Cloudflare CEO Prince says builders and sellers are safe but AI is coming for the measurers

Cloudflare CEO Matthew Prince laid off more than 20 percent of the company's workforce, despite record revenue. He says middle management, operations, and compliance roles are the ones AI is replacing.

Prince writes in a guest column for the Wall Street Journal that Cloudflare is posting record revenue, strong free cash flow, and more new customers than ever. Still, he cut more than 20 percent of the workforce to prepare the company for what he calls a "changing business" in the age of AI.

There's no comparable case in US business history, Prince claims: a public company growing at over 30 percent while also cutting more than 20 percent of its staff. He predicts this kind of move will become the norm within a year.

A three-role framework decides who gets cut

Prince builds his argument on Peter Drucker's 1954 book "The Practice of Management," dividing roles at every company into three rough buckets: builders, who develop the product; sellers, who close deals; and measurers, who handle oversight and control functions like internal audit, revenue recognition, middle management, and marketing.

"The vast majority of those we laid off last week were measurers," Prince says. Cloudflare thinned out middle management because AI lets each manager handle more direct reports without losing track of their teams, according to Prince. Operations were merged into a single group that supports the whole business, leaning on AI for specific expertise. Marketing, which Prince says "was teeming with measurers," was cut significantly, and finance was further consolidated and automated.

Drucker argued that measuring matters, but you win customers by building and selling, according to Prince. The best companies pour their money into those two functions.

Builders and sellers stay; measurers go

Prince sees builders and sellers as safe from AI-driven cuts. If an engineer becomes ten times more productive with AI, you want to hire as many as you can, he argues. Salespeople are safe too, Prince says, because humans still control budgets and prefer buying from other humans who can build trust.

Measurers are the ones losing out. "AI isn't coming for builders or sellers, but it is coming for measurers. Tireless, independent, efficient and available, AI systems can now measure an organization with a level of objective detail and precision that was previously impossible even for the best employees," Prince writes.

The layoffs don't mean a net reduction in headcount, Prince insists. Cloudflare has a record number of open positions, and total staff is expected to keep growing. Fewer measurers means the company can put more money into areas that drive growth, he writes.

Using AI isn't the same as replacing workers with AI

Claims like these always raise the question of "AI washing." Cloudflare could be blaming AI for layoffs that are really about plain old financial pressure. And there are signs pointing that way.

Start with Cloudflare's vague messaging. The company touts a 600 percent jump in internal AI usage over three months in a blog post. But using AI more isn't the same as replacing people with it. Cloudflare offers no hard evidence that AI has actually taken over—or could take over—the work of more than 1,100 employees.

The financials tell a less rosy story than Prince suggests. According to Cloudflare's Q1 FY2026 results, revenue grew 34 percent to $639.8 million. But the company posted a $62 million operating loss in the same quarter. Gross margin dropped from 75.9 to 71.2 percent. Cloudflare is growing fast but not making money, and it's keeping less of every dollar it brings in. That's a strong reason to cut payroll.

Reuters reports that Cloudflare's stock fell more than 15 percent after the latest earnings release. The guidance pointed to slower growth, and AI infrastructure costs were eating into margins. Analyst firm Morningstar said Cloudflare is trading salaries for higher infrastructure costs and depreciation to protect profitability.

Cloudflare's own 2025 annual report (10-K) hints at a simpler explanation. The company overhired in the past. Headcount surged from 3,682 at the end of 2023 to 5,156 at the end of 2025, a 40 percent jump in two years. Cloudflare itself acknowledged that this rapid growth was straining management, admin, operations, and finances.

Put together, this looks a lot like AI washing. That doesn't mean Prince hasn't factored in real efficiency gains from AI. And his reasoning for who stays and who goes could be genuine.

Prince wouldn't be the first. Jack Dorsey's fintech Block cut nearly half its workforce and said AI tools let smaller teams work in new ways. Dorsey later admitted Block had simply overhired during Covid. Indeed and Glassdoor slashed around 1,300 jobs last summer with the same pitch: AI was making hiring more efficient and cutting down on manual work, without delivering any proof to back up that claim.