“At Sequoia, we see that speed is the best predictor of startup success. Most companies are focused on AI as a productivity enhancer. Few are focused on the potential of AI to change how we work together,” they wrote.
Dorsey and Botha are rejecting what they see as 2,000 years of hierarchical organizational structures, starting with the Roman army, that relied on middlemen to “route information, precompute decisions, and maintain alignment across a complex organization,” thereby slowing the flow of information. They argue companies today are still running on the same system.
“Most companies using AI today are giving everyone a copilot, which makes the existing structure work slightly better without changing it,” they wrote. “We’re after something different: a company built as an intelligence (or mini-AGI),” they wrote.
Dorsey and Botha proposed companies need both a “world model” of their operations and a strong “customer signal.” Simply put, they believe companies need a way to record and track all decisions, discussions, plans, problems, and progress to build an ever-evolving “world model.” This system would replace the role of managers, who relay information across an organization. The second part of their plan is even more straightforward: Follow the money to determine the model’s success.
“Money is the most honest signal in the world,” they wrote. This approach may work particularly well for Block because it can track buyers through Cash App and sellers through Square in real time, and AI can process that information faster than humans.
“The traditional road map, where product managers hypothesize about what to build next, is any company’s ultimate limiting factor,” they wrote. “In this model, customer reality generates the backlog directly.”
If you’re wondering where Block’s remaining 6,000 employees sit in this new model, Dorsey and Botha have an answer for that: the edge, or “where the action is.” On the edge of their new system, people will be able to sense things the model can’t perceive, such as cultural context, trust, intuition, and “the feeling in the room.” What makes their proposal more than just a database is how humans will interact with it and use it without needing a chain of command, they wrote.
The company reported a gross profit of $2.87 billion in Q4, up 24% year over year. Block’s shares rose about 3% immediately after the pair published the paper on March 31, but have fallen slightly in the days since. Over the past year, the company’s stock has fallen 9%.
“Block is in the early stages of this transition,” Dorsey and Botha wrote. “It will be a difficult one, and parts of it will likely break before they work.”
