Cloudflare was growing 30%, sitting on $4.1 billion in cash, and had just closed the largest contract in company history when CEO Matthew Prince decided to cut a fifth of the workforce.
On May 7, Prince and co-founder Michelle Zatlyn told employees they were eliminating more than 1,100 jobs globally. Cloudflare's Q4 2025 revenue had hit $614.5 million, up about a third from the year before, with a new record annual contract averaging $42.5 million per year. The company still expects to grow 28-29% this year. This was not a company in trouble.
Prince framed the cuts around a taxonomy that's now spreading across Silicon Valley. He split Cloudflare's workforce into two categories: "builders," meaning the engineers who ship product, and "measurers," meaning people in middle management, finance, legal, internal auditing, and revenue recognition who track and coordinate what the builders produce. Then he let the measurers go.
"Today's actions are not a cost-cutting exercise," Prince and Zatlyn wrote. "They are about Cloudflare defining how a world-class, high-growth company operates and creates value in the age of AI."
The reasoning comes down to a bet Prince is making about where the internet is headed. He said in the company's earnings release that "if agents are the new users of the web, Cloudflare is the platform they run on and the network they pass through." He's rebuilding the company around a future where AI agents generate most of the traffic online, and in that world you need people who can build the infrastructure. You don't need people tracking progress in spreadsheets.
The SEC filing puts the cost of the restructuring at $140 to $150 million. That's roughly 7% of annual revenue spent to buy a fundamentally different org chart.
Cloudflare isn't making this bet alone. Within weeks of Prince's announcement:
- Shopify published a company-wide memo declaring that engineers, designers, and product managers are "crafters" and everyone else plays a supporting role. "Since the floor has been raised, we are now exclusively hiring for the ceiling," VP of Talent Sam Gregg-Wallace wrote. "What matters most is what AI can't give: taste, judgment, and the willingness to own outcomes."
- Block released an internal document called "From Hierarchy to Intelligence," describing a shift from traditional reporting structures to AI-coordinated workflows.
- Coinbase posted about building "a leaner and faster" company along the same builder-first principles.
According to a Korn Ferry survey of 15,000 professionals worldwide, 41% of employees say their companies trimmed management layers in the past year. The logic underneath all of it is that AI tools have made a huge amount of coordination work redundant. When agents can handle scheduling, reporting, and progress tracking, the person whose entire job was to gather that information and relay it up the chain starts to look unnecessary. Bret Greenstein, chief AI officer at consulting firm West Monroe, told Fortune that "thanks to AI at everyone's fingertips, CEOs know things as fast as anyone in the team. You don't really need a translator."
Cloudflare says it has a record number of open positions in "areas that drive growth." But several workforce researchers have raised a quieter concern: if you eliminate the roles where people traditionally learn how a business actually works, you might not have anyone qualified to run it in 10 years.
The severance packages tell you everything about where we are in this cycle. Cloudflare is spending up to $150 million to pay people to leave, which is the kind of money you only spend when you believe the org chart you're buying is worth more than the one you're selling. A year from now, when every mid-cap tech company has run its own builder-or-measurer sort, those packages will be a lot thinner. The only question is which side you'd land on if your company ran the same exercise tomorrow.
