Dropbox layoffs are hitting about 16% of the company’s global workforce despite its continuing profitability. The layoffs began immediately.

Dropbox co-founder and CEO Drew Houston announced the layoffs in a blog. Dropbox is the latest company doing business in the channel to announce layoffs. Job cuts have impacted thousands of workers since the start  of the year.

Dropbox’s Drew Houston

“First, while our business is profitable, our growth has been slowing,” Houston said. “Part of this is due to the natural maturation of our existing businesses, but more recently, headwinds from the economic downturn have put pressure on our customers and, in turn, on our business. As a result, some investments that used to deliver positive returns are no longer sustainable.”

Secondly, and more consequentially, the artificial intelligence (AI) era of computing has finally arrived, he said.

“We’ve believed for many years that AI will give us new superpowers and completely transform knowledge work,” Houston said. “And we’ve been building towards this future for a long time, as this year’s product pipeline will demonstrate.”

Dropbox’s Opportunity Is ‘Greater Than Ever’

The opportunity is “greater than ever,” but so is Dropbox‘s need to act with urgency to seize it, Houston said.

“Over the last few months, AI has captured the world’s collective imagination, expanding the potential market for our next generation of AI-powered products more rapidly than any of us could have anticipated,” he said. “However, this momentum has also alerted our competitors to many of the same opportunities. In an ideal world, we’d simply shift people from one team to another. And we’ve done that wherever possible. However, our next stage of growth requires a different mix of skill sets, particularly in AI and early-stage product development. We’ve been bringing in great talent in these areas over the last couple years and we’ll need even more.”

Dropbox Layoffs Provide Money for Future Growth

In some areas, investments that showed promise before the downturn have more limited potential today, Houston said.

“In others, we haven’t been executing consistently or managing performance as tightly as we need to,” he said. “So we’ve made more significant cuts in these areas in order to free up investment in our future growth.”

Companies that embraced a new reality and took decisive action did well while those that held onto the past or tried to have it all did not, Houston said.

“These transitions are never easy, but I’m determined to ensure that Dropbox is at the forefront of the AI era, just as we were at the forefront of the shift to mobile and the cloud,” he said. “We’ll need all hands on deck as machine intelligence gives us the tools to reimagine our existing businesses and invent new ones. And I’m committed to doing everything in my power to best position ourselves for the future and unlock our full potential.”