Dropbox drops 16% of staff, points finger at hard-up customers and AI
We've progressed from blaming this kinda thing on millennials, immigrants, China, woke libs, etc
Dropbox axed 500 employees, or 16 per cent of its workforce, on Thursday as the online storage biz pivots to AI amid slowing growth.
CEO Drew Houston said in a canned statement the layoffs were the result of an economic downturn, following the peak working-from-home cloud frenzy of the pandemic, and the arrival of an "AI era of computing," adding "AI will give us new superpowers." But not jobs, it seems.
Here's the boss blaming the economy and customers closing their wallets:
While our business is profitable, our growth has been slowing. Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business. As a result, some investments that used to deliver positive returns are no longer sustainable.
And then The Pivot:
The AI era of computing has finally arrived. We’ve believed for many years that AI will give us new superpowers and completely transform knowledge work. And we’ve been building towards this future for a long time, as this year’s product pipeline will demonstrate.
The opportunity in front of us is greater than ever, but so is our need to act with urgency to seize it. Over the last few months, AI has captured the world’s collective imagination, expanding the potential market for our next generation of AI-powered products more rapidly than any of us could have anticipated.
However, this momentum has also alerted our competitors to many of the same opportunities.
As Dropbox shifts gears to focus on artificial intelligence, the biz wants to retain and hire people with machine learning expertise and experience developing and shipping early-stage products. The goal seems to be to develop features and functionality that's driven by AI, and keep up with similar stuff put out by rivals. Employees working on projects outside these areas, meanwhile, have paid a heavy price.
Houston said his organization will combine its Core and Document Workflows businesses to streamline its key file, sync, and share products as well as building new AI-powered features. Staff laid off from Dropbox will receive severance and equity packages, including at least sixteen weeks of pay and their Q2 equity vest.
The San Francisco company expects to spend roughly $37 million to $42 million in restructuring costs that will impact its Q2 earnings later this year, according to an SEC filing.
In the fourth quarter of 2022, Dropbox recorded a six percent year-on-year lift in revenue to $600 million, resulting in a $330 million profit, more than double that of Q4 2021. It ended the year with a $550 million profit, up 65 percent. Sounds like a lot of cash but if Dropbox is pivoting to ML stuff, that's going to cost a fair amount to do right.
Generative AI, particularly large language models capable of processing and producing text, is already impacting the way people work. Employees are turning to software like ChatGPT to write emails, documents, and code across all sorts of roles, from HR and marketing to engineering. Now, companies like Dropbox are rushing to develop AI-powered productivity tools in a bid to capitalize on the hype.
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They believe that AI models can help automate mundane repetitive tasks and increase productivity; jobs will be displaced as the technology takes over some roles. It's not clear how disruptive the changes will be, however, and it's likely the technology will eventually bring about opportunities and new roles for people. Just as we've had to master ordinary software applications in our lines of work, we'll just need to master this upcoming generation of semi-automated and automated apps. Experts predict AI will thus impact, but not necessarily entirely eliminate, white-collar jobs and knowledge workers the most.
"Change is constant in our business, and technology transitions over the last few decades are instructive," Houston waxed lyrical.
"As the world moved from physical film to digital photography, or from land lines to wireless communication, or from DVD rentals to streaming, opportunity and disruption went hand-in-hand. Companies that embraced a new reality and took decisive action did well. Companies that held onto the past or tried to have it all did not."
"These transitions are never easy, but I'm determined to ensure that Dropbox is at the forefront of the AI era, just as we were at the forefront of the shift to mobile and the cloud. We'll need all hands on deck as machine intelligence gives us the tools to reimagine our existing businesses and invent new ones. And I'm committed to doing everything in my power to best position ourselves for the future and unlock our full potential." ®