Dropbox Lays Off 500 Employees As CEO Touts AI Future

‘Our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development. We’ve been bringing in great talent in these areas over the last couple years and we’ll need even more,’ says Dropbox CEO Drew Houston in a message announcing the termination of 500 employees.

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Dropbox is laying off 500 employees, or about 16 percent of the company’s global workforce, as the cloud storage and software company focuses on driving artificial intelligence.

“I want to recognize the impact this decision has on Dropboxers who are affected and their families, and I take full ownership of this decision and the path that led us here,” said CEO Drew Houston in a message to employees today. “While our business is profitable, our growth has been slowing.”

By laying off 16 percent of its global workforce, San Francisco-based Dropbox is freeing up investment for future growth and momentum around AI, according to Houston.

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“The AI era of computing has finally arrived,” Houston said. “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.”

[Related: Red Hat Layoffs: Cuts, ‘Cultural Change’, CEO Decision—5 Key Things To Know]

In an ideal world, Houston said Dropbox would simply shift employees from one year to another. However, “our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development. We’ve been bringing in great talent in these areas over the last couple years and we’ll need even more.”

Houston said 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.”

‘Economic Downturn’ Put Pressure On Dropbox Customers

In addition to its shift towards AI innovation, Houston also said the 500 layoffs are, in part, due to the “economic downturn,” which has put pressure on Dropbox customers.

“In some areas, investments that showed promise before the downturn have more limited potential today. In others, we haven’t been executing consistently or managing performance as tightly as we need to,” he said. “So we’ve made more significant cuts in these areas in order to free up investment in our future growth.”

Dropbox employees impacted by the layoffs are being alerted today. “To all of you impacted by today’s news, we’re committed to doing as much as we can to take care of you through this transition,” Houston said.

Tech Layoffs 2023

Dropbox is just one of a slew of tech companies of all shapes and sizes who have conducted hundreds, sometimes tens-of-thousands, of layoffs in 2023.

For example, Google unveiled plans to cut 12,000 employees this year, Microsoft will lay off 10,000 and Amazon is laying off 27,000 employees, including some at Amazon Web Services.

Just this week, Red Hat revealed similar cuts to Dropbox as the open source software company lays off nearly 800 employees, or 4 percent of the company’s global workforce.