Cloudflare

Team:

We are writing to let you know directly that we’ve made the decision to reduce Cloudflare’s workforce by more than 1,100 employees globally.

Translation: We have decided that Cloudflare can generate more shareholder value with 1,100 fewer employees. Today, those employees cease being productive assets and become realized efficiency gains.

The way we work at Cloudflare has fundamentally changed. We don’t just build and sell AI tools and platforms. We are our own most demanding customer. Cloudflare’s usage of AI has increased by more than 600% in the last three months alone. Employees across the company from engineering to HR to finance to marketing run thousands of AI agent sessions each day to get their work done. That means we have to be intentional in how we architect our company for the agentic AI era in order to supercharge the value we deliver to our customers and to honor our mission to help build a better Internet for everyone, everywhere.

Translation: AI is the perfect explanation for a layoff because it simultaneously sounds innovative, inevitable, and exciting to investors. We would like you to know that we use a tremendous amount of AI. Whether AI directly replaced all 1,100 of these jobs is less important than establishing a clear connection between "lots of AI" and "fewer employees." If mentioning AI enough times causes analysts to describe this as an AI transformation instead of a workforce reduction, the stock may go up before the severance checks clear.

Today is a hard day. This decision unfortunately means saying goodbye to teammates who have contributed meaningfully to our mission and to building Cloudflare into one of the world’s most successful companies. We want to be clear that this decision is not a reflection of the individual work or talent of those leaving us. Instead, we are reimagining every internal process, team, and role across the company. Today’s actions are not a cost-cutting exercise or an assessment of individuals’ performance; they are about Cloudflare defining how a world-class, high-growth company operates and creates value in the agentic AI era.

Translation: Many of the people leaving are talented employees who helped make Cloudflare successful. Unfortunately, once a company becomes successful, management often concludes that the next phase of success requires fewer people. This is not necessarily about poor performance. It is about deciding that labor costs should grow more slowly than revenue. While eliminating 1,100 salaries is objectively a cost-cutting exercise, calling it an AI-driven organizational redesign sounds considerably more visionary and tends to produce better earnings-call reactions.

This is a moment we need to own as founders and leaders of the company. Matthew has personally sent out every offer letter we've extended. It is a practice he has always looked forward to because it represented our growth and the incredible talent joining our mission. It didn’t feel right for this message to come from anyone other than the two of us. Rather than trickling out notices through managers, we will be sending emails to every employee.

Translation: We would like everyone to remember that we once enjoyed hiring people before discussing why we are now firing them. We are personally delivering this message because if 1,100 employees are about to become angry, it is better optics for the founders to absorb the criticism than to outsource it entirely to middle management.

Within the next hour, every member of our global team will receive an email from both of us clarifying how this change affects them. For those departing today, we will send this update to both their personal and Cloudflare addresses to ensure they receive the information immediately.

Translation: The decision has already been made. We are now entering the logistics phase. Some of you are reading an announcement about a layoff. Others are reading an announcement about your layoff.

It’s important to us that we treat departing team members right and in a way that exceeds what we’ve seen from other companies. We believe acting with empathy isn’t about avoiding hard decisions but rather about how you treat people when those decisions are made. If we are asking our team to be world-class, we have a reciprocal obligation to be world-class in how we treat them. We are pairing the directness of these measures with severance packages that lead the industry. The packages for departing employees will include the equivalent of their full base pay through the end of 2026. Healthcare coverage is different across the globe, and if you’re in the United States, we’ll continue to provide support through the end of the year. We are also vesting equity for departing team members through August 15th, so they receive stock beyond their departure date. And, if departing team members haven’t hit their one-year cliffs, we are going to waive those and vest their pro-rated equity through August as well.

Translation: We are spending a substantial amount on severance because generous layoffs create better headlines than ruthless layoffs. We would like future candidates, customers, and investors to conclude that although we eliminated 1,100 jobs, we did so tastefully. Also, if you're going to explain that AI is transforming the workforce, writing a larger severance check helps keep the conversation focused on our generosity rather than our headcount reduction.

We’ve asked the team to do this only once, as hard as that may be today. We don’t want to do it again for the foreseeable future. By taking decisive action now, we provide immediate clarity to those departing and protect the stability of the team that remains. We are making these changes now because making smaller, repeated cuts or dragging a reorganization out over multiple quarters creates prolonged emotional uncertainty for employees and stalls our ability to build. It’s the right thing to do; it’s the honest thing to do; and it reflects the values of the company we are continuing to build.

Translation: Large layoffs are generally preferable to a series of smaller layoffs because they reduce uncertainty, reset the cost structure all at once, and allow management to return to talking about growth. We hope this reduction is large enough to satisfy investors and convince remaining employees that they survived the final round. If AI delivers even greater productivity improvements later, we reserve the right to revisit the definition of "foreseeable future."

Cloudflare started as a digitally native company built in the cloud. That allowed us to catch up to and pass companies that had a head start of years or decades but were slowed down by outdated systems and processes. As we’ve now become the leader, we cannot rest on the workflows and organizational structures that worked yesterday. We’re confident that our reshaped organization will be even faster and more innovative as we continue building the future.

Translation: Yesterday's disruption story was cloud computing. Today's disruption story is AI. Public companies periodically need a new narrative to explain why the future will be even better than the present. We believe investors will reward a company that claims it can achieve the same—or greater—output with fewer employees, especially if the words "AI," "innovation," and "efficiency" appear in close proximity.

To those departing us: you’ve helped build the strong foundation Cloudflare stands on today. We have the utmost respect for your work and gratitude for the impact you have made. We’re confident you will land at other great places and build many future great companies, bringing with you a unique set of skills learned while building Cloudflare.

Translation: Thank you for helping build the company that no longer believes it requires your position. We sincerely appreciate your contributions and are claiming to be optimistic that another company will hire you, but we really don't care.

Transparency is a core principle at Cloudflare, and it was important that you hear this from us first. We will be heading to our earnings conference call at 2 PM PT, when we’ll share more. We also plan to address today’s announcements live with the team at our all-hands meeting.

Translation: We wanted employees to hear about the layoffs before investors did. Now that we've handled the employee portion of the announcement, we can move on to explaining the strategic benefits to analysts and shareholders, who will ultimately decide whether today's decision was rewarded.

It’s not an easy day, but it’s the right decision. Our mission to help build a better Internet is more important now than ever, and there’s a lot of work left to be done.

Translation: It's not an easy day for you. And for those remaining: time to pick up the slack. You've seen what we're capable of. Fuck you.