Block cut 4,000 jobs in February. That's 40% of the company. Stock jumped 24% the same day.
This wasn't a struggling company. Q4 gross profit was $2.87 billion, up 26% year over year. Wall Street didn't reward Block for surviving. It rewarded Block for getting smaller.
Then on March 31, Dorsey published "From Hierarchy to Intelligence" with Sequoia's Roelof Botha. The argument: corporate hierarchy is a 2,000-year-old information routing protocol. Roman Army to Prussian military to American railroads to your org chart. AI now does that routing continuously, at scale, without the messenger layer.
His new org structure: individual contributors, directly responsible individuals, and player-coaches. No middle management tier.
His math: "100 people + AI = 1,000 people."
If you run an agency, that math should keep you up tonight. Not because it's true yet. Because your clients believe it is.
The Coordination Layer Is the Target
Here's what Dorsey is actually describing. The middle of every organization -- the people who route information between the people doing the work and the people paying for the work -- is the layer AI threatens first.
Account directors. Project managers. Coordinators. Producers. The people who translate what the client said into what the team builds, then translate what the team built back into what the client wanted.
That's not a dig. That work matters. But it's also the bulk of what most agencies sell. Strip away the titles and the agency model is: client pays agency, agency takes a margin, agency coordinates a team, team does the work. The coordination is where the margin lives.
Dorsey just told every CEO in America that the coordination layer is what AI replaces. And Wall Street gave him a 24% raise for saying it.
Wall Street Is Grading on This Now
Block isn't the only data point. Omnicom merged with IPG to create the world's largest ad holding company, then immediately doubled their cost savings target to $1.5 billion. Labor reductions account for $1 billion of that. Headcount dropped from 128,000 to roughly 105,000 in about a year. Stock went up 15%.
They killed DDB. Founded in 1949. They killed FCB. Founded in 1873. Brands that survived world wars and the Great Depression didn't survive this.
Forrester predicts 15% of agency jobs -- 47,000 positions -- eliminated in 2026 alone. They're calling it "workforce inversion." The junior layer that agencies arbitraged (expensive creative directors overseeing cheap juniors, pocketing the spread) is collapsing. AI handles the junior work. The spread disappears. The model breaks.
WPP's new CEO called 2025 "unacceptable" and brought in McKinsey. If you're an agency person, you know what McKinsey showing up means.
The Part Nobody Wants to Say Out Loud
Here's where it gets uncomfortable. Most of these cuts have nothing to do with AI actually working.
Only 2% of executives say they made large staff reductions because of actual AI implementation. Sixty percent made cuts in anticipation of efficiencies that don't exist yet. An NBER paper found 90% of executives report AI has had zero impact on employment at their companies.
Marc Andreessen said the quiet part loud on March 31: "Most large companies are overstaffed by 50-75%. Now they all have the silver bullet excuse."
Sam Altman confirmed it too. The CEO of the company selling the AI said companies are using it as cover for financially motivated layoffs.
Block employees told reporters that 95% of AI-generated code still needs human modification. Dorsey's manifesto describes the destination, not today's reality.
But here's why that doesn't help you. It doesn't matter whether AI actually replaces middle management. What matters is that Wall Street, CEOs, and your clients now believe it does. And they're acting on that belief.
Your Clients Are Doing the Math Right Now
When a client's CEO reads Dorsey's manifesto, they don't think "interesting thought experiment." They think "what am I paying my agency for?"
The coordination layer between them and the work is exactly what agencies provide. Account management. Project management. Status calls. Decks about decks. And now their board is asking why that layer can't be handled by the same thing Block used to justify cutting 4,000 people.
Sixty percent of hiring managers say they emphasize AI's role in cuts because "it's viewed more favorably than financial constraints." Your clients will use the same framing to renegotiate your contract. The perception is the weapon, not the technology.
If your agency's value is coordination -- managing timelines, translating requirements, scheduling resources -- you're the line item that just got a target on it.
The Agencies That Survive This
Gartner predicts 50% of companies that cut staff citing AI will rehire those roles by 2027 under different titles. The work doesn't disappear. The pricing does. Companies will still need coordination, still need execution, still need someone who knows what they're doing. They'll just pay less for it and call it something else.
The agencies that die are the ones selling coordination as the product. The ones that survive are the ones doing the work their clients can't do themselves.
There's a difference between an agency that manages a project and an agency that is the technical capacity. Between a team that coordinates developers and a team that writes the code. Between a layer of overhead and an elastic extension of the client's actual capabilities.
When Block employees say 95% of AI code still needs human modification, that's the gap. That's where the work lives. Clients will try to go AI-native, hit that wall, and need someone who actually knows what they're doing. Not someone who manages people who know what they're doing. Someone who does the work.
What This Means for You
If you're an agency owner reading this, the question isn't whether Dorsey is right. It's what your client thinks when they read his manifesto.
If your answer is "they'll realize they still need our account team" -- you have a problem.
If your answer is "they can't build what we build, regardless of how they feel about middle management" -- you're probably fine.
The agencies that come out of this are the ones that can say: we're not the layer between you and the work. We are the work. Cut every coordinator, every project manager, every account director. We're still the ones writing the code, hardening the servers, building the thing you can't build yourself.
That's the model we run at Kief Studio. Two founders, 40+ custom tools, and the ability to scale delivery without scaling headcount. We work behind agencies as invisible technical capacity -- your brand, our engineering. When your clients start asking about AI and headcount, you don't need to defend your org chart. You need to point at the work.
The first conversation is free. kief.studio/contact