Ask HN: If AI makes your devs super productive, why layoff?

The recent news about the massive layoff at Block doesn’t quite add up for me.

The claim by the company was that AI made their devs so efficient that they could layoff 40% of them to make the company lean and still maintain the core product.

But why don’t you just keep all those super productive devs and expand into new products/verticals? You could keep your same profit margins plus have 100 random little ai-powered mission-aligned startups under your control.

I’m worried that everybody is going to use “AI is making us efficient” as a cover story for needing to slash expenses as the recession kicks in. This is worse than simply being in denial about a recession because it’ll have the effect of further inflating the AI bubble.

Am I just being paranoid?