I’ve seen managers hiring people with an intent to lay them off when winds change to protect themselves and their close circle. I can only imagine they’ve had great KPIs in both cases: first for scaling the team, and then for cutting costs.
Back in the late 90s a senior Microsoft exec explained this to me, they had acquired staff and continued to operate entire divisions which he described as "ballast". In the future, once the stock price increases slowed, they would be heaved over the edge of the balloon basket so that it could continue to rise. I often think about that.
This is completely acceptable. When was the last time you saw any job seeker seriously enquire about such practices in interviews or at the application stage?
A lot of people here and in the industry in general seem to optimise for compensation package and put blinkers on themselves for other factors that are definitely relevant.
Companies aren't penalised by candidates for such practices. I'm not saying it's good but it's astounding to me the number of people who for example optimise entirely for salary and then are shocked when the working conditions are very poor.
People game companies and companies will game people in return. Murray Gell Man amnesia will kick in and next week there will be thread about how CloudFlare is a great place to work for software devs because you can earn 20% more than other comparable companies with no reference to how things like job security or working conditions are measured.
It's the natural result of "fire the bottom 10% every year".
If that's the rule in your organization, and you have a core group of people that actually know the systems and get the work done, you better make sure you have 10% padding every year, lest you layoff someone important and their friends all quit in disgust. And since competence and institutional knowledge is built over time, that implies a revolving door of new folks coming in and most of it not making it.
I know a medium sized defense contractor that ultimately had to sell itself a few years because they did this.
They would come recruiting in bulk at our school only to fire the majority within a year to satisfy their stack ranking nonsense.
10 years later, the engineers they were protecting retired and they couldnt find anyone willing to work for them, even people still in school knew the reputation.
Or it was a combined strategy - hire interns who will hopefully be able to replace some higher paid employees at lower cost once they learn the ropes. Then reduce headcount further replacing with AI.
It feels like it was the most beneficial implementing better decision making mechanics by replacing manager with AI, not lowly folks doing actual value creation.
LLM models have better reasoning abilities than these folks....
This (from the September 2025 post) now evokes the Curb theme:
> Like you, we have seen numerous reports that more and more firms are capping their total headcount in favor of leaning on more AI tools, leading to downsizing their intern and new-graduate hiring. This is resulting in increased sidelining of new college graduates. But we think this misreads the moment completely, so we’re heading in the opposite direction.
> While we are excited about what AI tools can help do, we have a different philosophy about their role. AI tools make great team members even better, and allow firms to set more ambitious goals. They are not replacements for new hires — but ways to multiply how new hires can contribute to a team.
This is the predominant (public) talking point. And it’s true.
But along with that: when you have effective people becoming even more effective with AI, it becomes glaringly obvious who the INeffective people are. At which point it becomes hard to justify keeping those people around.
(That often includes people who are otherwise effective but aren’t utilizing agents and are therefore losing their edge.)
> You lay off 1100 who are late in their career for younger people who will work more hours for less.
Yet management always seems to miss the institutional knowledge, and experience, that also walks out the door laying off those 1,100 people 'late in their career'...
It's not possible to cram 25 years of experience into two.
I worked in a company that did that. They couldn't rehire the senior after the junior burned with a bug 700k in 20 min by touching a part of the codebase no one had context for anymore.
Young people today have grown up in a low trust society and have a totally different mindset. They have no qualms with figuring out how to extract as much as possible from their employer while providing as little value as they can. They will fake their competence as long as possible using LLMs and then go do it again somewhere else.
Can't blame them it's the culture we have now especially in tech, and it's incentivized top-down.
Laying off people with experience which only 1% of their younger colleagues will learn because LLMs made it redundant enough is misguided today. If I were a CEO I’d hold on to my 15-20 yoe engineers for my dear life; can lay them off in 2028.
yes sure. its pure accounting and buying into the scam that genai+junior will reduce costs. meanwhile they tokenmaxing vibecoding uis for 50% of their wages cost. I will short every company making those moves.
>You're building the future with new fresh people instead of the "dead weight"
If the "future" being built is one that those same interns would be dropped as "dead weight" as soon as they settle into families and refuse to be exploited with overwork, then it's a bad future, even if it's one with more CDN features.
Although, instead, it will be a more enshittified one anyway: they're cheapening your company and the product and lose organizational and operational knowledge in the process.
But the truth would likely be closer to that those fired would be a mix of mostly extra people hired plus some older employees. But instead of "we hired extra X less than a year ago, we shed X now", it's rebranded as "we reduce our workforce thanks to AI" to get possitive press and appeal to the less bright small-time investors.
There's an interesting assumption here that all people working at Cloudflare are great developers, and none deserve to be fired for poor code or laziness.
This seems to be the new normal in Big Tech. They regularly announce massive layoffs, but if you look at their size over time it stays stable or grows. Cloudflare size grew every year. Microsoft size was stable for the past 4 years despite all the layoffs. Google had lost some (4%) employees in 2023, but has grown back to 2022 size last year. Meta shrunk by 22% in 2023, but has been growing in size since then and is probably back to 2022 size right now.
These companies overhire and then downsize. This is covered up by the moronic narrative about AI.
Side note. You know who is steadily shrinking, though? Intel. Wild, eh?
> Google had lost some (4%) employees in 2023, but has grown back to 2022 size last year. Meta shrunk by 22% in 2023, but has been growing in size since then and is probably back to 2022 size right now.
Google's revenue in 2022 was $282 billion, in 2025 it was $402 billion (43% growth).
Meta's revenue in 2022 was $117 billion, in 2025 it was $201 billion (72% growth).
Surging profits paired with flat employment continues the concentration of wealth.
> You know who is steadily shrinking, though? Intel. Wild, eh?
Intel's revenue is falling ($63 billion in 2022 vs $52 billion in 2025), makes sense that they would trim headcount.
> This seems to be the new normal in Big Tech. They regularly announce massive layoffs, but if you look at their size over time it stays stable or grows.
Periodic layoffs always happen at all big companies.
I think it’s only surprising to people now because it’s being tied to the AI worries at the same time where we’re exiting an unusual period where layoffs all but stopped for a few years after COVID.
The layoff sizes are also larger because there was so much overhiring in those years after COVID. Some rebound effects in play.
Interestingly, at least on my browser, the bottom of the Y axis is not consistently zero from chart-to-chart, which distorts the message being conveyed by these charts.
> The number of our intern goal, a nod to our 1.1.1.1 public DNS resolver, is intentional.
But like the sibling comment says, "over 1,100" does not reference any of their resolver IPs anyways. In all likelihood, they hired fewer than the maximum of 1,111 interns and they are probably chopping slightly more than that here (max vs min).
First politics. Now businesses. This sounds like a wildly poorly written parody by teenagers.
"reduce Cloudflare’s workforce by more than 1,100 employees globally."
Are they 1) halting all the 1111 interns, 2) keeping the 1111 interns, now armed with AI, to replace mid-level/senior institutional knowledge or 3) a mix?
i saw this ALL the time at past employers. Employers higher all kinds of interns who eagerly get truck loads of work done and build great connections. and 2 years later the company is getting sold off, out of business, or mass lay offs all over the place. what's the point of highering all those interns in the first place?? geez.
Need to propagate a lot of dollars fast, 24/7 as a moat on it remaining a reserve currency.
99% of these software startups are basic software that can be handled by a single dev; see Reddit apps and such.
But that money printer was running hot and heavy. Needed to funnel it somewhere. Why not that favorite political cudgel of the elites; pointless busy work jobs! Let's invest in a bunch of shops nearby for them to lunch at too!
>mass lay offs all over the place. what's the point of highering all those interns in the first place?? geez.
If you don't hire them, someone else can hire them. Out of 1,000 you hire, one could be an "attention all you need" research paper writer, who could set up the next stage of innovation which you'll completely miss if you do not get anyone.
Initially, you’ve got to starve out the market of talent to stop competition from growing by nipping the threat in the bud.
Seems no CEO simply wants to say the company is under performing, we hired too many people, and now we’re resetting. But it’s clear that’s what happened on nearly all these layoffs.
None of these announcements provide any convincing evidence that AI is anything more than a convenient distraction from the real reasons for the layoffs.
Wonder if they'll do it like they did for Brittany Pietsch. She recorded her firing video some years ago. I think it's on tiktok but there are youtube videos discussing it as well.
Anyway, new employee at Cloudflare, just finished onboarding. Suddenly a short meeting is scheduled with two people she had never met before. She is told she is let go for "performance" reasons. She kind of tears into them with "what performance issues, I only got great reviews" just to hear the HR people squirm and backpedal, well because, they know they are lying. But of course, they're trained enough to never admit it and say "they'll get back to her on that". Needless to say, it has the same effect as a suspect being arrested arguing with the cops. But it did make Cloudflare "famous" on tiktok for a bit.
I found that video and I couldn't finish watching it. TBH it's really incomprehensible to me why we've created a culture where being so heartless is praised upon.
HR doesn’t squirm because they are lying. They squirm because they minimize lawsuit surface area as much as possible. I have been on the giving end of performance layoffs in big corps and there is an extremely strict script you have to stick to (both HR rep and me as the manager).
I saw the video you’re referring to and it’s completely unsurprising they clam up further when she became confrontational. You’re not gonna talk your way out of a termination unless you have some pretty hard evidence it was for something illegal.
That’s just what getting fired looks like and people don’t often get to see the process so cloudflare “became famous”.
I wish tech companies would start building great products again, rather than trying to build the future. I've kind of had enough of Tech's vision of what the future should be.
I think this sends a clear message. And the message is this: "Don't work here! You will be f*d! Soon!"
(it also sends clear message to the clients: you will have to suffer through the cheapest to run AI agent in case of troubles, because yes, we care the most about Wall Street guy's income, not anyone else's, we save money on everything else anytime, even when we don't have to)
Also how EMs in amazon construct hunger games. Just hire a person every now and then so they can let go of another to prove you made your team better on some non-sensical performance evaluation axes..Cue the hunger games.
This paragraph from September 2025 didn't age well:
Like you, we have seen numerous reports that more and more firms are capping their total headcount in favor of leaning on more AI tools, leading to downsizing their intern and new-graduate hiring. [...] But we think this misreads the moment completely, so we’re heading in the opposite direction.
If you listen to people on HN you could think AI is not increasing productivity or is even having a net negative effect.
I think the reality is different.
In this thread I saw the resume of an engineer affected by this Cloudflare layoff. In the resume he claimed that adopting opencode in his workflow, he shipped an integration in half the time it took peers without AI assistance for similar projects.
Honestly not a bad theory. There’s definitely a huge disparity between actual productivity gained by using agentic coding done somewhat properly… and a non-stop wave of vibe coded work causing outages and churn. Pre-Covid hiring coupled with the high enterprise pricing for AI plans, it would make sense.
It is May 2026, there is no difference between AI and non-AI bills.
Most (if not all) major enterprises in the US have gone through at least one round of org-wide subscription renewals (eg: Atlassian product packs, Microsoft product packs, etc) where 1) price increases were mandatory, 2) AI features could not be opted out of, and 3) AI feature usage was strongly encouraged from C-suite to client-facing biz staff to telephone agent support staff.
I repeat, we are passed the point where AI bills and non-AI bills can be differentiated. We are all paying for these features driven by tokens whether we like it or not, whether the cost-benefit analysis makes sense, and whether they are even being used.
And we are all passing the costs onto everyone lower on the totem pole, from insurance groups to bank groups to national grocery chains to consultant conglomerates to minimum wage front-line staff to below-minimum-wage gig workers.
And this is why there are layoffs, every price increase from the top down causes further price increases to cascade down.
> The number of our intern goal, a nod to our 1.1.1.1 public DNS resolver, is intentional.
Hiring and firing based on things like this should be a huge red flag.
I’m surprised they didn’t lay off 1001.
I realize those were interns, so maybe the expectation is they’re temporary from the start, but picking these numbers for marketing instead of need is silly.
> Cloudflare aims to hire as many as 1,111 interns over the course of 2026. […] That’s why this significantly increased class of interns will have a special focus: to ramp up the creative and widespread application of AI with a fresh approach.
vs.
> 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.
It's almost like there's a difference between a contractor and an employee. You'd think someone in the smartest cohort would know the difference. You wouldn't hire a full time groundskeeper just to plow your snow for 4 months and fire them when the weather changes.
> 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
They have a reputation to maintain, otherwise it will be difficult to recruit the best people in future. That being said, damn, that is a very generous package by any measure.
First packages tend to be the best. If you work for them beware, the next round won't be as good (if there is one). The economy isn't the best, but if you get an okay job offer anyway you should probably take it rather than risk you will be in the next round that is worse.
Dont' get it twisted, anyone; plenty of companies have a reputation to maintain for this reason (but don't do this). This is an absurdly generous severance package.
Damn. I got two weeks notice and then got shown the door with nothing. And now I get to compete with all these people who are going to be so much less stressed
Proper layoffs require at least 60 days of notice or 60 days of pay. Maybe you weren't part of a proper layoff, but if you think you were, check out the WARN act.
I want to agree, however, it will take every bit of that time for some to find new placement. These AI cuts aren't just making it harder to keep a job, but harder to get a job as well.
For better or worse, it isn't a company's job to pay laid off employees until they find a new role.
The industry standard for severance is 1-2 weeks pay per year at the company, paying out roughly 7 months is a big deal (and yes, an acknowledgment of how rough they know the job hunt will be).
I just tried hiring someone and received over 200 resumes that looked mostly fake. Thinking about adding a final in person interview in an attempt cut down the garbage when I repost.
This isn’t my experience, but I think it depends highly on the segment. We have mainly senior C++ devs (database company), and it’s still a challenge to find great engineers.
I think the current job market isn’t “one size fits all”. Having said that, obviously if they’re getting laid off, they may very well be in the segment that’s less desirable.
> however, it will take every bit of that time for some to find new placement.
Isn't this another way of saying the severance package is generous enough to cover the time needed to find another job even in a down market?
If a severance package that covers the time needed to find a job isn't enough then it's starting to feel like we're being angry just to be angry. I don't like layoffs either (I've been laid off before) but if a company is giving 7 months of severance on what was already a very high paying job, that's very good.
Depends on what you specialise in. Sysadmins seem to be in demand (which isn't a programming job but is in tech still) and embedded hasn't been killed by AI yet (and I doubt it will)
"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.
"We’re basically using our own staff as guinea pigs. Our AI usage has spiked 600% lately, mostly because everyone from HR to marketing is leaning on bots to do their actual jobs. We’re forced to restructure the whole company around these agents just to keep up with the hype, hoping it actually helps us ship something useful and justifies the "better internet" PR we keep pushing."
I don't read this as employing 20% was twiddling their thumbs and sitting around.
If it means anything beyond economic issues, I read the implication as their LLM expenses have gone threw the roof and with the choice of cutting LLM use or cutting headcount, well we see what mattered more to them.
Unfortunately I think we’ll see more and more of this as companies continue to encourage their employees to use LLMs everywhere and for everything. Eventually they will have to come to terms with the cost of such mandates, and it’s either ask your employees to “use AI less,” or it’s let some percentage go and continue to let the rest burn tokens.
it's all marketing wank, but how can they "supercharge the value delivered to customers" through company restructuring? whether they hire 50k more people or fire everyone, the value delivered to the customer depends on the quality of the product and the price - irrelevant of cloudflare's margins.
I believe they meant that the cost of using an LLM is extremely high! There are reports of people spending USD $500~1000 a day! There's the possibility of decoupling of effort and output! Which causes an illusion of work.
Of course it's a lie. Cloudflare is saying, essentially: "AI is making us so profitable that we've decided to reduce our profit by 20%, to keep it reasonable."
But they’re not profitable? They make 450k per employee revenue, but lose 17k profit. Meanwhile they spend 470 million in stock based compensation for example, up 100 mil from year before, on 5k employees, which they’ve been increasing a lot every year.
I am confused by this post. No trolling: You wrote "reduce". Did you mean to say/write "increase"? If you layoff people to reduce costs, then your profitability should increase.
You also have to consider nowadays whether a human even wrote most of it, or if is just a tale told by an idiot, full of sound and fury, signifying nothing.
But yes I agree the trigger for layoffs is never massive productivity, the reasons give here are completely bogus and if management actually believe any of it the company deserves to die.
Firing people because they became more productive with AI does not really make sense. If productivity went up, the company should be able to ship more, support more customers, or grow faster with the same team. This sounds less like an AI efficiency story and more like a funding or cost-control story dressed up to keep investors calm
I will reply here assuming that you posted with good intent. I think that their PR statement is reasonable from an investor perspective. Try to detach yourself from the personal effects of layoffs. In short, they are saying: Thanks to AI, we don't need as many people to run our business. It is pretty clear to me. Sure, you can be angry about the layoffs, but the economics are clear: AI is increasing profitability faster than the business is growing, so they are using layoffs to reduce costs. Imagine that you have an HR team of five people. If AI has dramatically improved worker efficiency, can you have an equally effective HR team with only four people? That is basically what happened here.
I think GPs point is that this is how they're trying to spin it, but they're not explicitly saying it, and there are doubts whether it's actually true. For outside observers it's difficult to simply ignore all the embarrassing outages that cf has experienced recently and just accept that the company has suddenly solved all their issues by using AI and firing people.
> AI is increasing profitability faster than the business is growing
I don't understand how this could be the case for Cloudflare specifically. They made their name with DDoS protection and sandboxed hosting. These are exactly the products whose demand rises in lockstep with agent adoption. How could they possibly be allowing all the growth opportunity to slip past them? In times like this, with rising productivity to boot, you increase headcount, not decrease.
I hope this bubble bursts soon. HR people avoiding to do their actual job seems like it is the modus operandi in the majority of businesses these days.
Which part of that sentence was confusing? I found it perfectly clear. Their internal AI use is exploding, which is a signal that they need to structure for that, and so they’re laying people off as one of the first steps towards actioning that signal.
Nowhere did they indicate there is less work to do, in fact quite the opposite.
The sentence is not confusing, the sentence doesn't mean anything. There's nothing confusing about it, but there's no information either. "We're making great strides in AI" and "We need to cut 20% of people" are simply two statements without any connection aside from the fact that they are next to each other in the sentence.
> Their internal AI use is exploding, which is a signal that they need to structure for that, and so they’re laying people off as one of the first steps towards actioning that signal.
I don't see anywhere where the jump from "structuring for AI" directly leads to "laying people off", unless "structuring for AI" means there is less work for people to do, do you?
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 something 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.
They will just expect a lower wage rate. There's some tacit collusion going on here.. they are using LLMs as a vehicle to address the price that comes with the true shortage of software engineers. You seriously dont think they talk about this behind closed doors? of course they do.
Almost 99% sure that They hired a consultant firm (MBB) that told them who to cut; this is pretty standard practice now at public tech corps. Especially if EMs weren’t in the loop. This looks like purely a margin improvement exercise thats hiding weaknesses in the company’s financial performance.
I really don't know. My org now has 40+ engineers with 2 managers. Down from 6. I really don't know how they will do it. Each one of us were handling critical shit, and desperately needed more engineers. PMs made things run and they got hit even harder
No one had any idea. My director got the same email
This style of layoff seems far more common post-2020 than targeted "restructuring". I've lived through a few layoffs now, survived most of them, but each time and at each company I've gotten by on an apparent roll of the dice and nothing more. Every time I've seen some truly important ICs get let go, their EMs having no input.
> I was trying to hire more people because we're so busy with everything we needed to do
That’s how it was at my previous company also. If you asked any engineer there they’d say “I’m incredibly busy, and I need more headcount to get through the things on my plate”. Then they laid off 40% of the company because AI had made everything so efficient shrug
In my experience, companies never value transparency. And it's doubly true for companies that boast about transparency. Obviously, it's within their authority to cut head count, but they've also obviously made some kind of major strategic shift either to cut costs or abandon some lines of business and they are not being upfront about it at all. The stock is up 111% over 12 months. They don't seem to be in any danger of crashing or collapsing.
I know of 4 teams in Cloudflare One, who lost EMs, PMs and engineers in really critical connectivity systems. Our list of things we need to do is years long. Many of those are needed for reliability and scaling.
They quietly stopped hiring months ago and I figured things were not good. My mistake was thinking my group would be a little safer being profit drivers and big deals...
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'm honored you're responding! I've received a few leads from this comment that I'm chatting with, and it's been a major morale boost for me.
At this point in my life and the economy I'm not particularly looking for such early-stage startups like Magnetic (especially w/ relocation to SF), but thanks for giving me the heads up!
Firstly, kind sir, layoffs are hard for each and everyone of us and I wish you best as you navigate it. I know you will get many wishes and good lucks though but consider my wishes to be one of many to help ya out.
I recommend if you can share your CV/send a message there, I will try to also keep an eye on it if you do share your CV/resume there and I would love to upvote your comment there to shower some more exposure/love from the community as you are member of hackernews. You are also part of the hackernews community and its the least that I/we can do.
You probably have other stuff on your mind right now, thus I can understand if you are not in the mood for answering, but I‘m too curious to not ask:
According to the Reuters article, AI use has increased 6x over only three months. How did that feel from the inside? I’m especially curious because Cloudflare is not a toy company, and this is not about some influencer trying to sell me their latest „this changes everything“ bullshit.
So, shifting a company significantly towards agentic AI, and I assume this isn’t simply about „install Claude Code on every desk“: would you say it actually works? Or would you say it’s still more of a bet, and still needs to prove itself as a sustainable long-term strategy?
I work at a similar scale company. Like an average person's experience, some things are amazing and super productive with AI and some things aren't. And it's not always the same things all the time.
Sometimes we are able to do a ground up rewrite of a service and squeeze huge efficiency gains out of it all bc AI is helpful in doing so and we have a very good test harness.
Sometimes it makes subtly wrong suggestions that people follow and cause outages.
Sometimes it leads to huge headaches for devs who have to review huge backlogs of code with no idea which parts are serious and which are low effort AI slop.
Sometimes it lets you do a 2 month project in 2 weeks.
I had OpenCode doing most of my substantial code changes for me, once I figured out what the code changes had to be. (so, it saved me typing but not thinking) I also vibe-coded (really slop-forked TBH, that's the Cloudflare way after all) an internal tool that our team used. I definitely was not a small user of our AI tools, though I know that there are others with significantly more.
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.
"A company finds itself with surplus labor capacity due to the efficiencies in AI"
That is one possible interpretation, though I don't think it's supported by any facts.
A competing explanation: companies are spending a ton of money on AI in search of efficiency, and then laying people off in order to offset these investments. That's certainly what's been happening at Microsoft, Oracle, Meta, etc.
You can't really compare them to Microsoft, Oracle, or Meta. Those companies aren't cutting costs because AI replaced their own employees. They're pouring money into AI infrastructure and models because they want to sell that capacity to others.
Their thinking is more: instead of funding another internal product team, they can redirect that payroll spend into more AI compute and models they hope to monetize.
I don't believe CloudFlare is doing that, though they might, they could be needing to spend in Edge AI compute and what not, building out that infra isn't free, so they might need to find places the cash will come from.
AI is a fraction of cost of an employee though right? I have an 1000$/mo AI budget which is a fraction of my salary, and most people don’t hit their limits.
Yeah, I wrote this before I dove into their balance sheets for another comment. Cloudflare’s cuts are more defensible than most, but the timing and explanation are shady given that they’ve had the same problems for years.
> A company finds itself with surplus labor capacity due to the efficiencies in AI
It's likely more:
A company finds itself with surplus labor capacity due to the over hiring during Covid, cutting down on risky ventures, protecting margins, and narrowing scope.
But I think there's also:
A company wants to see if AI is making them more efficient, decides to cut people as if it was and see what happens.
I also am not sure about the short term stock price, many recent mass layoffs the stock often moved down. The CloudFlare stock is tanking in after market for example.
Excess labor would only translate to increased revenue and new products if these companies had a product vision to begin with. But they don't, so people get sacked.
You are on the right path, but I think you are off by a bit. Every company has more work they want to do than budget allows. However some of those things won't pay off fast enough. That is they have product vision but are smart enough to realize that those extra things they won't be able to do are not things customers are willing to pay extra for today.
> 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.
Why do you think it's greed? The company's stock is down and they just missed expectations on their last earnings report (unheard of in big tech in the last 2 years).
This was kind of my read as well. We are increasing our AI usage but not in a way that meaningfully affects our ability to deliver on our product roadmap, so the solution is to cut opex on people so we can devote more to compute. The last bit is obviously speculation but it doesn’t feel like a far leap.
My charitable company strategy take: this is companies skating to where they think the puck will be
Given the rapid progress in LLM capability in recent history, it's reasonable to expect that continues... at least to some degree.
Consequently, companies are going to need to continue to cut, and delaying those cuts will only leave them in a worse position.
Devil's advocate counterpoint: it's currently unclear where AI does and doesn't provide efficiency gains in a business, so some companies are making headcount reductions without knowing where they should target them
This is simply a symptom that the company doesn't have good Quality Control processes in place.
AI-produced code is good but it's not so good that it can replace hand-crafted (or heavily supervised) code written by the type of engineer who works at Cloudflare.
What's really happening is that a few employees realized they can game the system by turning on a firehose of AI slop and pushing 10x the LOC than any other engineer (with or without AI), because there's no one to tell them to stop, and in fact with a management that actively encourages this.
> What's really happening is that a few employees realized they can game the system by turning on a firehose of AI slop and pushing 10x the LOC than any other engineer (with or without AI)
Did they figure out how to game the system? Or was the system set up exactly with incitaments to produce exactly this outcome?
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.
This genuinely wouldn't surprise me, and I need to go back to looking at balance sheets to see if I can sus out the validity of that narrative. As AI subsidization ends prematurely and costs skyrocket, we should expect to see those costs reflected in the operation statements of major customers.
Since I had Coinbase up for review already, I decided to peek there first for any sort of correlation. In 2023, their "Technology and Development" line item shows $1.32bn going out, and by 2025 it'd ballooned to $1.67bn. This is despite headcount actually contracting by almost a thousand people between those two statements, which would normally mean a smaller technology spend since a lot of corporate software is seat-based nowadays. This suggests that yeah, actually AI spend is creating a heavier drag on the balance sheets and it's being offset with layoffs since the "job replacement" narrative is strong. That said, I'd need to check dozens' more balance sheets to draw any sort of industry-wide conclusion.
And to factor in other infrastructure costs that's become more expensive too, such as hosting or hardware.
So unless you can isolate AI spending from others that's not going to be convincing.
Rings true because now teams end up building a lot of things that may or may not have alignment to customer/business needs.
The slow part has always been figuring out exactly what the customer/business actually needs, not the coding. Now teams are throwing money at tokens without solving the "who's buying this?" part appropriately and end up just building excess.
Personally, I think AI is just a convenient scapegoat for these mass layoffs. Also, these kinds of announcements contribute to sustaining the AI hype which all tech investors benefit from. And investors looove hearing about mass layoffs, stock goes up every time without fail.
investors are not some nefarious monolith cheering for companies to make decisions based on how it benefits The Vibes. they're analysts assessing business decisions.
This is no that far fetched...
I don't think it's that common that a customer sits on the fence and says "If only company X had Y on their feature list I'll be a paying customer". So the speed at which the company now runs through its roadmap does not equate to new customers joining.
They are laying people off because the cost of financing have gone up. The risk free rate is now almost 5%. For equity financing you'd need to show revenue growth models that allows repayment at that rate plus equity risk premium (which is quite large for new growth companies).
So the CFO makes a model that allows for this and for sufficient ROI they need less people to be more productive. This mechanically forces them to lay people off.
Of course laying people off might actually not improve productivity, but they need this to have chance.
They're laying off the people who can't produce a minimum of 2x with AI, and keeping the maximalists with no life outside of work barely keeping up with the 100k LOC a week they're shipping to prod.
Suits have an idea of what the New Model Coder should be, and it's not people who don't burn through 100,000,000 tokens a week.
I wouldn't argue that it doesn't give any benefits. However, it's not worth the current cost unless you already own RTX PRO 6000 to run any reasonable LLM. I'm using Claude Free and I'm happy with what I get, especially for the cost of $0.
I'm eagerly waiting for the prices to come down so I can upgrade my PC to AM5 and run Gemma 4.
Its quite possible that LLMs become housed units like the next PC. Initially it starts off as being a large thing in data centers (like computers did) until they got smaller and smaller. Except I expect the time it takes to get smaller and smaller to compress much more - given that we live in a world with far more resources and risk-taking.
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
Not meaningfully, but sometimes 6mo-1y as part of an undergraduate programme to gain industry experience. E.g. I had 6mo in my third year (not at Cloudflare).
Vague overtones on AI savings without any hard evidence that’s happening, while ignoring obvious evidence that the company over-hired and is now underperforming relative to what would be needed to justify all that headcount.
Nobody believes these narratives at this point and CEOs would garner a lot more respect if they just simply said
“I screwed up, we hired too many people and fell short of performance targets. I own that. This resets us back on track.”
They are in a great position to generate a lot of value without rising prices, they haven't realized it yet because what they have to do is pretty boring.
I use Cloudflare for a lot of my side projects. It's a pleasure to use, and I manage to stay under the free tier. It does feel like they should be bigger in the cloud space, but I imagine the major players get a lot of revenue from VMs, which is a space Cloudflare has avoided.
Their AI costs have increased 600% but this hasn't translated into actual revenue. Also they are probably projecting AI costs to keep growing. They've done the math and at some point it is going to affect their bottom line.
Reducing or limiting AI usage would be inconceivable given Cloudflare itself has invested on AI and is selling AI services. Instead they've opted for reducing about 20% of their head count.
I don't think so. I think this is a common narrative in Hackernews when layoff news are shared. All the people I talk to in the industry positively confirm a boost in productivity. Its contribution to actual revenue could lag but it is present and confirmed by many.
I feel new startups, features and more services coming online would be a good measurement of this amazing productivity boost we're seeing.
Have you noticed a major improvement in every service you pay for ? Like many new features and incredible improvements in user experience and reliability? Because I’ve not really noticed that. Actually, things seem to be offline more than they used to, namely GitHub.
I am definitely more productive at generating lines of code though which definitely gives me the illusion things are mOvInG rEaLly FaSt.
Nah, even insane token costs don't come close to the costs of labor.
Most likely this is just 'AI-washing' - dressing a layoff for economic reasons (such as propping up their shrinking margins) as something more palatable to investors (AI).
It's such a bad time to be laid off right now. The competition is ridiculous. I have to compete with like 100k world class employees. Best wishes cloudflare former employees. I hope some of you make new companies and hire other geeks who are on their butts. A lot of us at other companies got the boot with no severance or early stock vestings. It could be worse!
"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.
The AI argument doesn't make sense to me for layoffs. If AI is making the company more productive then there's an incredible opportunity to use the existing workforce to tackle the massive backlog of important work. A big layoff only makes sense if there is no more useful work to do or you're killing products.
AI usage is getting expensive since Anthropic et al are turning the screws, and that money has to come from somewhere. Reducing AI usage is blasphemy of course, so cutting headcount is the only path forward.
Is there no one figuring out ROI on AI spend vs human payroll? I can't make sense of this idea that companies are firing productive employees because they're spending too much money on AI that isn't doing anything for them... they still hope chatbots will be worth it in the future?
The marginal gains are inevitably diminishing (since you pick the lucrative options).
There's a practical rate at which work can be done, limited by all sorts of things like organisation friction, how fast customers are willing/able to adopt new features, and how fast you can learn from it.
Arguably AI can improve all of these, but those improvements might not be happening as fast as CloudFlare are able to pump out features.
Further, this is all exacerbated by upper management having to made decisions at the nth derivative. Meanwhile, salary costs you now. You might foresee vast riches in future, but you have to remain solvent and competitive until then.
These all points towards layoffs. There are many factors that point towards keeping employees.
How to decide? No idea. Rightfully no one trusts me to make these!
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.
Yes. We've since changed the top link to a third-party article. We prefer to do this with corporate press releases* - this is probably the #1 exception to HN's "please post the original source" rule (https://news.ycombinator.com/newsguidelines.html). If anyone sees a better third-party article, we can change it again.
(Edit: it's not really an exception because the purpose of a corporate press release is usually to obscure the main story, which means it's misleading, so by HN rules we should change it.)
(Edit 2: I feel like I should add that this isn't specific to Cloudflare! It's literally a generic problem.)
It's interesting how every time there's a layoff, the blog post always has a title like "Preparing for what's next" or "An update on our workforce" or "Getting ready for the agentic era"!
I’ll never forget how when I was at Google, every email with subject line “An update on X” meant X was getting axed. Like, just say so in the subject line…
> "Building for the future" gave me the impression that it's about some major new initiative...
If you'll believe them, it indeed is:
... [the Leadership at Cloudflare] have to be intentional in how we architect our company for the agentic AI era ... reimagining every internal process, team, and role across the company.
... [This layoff is] not a cost-cutting exercise ... [but] Cloudflare defining how a world-class, high-growth company operates.
... We don't want to [mass layoff] again for the foreseeable future.
... [Cloudflare] cannot rest on the workflows and organizational structures that worked yesterday. We're confident that [Cloudflare] will be even faster and more innovative [after layoffs] ...
They're architecting their company for an agentic future? They're reimaginging the definition of a world-class, high-growth company? They're not resting on the workflows that worked yesterday?
blegh
What the hell does any of that actually mean? Like in real life words? Because that much corporate bullshit really sounds like it is a cost-cutting exercise.
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%)
Whatever the play here they can’t be angling for any external PR or internal morale boost. What if they wrote: “This is a tough economy and we have to tighten our belts.” Maybe that’s naive of me. Bad signal to investors as opposed to insignificant employees and commoners (PR)?
But contrast with this:
> 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.
What is this even saying? We use a lot of AI. And not just for other people... for ourselves. This means that: we need to be intentional?
What is a regular, not-investor, person supposed to glean from this? We’ve hit the automation jackpot: some of you will be fired, some of you will get more work for the same pay?[1] Along with shoving your face with euphoric buzzwords “AI era”, “supercharge the value”.
I must surmise that whatever PR and internal morale blow (?) matters so little to them. They are not at all afraid of any backlash from any lowly people.
[1] Again. This paragraph isn’t saying anything beyond that they are using AI and ho-ho things are a-changing. So one has to guess.
The job market is already brutal for many candidates, especially people who aren’t social media personalities and don’t have names like Cloudflare, Meta, Amazon, or Google on their CVs. Some people will end up homeless...
At least having Cloudflare on their resume will likely help many of these people land new opportunities, so I wouldn’t be too worried about their long-term prospects...
What I don’t fully understand is why a company like Cloudflare decides to let experienced people go under the umbrella of “reorganisation.” Couldn’t some of them be given the opportunity to adapt to new priorities or ways of working?
What exactly is so fundamentally difficult in 2026 that someone with years of experience can’t learn?
Of course, large organisations sometimes develop dysfunctional habits. I’m not saying that’s necessarily the case here, but common examples include:
1. Problems that a motivated engineer could solve in minutes instead turn into meetings scheduled a week later, followed by more meetings.
2. People are becoming so process-oriented or conservative that they reject new approaches by default (Not even trying things out, and I don't mean migrating to a new fancy framework)
3. Engineers losing touch with product thinking and customer impact.
And if the explanation is cost-cutting, it’s fair to ask where companies choose to spend money elsewhere, e.g. unlimited LLM token usage with little accountability, extravagant off-sites, flying thousands of employees to expensive locations, etc.
Finally, why do they keep hundreds of job openings on their careers page? Are those false job descriptions wasting candidates' time?
> What exactly is so fundamentally difficult in 2026 that someone with years of experience can’t learn?
It's having the experience to point out all the issues in the generated code that's the issue. The interns they hired won't have the experience to push back and slow the slop machine down.
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?
You only have to be there for the company in that you do work for them and they give you money in return. Any tech guys working for them will have received plenty of money. I feel sorry for the non-tech people though (HR, recruiters, etc.).
This announcement is bullshit though. Banging on about transparency and then not even trying to give a reason. They didn't even try to say it's because of AI! They just say "AI is important. We're laying off 1000 people." Wtf.
Wow, the way Upwork is handling this seems really bad. They announced the layoffs today, but nobody will know who is being let go until next week! Sheesh.
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.
Clearly if AI were the productivity booster that we're told it is, you'd see hiring into it, not firing. Though I guess on the call Prince did say he expect end '27 to have more employees than for any of '26. Anyway.
Except for one small, very tiny, itsy-bitsy problem. We humans are very bad at understand the second and third order effects of events. Really, really bad. First order consequences: "Oh we don't need people anymore".
Do I know the second order effects? Probably not. But at least I know they will be there.
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.
I know this is cold comfort, but in times like this, it can be a good idea to start your own company. Cloudflare itself was founded in the wake of the GFC (post-2008), when tech was dead as a doornail. The best time to start something is when awesome people to work with are unemployed.
Makes sense to do these things. To realistically make it through this paradigm shift you need to organize into a thing that can exploit it. That inevitably requires eliminating teams that don't fit into the new picture. The severance package seems quite generous. Hope everyone lands on their feet.
It's not that individuals are not useful, or even that their roles are not useful. It's that you have to structure your organization to be able to exploit a coming wave, and existing mechanisms and operations just get in the way. By the time Netflix shut down the DVD business it was making $80 m in revenue and the margins on that business were some 50%. But if you think the writing is on the wall, you're forced to act.
Doesn't mean the people in the DVD-mail-ops sides were bad at what they do. The world had just changed and the business became different.
I interviewed at cloudflare in ~2020 and didn’t get the job - everyone I met during the process seemed really smart and kind though. Would love to work with some of those people
Email me subject “cloudflare” if interested - thomas@ our domain (I am the cofounder)
This comment should be higher given how much FUD is in these comments. Hacker News having a meltdown about a bunch of backoffice folks getting laid off while they’re still aggressively hiring SWEs is… something
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
My response to this, as a generally satisfied CloudFlare customer who was excited to try out agentic email, is that it's not a good time to increase the amount of business I do with them.
The sre team I was hired onto last month, just lost 2 of ~12.
Cynically: our team hired two (me, senior, and a junior) and then we lost two (staff, guy who had been around since the founding, and a senior+ guy)... I kinda assume they baked in some of the layoff decisions into their past quarter or two of hiring to reduce seniority, and salaries, overall. Really short-sighted.
I was still needing to get some 1:1s scheduled with the guy who'd been here for Forever and knew which closets had all the skeletons stashed away. Can't do that now.
A few people here have been impacted, so I want to talk about something constructive that could help them. As someone observing industry trends from the outside for a while, my advice to those looking to get hired these days: Build something useful from scratch – on your own –- that you can show off as soon as possible.
The buzzword everyone is looking for is "high-agency." (No, not those agents, but yes, those will help.) Basically employers want someone who will start something from scratch and take it to the finish line by themselves.
The interesting thing about this is, it is by definition not something you can put on your resume; It is something you show, not tell.
Yes, you need to do this even as you go through the absolute hell that is a job search. But trust me, this will a) help get a much better job, and b) help in the long run throughout and beyond your career. This will be the most valuable skill in the future.
You don’t need to use AI, but looking at the timeframes and skills in demand, yes, you very likely want to use AI.
A few other thoughts:
1. Target an area you are very familiar with. This will sharply cut down the time to MVP. This will be a challenge for the more junior folks, who should consider reaching out to senior mentors. Mentors, consider outsourcing a suitable personal project to them.
2. It could be something you are an expert on at work, if your employment contract and IP laws allow. As a bonus, releasing this as open source, or even a competing product if you’re so inclined, will have that intangible bonus of sticking it to your ex-employer.
3. Even if heavily using AI, keep your hands-on skill active. Most companies still do old-school leetcode interviews.
4. Bonus if you do something multi-disciplinary. Sprinkle in a domain you have no background in -- design, writing, sales, marketing, data science, frontend, whatever. You'll definitely need AI for this, and even when you make mistakes, few will harshly judge somebody down on their luck trying to expand their boundaries.
I understand that your advice comes from the right place. However "High-agency" is the "Full-stack Engineer" of the AI era.
A single salary covering many disparage positions and roles. It's been reworded b/c with AI, apparently you don't even need to be an engineer (or expect to be paid as one) anymore!
Hmm, I think "generalist" is the more current term for "Full-Stack Engineer." But that's more about technical skills. "High-agency" is more a combination of personality traits and technical ability.
So in terms of buzzwords it would be something like generalist + self-starter + go-getter + hustler + finisher.
They won't say it, but everyone wants basically a solo founder, except one who (to your point) gets paid as an employee.
Which is why I am saying this is going to be the most important skill. If they don't pay you enough, you could just go be a solo founder for real.
"We are reorganizing for the agentic AI era" reads better than "our gross margin is compressing, our SBC is too high, and our growth is decelerating." Both descriptions could be true; only one gets you a flattering blog post.
The level of group think here is unbelievable. Any opinion other than this is down voted immediately.
A whole page of people bargaining and not wanting to face reality.
At my work, our healthcare plan renewed May 1st. We have great insurance. The CEO told us that the healthcare premiums just went up 50% so enjoy this year because it is going to be less great next year.
It doesn't matter how many people have a type of religious faith that this has nothing to do with AI and is all posturing.
The reality is AI is going to get cheaper in the future and I am just going to keep getting more expensive as an employee as we circle the drain in this health care and debt death spiral that everyone is also in complete denial of with no political will to do anything about.
S&P 500 is at an all time high. The real layoffs haven't even started yet.
Yeah, I just don't understand the thinking here on HN anymore. (My account is 15 years old)
It was clear to me even before ChatGPT arrived that software was eventually going to go the same way agriculture went. We will simply need fewer people to do the job than before.
I don't buy that AI will completely automate away all software engineering. I think if you're not in the top ~40% skill wise, you're in serious trouble and have a bleak future.
It’s not like this is a factory floor where you process something coming in and AI suddenly makes the process more efficient and people are idle.
Every team in tech world has infinite backlog, you don’t fire 20% the minute someone manages to close a few tickets.
Many CxO made a decision to spend $$$$ on AI; that's their bet and they're are adamant about it. Money should come from somewhere and layoffs is the easiest way to free some budget in a software company. Was it a good bet only time will tell.
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.
Expenses were more on purpose, they amortized a bunch of hardware depreciation now instead of over 5-7 years with the new tax changes. This is pure greed
Flippant sarcasm that they're pretending this wasn't a financial decision, and was entirely about being ready for the amazing productivity gains of ai they've already seen, expanding across the business.
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.
Yeah I'm there with you. I got lucky as a kid with delving into this as a hobby and it turned into a professional career. Thought we could change the world for the better, what we made instead was social media cancer and LLMs that can pretend to make everyone 10x more productive. I loathe it.
Absolutely. News like this is so hard to ignore. Nervous as hell to drop big money on things the family needs right now. Grateful to have a job, but life overall was just better in almost every sense before AI became part of our daily vocabulary and layoffs occurring every couple of weeks.
I've been out of work since almost a year ago after getting laid off and the same is true for a lot of my coworkers; the job market is absolutely broken in half for a lot of different but related reasons. Thankfully I have significant savings and low costs so I can just coast and do stuff in my own time, but the same hasn't been true for others I know.
Frankly I fully expect people to get even angrier once they become unable to meet the bills and companies still tout the whole AI line.
Really sorry to see the news about the RIF. My thoughts are with everyone affected.
If you (or someone you know) were impacted and want to stay in the distributed systems or data plane space, we’re doing a lot of work at Kong ($2B valuation API & AI governance company) on high-performance proxies, control planes, and Rust, Golang, etc. (I used to work on Cloudflare's edge proxy project)
Happy to chat about the roles or just the tech stack in general if you want to geek out. Feel free to reach out: datong#konghq.com
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?
There's multiple simultaneous narratives: the industry-wide one of slashing well-paid tech talent under the guise of AI productivity boosts, and what's actually going in at each company.
Cloudflare is an outlier because the company doesn't actually make money at present; their past three annual statements show net losses in the tens to hundreds of millions of dollars. Not hemorrhaging cash per se (their cash reserves alone could cover ~9 more years of losses), but still enough to warrant some cutbacks - and AI is the current scapegoat, thus they finger AI and throw folks out the door.
Coinbase's story is different: they're making good money, but their industry is inherently volatile. Again, recent volatility in the crypto markets related to...things...is dragging down long-term prospects for currencies, while ongoing trades are broadly just insiders doing insider things or exiting their positions for liquidity. Still, their share price is down 27% over 5 years and 18% YTD, so they also need to pump their share price so the executives get paid; layoffs are consistently rewarded by the shareholders, thus they axe part of their workforce for the bump and fingerpoint to AI.
Never take what a company says at face value, and always check their balance sheets. What Cloudflare did sucks but could be warranted to some degree; what Coinbase did has no justification whatsoever beyond naked greed.
> Cloudflare is an outlier because the company doesn't actually make money at present; their past three annual statements show net losses in the tens to hundreds of millions of dollars.
Their free cashflow is high; they're choosing not to report a profit. I don't think it's useful/accurate to say they don't make money.
Don't get me wrong, they may be doing a layoff to boost margins or enter GAAP profitability but the company revenue exceeds its operating cost by quite a bit.
> First quarter revenue totaled $639.8 million, representing an increase of 34% year-over-year
So they're growing 34% annually.
> Free cash flow was $84.1 million, or 13% of revenue, compared to $52.9 million, or 11% of revenue, in the first quarter of 2025.
Cash, cash equivalents, and available-for-sale securities were $4,163.9 million as of March 31, 2026.
...and they have $84 million free cash flow in one quarter, and it's consistently pretty good cashflow.
And they have $4b of cash or cash equivalents stockpiled. It seems pretty healthy to me.
Its quite filthy but it benefits them all to lay off lots of people to reset the wage rate in the market... Im sure we will see a wave of re-hiring when this stuff starts to blow over but many initially will be at a much lower wage rate.
Whenever someone brings up ZIRP, especially someone with a username like yours, it's an indicator that they have no clue what they are talking about and like to regurgitate things they read on the internet.
> Also the US economy is collapsing, that probably has some relevance.
I think there's also a certain permission structure that once one sufficiently large org does a big round of layoffs and doesn't get punished, a bunch of others will run the same playbook. We've seen this before -- back in 2022 when Elon fired like half or more of Twitter and the service didn't immediately implode, it gave other CEOs permission to do massive layoffs in the guise of "efficiency" even though the real reason was ZIRP was over. Now they're claiming it's because of AI when it's really that their margins are eroding because the overall economy is slumping and they need to offset AI spend.
I don't see how laying people off isn't inherently and always a "cost-cutting exercise." If they had an unlimited budget, they probably wouldn't be laying them off, right?
Maybe it's supposed to mean that it's not... something more specific?
At this point, the thread has over 700+ comments, but if any impacted Cloudflare folks see this and are interested in working on the same shape of problems, Fastly posted our "Who's Hiring?" for May at this link https://news.ycombinator.com/item?id=47975839
Happy to answer any questions, though I only check HN about once a day.
2008 really wasn't that bad if you were in tech...
No idea about 2001, but I've heard it was fairly rough. More recently I've seen people say now it's harder to find work today, I think in part because in 2001 it was mostly tech companies laying off talent, while corporates who were less impacted by the dot-com bubble were still building out their engineering teams.
The problem with the 2001 dot com bust was that it came on the heels of the telecoms downturn, so the two biggest (at the time) tech sectors were in trouble simultaneously.
Yes, there was still corporate IT - and some areas like finance were positively booming. But for online retail, media, advertising, etc it was a wasteland for 4-5 years. Plenty of people never found a way back into the industry.
To me, it felt much worse then than it does now (though perhaps the USA is being hit much harder at the moment).
2008 did hit tech but, outside of finance, the shock was over much quicker. The effects on the bricks & mortar economy were more obvious, though, so it got covered more in the media.
The problem today is we had 10 years of “learn to code” and a a lot of people did. Similar to 2001. 2009 wasn’t really bad for tech since we had a huge shortage of workers in the space. Companies would hire straight out of mid-tier universities. CS departments were desperate for students.
From memory, the only recent layoff where the company was not only profitable, but also growing is this one.
It's not clear if we are at the beginning of a crash or if the everything-bubble still has some pressure to expand. But whatever impression people can report here are about the past, and thus not about any crash.
2001 set tech jobs back a few years. 2008 wasn't nearly as bad for tech because as money got tight, there was an impetus for companies to invest in tech to cut costs. I think a similar thing might be unfolding now with non-tech companies investing in AI to streamline processes.
2008 the global economy came somewhere between hours to days of completely crashing if AIG hadn't been bailed out. Other than Covid, it's only the second time in the past 50 years unemployment hit double-digits, the other time being the early 80s recession in the wake of the 1979 energy crisis, which saw inflation go as high as 13.5% and the prime interest rate hit 21.5%. You're probably only concerned about your own industry, but even now, unemployment is still around the lowest it's been since WWII outside of the past couple of years and the late 50s.
It'll be another 40 years hopefully to get a full lifetime of experience and see how I ultimately feel about this, but right now, my sense is software saw a huge boom in the 2010s, a la aerospace in the 60s and finance in the 90s, and it isn't going to die, but that boom was never going to last forever, either. Being a specialist surgeon was always the only true close to guarantee you'll make half a mil annually with supreme job security. Everything else sees booms, busts, regional disparities, and power laws that make it hard to even talk to each other about it because nobody's experience is universal. Even now, in my particular niche of the industry, I don't know anybody who's been laid off. My own company and our competitors are not exactly drowning in cash (I work largely on commission and it's been a terrible quarter), but we're expanding headcount, not reducing.
Conversely, in the 2010s as software boomed and I did terrifically, basically my entire family is in trades and it was totally different for them. Drastic cyclical instability, projects started but then canceled all over the place, injuries, bankruptcies, drug addiction, prison terms. But that's also in California. I live in Texas and construction here seemingly mostly stayed in the boom state. All the tradesmen I know from here rather than family did much better. We also had roughneck as a lucrative fallback option for anyone that didn't mind living in the middle of nowhere thanks to the fracking and shale booms. Computer geeks from 2006 to 2021 or so also had that kind of easy skill transfer fallback thing thanks to the boom in computational data analytics due to advances in data storage and machine learning technologies.
We might even do well to remember that hyperscalers drowning in ad money for the past 20 years had a practice of intentionally overhiring to hoard talent but not give them anything productive to do, putting them into restrictive NDAs and non-competes largely to prevent them from starting their own companies or working for competitors. If that practice is ending, it floods the labor market, driving down wages, and reduces industry-wide employment metrics, but it's not death of the profession so much as ending a market distortion. Maybe it even supercharges entrepreneurialism, but right now we just seem to see a boom in the "solo indie dev" putting out reams of slop. At some point, people have to actually work together and have a real product vision that solves a problem other than using AI to make dev tools to harness AI for making more dev tools.
I'm sure this is going to happen a lot to big companies, with AI they are all going to find they have too much staff and are not likely to benefit from a higher pace of development. Smaller/Mid size companies on the other hand are likely limited in how much staff they can take on and AI just accelerates their plans (I'm in a company like this).
These relative figures mean nothing. Your usage of one specific ultra-new model went from one hour a month to seven? congrats to the 600% increase. Your use of a widespread common model went from 1M tokens to 7M tokens ? Also a 600% increase. Your spend on AI from 1M/month to 84M/year ? ditto.
Other than the latter, I'd read all this as meaningless. Am I wrong?
The CEO of this company is worth close to $7 billion. So I don't buy the lame limp-wristed argument about laying people off due to AI.
So if the CEO reads this? Put yourself in the shoes of all the people you laid off just now. Those people that have families, who all they were ever trying to do is maybe save up a million dollars so they could retire. In doing so despite the company making record profits. While you have enough money to buy yourself a damned cruise ship and then some. What are you going to do with all that money anyway?
Companies like cloudflare operate at a very critical spot as of today. They manage the end points where TLS terminates for most of the internet traffic which means that they have access to all the information flowing through them in clear. When a company is so much motivated by the profits then it would not be too far away when they start selling all this information. With this much centralized control, they can easily turn to abusers instead of being internet gatekeepers for profit. Firing so many people is bound to disrupt the operations, the only question is how much can they can hide/manage.
I think this is the reason why the detailed definition of companies varies, the motivation and regulation on a company varies too. Absent the regulations, financial institutions would have run off with the money by now
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?
Interestingly NET is down 15%-ish in extended hours trading and was even down 20% at some point. Many times a stock will make a positive move when layoffs are announced.
Cloudflare is a growing company by most metrics so if efficiencies through AI were the reason for the layoffs they'd just take the boost and grow even faster.
It all doesn't check out and I think the real reason for the layoffs and the negative sentiment by the market on the news is that their revenue growth was not as fast as their expenses and they realized they overhired. Leadership doesn't want to dive too much into the red even if it would mean bigger growth down the line. They are now beholden to the near and mid term stock performance.
I've had the chance to talk to some SWEs working at Cloudflare off the record in recent months and the one concensus I heard was that there was many times some tension between the boots on the ground and the decisions from senior managment but of course nothing they could do and especially after this they'll make sure to be quiet should they remain. There seemed to be a lot of pressure to deliver features and new products but quality has been left behind which means the SWEs felt pressure to deliver while also having to deal with the ensuing issues to resolve.
Either way I wish everyone affected the best and a speedy job hunt - there'll be quite a few really good people on the market now for no fault of their own.
Sorry to everyone affected by this. If any infra/platform folks in Europe are looking, Luxonis is hiring a Senior DevOps / Platform Engineer. It’s remote in Europe, focused on cloud infrastructure and internal developer platform work for spatial AI / computer vision products:
https://www.luxonis.com/about-us#devops-engineer
IDGI. How is a company that owns a bunch of infrastructure you almost have to use to put your service on the internet not more profitable such that they have to do layoffs?
Screw Cloudflare. I went through a bizarre 3+ months hiring process where I would have a disconnected, vague 30 minute interview with someone every couple weeks. Then, suddenly rejected for no real reason given.
Their hiring process is remarkably bad for a company that otherwise is so well run. My most recent experience was them throwing a workday link at me to fill something out before we even had the initial phone screen and the forms/ui was so poorly designed that I stopped responding to them.
Wow, and I had thought they would be one of the winners in the AI era. A lot of SaaS's can be recreated with an agent and some tokens, but I thought the more infra-y companies would be the beneficiaries. I've vibe coded a few Cloudflare Workers and thought it was a great experience. And Claude knew how to use wrangler to do a lot itself.
TBH I'm surprised people don't see the obvious result of this collective madness:
1. Force every engineer to use agentic AI to the max.
2. Constant anxiety at work due to the threat of job loss and unreasonable expectations from management/business.
3. Engineers start yoloing everything using AI while wasting tokens.
4. Speed goes up in the short term, while quality and expertise degrade little by little, all while bleeding money due to AI usage.
5. One year down the line you have a company full of engineers that don't care and a bunch of slop-bloated, bug-ridden products that the customers don't want, and a massive bill.
Not sure how to feel about this. On one hand, the transparency about the layoff and the severance package for the employees are positive things.
But seeing the intern hiring count the year before basically offsetting the layoff headcount makes me think they've been planning to replace their employees with interns and plug the expertise gap with AI.
Isn't the most likely explanation here that they needed to show in their earnings call how their bet on becoming AI infrastructure is leading to high revenue growth expectations, and that isn't happening (yet)?
The stock is currently at -17% in after hours trading.
So you need to do something that's good for your margins to show investors.
Why are they laying off anyone when you got 500 million plus in pure profit. The tax system needs to be reworked to not incentivize layoffs. Major taxes should happen to support the well fair system in order to support people laid off. This is a stupid system we live in.
"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."
So basically, there were too many people burning too many tokens lol
Cloudflare is transforming into yet another surveillance company.
I always see this "Cloudflare ensures you are not a bot"
soon may change to "Cloudflare ensures you have a digital ID"
They will not need so many people for this and there will not exist competition to bring better products when people are fired massively and are crippled by financial problems.
AI for me is an excuse. Not the main issue.
It is a strategic transformation to ensure dominant position by killing off competition. Afterall employees are always viewed as threat.
Cloudflare's stock price has been disconnected from reality for a while.. the only one that's wilder is Palantir which at least has revenue growth numbers that are very impressive.. meanwhile Cloudflare's enterprise value vs next 12 months revenue and revenue growth just don't justify this completely out of whack market valuation. I feel bad that the company has to try and sustainably justify that. It's incredible to watch the velocity of their launches. But I suppose the reality is most of them are just not selling
"velocity" is not "frequency"; someone throwing semi-finished products at the wall to see what sticks surely has frequent product launches. But even if these ship fast from inception to launch, this scattergun approach does not scale to provide product maintenance or support. It's a productivity smokescreen for lack of a product strategy, and claiming AI will substitute for support/maintenance fits straight in with that. Anything but coherent strategy, that. Maybe here's an unexplored AI opportunity.
You have however many people who you seem to believe have no useful work to do in their current roles. You aren't bleeding money. Is that not the time to invest in new products? To take moonshots?
Is this not admitting that they simply can't come up with any new ideas to invest in? That their intellectual capacity has topped out?
Profitable companies laying people off like this tells me they're done innovating and now it is time to milk the cash cows for all they're worth.
All the AI stuff is just noise to make it sound better - the real issue is the economic downturn.
If anything, AI makes each employee much more valuable because they can be much more productive and most big companies always have stuff that needs doing and opportunities for growth. So it's a sort of Jevons Paradox[1] situation but where human labour is the resource.
I feel like they overhired over the years and now they reap what they sow. AI just accelerated their awareness of overhiring. I think if Cloudflare or any other well established software company stopped hiring this year, they would be doing the same as they did last year. At the end even the management will be replaced by AI.
How wonderful that even CEO Matthew Prince and COO Michelle Zatlyn can be replaced by AI. Maybe not today or tomorrow, but the day after tomorrow.
THEN I’ll be happy when management has rendered itself obsolete and becomes unemployed. Because the AI prompts used to replace the CEO and COO are trivial.
How wonderful that even CEO Matthew Prince and COO Michelle Zatlyn can be replaced by AI. Maybe not today or tomorrow, but the day after tomorrow.
THEN I’ll be happy when management has rendered itself obsolete and becomes unemployed. Because the AI prompts used to replace the CEO and COO are trivial.
Their stock has gone down nearly 20% in early trading today. When layoffs happen, usually it is the opposite, so I imagine Matthew Prince must be annoyed!
I am disappointed by this decision from Cloudflare. I've always felt that massive layoffs are something that companies who are greedy and don't care about their employees do (like Amazon and Meta). Up until now, my impression of Cloudflare has been that they care about their societal impact to an extent and still share old values from how tech companies used to be. Maybe they're starting the downward make-money-at-all-costs spiral that has gripped the rest of tech.
Their valuation is crazy. Trading at $260, with no profit, their price:sales ratio was 36x (extremely high). Now, trading at $195, their price:forward earnings ratio is 130x (extremely high). Unless they crushed earnings and revenue estimates and juiced their forward guidance, Cloudflare stock could have gone anywhere. Also, the stock is trading where it was a month ago.
They want to polish upcoming employees into getting more used to AI tools usage but they don't want keep burning cash on experienced ones. They have to establish more YOY growth. Looks like everybody has to justify in the market why they need AI agents more than employees.
I find it surprising that the word "incident" doesn't yet show up on this page. Cloudflare had at least two nasty incidents a few months ago. It certainly shook my confidence in the company's ability to run its infrastructure.
By the way, I love that their stock lost ~23% after this decision. I assume the C suite thought this would goose the stock like all the other companies pulling this...
"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."
So basically, there just were too many people using too many tokens LOL
Wouldn't the layoffs be when the price changes are announced then? Isn't going all in on current credit prices mean that you use as many parallel work streams as possible?
> Matthew has personally sent out every offer letter we've extended. It is a practice he has always looked forward to because it represented our growth and the incredible talent joining our mission
Who gives a shit if you treat your staff like this?
I will add cloudflare to the list of companies that I’ll never work for. Shame, because it seemed like an interesting place
wish they would have just moved these people to technical support; cloudflares support is the worst i've ever experienced even under business/enterprise contracts (no replies ever in most cases)
"Enshitification" is not a new concept. A business should always be willing to make their product cheaper, even at the cost of quality, until the customers start turning away. Of course you need to be able to catch that moment early enough so that you don't lose too much market share to competition. But that will give you increased profits. The same with increasing prices.
On a side note, I'm curious as to how "600% increase in AI usage" is measured. Are their agentic workflows' bills skyrocketed 600% in the last 3 months? That would be in line with what other people using agents are seeing (costs are way higher than they expect/used to be). In that case, that would mean that LLM/agents are no longer necessarily cheaper than human labor, no?
Labor market data this week came out stronger than expected, even as large layoffs in IT continue to happen and IT job market continues to be very slow.
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?
Someone who knows the product deeply and has grown it into what it is today will always stay valuable.
AI can replace people at a low level because they are seen as a cost. While people at the top are better connected.
CEOs travel a lot, probably subscribing to 100 mastermind groups where CEOs of other companies also hang out, playing dozens of mind games and strategising all the time.
Such people are hard to replace. The average employee's role is finite, and they aren't taking much risk; therefore, it's trivial to get rid of them.
Low level employees are always taking far bigger risks in relative terms, the worse position a CEO will be in if all of his "risk" hits him is that they'll have to become a regular low level employee.
> 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.
This seems kind of a critical point in time. I consider Cloudflare to be one of the more serious engineering organizations based on the quality of the products. Assuming they are not lying, them cutting 20% workforce citing AI signals there is actual teeth to this AI optimism.
On the other hand "only" 20% for the foreseeable feature is good news? It means there is ceiling to productivity that AI offers.
Or perhaps I am giving Matthew Prince too much credit here, and this is just an opportunistic cost cutting measure.
With the alarming explosion of never-before realized security exploits, this really doesn't seem like the best time in history to turn the day-to-day running of a massive security platform like Cloudflare over to AI.
I am getting fucking sick and tired of a “service” that behaves so much like hostile malware and spyware that it gratuitously trips the protections I have added to my browsers and refuses to let me proceed.
Cloudflare is the CP of the Internet: almost no-one wants it, yet it persists like maggots eating the eyes of children.
What the hell!? Cloudflare is absolutely killing it and now they're laying people off! I know some good people there with deep expertise and I hope they're not affected.
So you suggest they give out free money to people they don't need?
If you believe it negatively impacts Cloudflare, feel free to start a competing company and hire all those; it's free market after all, anyone can raise money if you can show there is any point in your vision.
What's funny is software guys have forever automated jobs of others. Remember? Automating e-commerce logistics? Automating taxis? Automating vacuuming of floor?
But when their own job is in danger, "think of employees" comes into consideration?
Feel free to start an Indian company. But you don't do that. You come to the West like Nadella and Pichai and take away the jobs in Western companies, genius.
in a ten 10 years like this ai enthsiasts crowd the world, we'd be getting starving cuase nobody wants to grow plants and be farmers. only chemical food and dirty water that's ai advantage
corporation ai monsters now will be brainwashing you and we'll be under control of ai .... that's a pity end of humanbeings but with greedy governments and bankers, only way we can aford now is to live somewhere at the end of the world in Nebraska build a barn and never go to big cities. all i want for my children is pure air and water but this fecking boots on the ground like us army marching in ukraine and nato shaking nuclear weapons around my home.
20% of the workforce is currently being utilised for testing purposes by various companies. (just like we deploy Canary to 10% traffic for test)
In reality, approximately 5-10% of the workforce is equipped with AI technology and can now autonomously manage the entire company.
I am pretty sure CEOs can already see it! Companies create a great deal about the revenue per employee.
Downvoting my statement will not alter the situation, Claude and GPT-5.5 have the potential to replace most system administrators, DevOps engineers, copywriters, support personnel, and other roles.
I have observed this phenomenon in private product companies in India, where I serve as a consultant to multiple companies. I have noticed that 5-10% of the workforce is sufficient to ensure the continued performance of products, with reduced communication overhead, faster updates, and improved reliability.
I also have several side projects that encompass a wide range of responsibilities, so I am not merely a passive executive role.
In India, it has become increasingly challenging to secure jobs in the DevOps, system administration, and frontend domains.
In my opinion, a backend engineer’s job is the most difficult to replace at present, particularly if that engineer possesses a deep understanding of market and product dynamics.
This is awkward.
Exhibit A - September 2025 - "Help build the future" - Cloudflare hires 1111 interns to "help build the future" [https://blog.cloudflare.com/cloudflare-1111-intern-program/]
Exhibit B - May 2026 - "Building for the future" - Cloudflare lays off 1100 people, about 20% of their workforce to "continue building the future" [https://blog.cloudflare.com/building-for-the-future/]
I'll finish on this quote: "The future ain't what it used to be." — Yogi Berra
I’ve seen managers hiring people with an intent to lay them off when winds change to protect themselves and their close circle. I can only imagine they’ve had great KPIs in both cases: first for scaling the team, and then for cutting costs.
This has a name, and also a poster boy.
Amazon's well known "hire-to-fire" [1]
https://www.inc.com/jason-aten/amazons-controversial-hire-to...
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Back in the late 90s a senior Microsoft exec explained this to me, they had acquired staff and continued to operate entire divisions which he described as "ballast". In the future, once the stock price increases slowed, they would be heaved over the edge of the balloon basket so that it could continue to rise. I often think about that.
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This is completely acceptable. When was the last time you saw any job seeker seriously enquire about such practices in interviews or at the application stage?
A lot of people here and in the industry in general seem to optimise for compensation package and put blinkers on themselves for other factors that are definitely relevant.
Companies aren't penalised by candidates for such practices. I'm not saying it's good but it's astounding to me the number of people who for example optimise entirely for salary and then are shocked when the working conditions are very poor.
People game companies and companies will game people in return. Murray Gell Man amnesia will kick in and next week there will be thread about how CloudFlare is a great place to work for software devs because you can earn 20% more than other comparable companies with no reference to how things like job security or working conditions are measured.
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It's the natural result of "fire the bottom 10% every year".
If that's the rule in your organization, and you have a core group of people that actually know the systems and get the work done, you better make sure you have 10% padding every year, lest you layoff someone important and their friends all quit in disgust. And since competence and institutional knowledge is built over time, that implies a revolving door of new folks coming in and most of it not making it.
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I know a medium sized defense contractor that ultimately had to sell itself a few years because they did this.
They would come recruiting in bulk at our school only to fire the majority within a year to satisfy their stack ranking nonsense.
10 years later, the engineers they were protecting retired and they couldnt find anyone willing to work for them, even people still in school knew the reputation.
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Using human resources as moat to protect themselves when the barbarians come. Seems to Management 101
Or it was a combined strategy - hire interns who will hopefully be able to replace some higher paid employees at lower cost once they learn the ropes. Then reduce headcount further replacing with AI.
Surely nothing will go wrong with this strategy !
It feels like it was the most beneficial implementing better decision making mechanics by replacing manager with AI, not lowly folks doing actual value creation.
LLM models have better reasoning abilities than these folks....
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The term for this is „buffer hiring“.
Company internal GDP equivalent increase of a funeral.
Totally.
In companies that routinely layoff people for lulz, executives collect business units for layoff fodder to protect their key players.
It’s the proving ground for the sociopaths who rise up.
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300% accurate
This (from the September 2025 post) now evokes the Curb theme:
> Like you, we have seen numerous reports that more and more firms are capping their total headcount in favor of leaning on more AI tools, leading to downsizing their intern and new-graduate hiring. This is resulting in increased sidelining of new college graduates. But we think this misreads the moment completely, so we’re heading in the opposite direction.
> While we are excited about what AI tools can help do, we have a different philosophy about their role. AI tools make great team members even better, and allow firms to set more ambitious goals. They are not replacements for new hires — but ways to multiply how new hires can contribute to a team.
> AI tools make great team members even better
This is the predominant (public) talking point. And it’s true.
But along with that: when you have effective people becoming even more effective with AI, it becomes glaringly obvious who the INeffective people are. At which point it becomes hard to justify keeping those people around.
(That often includes people who are otherwise effective but aren’t utilizing agents and are therefore losing their edge.)
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Both of those are true assuming the lay offs come from different demographics.
You lay off 1100 who are late in their career for younger people who will work more hours for less.
You're building the future with new fresh people instead of the "dead weight"
> You lay off 1100 who are late in their career for younger people who will work more hours for less.
Yet management always seems to miss the institutional knowledge, and experience, that also walks out the door laying off those 1,100 people 'late in their career'...
It's not possible to cram 25 years of experience into two.
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Being old doesn't always mean "dead weight". They are dropping experienced people, so from where are young people are going to get experience?
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Or it is just regular ageism.
I worked in a company that did that. They couldn't rehire the senior after the junior burned with a bug 700k in 20 min by touching a part of the codebase no one had context for anymore.
Young people today have grown up in a low trust society and have a totally different mindset. They have no qualms with figuring out how to extract as much as possible from their employer while providing as little value as they can. They will fake their competence as long as possible using LLMs and then go do it again somewhere else.
Can't blame them it's the culture we have now especially in tech, and it's incentivized top-down.
Laying off people with experience which only 1% of their younger colleagues will learn because LLMs made it redundant enough is misguided today. If I were a CEO I’d hold on to my 15-20 yoe engineers for my dear life; can lay them off in 2028.
Mmmm, fresh people.
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yes sure. its pure accounting and buying into the scam that genai+junior will reduce costs. meanwhile they tokenmaxing vibecoding uis for 50% of their wages cost. I will short every company making those moves.
there's no way 1100 interns are all going to be offered full time jobs
Isn’t this illegal?
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>You're building the future with new fresh people instead of the "dead weight"
If the "future" being built is one that those same interns would be dropped as "dead weight" as soon as they settle into families and refuse to be exploited with overwork, then it's a bad future, even if it's one with more CDN features.
Although, instead, it will be a more enshittified one anyway: they're cheapening your company and the product and lose organizational and operational knowledge in the process.
But the truth would likely be closer to that those fired would be a mix of mostly extra people hired plus some older employees. But instead of "we hired extra X less than a year ago, we shed X now", it's rebranded as "we reduce our workforce thanks to AI" to get possitive press and appeal to the less bright small-time investors.
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>Both of those are true assuming the lay offs come from different demographics.
That's the point.
You know what's way more expensive than an old senior developer? The 10 interns you try to replace them with.
The future might have more outages then.
Yes, left is right, up is down.
I always wonder what happens to institutional knowledge in American companies.
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I don't think a 17 yrs old company has that many long tenured people!
Surely they wouldn't keep all of the new hires.
There's an interesting assumption here that all people working at Cloudflare are great developers, and none deserve to be fired for poor code or laziness.
You're almost defining part of, or the beginning of, the process of enshittification.
I'm also interested in the proportion of H1B vs US citizens in this layoff vs the last 1100 people they hired (minus overlap)
This seems to be the new normal in Big Tech. They regularly announce massive layoffs, but if you look at their size over time it stays stable or grows. Cloudflare size grew every year. Microsoft size was stable for the past 4 years despite all the layoffs. Google had lost some (4%) employees in 2023, but has grown back to 2022 size last year. Meta shrunk by 22% in 2023, but has been growing in size since then and is probably back to 2022 size right now.
These companies overhire and then downsize. This is covered up by the moronic narrative about AI.
Side note. You know who is steadily shrinking, though? Intel. Wild, eh?
https://www.macrotrends.net/stocks/charts/NET/cloudflare/num...
https://www.macrotrends.net/stocks/charts/MSFT/microsoft/num...
https://www.macrotrends.net/stocks/charts/GOOGL/alphabet/num...
https://www.macrotrends.net/stocks/charts/META/meta-platform...
https://www.macrotrends.net/stocks/charts/INTC/intel/number-...
> Google had lost some (4%) employees in 2023, but has grown back to 2022 size last year. Meta shrunk by 22% in 2023, but has been growing in size since then and is probably back to 2022 size right now.
Google's revenue in 2022 was $282 billion, in 2025 it was $402 billion (43% growth).
Meta's revenue in 2022 was $117 billion, in 2025 it was $201 billion (72% growth).
Surging profits paired with flat employment continues the concentration of wealth.
> You know who is steadily shrinking, though? Intel. Wild, eh?
Intel's revenue is falling ($63 billion in 2022 vs $52 billion in 2025), makes sense that they would trim headcount.
> This seems to be the new normal in Big Tech. They regularly announce massive layoffs, but if you look at their size over time it stays stable or grows.
Periodic layoffs always happen at all big companies.
I think it’s only surprising to people now because it’s being tied to the AI worries at the same time where we’re exiting an unusual period where layoffs all but stopped for a few years after COVID.
The layoff sizes are also larger because there was so much overhiring in those years after COVID. Some rebound effects in play.
Interestingly, at least on my browser, the bottom of the Y axis is not consistently zero from chart-to-chart, which distorts the message being conveyed by these charts.
Why do we need to complicate here? cloudFlare is not making any profit. They are losing money.
The board probably wants profit now (they predict less growth) so the management needs to cut the costs.
This AI story is a just an excuse. If there is not AI they will say “high gas prices”. Or “inflation”. Or whatever …
It is true that the companies like Meta, Oracle and Microsoft are laying off due to AI but because they need money to build compute power.
There are some companies who maybe do lay offs due to AI replacing employees. But this might not be the one.
I'll just point out that this is exactly the point in the corporate character arc where every company before turns evil.
I never liked the idea of every web site in the world using CloudFlare, but I like it even less now that they're struggling.
> so the management needs to cut the costs
I love it that they explicitly say in their blog post "this is not a cost cutting exercise".
Of course, every "regrettably..." letter from company execs is understood to be an entirely performative ritual.
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> They are losing money.
They have $4b in cash and Q1 FCF $84m, and 70% gross margin. They can become profitable anytime they want.
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Those 11 damn lucky interns!
The 1%!
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Are they taking the piss by hiring and firing the same number as their public DNS IP ?
The "as many as 1,111" number was:
> The number of our intern goal, a nod to our 1.1.1.1 public DNS resolver, is intentional.
But like the sibling comment says, "over 1,100" does not reference any of their resolver IPs anyways. In all likelihood, they hired fewer than the maximum of 1,111 interns and they are probably chopping slightly more than that here (max vs min).
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Their main DNS is 1.1.1.1 but their secondary is 1.0.0.1 not 1.1.0.0, so close but not quite.
First politics. Now businesses. This sounds like a wildly poorly written parody by teenagers.
"reduce Cloudflare’s workforce by more than 1,100 employees globally."
Are they 1) halting all the 1111 interns, 2) keeping the 1111 interns, now armed with AI, to replace mid-level/senior institutional knowledge or 3) a mix?
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About as awkward as "Q1 revenue up 34% YoY". https://www.techmeme.com/260507/p43#a260507p43 https://www.bloomberg.com/news/articles/2026-05-07/cloudflar...
i saw this ALL the time at past employers. Employers higher all kinds of interns who eagerly get truck loads of work done and build great connections. and 2 years later the company is getting sold off, out of business, or mass lay offs all over the place. what's the point of highering all those interns in the first place?? geez.
Interns getting “truck loads” of work done has not been my experience. Potted plant is a better metaphor.
Liquidity in the currency market.
Need to propagate a lot of dollars fast, 24/7 as a moat on it remaining a reserve currency.
99% of these software startups are basic software that can be handled by a single dev; see Reddit apps and such.
But that money printer was running hot and heavy. Needed to funnel it somewhere. Why not that favorite political cudgel of the elites; pointless busy work jobs! Let's invest in a bunch of shops nearby for them to lunch at too!
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>mass lay offs all over the place. what's the point of highering all those interns in the first place?? geez.
If you don't hire them, someone else can hire them. Out of 1,000 you hire, one could be an "attention all you need" research paper writer, who could set up the next stage of innovation which you'll completely miss if you do not get anyone.
Initially, you’ve got to starve out the market of talent to stop competition from growing by nipping the threat in the bud.
Future can pay for all of this if you succeed.
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…but AI!
Seems no CEO simply wants to say the company is under performing, we hired too many people, and now we’re resetting. But it’s clear that’s what happened on nearly all these layoffs.
None of these announcements provide any convincing evidence that AI is anything more than a convenient distraction from the real reasons for the layoffs.
Worst way to grow the company by 11 people
Wonder if they'll do it like they did for Brittany Pietsch. She recorded her firing video some years ago. I think it's on tiktok but there are youtube videos discussing it as well.
Anyway, new employee at Cloudflare, just finished onboarding. Suddenly a short meeting is scheduled with two people she had never met before. She is told she is let go for "performance" reasons. She kind of tears into them with "what performance issues, I only got great reviews" just to hear the HR people squirm and backpedal, well because, they know they are lying. But of course, they're trained enough to never admit it and say "they'll get back to her on that". Needless to say, it has the same effect as a suspect being arrested arguing with the cops. But it did make Cloudflare "famous" on tiktok for a bit.
I found that video and I couldn't finish watching it. TBH it's really incomprehensible to me why we've created a culture where being so heartless is praised upon.
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HR doesn’t squirm because they are lying. They squirm because they minimize lawsuit surface area as much as possible. I have been on the giving end of performance layoffs in big corps and there is an extremely strict script you have to stick to (both HR rep and me as the manager).
I saw the video you’re referring to and it’s completely unsurprising they clam up further when she became confrontational. You’re not gonna talk your way out of a termination unless you have some pretty hard evidence it was for something illegal.
That’s just what getting fired looks like and people don’t often get to see the process so cloudflare “became famous”.
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I wish tech companies would start building great products again, rather than trying to build the future. I've kind of had enough of Tech's vision of what the future should be.
I think this sends a clear message. And the message is this: "Don't work here! You will be f*d! Soon!"
(it also sends clear message to the clients: you will have to suffer through the cheapest to run AI agent in case of troubles, because yes, we care the most about Wall Street guy's income, not anyone else's, we save money on everything else anytime, even when we don't have to)
Also how EMs in amazon construct hunger games. Just hire a person every now and then so they can let go of another to prove you made your team better on some non-sensical performance evaluation axes..Cue the hunger games.
Didn't know about Yogi Bera's quotes: https://en.wikipedia.org/wiki/Yogi_Berra#%22Yogi-isms%22
Some of these are unintentionally as witty as Mark Twain’s
11 interns did okay.
The 1% always does ok
This paragraph from September 2025 didn't age well:
Like you, we have seen numerous reports that more and more firms are capping their total headcount in favor of leaning on more AI tools, leading to downsizing their intern and new-graduate hiring. [...] But we think this misreads the moment completely, so we’re heading in the opposite direction.
The skeptical assumption is they need to pay for the AI bills, not that the AI use is actually providing the promises CEOs are making.
The reasonable assumption is they believe a recession is coming.
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If you listen to people on HN you could think AI is not increasing productivity or is even having a net negative effect.
I think the reality is different.
In this thread I saw the resume of an engineer affected by this Cloudflare layoff. In the resume he claimed that adopting opencode in his workflow, he shipped an integration in half the time it took peers without AI assistance for similar projects.
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Honestly not a bad theory. There’s definitely a huge disparity between actual productivity gained by using agentic coding done somewhat properly… and a non-stop wave of vibe coded work causing outages and churn. Pre-Covid hiring coupled with the high enterprise pricing for AI plans, it would make sense.
infrastructure changes slowly. once its built its not clear what you are paying 1111 people for.
It is May 2026, there is no difference between AI and non-AI bills.
Most (if not all) major enterprises in the US have gone through at least one round of org-wide subscription renewals (eg: Atlassian product packs, Microsoft product packs, etc) where 1) price increases were mandatory, 2) AI features could not be opted out of, and 3) AI feature usage was strongly encouraged from C-suite to client-facing biz staff to telephone agent support staff.
I repeat, we are passed the point where AI bills and non-AI bills can be differentiated. We are all paying for these features driven by tokens whether we like it or not, whether the cost-benefit analysis makes sense, and whether they are even being used.
And we are all passing the costs onto everyone lower on the totem pole, from insurance groups to bank groups to national grocery chains to consultant conglomerates to minimum wage front-line staff to below-minimum-wage gig workers.
And this is why there are layoffs, every price increase from the top down causes further price increases to cascade down.
So they basically fired all the interns? Can anyone who works or knows someone who works for Cloudflare can confirm?
I doubt it. Interns are cheap. They've replaced paid staff with interns!
Opus 4.6 was released between those dates
This and the crazy macro economic environment.
Those 11 be Boaz & Jachin of building the Cloudflare's future.
More than enough to vibecode it down.
Why should a company continually grow in headcount?
> The number of our intern goal, a nod to our 1.1.1.1 public DNS resolver, is intentional.
Hiring and firing based on things like this should be a huge red flag.
I’m surprised they didn’t lay off 1001.
I realize those were interns, so maybe the expectation is they’re temporary from the start, but picking these numbers for marketing instead of need is silly.
Turns about they only needed 11 interns.
That one guy must be really good at the job. Congratz.
Quoting from the links you shared:
> Cloudflare aims to hire as many as 1,111 interns over the course of 2026. […] That’s why this significantly increased class of interns will have a special focus: to ramp up the creative and widespread application of AI with a fresh approach.
vs.
> 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.
lol
This led me down a rabbit hole - didn't know Yogi Berra was responsible for so many witticisms.
Imagine if they hired those 1111 to do the most massive nine-month-long live coding interview and only 11 pass the bar.
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Your snow plower and landscaper don't get judged for having 5+ different customers in 5 years. They don't show up in ATSes as job hoppers.
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It's almost like there's a difference between a contractor and an employee. You'd think someone in the smartest cohort would know the difference. You wouldn't hire a full time groundskeeper just to plow your snow for 4 months and fire them when the weather changes.
> 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
They have a reputation to maintain, otherwise it will be difficult to recruit the best people in future. That being said, damn, that is a very generous package by any measure.
First packages tend to be the best. If you work for them beware, the next round won't be as good (if there is one). The economy isn't the best, but if you get an okay job offer anyway you should probably take it rather than risk you will be in the next round that is worse.
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Dont' get it twisted, anyone; plenty of companies have a reputation to maintain for this reason (but don't do this). This is an absurdly generous severance package.
Meta did it based on tenure. People that were there for 10 years got about an entire year.
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Damn. I got two weeks notice and then got shown the door with nothing. And now I get to compete with all these people who are going to be so much less stressed
> compete with all these people who are going to be so much less stressed
Well many of these folks then would prefer to decompress and chill for a few months instead of hitting the recruitment process early.
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Proper layoffs require at least 60 days of notice or 60 days of pay. Maybe you weren't part of a proper layoff, but if you think you were, check out the WARN act.
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I want to agree, however, it will take every bit of that time for some to find new placement. These AI cuts aren't just making it harder to keep a job, but harder to get a job as well.
For better or worse, it isn't a company's job to pay laid off employees until they find a new role.
The industry standard for severance is 1-2 weeks pay per year at the company, paying out roughly 7 months is a big deal (and yes, an acknowledgment of how rough they know the job hunt will be).
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> but harder to get a job as well.
I just tried hiring someone and received over 200 resumes that looked mostly fake. Thinking about adding a final in person interview in an attempt cut down the garbage when I repost.
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This isn’t my experience, but I think it depends highly on the segment. We have mainly senior C++ devs (database company), and it’s still a challenge to find great engineers.
I think the current job market isn’t “one size fits all”. Having said that, obviously if they’re getting laid off, they may very well be in the segment that’s less desirable.
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> however, it will take every bit of that time for some to find new placement.
Isn't this another way of saying the severance package is generous enough to cover the time needed to find another job even in a down market?
If a severance package that covers the time needed to find a job isn't enough then it's starting to feel like we're being angry just to be angry. I don't like layoffs either (I've been laid off before) but if a company is giving 7 months of severance on what was already a very high paying job, that's very good.
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Depends on what you specialise in. Sysadmins seem to be in demand (which isn't a programming job but is in tech still) and embedded hasn't been killed by AI yet (and I doubt it will)
Have there been any better tech layoff packages in the last few years?
This is probably the best, wow.
Almost as though they're conscious of how much of a dick move this layoff is...
The question is are they being good to their employees or do they severe headwinds in the job market going forward
In Europe they’re pretty much obligated to provide this package
Complete fiction. Over covid it was common in big tech layoffs to get much less severance in Europe than US.
Definitely not true in the UK. This is extremely rare for it's generosity. I've never seen anything like this in the UK.
As a general rule USA Tech is much nicer to their employees both when working and during a layoff then Europe.
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As always, it depends on the country.
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"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.
Here, I translated it for you (https://translate.kagi.com/?from=linkedin&to=en_us)
"We’re basically using our own staff as guinea pigs. Our AI usage has spiked 600% lately, mostly because everyone from HR to marketing is leaning on bots to do their actual jobs. We’re forced to restructure the whole company around these agents just to keep up with the hype, hoping it actually helps us ship something useful and justifies the "better internet" PR we keep pushing."
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I don't read this as employing 20% was twiddling their thumbs and sitting around.
If it means anything beyond economic issues, I read the implication as their LLM expenses have gone threw the roof and with the choice of cutting LLM use or cutting headcount, well we see what mattered more to them.
Unfortunately I think we’ll see more and more of this as companies continue to encourage their employees to use LLMs everywhere and for everything. Eventually they will have to come to terms with the cost of such mandates, and it’s either ask your employees to “use AI less,” or it’s let some percentage go and continue to let the rest burn tokens.
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Those 20% were unproductive in the literal sense or the economic sense.
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llms don't need healthcare or stock grants
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it's all marketing wank, but how can they "supercharge the value delivered to customers" through company restructuring? whether they hire 50k more people or fire everyone, the value delivered to the customer depends on the quality of the product and the price - irrelevant of cloudflare's margins.
Products will low/negative margins just won't happen or will get killed. But if the margin increases, they might live.
Also with higher margins, more money can be invested in research/experimental products
The price obviously depends on how much salary they have to pay.
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I believe they meant that the cost of using an LLM is extremely high! There are reports of people spending USD $500~1000 a day! There's the possibility of decoupling of effort and output! Which causes an illusion of work.
What kind of problems do people solve that require this amount of money per month, let alone per day?
Is anyone reviewing the output of the generated work (PRs, docs etc)?
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Of course it's a lie. Cloudflare is saying, essentially: "AI is making us so profitable that we've decided to reduce our profit by 20%, to keep it reasonable."
But they’re not profitable? They make 450k per employee revenue, but lose 17k profit. Meanwhile they spend 470 million in stock based compensation for example, up 100 mil from year before, on 5k employees, which they’ve been increasing a lot every year.
by laying people off they increase their profit, at least in the short term (which is all that shareholders care about)
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They’ve been pumping out products like crazy
They don’t need them. Simple as that
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I am confused by this post. No trolling: You wrote "reduce". Did you mean to say/write "increase"? If you layoff people to reduce costs, then your profitability should increase.
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> 20% of people were sitting around without any work to do
Obviously not directly, because work stretches itself to the time available.
You also have to consider nowadays whether a human even wrote most of it, or if is just a tale told by an idiot, full of sound and fury, signifying nothing.
But yes I agree the trigger for layoffs is never massive productivity, the reasons give here are completely bogus and if management actually believe any of it the company deserves to die.
Typical fire until something breaks and usually that something is inertia/timelines. Stagnation really
Aka bullshit
corporate lawyers tend to do the same shit. s
say a lot - while saying nothing.
Firing people because they became more productive with AI does not really make sense. If productivity went up, the company should be able to ship more, support more customers, or grow faster with the same team. This sounds less like an AI efficiency story and more like a funding or cost-control story dressed up to keep investors calm
I will reply here assuming that you posted with good intent. I think that their PR statement is reasonable from an investor perspective. Try to detach yourself from the personal effects of layoffs. In short, they are saying: Thanks to AI, we don't need as many people to run our business. It is pretty clear to me. Sure, you can be angry about the layoffs, but the economics are clear: AI is increasing profitability faster than the business is growing, so they are using layoffs to reduce costs. Imagine that you have an HR team of five people. If AI has dramatically improved worker efficiency, can you have an equally effective HR team with only four people? That is basically what happened here.
As an investor, it sounds fucking stupid. They aren't dogfooding, they're eating all the dogs' food.
They fired some talented folks. Folks who could be retrained. Folks whose experience snd expertise is valuable. Don't kid yourself.
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I think GPs point is that this is how they're trying to spin it, but they're not explicitly saying it, and there are doubts whether it's actually true. For outside observers it's difficult to simply ignore all the embarrassing outages that cf has experienced recently and just accept that the company has suddenly solved all their issues by using AI and firing people.
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> AI is increasing profitability faster than the business is growing
I don't understand how this could be the case for Cloudflare specifically. They made their name with DDoS protection and sandboxed hosting. These are exactly the products whose demand rises in lockstep with agent adoption. How could they possibly be allowing all the growth opportunity to slip past them? In times like this, with rising productivity to boot, you increase headcount, not decrease.
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Thanks to AI, security is more important than ever.
If A1 was real, cloudflare would be 1000% more needed and they would be falling behind with their 600% productivity gainz
That’s what they claim, though.
On its own its just words which might or might not reflect reality. The phrasing strongly indicates its the latter, however
I hope this bubble bursts soon. HR people avoiding to do their actual job seems like it is the modus operandi in the majority of businesses these days.
Which part of that sentence was confusing? I found it perfectly clear. Their internal AI use is exploding, which is a signal that they need to structure for that, and so they’re laying people off as one of the first steps towards actioning that signal.
Nowhere did they indicate there is less work to do, in fact quite the opposite.
The sentence is not confusing, the sentence doesn't mean anything. There's nothing confusing about it, but there's no information either. "We're making great strides in AI" and "We need to cut 20% of people" are simply two statements without any connection aside from the fact that they are next to each other in the sentence.
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> Their internal AI use is exploding, which is a signal that they need to structure for that, and so they’re laying people off as one of the first steps towards actioning that signal.
I don't see anywhere where the jump from "structuring for AI" directly leads to "laying people off", unless "structuring for AI" means there is less work for people to do, do you?
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Isn’t it funny how the measure is how much AI is used instead of how productivity has evolved?
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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 something 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.
" Secretly hoping they'll have to rehire."
They will just expect a lower wage rate. There's some tacit collusion going on here.. they are using LLMs as a vehicle to address the price that comes with the true shortage of software engineers. You seriously dont think they talk about this behind closed doors? of course they do.
Absolutely. My hope is selfish - the market is awful
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My man, all these fuckers use the same parasitic management consultancies. That's why all this shit looks the same.
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> Seeing who is being laid off, especially on my team, it's the people who make things run.
How did the company decide who to lay off? They didn't even ask EMs?
Almost 99% sure that They hired a consultant firm (MBB) that told them who to cut; this is pretty standard practice now at public tech corps. Especially if EMs weren’t in the loop. This looks like purely a margin improvement exercise thats hiding weaknesses in the company’s financial performance.
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I really don't know. My org now has 40+ engineers with 2 managers. Down from 6. I really don't know how they will do it. Each one of us were handling critical shit, and desperately needed more engineers. PMs made things run and they got hit even harder
No one had any idea. My director got the same email
This style of layoff seems far more common post-2020 than targeted "restructuring". I've lived through a few layoffs now, survived most of them, but each time and at each company I've gotten by on an apparent roll of the dice and nothing more. Every time I've seen some truly important ICs get let go, their EMs having no input.
My boss had no idea layoffs were even coming, so who knows how they picked.
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Companies have so much data on employees/products/customers etc these days the EM's opinion is just noise.
> I was trying to hire more people because we're so busy with everything we needed to do
That’s how it was at my previous company also. If you asked any engineer there they’d say “I’m incredibly busy, and I need more headcount to get through the things on my plate”. Then they laid off 40% of the company because AI had made everything so efficient shrug
I guess a company can coast on reputation for a while, before things come crashing down at least at parts of the company.
In my experience, companies never value transparency. And it's doubly true for companies that boast about transparency. Obviously, it's within their authority to cut head count, but they've also obviously made some kind of major strategic shift either to cut costs or abandon some lines of business and they are not being upfront about it at all. The stock is up 111% over 12 months. They don't seem to be in any danger of crashing or collapsing.
Please point people you know to https://antithesis.com/company/careers/ which is hiring EMs and deep tech people
> Seeing who is being laid off, especially on my team, it's the people who make things run.
As a Cloudflare customer, that's reassuring! .. not.
I know of 4 teams in Cloudflare One, who lost EMs, PMs and engineers in really critical connectivity systems. Our list of things we need to do is years long. Many of those are needed for reliability and scaling.
They quietly stopped hiring months ago and I figured things were not good. My mistake was thinking my group would be a little safer being profit drivers and big deals...
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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…
Good luck, and if we can help at all, let us know.
Edit: this is a silly longshot, but please see https://news.ycombinator.com/item?id=48057989.
I'm honored you're responding! I've received a few leads from this comment that I'm chatting with, and it's been a major morale boost for me.
At this point in my life and the economy I'm not particularly looking for such early-stage startups like Magnetic (especially w/ relocation to SF), but thanks for giving me the heads up!
CV link: https://piperswe.me/cv.pdf
pretty minor since the rest are fine but your linkedin link is broken
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Firstly, kind sir, layoffs are hard for each and everyone of us and I wish you best as you navigate it. I know you will get many wishes and good lucks though but consider my wishes to be one of many to help ya out.
The who wants to be hired page is still open within Hackernews: https://news.ycombinator.com/item?id=47975570
I recommend if you can share your CV/send a message there, I will try to also keep an eye on it if you do share your CV/resume there and I would love to upvote your comment there to shower some more exposure/love from the community as you are member of hackernews. You are also part of the hackernews community and its the least that I/we can do.
:hug:
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That sucks, and the market is too bleak for empty platitudes.
This just sucks, period.
Take care of yourself until you land something. I'll keep this in mind if anything comes through my grapevine.
You probably have other stuff on your mind right now, thus I can understand if you are not in the mood for answering, but I‘m too curious to not ask:
According to the Reuters article, AI use has increased 6x over only three months. How did that feel from the inside? I’m especially curious because Cloudflare is not a toy company, and this is not about some influencer trying to sell me their latest „this changes everything“ bullshit.
So, shifting a company significantly towards agentic AI, and I assume this isn’t simply about „install Claude Code on every desk“: would you say it actually works? Or would you say it’s still more of a bet, and still needs to prove itself as a sustainable long-term strategy?
I work at a similar scale company. Like an average person's experience, some things are amazing and super productive with AI and some things aren't. And it's not always the same things all the time.
Sometimes we are able to do a ground up rewrite of a service and squeeze huge efficiency gains out of it all bc AI is helpful in doing so and we have a very good test harness.
Sometimes it makes subtly wrong suggestions that people follow and cause outages.
Sometimes it leads to huge headaches for devs who have to review huge backlogs of code with no idea which parts are serious and which are low effort AI slop.
Sometimes it lets you do a 2 month project in 2 weeks.
Interested as well!
Dropped you a email, we have openings for SREs
https://x.com/mgill25/status/2052639259924844894?s=20
Good luck, I'm sure you will find a great role!
Are they claiming to use AI to replace systems people too? As in infrastructure folks?
I’m curious, what was your AI usage and output like?
I had OpenCode doing most of my substantial code changes for me, once I figured out what the code changes had to be. (so, it saved me typing but not thinking) I also vibe-coded (really slop-forked TBH, that's the Cloudflare way after all) an internal tool that our team used. I definitely was not a small user of our AI tools, though I know that there are others with significantly more.
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good luck and take care of yourself!
Dude, you have the most amazing name ever. Hope you know that.
Thank you, I picked it myself :)
Goodluck mate
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.
"A company finds itself with surplus labor capacity due to the efficiencies in AI"
That is one possible interpretation, though I don't think it's supported by any facts.
A competing explanation: companies are spending a ton of money on AI in search of efficiency, and then laying people off in order to offset these investments. That's certainly what's been happening at Microsoft, Oracle, Meta, etc.
You can't really compare them to Microsoft, Oracle, or Meta. Those companies aren't cutting costs because AI replaced their own employees. They're pouring money into AI infrastructure and models because they want to sell that capacity to others.
Their thinking is more: instead of funding another internal product team, they can redirect that payroll spend into more AI compute and models they hope to monetize.
I don't believe CloudFlare is doing that, though they might, they could be needing to spend in Edge AI compute and what not, building out that infra isn't free, so they might need to find places the cash will come from.
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If you're not in leadership at Big Tech, you're only there for the stock price manipulations.
AI is a fraction of cost of an employee though right? I have an 1000$/mo AI budget which is a fraction of my salary, and most people don’t hit their limits.
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I think as someone pointed out earlier, this is more likely about margin preservation as their gross margins are deteriorating really quickly.
Yeah, I wrote this before I dove into their balance sheets for another comment. Cloudflare’s cuts are more defensible than most, but the timing and explanation are shady given that they’ve had the same problems for years.
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> A company finds itself with surplus labor capacity due to the efficiencies in AI
It's likely more:
A company finds itself with surplus labor capacity due to the over hiring during Covid, cutting down on risky ventures, protecting margins, and narrowing scope.
But I think there's also:
A company wants to see if AI is making them more efficient, decides to cut people as if it was and see what happens.
I also am not sure about the short term stock price, many recent mass layoffs the stock often moved down. The CloudFlare stock is tanking in after market for example.
There's STILL people propping the lie about over hiring? Just admit the economic system is not working for the workers already.
If using AI had a "substantial profit or revenue growth" wouldn't it make more sense to hire more people so they can use more AI and increase revenue?
If I can pay a person 100k and the result of hiring them is 1mil in my pocket, I am going to do that every day of the week.
The only reason to fire them would be that I think the money will still end up in my pocket without them.
It depends if your market has room to grow. If it’s saturated it’s just about COGS.
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Excess labor would only translate to increased revenue and new products if these companies had a product vision to begin with. But they don't, so people get sacked.
You are on the right path, but I think you are off by a bit. Every company has more work they want to do than budget allows. However some of those things won't pay off fast enough. That is they have product vision but are smart enough to realize that those extra things they won't be able to do are not things customers are willing to pay extra for today.
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cloudflare vibecoded a wordpress clone (emdash), they have no idea where to allocate engineers to make new products.
The work is mysterious and important.
> 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.
Why do you think it's greed? The company's stock is down and they just missed expectations on their last earnings report (unheard of in big tech in the last 2 years).
It seems more like a traditional layoff scenario
This was kind of my read as well. We are increasing our AI usage but not in a way that meaningfully affects our ability to deliver on our product roadmap, so the solution is to cut opex on people so we can devote more to compute. The last bit is obviously speculation but it doesn’t feel like a far leap.
My charitable company strategy take: this is companies skating to where they think the puck will be
Given the rapid progress in LLM capability in recent history, it's reasonable to expect that continues... at least to some degree.
Consequently, companies are going to need to continue to cut, and delaying those cuts will only leave them in a worse position.
Devil's advocate counterpoint: it's currently unclear where AI does and doesn't provide efficiency gains in a business, so some companies are making headcount reductions without knowing where they should target them
This is simply a symptom that the company doesn't have good Quality Control processes in place.
AI-produced code is good but it's not so good that it can replace hand-crafted (or heavily supervised) code written by the type of engineer who works at Cloudflare.
What's really happening is that a few employees realized they can game the system by turning on a firehose of AI slop and pushing 10x the LOC than any other engineer (with or without AI), because there's no one to tell them to stop, and in fact with a management that actively encourages this.
> What's really happening is that a few employees realized they can game the system by turning on a firehose of AI slop and pushing 10x the LOC than any other engineer (with or without AI)
Did they figure out how to game the system? Or was the system set up exactly with incitaments to produce exactly this outcome?
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That's the thing. There is no surplus labour capacity, neither they have any ideas for moonshot projects that could pay off left
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
This genuinely wouldn't surprise me, and I need to go back to looking at balance sheets to see if I can sus out the validity of that narrative. As AI subsidization ends prematurely and costs skyrocket, we should expect to see those costs reflected in the operation statements of major customers.
Since I had Coinbase up for review already, I decided to peek there first for any sort of correlation. In 2023, their "Technology and Development" line item shows $1.32bn going out, and by 2025 it'd ballooned to $1.67bn. This is despite headcount actually contracting by almost a thousand people between those two statements, which would normally mean a smaller technology spend since a lot of corporate software is seat-based nowadays. This suggests that yeah, actually AI spend is creating a heavier drag on the balance sheets and it's being offset with layoffs since the "job replacement" narrative is strong. That said, I'd need to check dozens' more balance sheets to draw any sort of industry-wide conclusion.
And to factor in other infrastructure costs that's become more expensive too, such as hosting or hardware. So unless you can isolate AI spending from others that's not going to be convincing.
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This is pretty interesting. I'd read your blog if you write a thing about it.
Ironically an analysis that Codex or Claude Code might be able to perform
Rings true because now teams end up building a lot of things that may or may not have alignment to customer/business needs.
The slow part has always been figuring out exactly what the customer/business actually needs, not the coding. Now teams are throwing money at tokens without solving the "who's buying this?" part appropriately and end up just building excess.
All judgement seems to have gone out the window.
At my last job, within our org, the director had 3 staff engineers building the same, but competing AI tool.
At the last all hands other teams announced their own similar AI engineer productivity tools.
I low-key regret now sticking around long enough to get a layoff package.
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Personally, I think AI is just a convenient scapegoat for these mass layoffs. Also, these kinds of announcements contribute to sustaining the AI hype which all tech investors benefit from. And investors looove hearing about mass layoffs, stock goes up every time without fail.
> Personally, I think AI is just a convenient scapegoat for these mass layoffs.
Coincidentally, same day as your post, Forbes published an article stating the same: https://news.ycombinator.com/item?id=48128765
cloudflare stock went down, genius
investors are not some nefarious monolith cheering for companies to make decisions based on how it benefits The Vibes. they're analysts assessing business decisions.
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This is no that far fetched... I don't think it's that common that a customer sits on the fence and says "If only company X had Y on their feature list I'll be a paying customer". So the speed at which the company now runs through its roadmap does not equate to new customers joining.
They are laying people off because the cost of financing have gone up. The risk free rate is now almost 5%. For equity financing you'd need to show revenue growth models that allows repayment at that rate plus equity risk premium (which is quite large for new growth companies).
So the CFO makes a model that allows for this and for sufficient ROI they need less people to be more productive. This mechanically forces them to lay people off.
Of course laying people off might actually not improve productivity, but they need this to have chance.
They're laying off the people who can't produce a minimum of 2x with AI, and keeping the maximalists with no life outside of work barely keeping up with the 100k LOC a week they're shipping to prod.
Suits have an idea of what the New Model Coder should be, and it's not people who don't burn through 100,000,000 tokens a week.
That makes no sense. If that were really true then they could’ve saved a bundle and did that same thing years ago before AI.
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They aren’t, go find the comments of people who worked at the company.
I wouldn't argue that it doesn't give any benefits. However, it's not worth the current cost unless you already own RTX PRO 6000 to run any reasonable LLM. I'm using Claude Free and I'm happy with what I get, especially for the cost of $0.
I'm eagerly waiting for the prices to come down so I can upgrade my PC to AM5 and run Gemma 4.
Its quite possible that LLMs become housed units like the next PC. Initially it starts off as being a large thing in data centers (like computers did) until they got smaller and smaller. Except I expect the time it takes to get smaller and smaller to compress much more - given that we live in a world with far more resources and risk-taking.
This links closely with this article i came across: https://readuncut.com/the-social-contract-is-broken/ how basically corporations are pursuing greed at such high levels.
This is a great article, actually. It does gather many of the empirical data I have seen and felt but were unable to put into word.
Wishful thinking. It may ease minds for those negatively affected by AI.
I mean even this blog from Cloudflare reads a little like that.
[dead]
this is such a cope take i don't even know what to say. how can people believe in obviously false things like this? like what's the mental model here?
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
Kind of makes me wonder if the "more than 1,100 employees globally" actually means "1,111" employees. Talk about committing to the bit
All 4 bits
What is an intern in this context? When I hear "intern" I think of a summer internship. Are there other types for software developers?
Not meaningfully, but sometimes 6mo-1y as part of an undergraduate programme to gain industry experience. E.g. I had 6mo in my third year (not at Cloudflare).
These all follow a same pattern now:
Vague overtones on AI savings without any hard evidence that’s happening, while ignoring obvious evidence that the company over-hired and is now underperforming relative to what would be needed to justify all that headcount.
Nobody believes these narratives at this point and CEOs would garner a lot more respect if they just simply said
“I screwed up, we hired too many people and fell short of performance targets. I own that. This resets us back on track.”
That would require the CEOs to admit they messed up.
> Cloudflare expects second-quarter revenue of $664 million to $665 million,
obviously $2.5e9ish/yr is substantial in absolute terms ... but that's it? They intermediate half the internet and only capture $7m/day?
Businesses tend to choose them because they're cheaper than alternatives.
They are in a great position to generate a lot of value without rising prices, they haven't realized it yet because what they have to do is pretty boring.
I think about investing in Cloudflare but that P/E ratio scares me off every time.
Their revenue is growing 30% yoy, so investors are speculating it to pay off in the end.
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They don't have a PE ratio. They have never made a profit.
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Don’t worry about P/E ratio. If you worry about P/E ratio all the time you would have missed every major tech opportunity for the past decade.
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I use Cloudflare for a lot of my side projects. It's a pleasure to use, and I manage to stay under the free tier. It does feel like they should be bigger in the cloud space, but I imagine the major players get a lot of revenue from VMs, which is a space Cloudflare has avoided.
Revenue is not profit. They "capture" much less than $7m/day.
Oh less than Atlassian. Suprised.
Atlassian has a moat of features despite being expensive. You see nibbles by stuff like Monday.com but never big chunks.
CloudFlare is honestly still iterating to find a moat other than 'really cheap'.
High P/E means a good moat.
(Too high and everyone is looking for a start-up to eradicate your product segment of course).
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My read of this:
Their AI costs have increased 600% but this hasn't translated into actual revenue. Also they are probably projecting AI costs to keep growing. They've done the math and at some point it is going to affect their bottom line.
Reducing or limiting AI usage would be inconceivable given Cloudflare itself has invested on AI and is selling AI services. Instead they've opted for reducing about 20% of their head count.
I don't think so. I think this is a common narrative in Hackernews when layoff news are shared. All the people I talk to in the industry positively confirm a boost in productivity. Its contribution to actual revenue could lag but it is present and confirmed by many.
It has boosted my productivity in my side projects but its nothing I can monetize. Maybe companies have the same problem.
Which public companies that do NOT sell AI have posted that AI has boosted their revenue?
I feel new startups, features and more services coming online would be a good measurement of this amazing productivity boost we're seeing.
Have you noticed a major improvement in every service you pay for ? Like many new features and incredible improvements in user experience and reliability? Because I’ve not really noticed that. Actually, things seem to be offline more than they used to, namely GitHub.
I am definitely more productive at generating lines of code though which definitely gives me the illusion things are mOvInG rEaLly FaSt.
Nah, even insane token costs don't come close to the costs of labor.
Most likely this is just 'AI-washing' - dressing a layoff for economic reasons (such as propping up their shrinking margins) as something more palatable to investors (AI).
It's such a bad time to be laid off right now. The competition is ridiculous. I have to compete with like 100k world class employees. Best wishes cloudflare former employees. I hope some of you make new companies and hire other geeks who are on their butts. A lot of us at other companies got the boot with no severance or early stock vestings. It could be worse!
"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.
The bottleneck is never code
The AI argument doesn't make sense to me for layoffs. If AI is making the company more productive then there's an incredible opportunity to use the existing workforce to tackle the massive backlog of important work. A big layoff only makes sense if there is no more useful work to do or you're killing products.
It's AI but not in the way you think.
AI usage is getting expensive since Anthropic et al are turning the screws, and that money has to come from somewhere. Reducing AI usage is blasphemy of course, so cutting headcount is the only path forward.
Is there no one figuring out ROI on AI spend vs human payroll? I can't make sense of this idea that companies are firing productive employees because they're spending too much money on AI that isn't doing anything for them... they still hope chatbots will be worth it in the future?
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It's not that simple.
The marginal gains are inevitably diminishing (since you pick the lucrative options).
There's a practical rate at which work can be done, limited by all sorts of things like organisation friction, how fast customers are willing/able to adopt new features, and how fast you can learn from it.
Arguably AI can improve all of these, but those improvements might not be happening as fast as CloudFlare are able to pump out features.
Further, this is all exacerbated by upper management having to made decisions at the nth derivative. Meanwhile, salary costs you now. You might foresee vast riches in future, but you have to remain solvent and competitive until then.
These all points towards layoffs. There are many factors that point towards keeping employees.
How to decide? No idea. Rightfully no one trusts me to make these!
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.
Yes. We've since changed the top link to a third-party article. We prefer to do this with corporate press releases* - this is probably the #1 exception to HN's "please post the original source" rule (https://news.ycombinator.com/newsguidelines.html). If anyone sees a better third-party article, we can change it again.
(Edit: it's not really an exception because the purpose of a corporate press release is usually to obscure the main story, which means it's misleading, so by HN rules we should change it.)
(Edit 2: I feel like I should add that this isn't specific to Cloudflare! It's literally a generic problem.)
* https://hn.algolia.com/?dateRange=all&page=0&prefix=true&sor...
Thanks for changing this dang, I and all of us really appreciate the work that you do towards hackernews :-D
Have a nice day!
Maybe I've become cynical and jaded, because when I saw the title I immediately thought to myself "oh, Cloudflare's announcing a layoff."
The corporate speak isn't working if people instantly know what it means!
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It's interesting how every time there's a layoff, the blog post always has a title like "Preparing for what's next" or "An update on our workforce" or "Getting ready for the agentic era"!
They should make it “Good news, everyone” like in Futurama.
Two days ago: “Today I've made the difficult decision to reduce the size of Coinbase by ~14%” (layoffs) https://news.ycombinator.com/item?id=48021368
The title should be something like "Cloudflare reducing workforce by more than 1,100 employees globally".
Yes, and such titles (whose purpose is to not say the thing) fall under "misleading" in https://news.ycombinator.com/item?id=48058224.
I’ll never forget how when I was at Google, every email with subject line “An update on X” meant X was getting axed. Like, just say so in the subject line…
It got to the point where people were sarcastically posting "An update on <myself>" when sending goodbye emails.
> "Building for the future" gave me the impression that it's about some major new initiative...
If you'll believe them, it indeed is:
They're architecting their company for an agentic future? They're reimaginging the definition of a world-class, high-growth company? They're not resting on the workflows that worked yesterday? blegh
What the hell does any of that actually mean? Like in real life words? Because that much corporate bullshit really sounds like it is a cost-cutting exercise.
This is what the true definition of "AGI" is.
Welcome to the corporate world
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%)
Whatever the play here they can’t be angling for any external PR or internal morale boost. What if they wrote: “This is a tough economy and we have to tighten our belts.” Maybe that’s naive of me. Bad signal to investors as opposed to insignificant employees and commoners (PR)?
But contrast with this:
> 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.
What is this even saying? We use a lot of AI. And not just for other people... for ourselves. This means that: we need to be intentional?
What is a regular, not-investor, person supposed to glean from this? We’ve hit the automation jackpot: some of you will be fired, some of you will get more work for the same pay?[1] Along with shoving your face with euphoric buzzwords “AI era”, “supercharge the value”.
I must surmise that whatever PR and internal morale blow (?) matters so little to them. They are not at all afraid of any backlash from any lowly people.
[1] Again. This paragraph isn’t saying anything beyond that they are using AI and ho-ho things are a-changing. So one has to guess.
Wonder if they used AI to write it. "We don't just [x]. We [y]" strikes again.
Gross margin doesn't include r&d and it looks like a bunch of engineering was laid off too
Yikes, so incremental margins are in the 50s. I think this says it all.
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/
They're still keeping the interns. Feels very much like a 'replacement'.
Am I math-ing right that this creates a 1:4 employee to intern ratio? (5000 x 20% layoffs = 1000 redundancies; 4000 employees and 1000 interns?)
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Gosh...
The job market is already brutal for many candidates, especially people who aren’t social media personalities and don’t have names like Cloudflare, Meta, Amazon, or Google on their CVs. Some people will end up homeless...
At least having Cloudflare on their resume will likely help many of these people land new opportunities, so I wouldn’t be too worried about their long-term prospects...
What I don’t fully understand is why a company like Cloudflare decides to let experienced people go under the umbrella of “reorganisation.” Couldn’t some of them be given the opportunity to adapt to new priorities or ways of working?
What exactly is so fundamentally difficult in 2026 that someone with years of experience can’t learn?
Of course, large organisations sometimes develop dysfunctional habits. I’m not saying that’s necessarily the case here, but common examples include:
1. Problems that a motivated engineer could solve in minutes instead turn into meetings scheduled a week later, followed by more meetings.
2. People are becoming so process-oriented or conservative that they reject new approaches by default (Not even trying things out, and I don't mean migrating to a new fancy framework)
3. Engineers losing touch with product thinking and customer impact.
And if the explanation is cost-cutting, it’s fair to ask where companies choose to spend money elsewhere, e.g. unlimited LLM token usage with little accountability, extravagant off-sites, flying thousands of employees to expensive locations, etc.
Finally, why do they keep hundreds of job openings on their careers page? Are those false job descriptions wasting candidates' time?
> What exactly is so fundamentally difficult in 2026 that someone with years of experience can’t learn?
It's having the experience to point out all the issues in the generated code that's the issue. The interns they hired won't have the experience to push back and slow the slop machine down.
> Couldn’t some of them be given the opportunity to adapt to new priorities or ways of working?
They could. You should be asking whether they want to or not.
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?
This is literally every public company you just described. Companies do not have loyalty to their employees.
You only have to be there for the company in that you do work for them and they give you money in return. Any tech guys working for them will have received plenty of money. I feel sorry for the non-tech people though (HR, recruiters, etc.).
This announcement is bullshit though. Banging on about transparency and then not even trying to give a reason. They didn't even try to say it's because of AI! They just say "AI is important. We're laying off 1000 people." Wtf.
Bill and Upwork also have announced layoffs today.
https://www.upwork.com/press/releases/upwork-ceo-hayden-brow...
https://www.bill.com/blog/a-message-to-bill-employees-may-20...
Wow, the way Upwork is handling this seems really bad. They announced the layoffs today, but nobody will know who is being let go until next week! Sheesh.
Executive: "Give me a title for the blog post where I'm laying off a bunch of people".
AI: "Building for the Future".
Executive: "Thank you! I knew it was the right decision".
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.
Clearly if AI were the productivity booster that we're told it is, you'd see hiring into it, not firing. Though I guess on the call Prince did say he expect end '27 to have more employees than for any of '26. Anyway.
I don't think productivity boosters lead to net hiring or firing, but I do think they lead to higher wages.
Building for the future is great!
Except for one small, very tiny, itsy-bitsy problem. We humans are very bad at understand the second and third order effects of events. Really, really bad. First order consequences: "Oh we don't need people anymore".
Do I know the second order effects? Probably not. But at least I know they will be there.
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.
I know this is cold comfort, but in times like this, it can be a good idea to start your own company. Cloudflare itself was founded in the wake of the GFC (post-2008), when tech was dead as a doornail. The best time to start something is when awesome people to work with are unemployed.
Makes sense to do these things. To realistically make it through this paradigm shift you need to organize into a thing that can exploit it. That inevitably requires eliminating teams that don't fit into the new picture. The severance package seems quite generous. Hope everyone lands on their feet.
It's not that individuals are not useful, or even that their roles are not useful. It's that you have to structure your organization to be able to exploit a coming wave, and existing mechanisms and operations just get in the way. By the time Netflix shut down the DVD business it was making $80 m in revenue and the margins on that business were some 50%. But if you think the writing is on the wall, you're forced to act.
Doesn't mean the people in the DVD-mail-ops sides were bad at what they do. The world had just changed and the business became different.
Okay, so what is Cloudflare's "DVD" equivalent? And what about AI necessitates smaller teams?
If you were impacted Magnetic (AI Tax Prep for CPA firms) is hiring senior - staff level engineers in SF https://www.ycombinator.com/companies/magnetic
I interviewed at cloudflare in ~2020 and didn’t get the job - everyone I met during the process seemed really smart and kind though. Would love to work with some of those people
Email me subject “cloudflare” if interested - thomas@ our domain (I am the cofounder)
Fyi, the CEO claims[0] they fired very few engineers. The prime target were allegedly salespeople
0: https://x.com/eastdakota/status/2052560831909433554
This comment should be higher given how much FUD is in these comments. Hacker News having a meltdown about a bunch of backoffice folks getting laid off while they’re still aggressively hiring SWEs is… something
MANY engineers were fired. including some of the best I've ever met. don't believe the CEOs lies.
makes sense, their revenue is atrocious
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
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.
it's about the comments / votes ratio.
To be more specific, it is a heuristic for detecting flamewars and/or controversial topics and it is quite good at that.
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My response to this, as a generally satisfied CloudFlare customer who was excited to try out agentic email, is that it's not a good time to increase the amount of business I do with them.
Prince is claiming they laid off very few SWEs, I know at least an entire team of SWEs.
https://x.com/eastdakota/status/2052560831909433554?s=20
The sre team I was hired onto last month, just lost 2 of ~12.
Cynically: our team hired two (me, senior, and a junior) and then we lost two (staff, guy who had been around since the founding, and a senior+ guy)... I kinda assume they baked in some of the layoff decisions into their past quarter or two of hiring to reduce seniority, and salaries, overall. Really short-sighted.
I was still needing to get some 1:1s scheduled with the guy who'd been here for Forever and knew which closets had all the skeletons stashed away. Can't do that now.
Doubt. The eng teams I know lost 15-25% of their SWEs.
Prince is a sociopathic liar
A few people here have been impacted, so I want to talk about something constructive that could help them. As someone observing industry trends from the outside for a while, my advice to those looking to get hired these days: Build something useful from scratch – on your own –- that you can show off as soon as possible.
The buzzword everyone is looking for is "high-agency." (No, not those agents, but yes, those will help.) Basically employers want someone who will start something from scratch and take it to the finish line by themselves.
The interesting thing about this is, it is by definition not something you can put on your resume; It is something you show, not tell.
Yes, you need to do this even as you go through the absolute hell that is a job search. But trust me, this will a) help get a much better job, and b) help in the long run throughout and beyond your career. This will be the most valuable skill in the future.
You don’t need to use AI, but looking at the timeframes and skills in demand, yes, you very likely want to use AI.
A few other thoughts:
1. Target an area you are very familiar with. This will sharply cut down the time to MVP. This will be a challenge for the more junior folks, who should consider reaching out to senior mentors. Mentors, consider outsourcing a suitable personal project to them.
2. It could be something you are an expert on at work, if your employment contract and IP laws allow. As a bonus, releasing this as open source, or even a competing product if you’re so inclined, will have that intangible bonus of sticking it to your ex-employer.
3. Even if heavily using AI, keep your hands-on skill active. Most companies still do old-school leetcode interviews.
4. Bonus if you do something multi-disciplinary. Sprinkle in a domain you have no background in -- design, writing, sales, marketing, data science, frontend, whatever. You'll definitely need AI for this, and even when you make mistakes, few will harshly judge somebody down on their luck trying to expand their boundaries.
Hope this helps, and all the best!
I understand that your advice comes from the right place. However "High-agency" is the "Full-stack Engineer" of the AI era.
A single salary covering many disparage positions and roles. It's been reworded b/c with AI, apparently you don't even need to be an engineer (or expect to be paid as one) anymore!
Nothing new under the sun.
Hmm, I think "generalist" is the more current term for "Full-Stack Engineer." But that's more about technical skills. "High-agency" is more a combination of personality traits and technical ability.
So in terms of buzzwords it would be something like generalist + self-starter + go-getter + hustler + finisher.
They won't say it, but everyone wants basically a solo founder, except one who (to your point) gets paid as an employee.
Which is why I am saying this is going to be the most important skill. If they don't pay you enough, you could just go be a solo founder for real.
"We are reorganizing for the agentic AI era" reads better than "our gross margin is compressing, our SBC is too high, and our growth is decelerating." Both descriptions could be true; only one gets you a flattering blog post.
Obviously AI is just a excuse
The level of group think here is unbelievable. Any opinion other than this is down voted immediately. A whole page of people bargaining and not wanting to face reality.
At my work, our healthcare plan renewed May 1st. We have great insurance. The CEO told us that the healthcare premiums just went up 50% so enjoy this year because it is going to be less great next year.
It doesn't matter how many people have a type of religious faith that this has nothing to do with AI and is all posturing.
The reality is AI is going to get cheaper in the future and I am just going to keep getting more expensive as an employee as we circle the drain in this health care and debt death spiral that everyone is also in complete denial of with no political will to do anything about.
S&P 500 is at an all time high. The real layoffs haven't even started yet.
Yeah, I just don't understand the thinking here on HN anymore. (My account is 15 years old)
It was clear to me even before ChatGPT arrived that software was eventually going to go the same way agriculture went. We will simply need fewer people to do the job than before.
I don't buy that AI will completely automate away all software engineering. I think if you're not in the top ~40% skill wise, you're in serious trouble and have a bleak future.
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Eh... Are you claiming the dollar inflation is caused by AI?
Or rather, are you claiming it's caused by productivity gains from AI?
It’s not like this is a factory floor where you process something coming in and AI suddenly makes the process more efficient and people are idle. Every team in tech world has infinite backlog, you don’t fire 20% the minute someone manages to close a few tickets.
> Every team in tech world has infinite backlog
I have non-tech friends who struggle to understand this, because they literally clear their entire backlog of work every single day they're at work.
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why not? isn't the implication of your point that companies should just hire infinitely so long as there's work to be done?
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Many CxO made a decision to spend $$$$ on AI; that's their bet and they're are adamant about it. Money should come from somewhere and layoffs is the easiest way to free some budget in a software company. Was it a good bet only time will tell.
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.
When you announce 639m USD revenue for q1 Then lay off a thousand people because you love the smell of your ai farts.
Yes, their revenue was $639m but their expenses were $702m.
It doesn't matter how much revenue you have if you are spending more than that.
Expenses were more on purpose, they amortized a bunch of hardware depreciation now instead of over 5-7 years with the new tax changes. This is pure greed
Are you trolling or just trying to avoid saying they didn't make any money and actually lost over $20 million?
Flippant sarcasm that they're pretending this wasn't a financial decision, and was entirely about being ready for the amazing productivity gains of ai they've already seen, expanding across the business.
Revenue != profit.
Thousand people cost 60m USD of quarterly _profit_ though (not even revenue)
That’s not how accounting works.
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.
Yeah I'm there with you. I got lucky as a kid with delving into this as a hobby and it turned into a professional career. Thought we could change the world for the better, what we made instead was social media cancer and LLMs that can pretend to make everyone 10x more productive. I loathe it.
As long as it's pretend productivity, things should settle in a decent place. How long that takes, who knows.
Absolutely. News like this is so hard to ignore. Nervous as hell to drop big money on things the family needs right now. Grateful to have a job, but life overall was just better in almost every sense before AI became part of our daily vocabulary and layoffs occurring every couple of weeks.
I've been out of work since almost a year ago after getting laid off and the same is true for a lot of my coworkers; the job market is absolutely broken in half for a lot of different but related reasons. Thankfully I have significant savings and low costs so I can just coast and do stuff in my own time, but the same hasn't been true for others I know.
Frankly I fully expect people to get even angrier once they become unable to meet the bills and companies still tout the whole AI line.
Yes - I was thinking about starting my own business but am staying put instead and saving as much as possible.
now seems like the perfect time to start a business?
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Really sorry to see the news about the RIF. My thoughts are with everyone affected.
If you (or someone you know) were impacted and want to stay in the distributed systems or data plane space, we’re doing a lot of work at Kong ($2B valuation API & AI governance company) on high-performance proxies, control planes, and Rust, Golang, etc. (I used to work on Cloudflare's edge proxy project)
Happy to chat about the roles or just the tech stack in general if you want to geek out. Feel free to reach out: datong#konghq.com
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?
There's multiple simultaneous narratives: the industry-wide one of slashing well-paid tech talent under the guise of AI productivity boosts, and what's actually going in at each company.
Cloudflare is an outlier because the company doesn't actually make money at present; their past three annual statements show net losses in the tens to hundreds of millions of dollars. Not hemorrhaging cash per se (their cash reserves alone could cover ~9 more years of losses), but still enough to warrant some cutbacks - and AI is the current scapegoat, thus they finger AI and throw folks out the door.
Coinbase's story is different: they're making good money, but their industry is inherently volatile. Again, recent volatility in the crypto markets related to...things...is dragging down long-term prospects for currencies, while ongoing trades are broadly just insiders doing insider things or exiting their positions for liquidity. Still, their share price is down 27% over 5 years and 18% YTD, so they also need to pump their share price so the executives get paid; layoffs are consistently rewarded by the shareholders, thus they axe part of their workforce for the bump and fingerpoint to AI.
Never take what a company says at face value, and always check their balance sheets. What Cloudflare did sucks but could be warranted to some degree; what Coinbase did has no justification whatsoever beyond naked greed.
> Cloudflare is an outlier because the company doesn't actually make money at present; their past three annual statements show net losses in the tens to hundreds of millions of dollars.
Their free cashflow is high; they're choosing not to report a profit. I don't think it's useful/accurate to say they don't make money.
Don't get me wrong, they may be doing a layoff to boost margins or enter GAAP profitability but the company revenue exceeds its operating cost by quite a bit.
See in their latest quarterly report: https://cloudflare.net/news/news-details/2026/Cloudflare-Ann...
> First quarter revenue totaled $639.8 million, representing an increase of 34% year-over-year
So they're growing 34% annually.
> Free cash flow was $84.1 million, or 13% of revenue, compared to $52.9 million, or 11% of revenue, in the first quarter of 2025. Cash, cash equivalents, and available-for-sale securities were $4,163.9 million as of March 31, 2026.
...and they have $84 million free cash flow in one quarter, and it's consistently pretty good cashflow.
And they have $4b of cash or cash equivalents stockpiled. It seems pretty healthy to me.
Its quite filthy but it benefits them all to lay off lots of people to reset the wage rate in the market... Im sure we will see a wave of re-hiring when this stuff starts to blow over but many initially will be at a much lower wage rate.
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Coinbase lost 40% transaction revenue. The AI thing is just smokescreen
https://finance.yahoo.com/markets/crypto/articles/coinbase-s...
Employees cost money. The ZIRP free-money era has ended. Companies have been laying off tech people for the last few years.
Also the US economy is collapsing, that probably has some relevance.
You couldn't tell this by looking at the stock market.
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Zirp ended over 4 years ago, what are you talking about, the us economy is collapsing? What? Care to elaborate on any of this?
Whenever someone brings up ZIRP, especially someone with a username like yours, it's an indicator that they have no clue what they are talking about and like to regurgitate things they read on the internet.
> Also the US economy is collapsing, that probably has some relevance.
Right...wait, what?
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AI productivity is a lie. It’s AI spending because the revenue hasn’t gone up.
I think there's also a certain permission structure that once one sufficiently large org does a big round of layoffs and doesn't get punished, a bunch of others will run the same playbook. We've seen this before -- back in 2022 when Elon fired like half or more of Twitter and the service didn't immediately implode, it gave other CEOs permission to do massive layoffs in the guise of "efficiency" even though the real reason was ZIRP was over. Now they're claiming it's because of AI when it's really that their margins are eroding because the overall economy is slumping and they need to offset AI spend.
Meta's layoff was also last week, much bigger than both.
Is Coinbase that major though? they're always doing lay-offs.
Coinbase for sure is driven by declining Bitcoin fundamentals and entry of other big players in the Trump inner circle. The AI narrative is a lie.
Cloudflare was overvalued and missed extreme expectations (down another 12% now).
By this time I wonder which investor still believes the AI excuse.
It seems that Bill.com and UpWork, too!
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I don't see how laying people off isn't inherently and always a "cost-cutting exercise." If they had an unlimited budget, they probably wouldn't be laying them off, right?
Maybe it's supposed to mean that it's not... something more specific?
At this point, the thread has over 700+ comments, but if any impacted Cloudflare folks see this and are interested in working on the same shape of problems, Fastly posted our "Who's Hiring?" for May at this link https://news.ycombinator.com/item?id=47975839
Happy to answer any questions, though I only check HN about once a day.
People who lived through 2001 and 2008 crashes, did it look like this or was it even worse than what's happening these days with so many layoffs?
2001 affected tech mainly, so a lot of folks went to other industries still hiring. And 2008 affected other industries more than tech, so the inverse.
2008 really wasn't that bad if you were in tech...
No idea about 2001, but I've heard it was fairly rough. More recently I've seen people say now it's harder to find work today, I think in part because in 2001 it was mostly tech companies laying off talent, while corporates who were less impacted by the dot-com bubble were still building out their engineering teams.
The problem with the 2001 dot com bust was that it came on the heels of the telecoms downturn, so the two biggest (at the time) tech sectors were in trouble simultaneously.
Yes, there was still corporate IT - and some areas like finance were positively booming. But for online retail, media, advertising, etc it was a wasteland for 4-5 years. Plenty of people never found a way back into the industry.
To me, it felt much worse then than it does now (though perhaps the USA is being hit much harder at the moment).
2008 did hit tech but, outside of finance, the shock was over much quicker. The effects on the bricks & mortar economy were more obvious, though, so it got covered more in the media.
I agree. It was still ok for most people in tech. Maybe rough for that single year. After that is was nothing but boom times.
I can't speak to 2001.
This feels like something much worse and weirder.
The problem today is we had 10 years of “learn to code” and a a lot of people did. Similar to 2001. 2009 wasn’t really bad for tech since we had a huge shortage of workers in the space. Companies would hire straight out of mid-tier universities. CS departments were desperate for students.
From memory, the only recent layoff where the company was not only profitable, but also growing is this one.
It's not clear if we are at the beginning of a crash or if the everything-bubble still has some pressure to expand. But whatever impression people can report here are about the past, and thus not about any crash.
2001 set tech jobs back a few years. 2008 wasn't nearly as bad for tech because as money got tight, there was an impetus for companies to invest in tech to cut costs. I think a similar thing might be unfolding now with non-tech companies investing in AI to streamline processes.
I don't remember 2001. But 2008 tech job market was way wayyy better than today.
2008 the global economy came somewhere between hours to days of completely crashing if AIG hadn't been bailed out. Other than Covid, it's only the second time in the past 50 years unemployment hit double-digits, the other time being the early 80s recession in the wake of the 1979 energy crisis, which saw inflation go as high as 13.5% and the prime interest rate hit 21.5%. You're probably only concerned about your own industry, but even now, unemployment is still around the lowest it's been since WWII outside of the past couple of years and the late 50s.
It'll be another 40 years hopefully to get a full lifetime of experience and see how I ultimately feel about this, but right now, my sense is software saw a huge boom in the 2010s, a la aerospace in the 60s and finance in the 90s, and it isn't going to die, but that boom was never going to last forever, either. Being a specialist surgeon was always the only true close to guarantee you'll make half a mil annually with supreme job security. Everything else sees booms, busts, regional disparities, and power laws that make it hard to even talk to each other about it because nobody's experience is universal. Even now, in my particular niche of the industry, I don't know anybody who's been laid off. My own company and our competitors are not exactly drowning in cash (I work largely on commission and it's been a terrible quarter), but we're expanding headcount, not reducing.
Conversely, in the 2010s as software boomed and I did terrifically, basically my entire family is in trades and it was totally different for them. Drastic cyclical instability, projects started but then canceled all over the place, injuries, bankruptcies, drug addiction, prison terms. But that's also in California. I live in Texas and construction here seemingly mostly stayed in the boom state. All the tradesmen I know from here rather than family did much better. We also had roughneck as a lucrative fallback option for anyone that didn't mind living in the middle of nowhere thanks to the fracking and shale booms. Computer geeks from 2006 to 2021 or so also had that kind of easy skill transfer fallback thing thanks to the boom in computational data analytics due to advances in data storage and machine learning technologies.
We might even do well to remember that hyperscalers drowning in ad money for the past 20 years had a practice of intentionally overhiring to hoard talent but not give them anything productive to do, putting them into restrictive NDAs and non-competes largely to prevent them from starting their own companies or working for competitors. If that practice is ending, it floods the labor market, driving down wages, and reduces industry-wide employment metrics, but it's not death of the profession so much as ending a market distortion. Maybe it even supercharges entrepreneurialism, but right now we just seem to see a boom in the "solo indie dev" putting out reams of slop. At some point, people have to actually work together and have a real product vision that solves a problem other than using AI to make dev tools to harness AI for making more dev tools.
it was worse
I'm sure this is going to happen a lot to big companies, with AI they are all going to find they have too much staff and are not likely to benefit from a higher pace of development. Smaller/Mid size companies on the other hand are likely limited in how much staff they can take on and AI just accelerates their plans (I'm in a company like this).
> Cloudflare’s usage of AI has increased by more than 600% in the last three months alone.
So did your outages...
These relative figures mean nothing. Your usage of one specific ultra-new model went from one hour a month to seven? congrats to the 600% increase. Your use of a widespread common model went from 1M tokens to 7M tokens ? Also a 600% increase. Your spend on AI from 1M/month to 84M/year ? ditto.
Other than the latter, I'd read all this as meaningless. Am I wrong?
The CEO of this company is worth close to $7 billion. So I don't buy the lame limp-wristed argument about laying people off due to AI.
So if the CEO reads this? Put yourself in the shoes of all the people you laid off just now. Those people that have families, who all they were ever trying to do is maybe save up a million dollars so they could retire. In doing so despite the company making record profits. While you have enough money to buy yourself a damned cruise ship and then some. What are you going to do with all that money anyway?
Companies like cloudflare operate at a very critical spot as of today. They manage the end points where TLS terminates for most of the internet traffic which means that they have access to all the information flowing through them in clear. When a company is so much motivated by the profits then it would not be too far away when they start selling all this information. With this much centralized control, they can easily turn to abusers instead of being internet gatekeepers for profit. Firing so many people is bound to disrupt the operations, the only question is how much can they can hide/manage.
> When a company is so much motivated by the profits
That is what a company is for.
I think this is the reason why the detailed definition of companies varies, the motivation and regulation on a company varies too. Absent the regulations, financial institutions would have run off with the money by now
You can lead an american to his firing, but you can't make him unionize.
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?
Interestingly NET is down 15%-ish in extended hours trading and was even down 20% at some point. Many times a stock will make a positive move when layoffs are announced.
Cloudflare is a growing company by most metrics so if efficiencies through AI were the reason for the layoffs they'd just take the boost and grow even faster.
It all doesn't check out and I think the real reason for the layoffs and the negative sentiment by the market on the news is that their revenue growth was not as fast as their expenses and they realized they overhired. Leadership doesn't want to dive too much into the red even if it would mean bigger growth down the line. They are now beholden to the near and mid term stock performance.
I've had the chance to talk to some SWEs working at Cloudflare off the record in recent months and the one concensus I heard was that there was many times some tension between the boots on the ground and the decisions from senior managment but of course nothing they could do and especially after this they'll make sure to be quiet should they remain. There seemed to be a lot of pressure to deliver features and new products but quality has been left behind which means the SWEs felt pressure to deliver while also having to deal with the ensuing issues to resolve.
Either way I wish everyone affected the best and a speedy job hunt - there'll be quite a few really good people on the market now for no fault of their own.
-24% now
> The way we work at Cloudflare has fundamentally changed. We don’t just build and sell AI tools and platforms.
Anyone else stumbled over that part? That is not at all how I perceive CF.
Sorry to everyone affected by this. If any infra/platform folks in Europe are looking, Luxonis is hiring a Senior DevOps / Platform Engineer. It’s remote in Europe, focused on cloud infrastructure and internal developer platform work for spatial AI / computer vision products: https://www.luxonis.com/about-us#devops-engineer
IDGI. How is a company that owns a bunch of infrastructure you almost have to use to put your service on the internet not more profitable such that they have to do layoffs?
Unlike the other hyperscalers, they don't attempt to wring every last dollar from their customers' wallets.
Screw Cloudflare. I went through a bizarre 3+ months hiring process where I would have a disconnected, vague 30 minute interview with someone every couple weeks. Then, suddenly rejected for no real reason given.
Their hiring process is remarkably bad for a company that otherwise is so well run. My most recent experience was them throwing a workday link at me to fill something out before we even had the initial phone screen and the forms/ui was so poorly designed that I stopped responding to them.
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?
20%
That's massive
Wow, and I had thought they would be one of the winners in the AI era. A lot of SaaS's can be recreated with an agent and some tokens, but I thought the more infra-y companies would be the beneficiaries. I've vibe coded a few Cloudflare Workers and thought it was a great experience. And Claude knew how to use wrangler to do a lot itself.
From the announcement it doesn’t seem like they’re losing, just that they’re cutting off their employees winnings.
layoffs are winning in the short term. investors love them, and if you cut staff but keep revenue that’s profit.
TBH I'm surprised people don't see the obvious result of this collective madness:
1. Force every engineer to use agentic AI to the max.
2. Constant anxiety at work due to the threat of job loss and unreasonable expectations from management/business.
3. Engineers start yoloing everything using AI while wasting tokens.
4. Speed goes up in the short term, while quality and expertise degrade little by little, all while bleeding money due to AI usage.
5. One year down the line you have a company full of engineers that don't care and a bunch of slop-bloated, bug-ridden products that the customers don't want, and a massive bill.
6. ceo/cto see the writing on the wall and exit before any blame sticks, receive a nice exit package, find another company to ruin
Not sure how to feel about this. On one hand, the transparency about the layoff and the severance package for the employees are positive things.
But seeing the intern hiring count the year before basically offsetting the layoff headcount makes me think they've been planning to replace their employees with interns and plug the expertise gap with AI.
Isn't the most likely explanation here that they needed to show in their earnings call how their bet on becoming AI infrastructure is leading to high revenue growth expectations, and that isn't happening (yet)?
The stock is currently at -17% in after hours trading.
So you need to do something that's good for your margins to show investors.
Why are they laying off anyone when you got 500 million plus in pure profit. The tax system needs to be reworked to not incentivize layoffs. Major taxes should happen to support the well fair system in order to support people laid off. This is a stupid system we live in.
Getting laid off in this job market is absolutely terrifying.
Hope everyone affected land on their feet.
"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."
So basically, there were too many people burning too many tokens lol
>Cloudflare expects second-quarter revenue of $664 million to $665 million, just under analysts' estimate of $665.3 million
Is this considered below expectations on wallstreet... enough to merit an 18% stock cut?
Analysts are the worst…
Lets not miss the obvious: cloudflare is not profitable. I believe the board is probably telling the management that they need to cut costs.
All this “AI bla bla efficiency bla bla agents bla bla” is a convenient excuse.
Why does "the future" in corporate announcements always mean layoffs?
My 100% completely personal opinion.
It is not that AI is the contributing factor.
Cloudflare is transforming into yet another surveillance company.
I always see this "Cloudflare ensures you are not a bot" soon may change to "Cloudflare ensures you have a digital ID"
They will not need so many people for this and there will not exist competition to bring better products when people are fired massively and are crippled by financial problems.
AI for me is an excuse. Not the main issue.
It is a strategic transformation to ensure dominant position by killing off competition. Afterall employees are always viewed as threat.
Cloudflare's stock price has been disconnected from reality for a while.. the only one that's wilder is Palantir which at least has revenue growth numbers that are very impressive.. meanwhile Cloudflare's enterprise value vs next 12 months revenue and revenue growth just don't justify this completely out of whack market valuation. I feel bad that the company has to try and sustainably justify that. It's incredible to watch the velocity of their launches. But I suppose the reality is most of them are just not selling
"velocity" is not "frequency"; someone throwing semi-finished products at the wall to see what sticks surely has frequent product launches. But even if these ship fast from inception to launch, this scattergun approach does not scale to provide product maintenance or support. It's a productivity smokescreen for lack of a product strategy, and claiming AI will substitute for support/maintenance fits straight in with that. Anything but coherent strategy, that. Maybe here's an unexplored AI opportunity.
You have however many people who you seem to believe have no useful work to do in their current roles. You aren't bleeding money. Is that not the time to invest in new products? To take moonshots?
Is this not admitting that they simply can't come up with any new ideas to invest in? That their intellectual capacity has topped out?
Profitable companies laying people off like this tells me they're done innovating and now it is time to milk the cash cows for all they're worth.
They also reported Q1 revenue up 34% YoY. https://www.techmeme.com/260507/p43 https://www.bloomberg.com/news/articles/2026-05-07/cloudflar...
I've been slowly moving all of my stuff over to Cloudflare. This certainly does not inspire confidence to continue down that path.
All the AI stuff is just noise to make it sound better - the real issue is the economic downturn.
If anything, AI makes each employee much more valuable because they can be much more productive and most big companies always have stuff that needs doing and opportunities for growth. So it's a sort of Jevons Paradox[1] situation but where human labour is the resource.
I feel like they overhired over the years and now they reap what they sow. AI just accelerated their awareness of overhiring. I think if Cloudflare or any other well established software company stopped hiring this year, they would be doing the same as they did last year. At the end even the management will be replaced by AI.
How wonderful that even CEO Matthew Prince and COO Michelle Zatlyn can be replaced by AI. Maybe not today or tomorrow, but the day after tomorrow.
THEN I’ll be happy when management has rendered itself obsolete and becomes unemployed. Because the AI prompts used to replace the CEO and COO are trivial.
So let’s hope for the day after tomorrow!
How wonderful that even CEO Matthew Prince and COO Michelle Zatlyn can be replaced by AI. Maybe not today or tomorrow, but the day after tomorrow.
THEN I’ll be happy when management has rendered itself obsolete and becomes unemployed. Because the AI prompts used to replace the CEO and COO are trivial.
So let’s hope for the day after tomorrow.
Thats a solid package tbh
Yes I am jealous. I'm on unemployment paying out of pocket for health insurance and my unvested stocks disappeared.
Their stock has gone down nearly 20% in early trading today. When layoffs happen, usually it is the opposite, so I imagine Matthew Prince must be annoyed!
I am disappointed by this decision from Cloudflare. I've always felt that massive layoffs are something that companies who are greedy and don't care about their employees do (like Amazon and Meta). Up until now, my impression of Cloudflare has been that they care about their societal impact to an extent and still share old values from how tech companies used to be. Maybe they're starting the downward make-money-at-all-costs spiral that has gripped the rest of tech.
Their valuation is crazy. Trading at $260, with no profit, their price:sales ratio was 36x (extremely high). Now, trading at $195, their price:forward earnings ratio is 130x (extremely high). Unless they crushed earnings and revenue estimates and juiced their forward guidance, Cloudflare stock could have gone anywhere. Also, the stock is trading where it was a month ago.
They want to polish upcoming employees into getting more used to AI tools usage but they don't want keep burning cash on experienced ones. They have to establish more YOY growth. Looks like everybody has to justify in the market why they need AI agents more than employees.
https://open.substack.com/pub/earthchronicles/p/building-for...
I find it surprising that the word "incident" doesn't yet show up on this page. Cloudflare had at least two nasty incidents a few months ago. It certainly shook my confidence in the company's ability to run its infrastructure.
Discussion thread on /r/Cloudflare: https://www.reddit.com/r/CloudFlare/s/47qJtr2yEx
20% is a crazy number. This is scary, as someone who works in this industry.
By the way, I love that their stock lost ~23% after this decision. I assume the C suite thought this would goose the stock like all the other companies pulling this...
Some of this is probably from all the companies they've acquihired, rather than genuine AI improvements.
For example, you probably don't need the extra finance person from the start-up you brought on.
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?
The future, for those who have the capital. The rest may die, shareholders don't care.
Then we must build our own future. One where we deny the capitalists access to their own automated killer robot armies.
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https://blog.cloudflare.com/building-for-the-future/
Surprised that this isn't part of a "journey"…
"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."
So basically, there just were too many people using too many tokens LOL
I suspect that companies anticipate that AI prices are going to go way, way up, and they're going all-in on the current "cheap" credits before then.
Wouldn't the layoffs be when the price changes are announced then? Isn't going all in on current credit prices mean that you use as many parallel work streams as possible?
> Matthew has personally sent out every offer letter we've extended. It is a practice he has always looked forward to because it represented our growth and the incredible talent joining our mission
Who gives a shit if you treat your staff like this?
I will add cloudflare to the list of companies that I’ll never work for. Shame, because it seemed like an interesting place
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Does anyone know if it will affect emdash (an attempt by cloudflare to build an alternative to wordpress - launched on April first this year)?
"AI will not replace you, it will just supercharge your existing capabilities."
"lol jk it will totally replace you, bye"
I would think cloudflare would benefit from all the vibe-coded apps as it is an easy target to deploy these on.
I interviewed there over a month ago and they ghosted me after 3 good rounds. I dodged a bullet it seems.
I interviewed, they didn't want to allow remote, requiring me to immovable move to Dallas. The rest of the team was in 5 other cities.
I'd have to move to sit in an office to jump on a Zoom.
...
Surprising that the share price took a dip on this. Normally retrenchments are seen as a plus
well at least they're getting some decent severance, still sucks, especially in this market.
Didn’t they just recently say they were hiring a huge number of interns because of AI?
The interns are training their replacements. Efficient.
It seems the market decided to cut 20% of Cloudflare's market cap today.
wish they would have just moved these people to technical support; cloudflares support is the worst i've ever experienced even under business/enterprise contracts (no replies ever in most cases)
Can the disgruntled ex-employees contribute to the Puppeteer Stealth plugin? ;)
Oof. I guess cloudflare is also gonna have an uptime monitor like Claude now.
"Enshitification" is not a new concept. A business should always be willing to make their product cheaper, even at the cost of quality, until the customers start turning away. Of course you need to be able to catch that moment early enough so that you don't lose too much market share to competition. But that will give you increased profits. The same with increasing prices.
On a side note, I'm curious as to how "600% increase in AI usage" is measured. Are their agentic workflows' bills skyrocketed 600% in the last 3 months? That would be in line with what other people using agents are seeing (costs are way higher than they expect/used to be). In that case, that would mean that LLM/agents are no longer necessarily cheaper than human labor, no?
Labor market data this week came out stronger than expected, even as large layoffs in IT continue to happen and IT job market continues to be very slow.
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?
Is the job market bad?
you can earn and spent but you'll never get enough here too i live in msk, russia and working full time job and yes,married have children
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.
Someone who knows the product deeply and has grown it into what it is today will always stay valuable.
AI can replace people at a low level because they are seen as a cost. While people at the top are better connected.
CEOs travel a lot, probably subscribing to 100 mastermind groups where CEOs of other companies also hang out, playing dozens of mind games and strategising all the time.
Such people are hard to replace. The average employee's role is finite, and they aren't taking much risk; therefore, it's trivial to get rid of them.
I was with you until the talk about risk.
Low level employees are always taking far bigger risks in relative terms, the worse position a CEO will be in if all of his "risk" hits him is that they'll have to become a regular low level employee.
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Sure, but at least agents can now buy domains!
i will never work for one of these mega big tech companies. making tons of $$$ then fire you. have a nice day.
"Building for the future"... then, "we're firing 1K+ people."
What a BS.
> 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..
This seems kind of a critical point in time. I consider Cloudflare to be one of the more serious engineering organizations based on the quality of the products. Assuming they are not lying, them cutting 20% workforce citing AI signals there is actual teeth to this AI optimism.
On the other hand "only" 20% for the foreseeable feature is good news? It means there is ceiling to productivity that AI offers.
Or perhaps I am giving Matthew Prince too much credit here, and this is just an opportunistic cost cutting measure.
Optimism?
first slowly, then all at once.
Saving Cost for the Future.
Another thought I had:
Companies are starting to realize they have a very captive consumer base. The consumers can't just move. They're collecting money.
It'll take a LONG time for a new competitor to pop up, for them to build out and start to steal customers.
Equally the cost for customers themselves to move is very high.
So in the meantime these large companies realize that by slowing down development they're not actually losing anything.
With the alarming explosion of never-before realized security exploits, this really doesn't seem like the best time in history to turn the day-to-day running of a massive security platform like Cloudflare over to AI.
> 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.
>It seems only costs increased. If productivity had increased along with the AI costs they wouldn't need to layoff.
Thing is average employee skill level is low. And entirely replaced by something like GPT 5.5
People have egos and people have "phases" in life. A 10x person isn't productive for all years of their life.
They've periods of high performance, periods of low performance, depression, etc.
Above all, communication overhead is the biggest bottleneck in product development and information withholding and asymmetry.
This makes AI far better because it can simply write all its findings to a file, which you can revisit later.
The day I switched to cloudflare for my domains... one of the best days in my life.
They should have fired 11 people more and match their public DNS resolver 1.1.1.1
How about the company just up and dies?
I am getting fucking sick and tired of a “service” that behaves so much like hostile malware and spyware that it gratuitously trips the protections I have added to my browsers and refuses to let me proceed.
Cloudflare is the CP of the Internet: almost no-one wants it, yet it persists like maggots eating the eyes of children.
"I have decided to sacrifice some of you for shareholder value, but that is something I am willing to do"
just finance things. nothing to see here...
Shameless title.
Cloudflare has achieved "AGI" internally.
A message devoid of any meaning. Like wtf does agentic era prep mean? Is their AI spend too high? Are they not profitable?
Also just once, I wish one of these CEOs would give themselves a slap on the wrist and take a pay cut
Did they find the vibecoding secret sauce?
What the hell!? Cloudflare is absolutely killing it and now they're laying people off! I know some good people there with deep expertise and I hope they're not affected.
what does this mean for https://blog.cloudflare.com/cloudflares-commitment-to-free/
TLDR:
free users make Cloudflare’s network smarter
free users create massive scale
some free users eventually become enterprise customers
and the huge traffic volume lowers Cloudflare’s own infrastructure costs.
"You either die the heroic startup, or you live to become the MBA'd villain"
The hollowing out of another iconic American brand begins.
https://polymarket.com/event/another-critical-cloudflare-inc...
That's not good, Cloudflare. Shame on you.
“pour encourager les autres.”
AI is so ineffective that compagnies that use it cannot pay their workers ! Poor guys tech bros.
disappointing
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Nice project. The interface feels clean and fast.
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So you suggest they give out free money to people they don't need?
If you believe it negatively impacts Cloudflare, feel free to start a competing company and hire all those; it's free market after all, anyone can raise money if you can show there is any point in your vision.
What's funny is software guys have forever automated jobs of others. Remember? Automating e-commerce logistics? Automating taxis? Automating vacuuming of floor?
But when their own job is in danger, "think of employees" comes into consideration?
Correct. The laid off staff can now build a startup with the skills they have learned at Cloudflare and compete.
AI exists now and there are no more excuses for them.
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Feel free to start an Indian company. But you don't do that. You come to the West like Nadella and Pichai and take away the jobs in Western companies, genius.
And in the case of Nadella, ruin said companies.
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in a ten 10 years like this ai enthsiasts crowd the world, we'd be getting starving cuase nobody wants to grow plants and be farmers. only chemical food and dirty water that's ai advantage
corporation ai monsters now will be brainwashing you and we'll be under control of ai .... that's a pity end of humanbeings but with greedy governments and bankers, only way we can aford now is to live somewhere at the end of the world in Nebraska build a barn and never go to big cities. all i want for my children is pure air and water but this fecking boots on the ground like us army marching in ukraine and nato shaking nuclear weapons around my home.
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hey now i am from msk,russia and i work as an aenginner, married
I'm not sure why they think I have the time to read all of that.
Who are you?
20% of the workforce is currently being utilised for testing purposes by various companies. (just like we deploy Canary to 10% traffic for test)
In reality, approximately 5-10% of the workforce is equipped with AI technology and can now autonomously manage the entire company.
I am pretty sure CEOs can already see it! Companies create a great deal about the revenue per employee.
Downvoting my statement will not alter the situation, Claude and GPT-5.5 have the potential to replace most system administrators, DevOps engineers, copywriters, support personnel, and other roles.
I have observed this phenomenon in private product companies in India, where I serve as a consultant to multiple companies. I have noticed that 5-10% of the workforce is sufficient to ensure the continued performance of products, with reduced communication overhead, faster updates, and improved reliability.
I also have several side projects that encompass a wide range of responsibilities, so I am not merely a passive executive role.
In India, it has become increasingly challenging to secure jobs in the DevOps, system administration, and frontend domains.
In my opinion, a backend engineer’s job is the most difficult to replace at present, particularly if that engineer possesses a deep understanding of market and product dynamics.