Dropbox layoffs 500 employees, making up about 16% of the company's entire workforce. Dropbox CEO Drew Houston blames the layoffs on the unstable economy in a note to staff, but he also claims that they will help the business expand its AI section.
"In an ideal scenario, we would simply switch individuals across teams. Everywhere we could, we've done it, says Houston. But for our next stage of growth, a distinct combination of skill sets is needed, notably in early-stage product development and AI. Over the past few years, we've been bringing in outstanding talent in these fields, but we'll still need more.
Houston claims that as part of the transformation, Dropbox is consolidating its core and document processing businesses and making changes to its product development teams. Houston adds that despite difficult economic conditions, Dropbox is still "profitable" and that the job layoffs are a result of the "natural maturation" of the Dropbox industry.
Houston says, "The changes we're announcing today are painful, but they're essential for our future." "Just as we were at the vanguard of the change to mobile and the cloud, I'm keen to make sure Dropbox is at the forefront of the AI age. As machine intelligence offers us the ability to reinvent our current businesses and build new ones, we'll need all hands on deck.
In a 2018 letter, Houston and Dropbox co-founder Arash Ferdowsi stated that "machine intelligence" will someday enable Dropbox to better understand and service its clients. Houston has previously shown interest in researching AI. Over the years, the file storage service has added a few AI-powered capabilities, such as the automated text recognition function it included in 2018. However, firing off staff just to bring in new hires with AI skills shows that Dropbox is serious about entering the market.
A minimum of 16 weeks of compensation, up to six months of healthcare, and the option to keep corporate equipment for personal use will be provided to affected employees. Additionally, they will get assistance with job placement and career counseling.
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