Author: Matthew Prince
Compiled by: Deep Tide TechFlow
Two weeks ago, I laid off more than 20% of our company's employees. I did not make this decision because Cloudflare was in trouble. On the contrary, our revenue growth has hit a record high, cash flow is ample, and the number of new customers we've acquired globally has reached unprecedented levels. I made this decision because the business environment is undergoing a dramatic shift; and to win in the future, Cloudflare must adapt.
Searching through American business history, you might not find a second publicly traded company like ours that, while maintaining over 30% high growth, also laid off 20% of its staff. However, what we did over the past two weeks will likely become the industry norm within the next year. This is a story about how artificial intelligence (AI) is reshaping everything, but unfortunately, many executives and commentators misunderstand how exactly AI will disrupt business rules and who will be impacted.
To figure this out, I reopened an old book published in 1954 (this book is 20 years older than me): Peter Drucker's "The Practice of Management." In this book, Drucker deeply analyzes the various roles within an enterprise. I categorize these roles into three types: builders, sellers, and measurers.
As the names suggest, "builders" are responsible for creating products, and "sellers" are responsible for selling them. "Measurers" encompass everything else: internal audit, revenue recognition (an accounting term referring to the process of determining when a sale can be officially recorded as income on the company's books according to accounting standards), finance, legal, compliance, middle management, daily operations, and so on, to name a few.
Contrary to the pessimistic predictions of some analysts, the jobs of "builders" are very secure and aren't going anywhere. If an engineer on my team could increase their productivity tenfold with the help of AI, I would definitely hire all such talent I could find in the market.
"Sellers" also have no need to worry about being replaced. Because those who control budgets are still living humans, they prefer to buy from people who are willing to take the time to listen to their needs, can build trust, and can provide support when problems arise.
"Measurers" are also crucial to the enterprise, but they are fundamentally different from the first two. Top "measurers" are often worth their weight in gold. They work tirelessly behind the scenes, not seeking the flowers and applause of front-of-house roles (like servers in a restaurant who directly face customers, referring to positions that easily attract external attention and praise); ideally, they can also maintain an objective perspective independent of other company departments. Drucker pointed out that measuring business performance is important, but customers are ultimately won through "building" and "selling." A truly top-tier company should invest the most resources in these two core functions.
The wave of AI is not targeting "builders" or "sellers"; it is truly aimed at "measurers." Tireless, absolutely independent, extremely efficient, and always online—today's AI systems, when measuring and examining a company, achieve a level of objective detail and precision that even the most outstanding employees of the past could not match.
Take Cloudflare, for example. In the past, our internal audit team could only sample a few business risk points for review each quarter. Now, we are fully implementing a new system that conducts continuous, 24/7 audits on every single business risk point. We are closing our books (closing our books, referring to the regular process where a company settles its accounts and issues financial statements at month-end or year-end) faster. We are making fewer mistakes, and even when occasional errors occur, they can be identified more accurately and reliably. As CEO, I now have unprecedented, excellent tools that not only allow me to precisely measure the company's overall operational status but also help me accurately identify rising stars within the team.
The vast majority of the employees we laid off last week were "measurers." We streamlined middle management across the company because, with AI assistance, managers can now oversee more direct reports while still conducting accurate performance evaluations and providing effective guidance. We consolidated scattered operational roles into a unified business support group, leveraging AI to fill gaps when specific expertise is needed. We also significantly reduced the marketing team—like most companies, it was once a heavy concentration area for "measurers." Furthermore, within the entire finance team, we found ample opportunities to consolidate roles and automate tasks.
However, the fundamental purpose of this layoff was absolutely not simply to reduce headcount. In fact, the number of open positions we are currently hiring for has reached a record high. I expect our total employee count to continue growing in the coming years. Precisely because the work of "measuring" no longer requires as much manpower, we can now free up resources to heavily invest in the talent that truly drives company growth.
This summer, we received nearly one million resumes competing for 1,111 paid internship positions. The interns we finally hired are not only exceptionally outstanding but also naturally AI-native (AI-native, referring to the new generation who grew up in the AI era, naturally adapting to and viewing AI as a mindset and fundamental tool). Without exception, they are all "builders" or "sellers," and we expect the vast majority of them to ultimately receive full-time offers.
They are the new generation of the future, who will invent new ways to power our business. Thanks to AI, we can now more precisely measure their contributions and accurately identify those future leaders. AI is by no means a harbinger of disaster leading to bleak unemployment for young people—quite the opposite is true.
AI will not end all jobs, but it will inevitably reshape every business. In the end, time will prove Drucker right. AI will greatly enhance our ability to measure our organization, so that the living humans on our team can focus all their energy on where they can truly create and capture value: building and selling.
