Cloudflare CEO explains motives in targeting specific roles while cutting 20% of workforce
When Cloudflare laid off more than 1,100 employees earlier in May, CEO Matthew Prince had a specific framework in mind for deciding who would go — one drawn not from Silicon Valley lore but from a management book published in 1954.
Prince turned to Peter Drucker's The Practice of Management to categorize every role inside Cloudflare into one of three buckets: builders, sellers, and measurers, he wrote in a Wall Street Journal opinion piece.
Builders create products. Sellers sell them. Measurers — a category Prince defines as encompassing internal audit, revenue recognition, finance, legal, compliance, middle management and operations — do everything else.
"The vast majority of those we laid off last week were measurers," he wrote.
Why measurers, not builders or sellers
The logic behind targeting measurers, Prince wrote, is that AI can now perform those functions with a level of precision and consistency that even strong human employees could not match. Builders, by contrast, are becoming more productive with AI — not redundant.
"If an engineer on my team can now be 10 times as productive, I'm going to hire as many as I can find," he wrote in the Wall Street Journal. Sellers, too, are safe, because humans still want to buy from people who build trust and fix problems.
AI, in Prince's framing, is not coming for the people who create or sell value — it is coming for the people who measure it.
A Chinese court recently ruled that employers cannot demote or dismiss staff solely to replace them with artificial intelligence.
What changed inside Cloudflare
Prince described specific operational changes that followed from that logic. Middle managers were cut because AI enables each remaining manager to oversee more direct reports while still effectively mentoring and evaluating teams. Operations functions were consolidated into a single group, with AI deployed to provide domain-specific expertise as needed.
The marketing team — which, like most companies' marketing functions, was "teeming with measurers," said Prince — was significantly reduced. Finance was consolidated and automated, he wrote in the Wall Street Journal.
Internal audit has also been restructured. Previously, Cloudflare's audit team examined a handful of business risk areas each quarter. Prince said the company is now moving to a model in which every business risk is audited continuously by AI systems, the company is closing its books faster, and he has better visibility into performance and talent than he has had at any previous point as CEO.
Cloudflare had said that it’s own internal use of AI had increased more than sixfold in the three months leading up to the announcement, according to Reuters. In a message to employees, Prince and co-founder Michelle Zatlyn described the company as reimagining every team and function to operate in what they called an "agentic AI-first operating model."
A pattern others may follow
Prince acknowledged the move was unusual in the Wall Street Journal. Cloudflare has not found another example in U.S. business history of a public company growing at more than 30% that simultaneously cut more than 20% of its workforce. But he suggested it would not remain unusual for long: “What we did is likely going to become the norm over the next year."
The CEO was explicit that the layoffs were not driven by financial pressure. Cloudflare posted record revenue growth and strong free cash flow in the period leading up to the cuts, and the company said the restructuring reflected a redesign of internal processes and roles rather than employee performance or short-term cost pressures, according to the Reuters report.
Cloudflare expects charges of $140 million to $150 million associated with the job cuts in the second quarter, according to Reuters. The company's shares fell roughly 19% in extended trading following the announcement, despite first-quarter revenue of $639.8 million that beat analysts' estimates of $621.9 million.
The company said it currently has a record number of open positions, and hired 1,111 paid interns this summer from a pool of nearly one million applicants. In the Wall Street Journal, Prince described those interns as "AI-native" and said the majority are expected to receive full-time offers. The cuts, in his telling, are not a reduction in ambition — they are a reallocation of it.
