Greetings! Before we get to today’s news, check out our new text-to-audio tool that lets you listen to all of our articles on desktop or mobile web. Just press the Listen button on any article (I promise you will not hear my voice, just in case the thought of that was offputting!). There must be a template out there somewhere, probably created by AI, that companies use to announce layoffs nowadays. After the usual verbiage about a “difficult decision,” yadda yadda, the template calls for the CEO to mention that “AI is changing how we work.”
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Greetings!
Greetings!
Before we get to today’s news, check out our new text-to-audio tool that lets you listen to all of our articles on desktop or mobile web. Just press the Listen button on any article (I promise you will not hear my voice, just in case the thought of that was offputting!).
There must be a template out there somewhere, probably created by AI, that companies use to announce layoffs nowadays. After the usual verbiage about a “difficult decision,” yadda yadda, the template calls for the CEO to mention that “AI is changing how we work.”
Coinbase joined the ranks of companies following that template on Tuesday, with CEO Brian Armstrong using such language about AI to help explain cuts of 14% of Coinbase’s workforce. But you couldn’t be blamed for thinking these layoffs have little or nothing to do with AI.
This is the third major round of layoffs Coinbase has undertaken since mid-2022, with the previous two triggered by economic or crypto downturns of the kind we’re in now. To be fair, Armstrong acknowledged that fact, noting, “We’re currently in a down market and need to adjust our cost structure now so that we emerge from this period leaner, faster and more efficient for our next phase of growth.”
But Armstrong also said Coinbase needs to be “lean, fast and AI native.” To that point, he borrowed language from other companies (Meta Platforms, Amazon) in declaring his intention to flatten Coinbase’s organizational structure. “Layers slow things down and create coordination tax,” Armstrong said. Amazon CEO Andy Jassy made this point in September 2024, and Meta CEO Mark Zuckerberg made it in March 2023.
Perhaps Armstrong should have been paying attention to them. Coinbase’s latest layoffs followed a hiring binge last year, which expanded its workforce by 31% to 4,951, the highest year-end employee count since it began reporting the figures when it went public in 2021. After the latest round of cuts, Coinbase will still have far more people than it had at the end of 2023!
Incredibly, Armstrong has been here before. In June 2022, when he announced layoffs of 18% of the workforce, he acknowledged Coinbase had grown too quickly. “It is now clear to me that we overhired.” Whatever happened to Silicon Valley’s idea of learnings?
Wall Street’s Overreactions
• Intel stock jumped 13% to $108 after Bloomberg reported Apple had held “exploratory discussions” about using Intel and Samsung to make its main chips in the U.S. Intel shares are up 71% this year on various signs that it is drawing interest as a backup chip producer amid a shortage of chips. Intel is now trading at higher multiples of forward profits and sales than Nvidia, according to Koyfin data.
• Shopify stock fell 16% after the e-commerce software firm projected a slowdown in revenue growth for the second quarter, after posting 34% growth in the first quarter.
• PayPal stock fell nearly 8% after new CEO Enrique Lores said he doesn’t plan to break up the company.
Musk’s AI Savvy
OpenAI president Greg Brockman doesn’t think Elon Musk gets AI. That’s what Brockman testified in court on Tuesday, and it perhaps explains why xAI, now part of SpaceX, hasn’t exactly progressed as Musk might have liked.
“Look, he knows rockets, he knows electric cars,” Brockman told the court, according to a Bloomberg report of his testimony. “He did not—and I believe does not—know AI.”
That’s a useful perspective for potential investors in SpaceX's upcoming initial public offering. SpaceX recently acquired xAI for $250 billion in stock, even though Musk has said he’s rebuilding the startup “from the foundations up” and all the co-founders other than him have left.
In Other News
• Elon Musk’s voting control of SpaceX jumped to 83.8% from 80% this year over the period when the space firm acquired xAI, according to newly available regulatory filings. His equity stake grew a percentage point to 42.5% over the same period.
• An agency within the U.S. Department of Commerce announced new agreements with Google, Microsoft and xAI that will allow the federal government to conduct national security testing on frontier AI models before they’re released to the public.
• AI voice startup ElevenLabs said Tuesday it had surpassed $500 million in annualized recurring revenue, up from $350 million at the end of last year, due to growth in sales of its voice agents to businesses.
• Microsoft is scrapping Gaming Copilot, an AI chatbot it had added to its Xbox mobile and PC gaming apps, the unit’s new CEO, Asha Sharma, said Tuesday.
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