“Change of this magnitude and at this speed is never easy and it will not be seamless,” Spiegel added in his memo.<\/p>\n
This cut at Snap marks at least the third larger scale layoff at the company since 2022, when it conducted its first major layoff which impacted 20% of its staff at the time.<\/p>\n
Spiegel’s comments on Wednesday are the first time he has pointed to AI as an explanation for staffing decisions.<\/p>\n
This year, activist investor Irenic Capital Management took a stake in Snap, saying in a public letter to Spiegel that it was “strange” the company remained unprofitable after 15 years in business and with hundreds of millions of monthly users.<\/p>\n
Irenic noted that an investor who put $1 into Snap when it went public in 2017 would be left with a stake worth only 23 cents today.<\/p>\n
An activist investor is a person or investment firm that buys shares in a company it believes is underperforming and then applies pressure for management and business changes. <\/p>\n
Snap now requires “a new way of working that is faster and more efficient, while pivoting towards profitable growth”, Spiegel wrote in his memo to staff.<\/p>\n
His explanation echoed that of other tech executives this year who have begun citing the increased capability of AI technology, mainly tools that help software engineers do coding work, as they order their own mass job cuts<\/a>.<\/p>\n Already this year Amazon, Meta, Block, Pinterest and Atlassian, among others, have collectively laid off several thousand workers.<\/p>\n Company executives have either pointed to increased use of AI tools meaning they need fewer workers, or noted that plans to spend hundreds of billions of dollars a year on investing in AI<\/a> requires cost-cutting in other parts of the company.<\/p>\n Jack Dorsey, the CEO of Block and the former leader of Twitter, said at the end of February that the rise of AI tools for tech workers “fundamentally changes what it means to build and run a company”.<\/p>\n