Author: Matthew Prince

Translation: TechFlow

Two weeks ago, I laid off more than 20% of the employees at the company. I did this not because Cloudflare is in trouble. On the contrary, our revenue growth has reached an all-time high, cash flow is abundant, and we have also acquired an unprecedented number of new customers globally. I made this decision because the business environment is undergoing a seismic shift; in order to win the future, Cloudflare must adapt to the changes.

If you search through American business history, you may not find a second publicly traded company like ours that has laid off 20% of its staff while maintaining a growth rate of over 30%. However, what we have done in the past two weeks may very well become the norm for the entire industry in the coming year. This is a story about how artificial intelligence (AI) is reshaping everything, but sadly, many executives and commentators misunderstand how AI will disrupt business rules and who will truly be impacted.

To clarify this issue, I reopened an old book published in 1954 (this book is 20 years older than I am): Peter Drucker’s “The Practice of Management.” In this book, Drucker analyzes the various roles within a business. I categorized these roles into three types: builders, sellers, and measurers.

As the name suggests, "builders" are responsible for creating products, while "sellers" are responsible for selling those products. The "measurers" encompass everything else: internal audits, revenue recognition, finance, legal compliance, middle management, daily operations, and so much more.

Contrary to some analysts' pessimistic predictions, the jobs of the "builders" are secure; they are not going anywhere. If one of the engineers on my team can increase their productivity tenfold with AI, I would definitely hire all the talent available in the market.

Sellers also don’t have to worry about being eliminated. Because the ones who control the budgets are still living, breathing humans, who prefer to buy from those who are willing to spend time listening to needs, can build trust, and can help back them up when things go wrong.

Measurers are equally essential to a business, but they are fundamentally different from the first two. Top measurers are often hard to find. They work tirelessly behind the scenes, not seeking the spotlight of front-of-house roles; ideally, they can maintain an objective perspective independent of other departments within the company. Drucker pointed out that while measuring business performance is important, customers are ultimately won through building and selling. A truly top-tier company should invest most of its resources in these two core functions.

The wave of AI is not directed at the builders or sellers; it is truly aimed at the measurers. Tireless, completely independent, highly efficient, and always online—today’s AI systems measure and evaluate a company with a level of objective detail and accuracy that even the best employees in the past could not match.

Take Cloudflare for instance; in the past, our internal audit team could only pick out a few business risk points for spot checks each quarter. Now, we are fully implementing a new system that conducts continuous audits on every business risk point around the clock. Our financial closing speed has become faster. The mistakes we make are becoming fewer; even when errors do occur, they can be pinpointed with greater precision. As the CEO, I now have an unprecedentedly excellent tool that allows me not only to accurately measure the overall operational status of the company but also to precisely identify the rising stars within my team.

Among the employees we laid off last week, the vast majority were measurers. We streamlined the middle management across the company because, with the assistance of AI, managers can now oversee more direct reports while still being able to provide accurate performance appraisals and effective guidance to teams. We consolidated dispersed operational roles into a unified business support group, allowing AI to fill in gaps where specific expertise is needed. We also significantly reduced the marketing team—like most companies, it had been the hotspot for measurers. Additionally, within the finance team, we found numerous opportunities to merge positions and achieve automation.

However, the fundamental purpose of this layoff was not simply to reduce headcount. In fact, the number of open positions we are recruiting for has reached an all-time high. I expect that our total employee count will continue to grow in the coming years. It is precisely because the work of measuring no longer requires so many people that we can now free up resources to invest heavily in those who can truly drive the company's growth.

This summer, we received nearly one million resumes for 1,111 paid internship positions. The group of interns we ultimately hired is not only exceptionally talented but also the native generation of AI. They are all builders or sellers, and we expect that the vast majority of them will ultimately receive full-time offers.

They represent the new generation of the future, who will invent entirely new ways to energize our business. Thanks to AI, we can now more accurately measure their contributions and precisely identify those future leaders. AI is not a precursor to disaster that leads to dismal unemployment among young people—it is just the opposite.

AI will not end all jobs, but it will certainly reshape every business. Ultimately, time will prove Drucker right. AI will greatly enhance our ability to measure organizations, allowing the living, breathing humans on our team to focus all their energy on where they can truly create and capture value: building and selling.