Coinbase Cuts 14% of Workforce in Restructuring to Flatten Management and Integrate AI

Coinbase announced on Tuesday it is laying off 14% of its staff, a move that could affect just under 700 employees based on the company's last employee count. The cryptocurrency exchange is restructuring to address a crypto downturn while altering its operations, including replacing managers with player-coaches and turning its organizational chart upside down.

The main motivator for the layoffs is making the company’s leadership structure flatter, with the reorg implementing new requirements for managers to contribute more as individual players.

Coinbase is cutting pure managers and opting for player-coaches who oversee team members but are also strong individual contributors. Following the layoffs, Coinbase’s leadership structure will stretch no more than five layers below Brian Armstrong's position, and the restructuring is flattening organizational structures to just five layers below the CEO and COO levels.

The company is increasing its employee-to-manager ratio, with each leader responsible for 15 or more reports, and leaders could now have more than 15 direct reports.

9 in 2024, according to Gallup. Coinbase is creating AI-native pods, which could include one-person teams directing agents that encompass the responsibilities of engineers, designers, and product managers. The company is putting together small teams that use AI tools and will experiment with one-person teams that would combine engineering, design, and product management roles.

Over the past year, AI has allowed engineers at Coinbase to ship in days what used to take a team weeks, while nontechnical employees are using AI to write code and many of the company’s workflows are being automated. These transformations influenced Tuesday’s layoff decision.

Coinbase secured GitHub Copilot and Cursor licenses for every engineer, and Brian Armstrong asked engineers to get onboarded with the AI tools by the end of the week.

Some in the company had said onboarding with the AI tools would take quarters, but Armstrong said last year on the Cheeky Pint podcast with Stripe CEO Patrick Collison, 'Some of them had a good reason, because they were just getting back from some trip or something. In the email, Armstrong also stated, 'AI is changing how we work.

Non-technical teams are now shipping production code and many of our workflows are being automated. Coinbase expects to incur approximately $50 million to $60 million in severance costs. The company did not immediately respond to Fortune’s request for comment.

Other companies have made similar moves, with Block laying off thousands citing the rapid advancement of AI, and Snap laying off thousands for the same reason. Meta’s new applied engineering team has a 50-to-1 employee-to-manager ratio, illustrating the trend toward flatter structures in tech.