The Price of AI: Booed Speeches & Cut Benefits

Nick: Welcome to the Wellable Weekly Podcast, where we talk about key topics and trends at the intersection of wellbeing, technology, and HR. I’m Nick, along with my good friend and colleague, Geoff. Geoff, happy Memorial Day weekend. 

Geoff: Yeah, happy Memorial Day weekend. Hard to believe it. Years flying by. We’re already almost at the end of May. 

Nick: I know, this whole year has been a little bit of a roller coaster. We’re both based in New England. Had great, very summery weather this week, but it looks like the weekend’s going to be so-so. So diving in, speaking of May, May is a time of graduation. Boston’s a very big college city, so there’s tons of commencements and graduations, and every commencement has commencement speakers. I actually love commencement speeches. Ever since high school, I’ve always played them, back before YouTube was a big thing, C-SPAN would play them on Saturday mornings, sometimes live and sometimes recordings. I love them. They’re short, no commercials, lots of motivation, typically great advice. When I hear a good one now, someone tells me about it and I’ll watch on YouTube, but I do a lot less of that now. 

Geoff: Yeah, it’s kind of like the original TED Talks, right? A little motivational burst. The Steve Jobs commencement speech is the one that always comes to mind. That’s kind of the gold standard. What’s your favorite? 

Nick: I love the Steve Jobs one, but that’s the classic answer. I actually remember it was 2005 because I graduated the next year and I was thinking, I would love for someone like that to be our commencement speaker. We did not get a Steve Jobs. But there’s one with James Carville, I think it was LSU or somewhere, where he told the story of Abraham Lincoln. He went through the history of his life, how he failed, how he failed, how he failed, over and over again, and tied it all together really nicely in a way that all those failures built up to him becoming arguably the most significant president in our history. 

Geoff: Wow, that’s a good one. Probably a warmer reception than some of the speakers have gotten over these past few weeks. 

Nick: Exactly. So for those following the commencement news, this is national news, there are commencement speakers across the country who have talked about AI and what that means for this future generation of young graduates. The most famous example is Google’s former CEO Eric Schmidt, who spoke at the University of Arizona. And these speakers are largely talking positively about the future of AI and they’re getting booed. You saw it at University of Central Florida, across the board. Honestly, it was happening so much that I bet a lot of speakers changed their speeches afterward, because this is clearly not a great topic to lead with for a Gen Z generation that’s getting impacted. 

Geoff: Totally. I mean, the commencement speeches I’ve seen, it’s almost always a pretty uplifting vibe. It’s an incredible day for graduates and usually the tone is one of optimism and hope. But clearly, when you have speakers talking about something like AI, and on one hand it probably helped many of those graduates write a paper or do research, they probably benefited from it during school, but right now they’re entering a labor market that is challenging, to say the least. We’ve talked on the pod so much about all the reductions in force occurring, especially at larger tech companies, and the way organizations are seemingly prioritizing investment in technology over investment in people, particularly for those highly coveted entry-level roles. I understand it. You can empathize with the grads. A speaker is touting the benefits of AI, saying it’s such an exciting and transformational time, but here they are with substantial student debt and job prospects that aren’t strong. It makes me think back to graduating in 2011, a couple of years removed from the financial crisis, going into a market that wasn’t exactly prosperous for new grads. But this feels a little different. 

Nick: It does. I heard a motivational speech about how every generation has their thing, it’s not the best of times, it’s not the worst of times, but it’s your time. And one of the speakers who got booed early on tried to liken the AI movement to the Industrial Revolution. It was not well received. But if you really think about it, the Industrial Revolution was telling a huge agrarian economy full of agricultural workers that they were going to lose their jobs, but they’d get a whole new set of jobs in the industrial workforce, which would eventually create the largest, fastest-growing middle class in history. It was a positive story at the end. But if you’re in that moment and you’re someone in the agricultural workforce, it’s a little scary. I think it’s a little scarier now because the speed at which the change is happening is much quicker than then. The positive outlook this person was trying to articulate just wasn’t well received, because these student-debt-laden graduates aren’t finding the jobs they wanted. And even the fortunate ones who do have jobs often took ones that weren’t the ones they aspired to get. And then where are they seeing the news? Tons of layoffs in the white-collar workforce, with CEOs not being shy about attributing it to AI. Honestly, you and I talked about this on another episode, how much of this is really AI, and how much is just right-sizing post-COVID hiring and having a bloated workforce? The answer is probably a combination, but you’re not hearing the latter narrative. You’re only hearing about AI. And then you’re seeing companies cut benefits, parental leave, 401k matching. There’s this company, I think it’s based out of Austin, called TTC. They offer a 401k employer match, very common in corporate America, and in the middle of the plan year, they decided to completely suspend it. Everyone in the middle of the year just stopped getting their matches. And the public rationale was that they were going to use those funds to invest in, quote, “tools, training, and capabilities that would define our future.” And if you’re an employee, you’re like: that’s real compensation I just lost, going to invest in something that could arguably take my job. AI has a tough brand. 

Geoff: Yeah. There’s no good way to deliver news like that, but I think sometimes the messaging is just coming off a little tone deaf. The CEO of TTC is saying, I think, a message that’s actually meant to be positive, that we have more flexibility to invest in the growth of the business. The second part of that statement is somewhat reasonable. But telling a workforce that this is a positive message when it’s directly impacting their compensation and their long-term financial well-being, that’s a tough message to send. It makes me think of the conversation we had a few weeks ago with Zoom and Deloitte making pretty substantial benefit adjustments to line items that we always thought of as untouchable, maternity leave, things like that. Those table stakes that for a long time, especially in the employee benefits world, were perceived as off-limits for adjustment. Once a few companies start making changes that were previously considered non-starters, it kind of opens the floodgates for others to follow suit. It doesn’t make it any easier for someone whose 401k contribution is getting cut. 

Nick: Exactly. The one thing I don’t understand is why employers, especially large ones with internal comms teams and all these processes, aren’t pushing a different narrative. I hope this happens, but I don’t think it will. The narrative that should be pushed is: we will distribute the gains from AI. I literally have not heard a single CEO say that. The message should be: AI requires a ton of investment today. That investment requires us to rationalize our cash flow. To do that, we have to do some layoffs, cut some benefits, maybe stop hiring, one of the three or a combination. But this investment, we have strong conviction, will help drive the success of our business going forward. And if it does, our plans are to distribute those gains. You could even create a bonus contingency factor: if AI is super efficient, we’re going to grow our top line, and to the extent we do, we’ll have a bonus plan for individuals who remain to receive that benefit. We’re able to do the same amount of work with half the workforce, we’ll take those extra gains and distribute them to employees. It doesn’t fix the folks who got laid off, and it doesn’t restore the short-term 401k match, but it creates a promise. It shows employees: I believe in this management team, I believe in this company, and I believe AI is going to help drive some success, and to the extent it does, I’m going to get some financial benefit in the future. I don’t know if that solves everything, but it’s at least a step forward in how companies manage the brand of AI. 

Geoff: The closest example I’ve seen is ClickUp. Their CEO Zeb Evans just announced he’s cutting 22% of the workforce and introducing $1 million salary bands for remaining staff, restructuring around this 100x model where AI agents outnumber employees three to one. It’s not a direct reinvestment of AI gains, but for those who remain, it kind of is. Because of this rationalization and restructuring, they’re able to adjust pay bands in a way they couldn’t previously justify given the margin profile of the business. 

Nick: Agreed. So the second article we’re going to talk about today, and this is not really an AI story even though on the surface you might read it that way, is about the Bolt CEO, Ryan Breslow, who has a very big social media following and whose company Bolt has had a turbulent history. He’s kind of a polarizing figure. We wouldn’t be talking about Ryan Breslow if he hadn’t been controversial, controversy is what the algorithms love. But effectively he’s on a video or interview talking about something that actually happened 11 months ago. When you read the article, you’re thinking it’s an AI story, but it’s not. In a single day, he fired the entire HR team, literally the entire HR team. In our world, that seems a little scary. But his rationale, and I think the headline catches you one way but the details tell a different story, is that he created a people ops team to fill in the gaps of HR. His view was: HR middlemen need to be removed. That’s not a novel conversation. A lot of the AI restructuring stories are all about cutting middle management, middle managers becoming individual contributors, or companies just not needing that layer anymore. Most famously, Jack Dorsey and Block, a 6,000-person company, where his vision is that everyone directly reports to him, 6,000 direct reports and zero middle management. But Breslow’s view was that HR serves two functions: certain critical operations, and then a lot of middlemen work. The operations stuff, payroll, headcount management, overseeing workplace culture, conducting surveys, all the things that need to happen, those don’t go away just because you fire the HR team. Those needs still exist. So what he did was lay off the HR team, put in a people ops team to address the most critical and most common operational needs, and then shift the middlemen responsibilities to managers directly. In short, he’s not saying the HR function is not needed. He’s saying the HR role as currently structured is not needed, and replaced it with a people ops team and had managers fill in the gap. 

Geoff: Yeah, and the way he delivered the news, in his classic style, it’s going to get more attention and more headlines. It’s certainly not an aspirational move, taking a pretty sizable cut to a core function. The reality is that Bolt has seesawed to great heights and then had a real come-back-to-earth moment. They’re going into lean mode, rebuilding effectively. There are going to be challenges with this decision, as soon as you have your first people-oriented dispute. His point is that they’re all remote, so there shouldn’t be that many issues. But I think that’s probably oversimplifying how business and life work. And I think a well-rounded HR team brings a soft skill set that they’re going to miss at some point. 

Nick: Agreed. Two things struck me. One, he’s doing this interview 11 months later and he doesn’t seem remorseful. Leaders make decisions and often walk them back. The fact that he hasn’t suggests either he lacks context for how things are going inside the organization, or those changes were actually fine. And honestly, I’m not that surprised, because when you look at what he actually did, he didn’t change that much. He just changed the name and the structure. The announcement made it sound like he fired the entire HR team, but another way to say the exact same thing is: I moved some of the HR functions to managers. That’s literally what it was. Not as catchy. Which is maybe why he’s good at marketing and getting asked onto big podcasts. The second thing is that it’s not that different from what we’re seeing in the broader white-collar restructuring being attributed to AI, the hollowing out of middle management. And we’re going to discover over time whether that has long-term impacts on the health of these businesses. Sometimes big business initiatives get reversed because over time you realize they weren’t as good as you thought. But sometimes they aren’t. Most famously, when Elon Musk acquired Twitter and laid off 80% of the workforce, everyone said the app was going to go down. Not in terms of content quality, that’s a separate conversation, but functionally. And they were wrong. The business still works. And if there’s anything you dislike about Twitter now, that has nothing to do with the workforce reduction. It’s about the content decisions he made. But he showed that these tech companies are genuinely more bloated than they appear. 

Geoff: Yeah, and that’s an important thing to keep in mind as we talk about a lot of these headlines. So many of them are larger tech companies that may have over-hired, and some of what we’re calling AI-driven restructuring is just rationalization after a period of extra growth. That seems like a good place to wrap up. Thanks as always to everyone who tunes in. You can subscribe to Wellable Weekly on Apple Podcasts, Spotify, wherever you get your podcasts. And be sure to subscribe to the Wellable Weekly newsletter for all the latest insights. Thank you.