM and I was trying to hire more people because we're so busy with everything we needed to do. My teams products are someone like 95% profit.

Really going to miss my team, they were wonderful to work with. Secretly hoping they'll have to rehire.

I refuse to believe it was about AI. Coming from the inside, the bottleneck was never code. Seeing who is being laid off, especially on my team, it's the people who make things run.

"We are our own most demanding customer. Cloudflare’s usage of AI has increased by more than 600% in the last three months alone. Employees across the company from engineering to HR to finance to marketing run thousands of AI agent sessions each day to get their work done. That means we have to be intentional in how we architect our company for the agentic AI era in order to supercharge the value we deliver to our customers and to honor our mission to help build a better Internet for everyone, everywhere." As an English enthusiast, I'm getting very frustrated at how the language is consistently abused in executive communications to write words without saying anything.

The implication that is NOT said is that suddenly 20% of people were sitting around without any work to do because AI was making everyone so efficient and productive. This does not, however, seem to be the reality, based on conversations within the company. It appears we have yet another case of economic downturn disguised as increasing velocity.

Letting go 1,100 people into a bleak job market. Absolutely awful.

It wouldn't shock me if people formerly in tech have changed careers entirely, seemingly every tech-focused company is laying people off in favour of AI.

With the hiring 1111 interns thing, I think these companies (amazon as well) need to realize this is doing anything but inspiring confidence in those interns. Instead of being excited about going there, more of them would opt to go elsewhere instead of returning full time, or if they do return full time they'd be in fear of being let go next.

Cutting salaries to pay the AI costs for the remaining engineers. Going to be rough as this trickles through the entire economy over the next 10 years.

It looks like they are using the "agentic AI era" as an excuse to restructure in order to boost margins. GAAP gross margin dropped ~5 points YoY (76% -> 71%)

When you announce 639m USD revenue for q1 Then lay off a thousand people because you love the smell of your ai farts.

Why is Matthew Prince not fired? They missed EPS and AI could write (or perhaps did write) this entirely meaningless announcement.

What they'll do instead is double down and start another 100 useless AI initiatives that no one wants.

Worst part about the ai era is that so many are convinced they can and need to be on top of it to the extent of losing their core competency while mass producing trash

It’s good stuff but there’s room for a lot of things

That's 2 major layoffs this week (Coinbase being the other). Is there an underlying common reason for this? And is it indeed AI-driven productivity as both companies claim?

Obviously AI is just a excuse

It's interesting to me that this is lower on the HN page than the Cloudflare post talking about the CVE handling even though the scoring is higher.

EDIT: Now it's off the main page, because of course it is.

They make it quite clear that these layoffs are in response to adapting to using AI at the company:

> The way we work at Cloudflare has fundamentally changed. We don’t just build and sell AI tools and platforms. We are our own most demanding customer. Cloudflare’s usage of AI has increased by more than 600% in the last three months alone. Employees across the company from engineering to HR to finance to marketing run thousands of AI agent sessions each day to get their work done. That means we have to be intentional in how we architect our company for the agentic AI era in order to supercharge the value we deliver to our customers and to honor our mission to help build a better Internet for everyone, everywhere.

The rest is hand-wringing about the emotional weight of the decision and what employees can expect from the process.

What remains to be seen is whether relying so heavily on AI will have similar outcomes to what we've seen from Microsoft and others. Which is to say, is now the time to stop using Cloudflare?

Wow, can't say I saw this one coming. Cloudflare has been putting out a lot of strong work lately. What percentage of their workforce is this?

Why does "the future" in corporate announcements always mean layoffs?

well at least they're getting some decent severance, still sucks, especially in this market.

Thats a solid package tbh

The message to every Cloudflare employee is clear: you'll be there for the company when times are hard. But the company will not be there for you when times are hard.

It does not matter if the way we work has changed, or AI adoption has increased, or aliens show up. This is a demonstrated lack of loyalty that would result in immediate termination of the situation were reversed.

The important take away for everyone else is do you trust Matthew Prince to always take the high road and do what is right, combined with the fact that they man-in-the-middle all of your websites encrypted traffic? What happens when revenues are down and the shareholders demand blood again?

Any other engineers just living life frozen at this point. I am unable to make any life decisions because it seems like I won't have a career in the near future. I am unable to purchase a home to settle down for my family, because dad might not have a job next week. I know I am fortunate to have a job, many don't, but fuck if this career isn't the worse thing ever for my overall health and happiness.

Cloudflare has achieved "AGI" internally.

I’m finding this a little difficult to square. If things are radically changing within the company and they’re rearchitecting how the company works, wouldn’t they start with a transition period? Letting 1k people go, many of whom will be important parts of the organization, while simultaneously making radical changes in light of a radical rate of change over the last few months, seems very high risk.

Taking everything at face value, does anyone have thoughts on why this change makes sense now vs. in 6 months? Are they ripping the bandaid off or… due to the size of the org?

> Cloudflare’s usage of AI has increased by more than 600% in the last three months alone.

So did your outages...

titling "Building for the Future" the announcement of a mass lay-off is disgusting and makes me sick to be honest

is this really the future we want to build?

Anything to not affect your bottomline, Matthew Prince.

Major scumbag. Get fucked.

> Cloudflare’s usage of AI has increased by more than 600% in the last three months alone.

It seems only costs increased. If productivity had increased along with the AI costs they wouldn't need to layoff.

Of couse, this is all bullshit. Making a vague gesture at AI makes it sound like the layoffs are positive.

Truth is this is simply cost cutting. Either due to overhiring in the past, or bracing for the likely economic downturn.

> That means we have to be intentional in how we architect our company for the agentic AI era in order to supercharge the value we deliver to our customers and to honor our mission to help build a better Internet for everyone, everywhere.

What a load of crap..

"I have decided to sacrifice some of you for shareholder value, but that is something I am willing to do"