Comment by Snoozle
2 months ago
"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."
[dead]
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.
I am perplexed at how it can cost so much. I have been using AI every day, all day for a few months now and I have not even gotten to spending $300 a month. I use Cursor for teams, so we get ~$80 of usage for our ~$40 per member, then we pay Cursor's upcharged API rates from there, and I STILL don't spend more than $300 a month, if that. What the hell is everyone doing with their fucking tokens?
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Those 20% were unproductive in the literal sense or the economic sense.
No, it is more accurate to say that leadership at Cloudflare does not know what they are doing nor have they known what to do for a good decade now.
Acting like workers at Cloudflare have any meaningful say in how work is made or the direction of the company is delusional neoliberal fantasy thinking.
The onus of poor business outcomes is laid directly on its leadership. Saying that workers were unproductive when they were coerced to follow leadership's mandates is just straight up class warfare.
Dang it Bobby indeed.
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llms don't need healthcare or stock grants
And if Jevans paradox wins out, all that money will just go towards 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.
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.
No it does not. It depends on what the market is willing 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)?
No, and nobody is going to find it when the guy from a third world village using a fake name that they hired to vibecode features puts a bitcoin miner in one of his daily 10k line agentic PRs.
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)
Not with the severance package they're offering, which is why their stock was down between 15-18% after announcing this
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They’ve been pumping out products like crazy
They don’t need them. Simple as that
someone has to maintain a he products
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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.
That’s a very MBA way of thinking.
If we extend the logic, if we have 0 employees then profitability is maximized right? Then shouldn’t every company have 0 employees?
Obviously hiring increases profitability, otherwise some of the biggest headcount companies wouldn’t have hired so many people
> 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.
I see this sentiment a lot on HN. To be clear, I am responding from the perspective of US labor law and general business practices. Employment is not a sacred right in the US. The US system is (larely) hire and fire easily. As a result, the US economy is mildly unstable for the middle class normies (much, much less stable that most other highly developed nations with strong labor laws -- most of G7/G20), but overall wildly dynamic for a large economy.
"They fired some talented folks."
Sure. That is guaranteed with large layoffs. I work in an insanely competitive industry, and there are annual culls each autumn of the bottom 5%. Few are surprised by who gets cut. What is harder to forsee is a business downturn and they need to layoff X% of staff. You see good people let go. That's just life in that kind of system.
"Folks who could be retrained."
Again, in the US, for white-collar office workers, this almost never happens, and surely not for very highly skilled software developers (probably most of the layoffs at Cloudflare). It is not required by law, and it is not a common business practice in the US.
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Unfortunately, "holistic" investors able (and willing) to look at the bigger picture and recognize that things like "institutional knowledge" cannot be expressed on a balance sheet are not the norm.
The norm - outside of outliers like Warren Buffett - is "when numbers go up then buy when numbers go down then sell".
The financialization / stonkmarketization of everything is slowly destroying our economies like a cancer.
this is a low quality comment that doesn't address the simple explanation: more productivity means fewer people are required.
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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.
I don't know what to think when I see comments like this. Everyone makes mistakes. And no one provides flawless service. If their recent issues are so damaging in your opinion, why is their business continuing to expand at more than 20% per year?
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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.
Could be they are actually not doing so well and try to cover it up with the usual AI is god excuses, to fool investors.
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.
> "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.
Huh? How is it not connected? More productivity means fewer people are required. I'm not sure how you are not able to connect these obviously connected statements.
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Or maybe you don’t understand what it means because you’re not the target audience?
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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?
I think it means - we're spending more money on AI thus we don't have as much to spend on people
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Noone knows what the correct structure for this new world looks like. We’ll see what they end up hiring for. But it’s fairly standard to lay off a bunch of people and hire new, rather than retrain, when you need to restructure
Isn’t it funny how the measure is how much AI is used instead of how productivity has evolved?
Not really. This is all so new, noone is using it correctly, because noone knows how to yet. We’re all just kind of flailing our arms around with it, but it’s clearly a force multiplier and its increased use is an actionable signal