What ClickUp’s mass layoff tells us about the future of work

AI’s biggest champions have been arguing for some time that the technology will usher in an era of unprecedented productivity gains, richly rewarding workers who use it and displacing those who don’t.

Zeb Evans, CEO of collaboration software startup ClickUp, claims this shift is imminent. Last Thursday, Evans announced on X that the company, which was last valued at $4 billion in 2021, had laid off 22% of its workforce, but characterized that reduction not as a cost-cutting measure, but rather as a radical embrace of AI that will take the company to the next level.

“Most of the savings from this change will flow directly back to the people who stay. We will introduce multi-million dollar pay scales. If you create an outsized impact using AI, you will be paid outside the traditional boundaries,” Evans wrote.

ClickUp recently introduced about 3,000 internal AI agents to perform a wide range of complex tasks on behalf of its employees, according to a Fortune article published a few days ago. Instead of carrying out the work themselves, employees are now expected to direct these agents and ultimately review the output to ensure it meets company standards.

Evans’ goal, according to his X post, is for AI to turn ClickUp into a “100x org.”

ClickUp isn’t alone in hoping that AI agents will deliver huge productivity gains.

According to a recent Gartner survey, about 80% of companies using autonomous technology have cut jobs. However, the research shows that there are staff reductions don’t necessarily translate towards meaningful financial returns.

While Gartner’s findings suggest some companies are using unproven AI as an excuse to cut corners, ClickUp claims this isn’t one of them.

Evans told TechCrunch via email that the startup is indeed seeing productivity gains thanks to AI agents. Not only is ClickUp measuring these efficiencies internally, but it is also apparently gearing up to incorporate them into a new product for its customers.

“Instead of gaming the token cost, we game the value created and time saved,” Evans wrote.

In recent months, a growing number of companies have started monitoring employee token consumption, using it as a benchmark to see who is actually adopting AI tools. But critics argue that “token maxxing” – as the concept is known – is the wrong metric because it only drives up AI costs.

“The people who automate their jobs with AI will always have jobs,” Evans claimed in his post. But as AI takes over more and more tasks, ClickUp will eventually need fewer and fewer people, eliminating those who can’t properly automate their functions.

Tech circles have long theorized about this scenario.

There already exists an extreme example of a high-profile startup using AI automation to its maximum potential. Polsia, a year-old startup that claims to handle all software operations for solopreneurs, is run by just one person: its founder and CEO, Ben Broca. That efficiency is apparently paying off: Polsia has just increased $30 million at a valuation of $250 million.