Dropbox, like other tech companies, has announced layoffs. To deal with sluggish growth, the industry leader in cloud storage announced that, rather than hiring new talent to develop its AI products, it will lay off 16% of its workforce. The layoffs will affect around 500 people.
According to CEO Drew Houston, the company is profitable, but growth is slowing because “the AI era of computing has finally arrived.”
He also stated that the company’s core cloud business was growing at a slower rate since clients were having difficulty due to the downturn. As a result, some of the company’s profitable investments became unsustainable.
“Part of this is due to the natural maturation of our existing businesses,” he explained, “but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business.” “As a result, some investments that used to provide positive returns are no longer viable.”
The company stated that while some employees were transferred from one team to another to focus on its AI activities, it still required more workers with a varied skill set, particularly in AI and early-stage product development.
“We’ve been bringing in great talent in these areas over the last couple of years, and we’ll need even more,” Houston wrote in an email to staff.
“AI computing has arrived.” We have a fantastic opportunity, but we must act quickly.”
During the COVID-19 pandemic in January 2021, the company laid off 315 people. In 2022, the corporation employed 3,118 full-time employees, 2,583 of whom were Americans.
Read also: Apple’s first major layoff eliminates corporate retail personnel
More on Dropbox’s cut
According to the SEC filing, layoff-related expenses will total $37 million to $42 million in Q2. On May 4, first-quarter results will exceed expectations.
Despite Dropbox’s outstanding performance, Houston said the company is cutting workers and investing in new areas to keep up with change as growth slows.
“While profitable, our growth has slowed. Our enterprises have matured, but the economic downturn has put strain on our clients and our business. Thus, some investments that previously yielded positive returns are no longer viable,” he wrote.
“Second, and more importantly, the AI era of computing has arrived,” he said. We’ve always believed AI would give us superpowers and transform knowledge work. “As this year’s product pipeline shows, we’ve been building towards this future for a long time,” he says.
Drew Houston, co-founder and chief executive officer, is also a member of the board of directors at Meta Platforms, which recently reported that AI was assisting it in increasing traffic to Facebook and Instagram and ad sales.
The concerns that AI would lead to additional employment losses are gradually becoming a reality, and the most recent development will only reinforce those apprehensions for organizations seeking to reduce operating expenses.
About Dropbox
Dropbox, Inc., an American company with headquarters in San Francisco, California, provides a file hosting service. Dropbox provides cloud storage, file synchronization, a personal cloud, and client software.
Drew Houston and Arash Ferdowsi, who were both MIT students at the time, started Dropbox as a startup company in 2007. They got their first money from the seed programme Y Combinator.
Dropbox creates a user-specific folder to centralize files. These folders are synchronized to Dropbox’s servers and other devices where the user has installed Dropbox, so all devices have the same files. Dropbox offers a free account with limited storage and paid memberships with more space and features.
Users of Dropbox Basic receive 2 GB of complimentary storage space. Dropbox provides desktop applications for Microsoft Windows, Apple MacOS, and Linux operating systems and mobile applications for iOS, Android, and Windows Phone smartphones and tablets.