A Silicon Valley CEO just sent the most savage staff memo ever, and the fallout is enormous

Cloudflare employees were hit with shocking news this week after the tech giant confirmed it would cut more than 1,100 jobs worldwide. The move came alongside a dramatic internal memo from the company’s founders, who said artificial intelligence is rapidly reshaping how work is done inside the business. As the layoffs spread across departments, the memo quickly sparked conversation across Silicon Valley about the future of work in the AI era.

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The Silicon Valley CEO sent the most savage staff memo ever

Cloudflare has announced one of the biggest tech layoffs of the year, with the San Francisco-based company eliminating roughly one-fifth of its workforce as it pivots toward an AI-driven future. According to the San Francisco Chronicle, the internet security and cloud networking company revealed the cuts Thursday while also reporting first-quarter revenue of $639.8 million — a 34% jump compared to the previous year. The layoffs affect more than 1,100 employees globally. At the end of 2025, Cloudflare employed 5,156 full-time workers, as per a report by the New York Post.


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Why is Cloudflare cutting so many jobs?

In an internal memo obtained by Business Insider, co-founders Matthew Prince and Michelle Zatlyn told staff the company had fundamentally changed because of its growing dependence on artificial intelligence.
“The way we work at Cloudflare has fundamentally changed,” the founders wrote.

They explained that the company was not only creating AI tools for customers but heavily using the technology internally across multiple departments, including engineering, finance, HR and marketing. “We don’t just build and sell AI tools and platforms. We are our own most demanding customer,” the memo stated, as per a report by the New York Post.

The founders also revealed that workers inside the company are now conducting “thousands of AI agent sessions each day,” with internal AI usage reportedly jumping more than 600% in only three months.

“That means we have to be intentional in how we architect our company for the agentic AI era,” they added.

How did AI change the company so quickly?

Cloudflare insisted the layoffs were not about poor employee performance or simple cost-cutting. Instead, leadership described the move as a sweeping redesign of the company itself. The company said it is attempting to “reimagine every internal process, team, and role across the company” as artificial intelligence becomes central to operations.

Executives also stressed that the layoffs would happen all at once instead of through repeated rounds of cuts.
“We’ve asked the team to do this only once,” the founders wrote, explaining that they wanted to avoid prolonged uncertainty among employees, as per a report by the New York Post.

Staff members were reportedly informed directly through email notifications instead of through conversations with managers.

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What are laid-off employees being offered?

Despite the scale of the cuts, Cloudflare said departing employees would receive unusually strong severance packages.

Affected workers are expected to continue receiving full base pay through the end of 2026. The company will also continue US healthcare coverage through the end of the year. Some employees will additionally receive equity vesting through Aug. 15, including workers who had not yet reached standard vesting milestones.

Cloudflare expects the restructuring to cost between $140 million and $150 million, largely tied to severance payments, benefits and related expenses. Most of those costs are expected to appear during the second quarter.
The company said the restructuring process should be largely complete by the end of the third quarter as it pushes toward becoming a faster and more aggressive AI-first company.

For many across Silicon Valley, the memo reflected a growing reality inside the tech industry that how companies are rapidly restructuring around artificial intelligence, even during periods of strong financial growth.

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FAQs

How many employees is Cloudflare laying off?
The company is cutting more than 1,100 jobs globally, about 20% of its workforce.

Did Cloudflare say the layoffs were performance-related?
No. The company said the restructuring was tied to its AI-focused transformation, not employee performance.