Over the last year, I wrote a fair bit about Marc Benioff and Salesforce. The CEO of the company made news last year when he announced that it would not be hiring any software engineers in 2025 due to a 30% productivity boost due to AI tools.
At the time I stated this was just the first shot. It seemed unlikely this was the end. In fact, I theorized it was the beginning of something that would rapidly expand.
It turns out this assessment was correct.
While politicians still talk about the same nonsense they always do, blaming everyone else for the problems they were put into office to fix, we see a quiet undercurrent taking place.
Over the next two years, I believe this will accelerate to the point where it will no longer be possible to hide.
I give Benioff credit. He seems like one of the more honest CEOs, at least when it comes to this topic. He doesn't hide behind corporate-speak. Instead, he lays it out there.
Speaking of lay, we are now getting layoffs from the company. Back in early September Benioff stated the head count at Salesforce was simply too high.
"I've reduced it from 9,000 heads to about 5,000, because I need less heads," Benioff said while discussing the impact of AI on Salesforce operations.
This is a rather blunt way to phrase it. That aside, it is clear what he did. AI is helping the company to increase its effectiveness. These were support roles, something that was obviously automated.
Many Silicon Valley companies are on a roll. They enjoy record stock prices. The ability to raise money never was easier for them. Each week, there are funding rounds in the billions.
Yet, throughout the year, we heard of the tech layoffs. Meta just announced it would be laying off 600 from its AI unit. The message was reorganization. Certainly, with something that is moving at an advanced pace, moves have to be made on the fly.
That said, it does line up with a larger trend.
The reality is that most companies are still trying to figure out AI integration. At most places, employees are hesitant to learn how to use the technology. Perhaps a few realize this will only be used to make them obsolete.
Management is still on a learning curve. There is a lack of overall corporate strategy. This is not a forever situation. These entities will figure it out.
My guess is the technology firms already did. It makes sense since they are the ones creating the tools that are increasing productivity.
If Benioff was seeing a 30% productivity gain in early 2025, what is he seeing now? Are these systems now capable of a 50% gain? 60%?
Whatever the answer is, the net result is a 10% reduction in the workforce. Think about that for a moment. A company seems massive productivity gains, likely increasing throughout the year, to the point where a significant percentage of the employees can be let go.
This is no an isolate case. Ultimately, it will spread to most industries, obliterating most knowledge work. The mantra that technology always creates more jobs than it destroys is being proven false.
My prediction is, no matter how well (or poorly) the economy fares in the US, we are going to see unemployment rise. Jobs will be lost due to the fact that AI is making many people redundant. Some will be reassigned of course. The fast percentage, however, will be let go.
As other industries figure things out, we could see this accelerate. The adoption curve of this technology will actually be one that reflects job destruction.
Benioff already figured this out.
