Stock-based compensation will drive software layoffs, CEO warned

A CEO of a major public software company called on a recent weekend to warn the industry is headed for a painful financial reset. He asked to remain anonymous so he could speak frankly. One of his main messages: stock-based compensation is too high for many SaaS companies now, and cuts will be needed.

That reality is already showing up — Atlassian said it is cutting 10% of its workforce and Block cut 40%. Both firms linked some layoffs to generative AI, but both said they are still hiring engineers. "Five years from now, we'll have more engineers working for our company than we do today," Atlassian CEO Mike Cannon-Brooks said.

"They will be more efficient." Generative AI is making it much easier to create software, swelling supply and pushing down the value of many products. That won’t kill SaaS; cheaper, more prevalent software could broaden use. At the same time, AI is changing engineering work and increasing demand for skilled engineers.

stock-based compensation, software layoffs, saas, generative ai, atlassian, block, mike cannon-brooks, engineers, workforce cuts, software supply