Interviewer: The biggest moat is going to be which companies understand something that's super hard for other people to understand. And if your answer to that is I don't know, then you maybe could get vibe coded away.

Interviewer: >> Block was one of the first to make a pretty drastic decision in cutting 40% of the workforce. What led up to that decision?

Owen Jennings: >> There's been this correlation between the number of folks at a company and the output from the company for decades and decades. I think that basically broke and what we were seeing is that one or two engineers who was on the tools is able to be 10 20 100x more productive over time. It's like pretty obvious that these systems are just going to be so much better than like having a thousand humans who are doing that work. I I do believe that fundamentally for a given product or for a given road map, you're going to need fewer engineers, fewer designers, fewer PMs. I think that's like very very clear.

Interviewer: >> So you show up on Monday, 40% of the company's gone. What's the most meaningful difference in how you're operating?

Owen Jennings: >> I think the biggest thing is what does it actually look like for a large public company to restructure itself around AI? Owen Jennings is the business lead at Block where he oversees product operations and customer support across Square, Cash App, and Afterpay. Before this role, he was the CEO of uh of Cash App during its critical scaling period. And recently uh block executed a roughly 40% reduction in force and they've been pretty candid about AI being a critical component of that decision. Owen has gone through the AI transformation at scale across product lines and business units and so we're going to dig into the that decision around the riff how block has adapted the current and future state of the business. So thank you so much Owen. Welcome to the stage.

Owen Jennings: Thanks.

Interviewer: Awesome.

Owen Jennings: >> Um, so you know, Jonathan, I think did an amazing job kind of setting the stage, you know, for this conversation. Uh, you know, talking about how important it is to be founderled. Uh, you know, Block was one of the first to make a pretty drastic decision in cutting 40% of the workforce. Um, maybe walk us through kind of what led up to that decision and how you thought about it.

Owen Jennings: Sure. I I think I would pro it probably starts two or three years ago. I think one thing about Jack is I I find Jack to be generally right and generally early. Uh sometimes very early. Um and I think that's flowed through Twitter, Square, Cash App, Bitcoin, etc. And so we were pretty early on the agentic development side. We actually launched Goose, which was the first agent harness, at least that I know of, um, in early 2024. And that started to augment how we approached software development, uh, how we thought about internal tooling. And I would say that over the over that period 24 and 25, it was like pretty meaningful progress. Um, and then late November, first week of December, it was just there was a binary change. you basically have Opus 46, you have uh codeex 53 and essentially you get this shift where I think the the the the tools and the foundational models were pretty good at writing code especially for new ventures and kind of like green space. Um it became clear almost overnight maybe in a couple of weeks that now they're incredibly capable working with existing complex code bases. Um and so there was a massive paradigm shift where at least from my perspective there's there's been this correlation between the number of folks at a company and the output from the company uh for you know decades and decades. I think that basically broke the first week of December and what we were seeing is that one or two engineers or a designer and an engineer who was on the tools quote unquote as we say is able to be 10 20 100x more productive. And so that's really what led us to make the the decision a few weeks ago. We spent Q1 discussing like what does this mean fundamentally? What does this mean in terms of how we're going to build products, how we're going to build software for customers, and then also um how we're going to run a company. What is it going to mean to actually run a company? And we spent Q1 as an executive team uh with Jack um working through that. Uh and ultimately that's what led us to this place where where we we did a reduction in force that was you know slightly greater than than 40%. And that wasn't even uh you know to the to the conversation we were just having the tools were flowing through really meaningfully on the development side and so the cuts were way larger on the development side. If you think of something as outbound sales or account management um the cuts were you know fairly dimminimous. Um and so that was really what we were reacting to. C can I push you a bit on this a little bit? I mean, Alex when he kind of introduced the, you know, the conference uh just, you know, an hour ago talked about the zer period. Uh, you know, how much of the riff was sort of overhang from 2021 kind of overhiring versus AI and and kind of like the product actual productivity gain is going to be in the business? Like if you look at where we were from a from a gross profit per full-time employee basis from like 2019 through 2024, we're basically like right in the middle of the pack with all of the um uh with all the competitors. Um if you look at last year, I think we were kind of I don't know second quintile or something like that. I think it's basically like Nvidia and Meta that are ahead of us. Um, and then when you look at the composition of what we did, if you thought it was like croft and bloat and so on and so forth, then like this riff would have acred to the operational teams and like like that sort of stuff. Those were really really meaningful cuts on the development side. You don't make really really significant cuts on the development side if you're not seeing a technology and a tool that's just fundamentally changed how we build. I mean, we're we're like we're not writing code by hand anymore. That's over. That's done. Um and so so anyway, everyone has their narrative. Um it's largely not true.

Interviewer: >> Um so maybe just walk through like tactically how did you actually execute you know this this transition you know culturally you know operationally in the business.

Owen Jennings: So I think so we were um the the the nice part about this riff uh relative to some other you know things that have happened at block or at other companies is we were coming from a position of strength on a on a profitability and operating income side. And so sometimes when it's really financially motivated, you know, the CFO or the CEO says, "Okay, we need to do a 16% riff in order to like hit this hit this target." And um that wasn't the case at all. We said, "What should the org look like given how these AI tools are flowing through now and what we expect to happen in the in the coming months and quarters." We had some core principles. Um the first one was reliability. When you do something this size, worst case scenario is you have an outage or you go down. So that's like P 00 not acceptable at all. Obviously, you know, things have been great over the past several weeks, which is fantastic. Second is building trust with customers and um compliance and navigating the regulatory environment. We all operate in a super complex nuanced regulatory environment. That's a non-negotiable. We have to make sure that we're that we're doing doing right there. For instance, like we we basically did not touch our our compliance team and our compliance technology team. Even if the tools are there, it's like let's not take any risks. And then third was let's continue to drive durable growth. So there's things that are on the road map that we already know that we're building. We need to continue to do that. We know that it might be a squad of three people instead of a feature team of 14 who's building that. We want to make sure we're continuing to build those features and that we're continuing to make longerterm bets. And then we built up the org from scratch. And in some areas like um the regulatory council team or the SDRBDR team, the org looked pretty similar to how it looked in January. Um on the development side, it looks completely completely different. Um and then you know from a from an execution perspective um you know we thought very deliberately obviously I've been in the company 12 years. A number of folks who we parted ways with are friends and colleagues for for you know more than a decade. um we were in a position where we're able to be generous in terms of you know the the the severance packages that we gave. We didn't cut people's technology access instantly which can suck. Uh we chose to have an all hands with everybody at the company. So Jack and the executive team were um you know looking each other in the eyes and explaining this decision and explaining the the drivers behind it. And um I I think that that it was on a Thursday. I think like the Friday, Saturday, Sunday there's a lot of shock uh dealing with ambiguity. Um and then what we've been doing is uh we massively reduced the number of meetings we have probably like 70 or 80%. So I now have time to like build and work and it's not backto-back meetings. We're also meeting with the company every week. So we have like a one or two hour all hands with Jack every every Monday. It just feels like we're we're smaller, we're leaner, we have fewer layers, we have larger spans, and it's it's been back to building.

Interviewer: >> So, you show up on Monday, 40% of of the company's gone. Like, what how is what's the most meaningful difference in how you're operating? I don't know, maybe it's in the EPD or elsewhere.

Owen Jennings: >> Um, I think that there's a there's a few different components to this. I think the biggest thing is so one concern that I have with like how some of these org changes might flow through the tech industry is that and and it gets back to the to the founder point. If you're not founder le and you don't have the the ability to be bold, then you're going to probably take a more incremental approach. And so the way that that's going to feel is like you do a 15% riff and it's like, oh, it's fine. and then you do another 15% riff and then culturally that's just like devastating for your team because there's always this like pending riff looming looming over your over your shoulder. Um this was obviously a decision to go in a different direction. I think one of the benefits that we got from this is like we were already seeing a a very meaningful increase in AI tool usage especially on the development side. This is just a massive forcing function. Like if we're building um okay, we're building Moneybot and we want to roll Moneybot out to 50% and there used to be a team of 15 people working on it and now there's a team of four people plus $2,000 on the tokens. That's this is like un unlimited access to tokens and you can use fast mode on cloud code. Um so now you have four people plus the tools. It's like okay well you need to have eight instances of goose up and you need to shift your workflow from sequentially working through a PR submitting it getting a review making the change to I have 14 agents who are building PRs on my behalf right now and I'm going to context switch between all of those and it's not just uh on the software development side it's for PMs too it's for growth marketers too the biggest shift myself included I I have you know countless agents running right now that I have to I have to go check on. Uh it's it's not um it's less of a linear workflow and it's more of like in the background there's 10 or 20 agents who are doing a whole bunch of stuff and then I have to check in on the work and nudge it and change it or what have you and then I can commit it to GitHub and I can I can get the markdown file. We can put it in the source of truth and we can move on.

Interviewer: >> Yep. So we have a lot of you know public companies in the audience. We have a lot of founder businesses in the audience. Do you expect other companies to kind of follow a similar path and and I guess what conditions need to be in place for that to be successful?

Owen Jennings: >> I I I don't I don't necessarily want to like I I talked at the beginning about um the ground work that happened in 23 24 and 25 like we built this agent substrate goose and then we built a lot of tooling at the company on top of it. We have an agentic operating system internal only called G2 where anyone can automate any deterministic workflow. So anyway, I think there's work to do to to be successful. I would expect many companies are doing that work. Some of them are incredibly um far ahead than than others. Um and so I I I don't know what to expect. What I will say is like to the extent that I I do believe that fundamentally for like a given product or for a given road map, you're going to need fewer engineers, fewer designers, fewer PMs. I think that's like very very clear based after like December. Um that doesn't necessarily mean that there's going to be fewer engineers, designers, and PMs in the world. Um, it's like the classic Jevans paradox thing where I I think that there's probably now just a superset of things that that can be built. Um, so I don't know, you know, a given tech company might be might be way smaller, but there might be 50 or 100 more tech companies or you're going to start getting this development working in in sectors and and areas where that hasn't historically been the case. Um, but I I'm not here to to predict the future. I'm focused on block.

Interviewer: >> Uh, fair. you you talked a bit about kind of the some of the AI infrastructure you build. Maybe you can get go in a bit more depth uh you know both in how it's impacting the kind of technology or I'm also curious about you know how are you using AI in other parts of the business you oversee ops customer support.

Owen Jennings: >> Yeah. Um so I got asked at a investor conference uh last week like how is AI like flowing through block and to me that it's like asking um how are computers flowing through block? uh like it's it's a uh fundamental in-built thing that has changed on in like a binary way over the past 18 months and then feels like it changed all over again in the past four months. Um so I'll break it down into internal and then external and how we're thinking about our products, what we're putting in customers hands and then I can talk a little bit about the the future and where we think things are going. So on the internal side, I think the biggest difference is the shape of the of the org. So we used to have kind of like a classic hierarchical uh structure. It it was functional. Um which was great, but it was like fairly standard if you like averaged through a bunch of medium-sized tech companies. Um and so you would have kind of like eight server engineers, four client engineers, a PM, a designer, and you would work linearly through your road map. Now we have um small squads. So squads of like one to six people. Um so meaning meaningfully smaller than the other teams would be. And we have way more flexibility and and fluidity where a given squad can work a few cycles on this product, get it live and then a cycle on this other product. Um which is different than how things worked a year or two ago where it's like I'm on the banking team. I'm going to be on the banking team forever. We also have way fewer layers. So on the development side, I think we probably cut our layers by I don't know 50 or 60%. Like on the product side, I only have I think two layers, maybe three layers in a in a couple places and so information is flowing um way more freely. I think that then in terms of how we actually build on the development side, things have changed. I think everyone's probably seen, you know, every every CEO out there is going on Twitter and showing their like green dot on on uh on GitHub. Um, but that's real. Like all of our designers are are shipping PRs. All of our product managers are shipping PRs. That's not that interesting anymore. I think more interesting is that we have uh internal tools that are similar to clawed code, but they're like more plugged into our infrastructure. So we have a tool called Builderbot. Builderbot is just autonomously merging PRs and actually like building features to 100%. We've had some fairly complex features that are built to 100%. More often than not, it's building them to like 85 or 90%. and then a human who who has a lot of context and understands does like the final the final 10%. So that feels really really different. The ability to go from um to go from idea to like this is in the hands of 100,000 or a million customers has been compressed massively since uh since December. Outside of development, I would say most of what we're seeing is like anytime there's a deterministic workflow, we're we're able to automate that. And so generally at a at scale tech company you have individuals who are working cues. Um a lot of that is just being completely automated away like from a customer support perspective. This is not new but you know our chat bots and and AI phone support and and whatnot are automating a a majority of inquiries that we get. And then it gets into like um product operations and risk operations and compliance operations and any sort of decisioning like generally um generally the the the models and the agents are going to do a better job than humans. Right now I think it's critical that we have a human in the loop. Uh that's like the key kind of buzzword uh when you talk to talk to partners and regulators and and what have you. Um, but over time it's like pretty obvious that these systems are just going to be so much better than like having a thousand humans who are who are doing that work. So that's on the internal side. Um, on the on the product side, I think that

Interviewer: >> and maybe just catch people up on kind of the shape of the business. Obviously you have Square, you have Cash App, you you made a big acquisition, Afterpay.

Owen Jennings: >> Sure. So um, so we used to operate in a business unit structure. So Square used to be kind of its own business unit with its own CEO. Cash App was its own business unit with its own CEO. Um that wasn't leading to the right outcome. So about 18 months ago, we functionalized the company. Just meaning that all of engineering rolls up to our head of engineering, all of design to our head of design, all of product to me. So we have a financial platform team that spans the entirety of block. We have a business platform team that's doing a lot of this automation that spans the the entirety of of block. And then increasingly we're building features and products that actually connect the Square side, the Cash App side, and the Afterpay side. And so naturally you you're building technology and you're building infrastructure that is not um brand specific. And that's actually like kind of central to our our overall strategy and and and overall thesis. Um, but yeah, I mean, CA Cash App went from when I joined Cash App in 2016, uh, we had just just started to to figure out how to monetize and had our first dollars of gross profit. And now I think Cash App's probably like I don't know 60ish% of like overall gross profit at the at the company. So overall been been growing at a healthy clip over the past decade. Um but uh Cash App and Afterpay have definitely been growing um more quickly, but increasingly we're trying to think about things from an ecosystem perspective and and that's maybe where like goose as a platform comes in which is we bu we built goose internally. The way to think about goose is um it's a nod to a top gun or whatever the co-pilot thing but the way to think about goose is it's a it's an agent harness and it's model agnostic. So I can run goose on an anthropic model, on a on a on an open AI model, on an open- source model. There's probably like 120 models that we have. And depending on what I'm trying to do, I'll kind of swap out the swap out the models. And then that was useful for a human to use, but we've built like the agentic layer on top. And so now a lot of the automations at at block are actually routing through the goose agent harness. And um we've been able to leverage this across the products that we're building. So, Moneybot, which we'd like to think of as like a CFO in your pocket, but it's essentially like a proactive um a proactive uh chatbot that can take actions on your behalf within Cash App. That's built on top of Goose. Manager bot, which is roughly a similar thing on the Square side, that's built on top of Goose. So, it's a lot of this foundational work on agentic systems and then like the the the triggers and the underlying data and events that you need to power them that's working across the uh the entirety of the of the company. So, on the on the product side, um I think that the the biggest shift has really been like we're going from a world where for the past 10 or 15 years, everyone's used to a static UI, a rigid UI. you tap through the UI, everyone has the same, everyone's Uber or Lyft or Cash App or whatever looks the same. That's going to fundamentally change in the next like six months. Um, generative generative UI is is is here. We're seeing it with Moneybot. We're seeing it with manager bot as the models get better.

Interviewer: >> What what is that going to look like kind of in practice? I'm curious.

Owen Jennings: >> I think I mean in simplest terms, it's like your Cash App should look really different from mine. And the reason why it's like, okay, well, I get my paycheck into Cash App and I'm super into Bitcoin. Let's say like you don't and you use Afterpay all the time. Great. When we open up our apps, that should be totally different. That you could probably achieve that just through personalization. That's not that interesting. What we're actually seeing and Anthropic had some releases this week that are that are incredible. We're actually seeing is like I can go into Moneybot and say, "How have I been spending my money?" And it'll show me a bunch of charts and uh and visual visualizations where it is actually like on the fly generating generating that visualization. It's not actually in the code itself. So that's really cool. It's also potentially a nightmare from like a QA perspective. And so we need to figure out how you're going to QA all these like non-deterministic outputs for for tens of millions of customers. But um a great example on the on the Square side is with ManagerBot. Maybe charts aren't that impressive to you, but with Manager Bot, let's say you're a you're a uh you own a multilocation quicks serve restaurant. you say like, "Hey, can you build me an app where I can uh manage scheduling for these two locations and like automatically fire off text via, you know, WhatsApp or or Signal or whatever to my um to my employees. It's actually going to like create that app for you. And the the way that that app looks and feels is not in the source code of the actual application that we push to the to the app store." And so I think it's um it gives folks way more control. It's way more uh ultimately I think it'll lead to higher engagement. Um I think it'll lead to better product and and really I think the key thing I I don't think that if we ask customers to to like prompt these tools themselves, they're going to necessarily know the right prompts and come up with the right answers. So, we've invested massively on the proactive intelligence side where what we've found, especially as it relates to money is like we need to be prompting our customers with things that we think make sense for them and that's where we're creating a lot of the the value.

Interviewer: >> So, I mean, I think we're all incredibly bullish on on kind of the impact of AI, you know, in kind of in the way that all these businesses run and the products you can create. How does that flow back to your stock price? you know the the business is the stock has been roughly flat for I don't know six or seven years.

Owen Jennings: >> yeah I think um so so I think you know markets are markets are cyclical and there's all sorts of things that are happening I remember uh in 2021 when our stock price was like I don't know 260 bucks and I was like that was a little bit irrational um you can take a a kind of longer term mature view and say you So markets are voting machines in the near term, but they're weighing machines in the long term. Just like focus on building,

Interviewer: >> you know, David and Jonathan earlier talked a bit about kind of defensibility. How do you think about your own moes at Square? I mean, at Block, excuse me. You, you know, you talked a bit about the ecosystem. You guys obviously have, you know, regulatory infrastructure. Um, you know, how do you think about, you know, that the business overall in that context?

Owen Jennings: Yeah, I think in the I think in the near term and the medium term, um there's a bunch of there's a bunch of modes that exist for for block and and we can talk about the industry more broadly. I think I think distribution and network effects are are one of them. I I agree on the the catrini piece and uh and Door Dash. I don't think anyone's vibe coding Door Dash in the next couple of weeks here. Uh I like to say like any of us can can create a peer-to-peer app in probably a week. uh no one's going to vibe code you know 50 or 60 million monthly activives who are actually using that. So I think that that's true. Uh I think um you know licenses and and regulatory posture um definitely exists. I think hardware right now it's like harder to imagine how some of the AI tools flow through to the to the hardware side. Like you can't vibe code a piece of square hardware. Um but I I think longer term if we continue like if we look at the rate of the change and and the change in the change I think longer term the key thing that's going to make uh a company defensible is um the extent to which the company understands something that is pretty hard for other companies to understand. And so we're increasingly building toward a world and talking about block as an intelligent system itself.

Owen Jennings: >> So basic like the the the the the way that I see this going if we can if you extrapolate forward the past several months is that ultimately a company is sitting on top of some sort of signal, some sort of like rich data and and and deep insight. Um for us it's like how sellers and buyers participate in the economy. Um and and most companies I think have this thing that they understand deeply. And then the question is going to be how quickly can you iterate to improve that understanding over time. And so we're building world models internally and externally of like understanding who our customers are but then also understanding how block operates. It's like you can imagine you can imagine for any company just like a markdown file of like who you are and then you need the feedback loop with two things. You need a feedback loop with the signal which is like what do you what do you deeply understand that's hard for others to understand and then you need a tool like builderbot or clawed code or what have you. And then you can just iterate through that loop over and over and again. It's like this is this is what I'm seeing. This is what's happening. Great. This is our markdown file for for block. These are our values. this is the metrics we're trying to optimize for. Um, this is what we care about. This is what we don't care about. And then you have a gentic system, so you can just build stuff. And right now, you basically you've taken that humans used to do that and it used to take a couple months to build a feature. Um, now it takes maybe a week or two and there's still humans involved. Pretty clear that in the future you'll be able to run that loop like I don't know hundreds, thousands of times a day and maybe there's some humans involved. Maybe not. Maybe the humans are more like editors. And so I think the the biggest moat is going to be like which companies understand something that's super hard for other people to understand. And if your answer to that is is um I don't know, then uh then you maybe could get vibe coded away.

Interviewer: >> This has been an amazing conversation. Thank you. Uh thank you so much for for joining us.

Owen Jennings: >> Appreciate it. Thanks so much.

Interviewer: >> Awesome.