Dorsey Mode: Why Tech's Most Misunderstood CEO is Right Again

Jack Dorsey is a man of contradictions.

He is the only founder to have two companies - Twitter and Block - join the S&P 500. This is an unbelievable accomplishment, surely one of the most impressive in business history.

Twitter is a real-time broadcast from your pocket to the world. It is the global nervous system for news, politics and culture. It remains that way today despite new ownership (a true testament to the power of the idea and the network).

Square took the $1,000 payment terminal and compressed it into a $10 piece of plastic that revolutionized small business commerce.

He was CEO of both companies simultaneously. During this period Twitter was famously described by Mark Zuckerberg as a “clown car” while Block let Toast, Stripe, and Shopify steal its lunch right out from under its nose. Both companies became bloated, sprawling fiefdoms and were eventually gutted (Twitter, famously by Elon Musk, and Block/Square/XYZ by his own hand). The divided focus did not work.

It’s become fashionable over the last few years to use Jack’s track record of executional missteps to dismiss him, and his ideas, entirely.

And to be fair, it hasn’t been the prettiest few years:

• He bought Afterpay at an announced price of $29B (at least he used stock for the acquisition). Block’s market cap four years later? $38B.

• He bought Tidal. Tidal! I think there was a reason besides being friends with Jay-Z but I can’t remember it.

• Elon cut 80% of Twitter and the team ships faster today than they ever did during the Dorsey Era.

• Oh, and we can’t forget the time he turned himself into a literal blockhead.

People struggle to hold these two Jacks in their heads at the same time. And after the last few years, they focus on the execution missteps and dismiss the innovator who is able to see the future, pull it forward, and put it in your pocket before people even realize the world has changed.

What they don’t realize is that these two sides of Jack Dorsey are two sides of the same trait.

The Jack who can’t sit still long enough to rigorously run a mature organization is the same Jack looking out five years, realizing the world will be radically different, and taking the knife to his own company. The Jack that lets his companies get way too big is the same Jack who can recognize the structure is now a noose in the AI era, and cut 40% in one go while his peers cut 10% each year and call it performance management.

Introducing: Dorsey Mode

Given Jack’s track record, I listened with real interest to his recent appearance on Brian Halligan’s Long Strange Trip, where he and Roelof Botha deconstructed what Halligan is now cheekily calling Dorsey Mode, Jack’s radical new approach to management in the AI era.

I’ll be honest. When Block announced the 40% layoff, I dismissed it. You can read what I said on Twitter right after the news dropped. I indexed way too hard on “unfocused” Jack without considering “visionary Jack.”

I said it had nothing to do with AI. I was wrong.

After listening to the full conversation, I’ve updated my position. Jack is pulling forward the future again and rebuilding his company for where AI is going to be.

He’s done this a few times now, and people always laugh at him. But more often than not, he’s right. Hell, the fact that his ideas keep working despite his execution probably means the ideas are twice as powerful as we give them credit for.

So here’s my updated read on Dorsey Mode, the four parts of his thesis that I think actually matter, and why I think Jack is early and right. Again.

The Four Big Ideas Behind Dorsey Mode

1. Cut 40% now

Brian Halligan: You laid off 40 percent of your employees. You know, Ruth Porat’s got this good line—if you’re gonna eat a shit sandwich, don’t nibble.

Jack Dorsey: We’d been making changes on the edge, like going from a GM structure to a functional structure to reduce—like, putting a cap on our layers to four—me plus four—and all these small things. But if we were to really reboot and rebuild the company, would we end up where we look today? And the answer was uniformly no.

And I think generally I wanted to make sure that we—if we knew that this was what our company was going to be in the future, I didn’t want to have to do it with our backs against the wall. We’re a public company, and there’s various challenges there. And other companies will probably get to this realization at some point. I don’t want to react to that.

I want to be ahead of it, because then we can do it with a lot more integrity. We can do it with a lot more generosity for the people that we’re asking to leave, and even for the people that we’re asking to stay. And we’re not just reacting into something mediocre. We’re acting towards excellence. And that’s just the tone that we wanted to set.

Let’s get right to the point. The only reason Jack had to cut 40% of his company is that he had too many people working there. There’s no other justifiable reason. AI is not good enough today to replace 40% of Block’s workforce. So the argument isn’t that AI is already replacing these people. It’s that Block needs 40% fewer people in three years, so the honest move is to get there now.

I agree with him. This is a layoff done with integrity. Which is crazy because cutting 40% of your company sounds truly barbaric.

Here’s what I believe. AI is fundamentally going to reshape organizations. I wrote a whole post last week about how the context carriers will get automated while go-to-market and innovation will become increasingly important (more on that in a minute). I also believe that most tech companies are 20-40% overstaffed. Put those together and many more layoffs are coming. The only question is who will eat the shit sandwich today, on their own timeline, and who gets it force-fed to them later.

Jack looked into the future and said: “I am going to need vastly fewer people at this company in three years. If I’m seeing that now, everyone else is going to see it either later this year or next year. The right thing to do, the compassionate thing to do, is to make this call now.”

And here’s the part that anyone who has gone through a layoff knows intimately. Every layoff requires a grieving process. We spend as much time at work as we do with our families.

The companies who cut 5-10% every year under the guise of performance management (Meta, Amazon) are taking the cowardly way out. Talk to anyone who works there. They’ve been in a perpetual state of high alert for the last four years. That’s no way to live your life.

Eat the sandwich and move on. It’s the right thing to do. Almost every tech company needs to do it. Jack is just doing it first, doing it once, and moving on.

I bet we will be able to count on one hand the people who follow his lead.

2. Your Org Should Only Be 2-3 Layers Deep

Jack Dorsey: Folks between me and anyone in the company - I want to get that down to two to three this year. In the most ideal case, there is no layer. Everyone in the company reports to me. That would be all 6,000 of the company.

That feels somewhat ridiculous when you consider the old structure, but when you consider that the majority of our work is going through this intelligence layer, it’s a lot more manageable.

Historically, the easiest way to get promoted was simply to manage more people. It wasn’t about your output, it was about your span of control. This led to bloated orgs with regional fiefdoms patrolled by a layer cake of middle management that becomes mired in political horse-trading.

The fix is to rip out the middle managers. It’s critical to do in the AI era for two reasons:

1. It’s war time. You can’t operate with a deep sense of urgency when every decision has to march up and down six layers of the org.

2. AI is exceptional at carrying context. Last week I wrote about the implication for ideas navigating horizontally through the business out to your customers, but it applies just the same to information moving vertically through your organization.

If you walked into almost any tech company today you would find VPs reporting to VPs. You would find managers with one and two direct reports. It is a deeply inefficient way to run a business, more a vestigial limb of the ZIRP era than anything resembling a management best practice.

In the AI era, the sluggishness that comes from being this top-heavy is deadly. You need more high-agency individual contributors, not middle managers whose idea of a productive day is feeding their direct report’s weekly updates into ChatGPT to generate bullet points to send up the chain.

Two or three layers isn’t realistic. You’re not Jensen Huang (who famously has 60+ direct reports), and neither are your VPs. But the idea stands. In the AI era you probably need to double your span of control (4 → 8 direct reports) and cut your layers (8 → 4 or 5).

3. Distribution and attention as the moat

Jack Dorsey: If I were starting a company today, I would be so excited about how quickly I could build things and how quickly I could prototype and get things out to customers. I would be in this valley of dread about distribution and attention, because there is so much noise out there and it’s so hard to get to the actual signal of who’s building something interesting that will actually fundamentally change something and will be around for more than a year.

I think distribution really becomes a differentiator. And I think there’s some event horizon where the way we think about distribution today closes off. If you don’t have the distribution today, it’s going to be very hard to fight for that.

What Jack is describing is Clay Christensen’s idea of The Conservation of Attractive Profits.

Christensen says that when one layer of the value chain gets commoditized, the profits migrate to a different area of the value chain where scarcity remains. Since AI is commoditizing application creation, that means value will accrue further downstream to those who own distribution.

We’ve seen this play out before the AI era. Meta and Microsoft have grown massive by copying others’ ideas and relying on their distribution to deliver “good enough” to their customers. Jack’s bet is that this dynamic will only become more true in the AI era.

If building becomes a commodity, why can’t Microsoft sell every piece of software any business might need? If getting found becomes even harder amidst the noise, Microsoft’s CIO relationships are worth more tomorrow than they are today.

In 2015 Alex Rampell wrote:

The battle between every startup and incumbent comes down to whether the startup gets distribution before the incumbent gets innovation.

The spin that Jack is adding on this truism is that distribution is about to get way, way harder because we are experiencing a Cambrian explosion of innovation. As a result, the current distribution channels are fading in value rapidly. You need to operate with great urgency to secure a position in the current channels where possible and begin testing intensely into the new ones. Building isn’t enough.

You can feel that urgency in Jack’s decision to cut 40% of his business so he can move faster. In the AI era, your business not only needs to keep up with the frantic pace of building that is now the market standard, but you’ll have to shift as much of your resources downstream as possible in order to capture increasingly scarce attention.

If you keep your eye on the job boards, and your ear to the ground, you will see and hear that Jack is putting his money where his mouth is. Square is investing heavily in field sales, and ramping very quickly. He is investing like a man who realizes distribution is going to be the choke point in the future.

4. Bring A Prototype

Jack Dorsey: Well, just two months ago, every meeting you would see a presentation or a Google Doc and we’d go through it. Now everyone is bringing a prototype that they built. Which is pretty amazing. And it’s either simulated data or real data, but it’s a cut on their work in a way that has far more depth and realism than we could ever get from a slide deck. And because they can actually modify it in real time, we can have a conversation around what they’re actually building in real time.

In due time this will be appreciated as the most forward-thinking and important operating principle of Dorsey Mode.

To understand why “Bring a prototype” is such an important suggestion, we have to go back to 2004. In June of that year, Jeff Bezos sent an internal email banning PowerPoint at all senior leadership meetings. In its place, Bezos mandated a 6 page narrative memo, read silently by all attendees for the first half hour of every meeting. The reasoning, in his own words:

A little more to help with the reason “why.”

Well structured, narrative text is what we’re after rather than just text. If someone builds a list of bullet points in Word, that would be just as bad as PowerPoint.

The reason writing a 4 page memo is harder than “writing” a 20 page PowerPoint is because the narrative structure of a good memo forces better thought and better understanding of what’s more important than what, and how things are related.

PowerPoint-style presentations somehow give permission to gloss over ideas, flatten out any sense of relative importance, and ignore the innerconnectedness of ideas.

This ended up being one of the most consequential management edicts in tech history (and probably his second most consequential edict, the first of which was the one that spawned AWS).

AWS started as an internal memo. Prime was an internal memo. Jeff’s lieutenants spread out through the tech ecosystem and carried the memo edict with them because it worked. You can’t hide behind a memo. If you were full of shit, you would get called on it in red ink and then by a very, very disappointed Bezos.

If you have heard stories of people getting eviscerated by Jeff during one of these memo reads, you would understand why it has become such a prevalent management method. It really does force a level of rigor that could never go into a slide deck.

I am here to tell you that the memo is dead.

The memo has calcified into a ritual that has lost connection to its true purpose. It has become performative; an opportunity to win points by highlighting the most minuscule point and embarrassing the presenter. I have even heard current Amazon employees suggest that the 6 page memo is why they are getting their butts handed to them in AI.

The memo is ill-suited for the lightning-fast AI era.

In 2026, the fastest way to think about an idea, present it to your team, and begin working on it is to just…build it.

AI has collapsed the cost and speed of prototyping. If you have been in the room while everyone is iterating on a working version of an idea in real time, you get it. It’s visceral and collaborative in a way that reading a memo and discussing a footnote for 45 minutes only to schedule a follow-up could never be.

You don’t have to pretend to be the customer in the room because you can be the customer in the room.

This isn’t just a suggestion for product teams. Instead of a marketing campaign brief, bring a mockup of the full campaign (copy, ad visuals, proposed landing pages). Sales teams can bring a configured demo. Finance teams can build an interactive model. Once you realize it, the opportunity to prototype is all around you.

Grab the wheel and start shipping. The rituals of the pre-AI era will not save you. Natural language can become a working product in minutes, so why stop at natural language?

Solving the “Two Jacks” Problem

Dismissing Jack is the easy move. It’s the one you see people default to on Twitter because his companies are messy and distracted, and the dunks wins them easy engagement.

But Innovator Jack has been right about a lot in the last twenty years. Social media, payments, remote work, yes, even crypto.

If I’m placing my bets, I’m choosing to bet that he is correct about the implications of AI on the org chart and the future of work.

The solution isn’t to ignore execution Jack; it’s to hold both Jacks in your mind. Don’t dismiss the ideas because the execution is weak. Acknowledge the ideas and the execution as two distinct parts of the same person, and appreciate that the people who are often right about the future struggle with living in the present.

Dorsey Mode isn’t the next management fad. You won’t see it in the bookstore next time you go to the airport. It’s a forward read on organizational design five years in the future. Personally, I’m paying attention, and I think you should too.