Business

This CEO laid off nearly 80% of his staff because they refused to adopt AI fast enough. 2 years later, he says he’d do it again

Published

4 months ago

August 17, 2025

Eric Vaughan, CEO of enterprise-software powerhouse IgniteTech, is unwavering as he reflects on the most radical decision of his decades-long career. In early 2023, convinced that generative AI was an “existential” transformation, Vaughan looked at his team and saw a workforce not fully on board. His ultimate response: He ripped the company down to the studs, replacing nearly 80% of staff within a year, according to headcount figures reviewed by Fortune.

Over the course of 2023 and into the first quarter of 2024, Vaughan said IgniteTech replaced hundreds of employees, declining to disclose a specific number. “That was not our goal,” he told Fortune. “It was extremely difficult … But changing minds was harder than adding skills.” It was, by any measure, a brutal reckoning—but Vaughan insists it was necessary, and says he’d do it again.

For Vaughan, the writing on the wall was clear and dramatic. “In early 2023, we saw the light,” he told Fortune in an interview, adding that he believed every tech company was facing a crucial inflection point around adoption of artificial intelligence. “Now I’ve certainly morphed to believe that this is every company, and I mean that literally every company, is facing an existential threat by this transformation.”

Where others saw promise, Vaughan saw urgency—believing that failing to get ahead on AI could doom even the most robust business. He called an all-hands meeting with his global, remote team. Gone were the comfortable routines and quarterly goals. Instead, his message was direct: Everything would now revolve around AI. “We’re going to give a gift to each of you. And that gift is tremendous investment of time, tools, education, projects … to give you a new skill,” he explained. The company began reimbursing for AI tools and prompt engineering classes, and even brought in outside experts to evangelize.

“Every single Monday was called ‘AI Monday,’” Vaughan said, with his mandate for staff that they could only work on AI. “You couldn’t have customer calls, you couldn’t work on budgets, you had to only work on AI projects.” He said this happened across the board, not just for tech workers, but also for sales, marketing, and everybody at IgniteTech. “That culture needed to be built. That was… that was the key.”

This was a major investment, he added: 20% of payroll was dedicated to a mass-learning initiative, and it failed because of mass resistance, even sabotage. Belief, Vaughan discovered, is a hard thing to manufacture. “In those early days, we did get resistance, we got flat-out, ‘Yeah, I’m not going to do this’ resistance. And so we said goodbye to those people.”

The pushback: Why didn’t they get on board?

Vaughan was surprised to find it was often the technical staff, not marketing or sales, who dug in their heels. They were the “most resistant,” he said, voicing various concerns about what the AI couldn’t do, rather than focusing on what it could. The marketing and salespeople were enthused by the possibilities of working with these new tools, he added.

This friction is borne out by broader research. According to the 2025 enterprise AI adoption report by WRITER, an AI platform that specifically helps enterprise clients with AI integration, one in three workers say they’ve “actively sabotaged” their company’s AI rollout—a number that jumps to 41% of millennial and Gen Z employees. This can take the form of refusing to use AI tools, intentionally generating low-quality outputs, or avoiding training altogether. Many act out due to fears that AI will replace their jobs, while others are frustrated by lackluster AI tools or unclear strategy from leadership.

WRITER’s Chief Strategy Officer Kevin Chung told Fortune the “big eye-opening thing” from this survey was the human element of AI resistance. “This sabotage isn’t because they’re afraid of the technology … It’s more like there’s so much pressure to get it right, and then when you’re handed something that doesn’t work, you get frustrated.” He added that WRITER’s research shows that workers often don’t trust where their organizations are headed. “When you’re handed something that isn’t quite what you want, it’s very frustrating, so the sabotage kicks in, because then people are like, ‘Okay, I’m going to run my own thing. I’m going to go figure it out myself.’” You definitely don’t want this kind of “shadow IT” in an organization, he added.

Vaughan says he didn’t want to force anyone. “You can’t compel people to change, especially if they don’t believe.” He added that belief was really the thing he needed to recruit for. Company leadership ultimately realized they’d have to launch a massive recruiting effort for what became known as “AI Innovation Specialists.” This applied across the board, to sales, finance. marketing, everywhere. Vaughan said this time was “really difficult” as things inside the company were “upside down … We didn’t really quite know where we were or who we were yet.”

A couple key hires helped, starting with the person who became IgniteTech’s chief AI officer, Thibault Bridel-Bertomeu. That led to a full reorganization of the company that Vaughan called “somewhat unusual.” Essentially, every division now reports into the AI organization, regardless of domain.

This centralization, Vaughan says, prevented duplication of efforts and maximized knowledge sharing—a common struggle in AI adoption, where WRITER’s survey shows 71% of the C-suite at other companies say AI applications are being created in silos and nearly half report their employees left to “figure generative AI out on their own.”

No pain, no gain?

In exchange for this difficult transformation, IgniteTech reaped extraordinary results. By the end of 2024, the company had launched two patent-pending AI solutions, including a platform for AI-based email automation (Eloquens AI), with a radically rebuilt team.

Financially, IgniteTech remained strong. Vaughan disclosed that the company, which he said is in the nine-figure revenue range, finished 2024 at “near 75% EBITDA”—all while completing a major acquisition, Khoros. “You multiply people … give people the ability to multiply themselves and do things at a pace,” he said, touting the company’s ability to build new customer-ready products in as little as four days—an unthinkable timeline in the old regime.

What does Vaughan’s story say for others? On one level, it’s a case study in the pain and payoff of radical change management. But his ruthless approach arguably addresses many challenges identified in the WRITER survey: lack of strategy and investment, misalignment between IT and business, and the failure to engage champions who can unlock AI’s benefits.

The ‘boy who cried wolf’ problem

To be sure, IgniteTech is far from alone in wrestling with these challenges. Joshua Wöhle is the CEO of Mindstone, a firm similar to WRITER that provides AI upskilling services to workforces, training hundreds of employees monthly at companies including Lufthansa, Hyatt, and NBA teams. He recently discussed the two approaches described by Vaughan—upskilling and mass replacement—in an appearance on BBC Business Today.

Wöhle contrasted the recent examples of Ikea and Klarna, arguing the former’s example shows why it’s better to “reskill” existing employees. Klarna, a Swedish buy-now pay-later firm, drew considerable publicity for a decision to reduce members of its customer support staff in a pivot to AI, only to rehire for the same roles. “We’re near the point where [AI is] more intelligent than most people doing knowledge work. But that’s precisely why augmentation beats automation,” Wöhle wrote on LinkedIn.

A representative for Klarna told Fortune the company did not lay off employees, but has instead adopted several approaches to its customer service, which is managed by outsourced customer-service providers who are paid according to the volume of work required. The launch of an AI customer-service assistant reduced the workload by the equivalent of 700 full-time agents—from roughly 3,000 to 2,300—and the third-party providers redeployed those 700 workers to other clients, according to Klarna. Now that the AI customer service agent is “handling more complex queries than when we launched,” Klarna says, that number has fallen to 2,200. Klarna says its contractor has rehired just two people in a pilot program designed to combine highly trained human support staff with AI to deliver outstanding customer service.

In an interview with Fortune, Wöhle said one client of his has been very blunt with his workers, ordering them to dedicate all Fridays to AI retraining, and if they didn’t report back on any of their work, they were invited to leave the company. He said it can be “kinder” to dismiss workers who are resistant to AI: “The pace of change is so fast that it’s the kinder thing to force people through it.” He added that he used to think that if he got all workers to really love learning, then that could help Mindstone make a real difference, but he discovered after training literally thousands of people that “most people hate learning. They’d avoid it if they can.”

Wöhle attributed much of the AI resistance in the workforce to a “boy who cried wolf” problem from the tech sector, citing NFTs and blockchain as technologies that were billed as revolutionary but “didn’t have the real effect” that tech leaders promised. “You can’t really blame them” for resisting, he said. Most people “get stuck because they think from their work flow first,” he added, and they conclude AI is overhyped because they want AI to fit into their old way of working. “It takes a lot more thinking and a lot more kind of prodding for you to change the way that you work,” but once you do, you see dramatic increases. A human can’t possibly keep five call transcripts in their head while you’re trying to write a proposal to a client, he offers, but AI can.

Ikea echoed Wöhle when reached for comment, saying that its “people-first AI approach focuses on augmentation, not automation.” A spokesperson said Ikea is using AI to automate tasks, not jobs, freeing up time for value-added, human-centric work.

The WRITER report notes that companies with formal AI strategies are far more likely to succeed, and those who heavily invest in AI outperform their peers by a large margin. But, as Vaughan’s experience shows, investment without belief and buy-in can be wasted energy. “The culture needed to be built. Ultimately, we ended up having to go out and recruit and hire people that were already of the same mind. Changing minds was harder than adding skills.”

For Vaughan, there’s no ambiguity. Would he do it again? He doesn’t hesitate: He’d rather endure months of pain and build a new, AI-driven foundation from scratch than let an organization drift into irrelevance. “This is not a tech change. It is a cultural change, and it is a business change.” He said he doesn’t recommend that others follow his lead and swap out 80% of their staff. “I do not recommend that at all. That was not our goal. It was extremely difficult.” But at the end of the day, he added, everybody’s got to be in the same boat, rowing in the same direction. Otherwise, “we don’t get where we’re going.”

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Business

‘Everybody wants the economy of tomorrow, but paying the bills today is absolutely critical’: Democratic governors huddle on affordability

Published

30 minutes ago

December 8, 2025

Jace Porter

Democratic governors met this weekend in Arizona, looking to parlay last month’s big victories for the party in New Jersey and Virginia into campaigns for next year’s midterms, when a majority of governor’s seats will be up for election.

Those elections helped Democrats zero in on what they see as a strategy to help grow their ranks in office and recover from big losses in 2024, when voters put Donald Trump back in the White House and gave Republicans majorities in both houses of Congress.

The plan is to focus intently on making life more affordable, a message they hope will work even in some conservative-leaning states.

“We have to be laser focused on people’s everyday concerns and how hard life is right now for the American people,” said Kentucky Gov. Andy Beshear, the new chairman of the Democratic Governors Association and a possible candidate for president in 2028. “Everybody wants the economy of tomorrow, but paying the bills today is absolutely critical.”

He and other governors said Democrats can use the affordability message as a cudgel against Trump without making him the central focus of their campaigns.

“Yes, we can judge a president, and we should judge this president,” Beshear said. “But we never judge those voters.”

Democrats hone in on costs

The meeting of Democratic governors comes as blue states have been under fire from the Trump administration, which is exercising power in novel ways against the president’s perceived enemies.

Trump has deployed the National Guard in California, Oregon and Illinois over the objections of their Democratic governors. His administration has demanded detailed voter data and threatened to cut off food assistance for states that don’t provide information to support his immigration crackdown.

Heading into a primary season in which factions will battle over the future of the party, Democratic governors largely sang from the same sheet over the weekend. A dozen candidates and sitting governors all said they plan to talk extensively about the costs of housing, child care, utilities and groceries during Trump’s second term.

But the unified focus on affordability papers over real divisions in the party’s ranks over how aggressively to confront Trump, who won all of the presidential battleground states last year, and how to deal with the rising costs that are squeezing Americans.

On the same day Democratic moderates with national security credentials, Mikie Sherrill in New Jersey and Abigail Spanberger in Virginia, won their governor’s races, Democratic socialist Zohran Mamdani won election as New York mayor. All ran on promises to tackle affordability, but they offered very different visions for how to deliver.

The affordability strategy isn’t without risk. Economic conditions could change, making concerns about prices less salient or urgent.

And Democrats could be setting themselves up for disappointment down the road if they win in 2026 but are unable to bring down costs to voters’ satisfaction, allowing Republicans to capitalize on the same buyer’s remorse Democrats are now seeking to stoke.

For Democratic incumbents seeking reelection, they can’t rest on fighting the Trump administration, said two-term Democratic Gov. Michelle Lujan Grisham of New Mexico. They need to show results.

“Deliver for me. But don’t forget to fight this,” said Lujan Grisham, who is barred by term limits from seeking reelection. “They do want both, and finding ways to cross-cut those and marry that I think is going to be a winning set of messages.”

Affordability also becomes a focal point for Trump

After the New Jersey and Virginia elections last month, the White House began shifting its message to focus more on affordability. Trump, who has not done much domestic travel during his second term, is scheduled to visit Pennsylvania on Tuesday to highlight his efforts to reduce inflation.

The president has talked more about affordability recently, and he reduced tariffs on beef and other commodities that consumers say cost too much. But Trump also has said the economy is better and consumer prices lower than reported by the media.

“The word affordability is a Democrat scam,” he said during a Cabinet meeting last week.

He continues to blame his Democratic predecessor, former President Joe Biden, for the increase nationwide in inflation rates that occurred this year after his return to the White House. Overall, inflation is tracking at 3% annually, up from 2.3% in April when Trump rolled out a sweeping set of import taxes.

Treasury Secretary Scott Bessent on Sunday said the administration will be intent on reducing inflation, after tackling immigration and pushing to have interest rates cut.

“I expect inflation to roll down strongly next year,” he said on CBS’s “Face the Nation.”

Democratic governors and candidates were largely aligned in the conclusion that many voters in 2024 didn’t feel as if their party was focused on their concerns or shared their anger at a system they believe is failing average Americans.

“I think if there was any failure in the presidential election, it’s we forgot what real people care about,” said Oregon Gov. Tina Kotek, who is expected to seek a second term next year.

“We’ve got to listen to people,” said Keisha Lance Bottoms, the former mayor of Atlanta who is running for Georgia governor.

Democrats believe some red states could be in play

Once Spanberger takes office in January, Democrats will control 24 governor’s offices, a significant improvement from the low point of just 16 following the 2016 election but still slightly behind the Republicans’ 26 seats.

Thirty-six states will hold elections for governor next year.

Among the hardest-fought contests will be in swing states that flipped between supporting Biden in 2020 and Trump in 2024. Those include Arizona, where Democratic Gov. Katie Hobbs is seeking a second term, and Nevada, where Republican Gov. Joe Lombardo is up for reelection. Wisconsin, Michigan and Georgia all have open seats that are widely expected to attract a large field of candidates and big spending.

The retirement of Democratic Gov. Laura Kelly in Kansas, an overwhelmingly Republican state in presidential contests, gives the GOP the upper hand there. But Democrats are talking about expanding the field by competing in states such as Iowa or Ohio, where the party used to be competitive but has struggled in the Trump era.

Gina Hinojosa, a Texas lawmaker running for governor in the nation’s second-most populous state, is making the case to Democratic donors that investing in Texas will be crucial to her party’s hopes of winning power in Washington before the 2030 census. Her state is projected to pick up at least four House seats and Electoral College votes at the expense of blue states such as California and Illinois.

“If we don’t flip before the end of the decade, there won’t be Democratic control of Congress or the White House,” Hinojosa said. “Because the math doesn’t work.”

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Business

Nonprofits are solving 21st century problems—they need 21st century tech

Published

1 hour ago

December 8, 2025

Jace Porter

AI is accelerating progress in almost every sector. But in the social sector, it’s exposing a gap.

Despite playing a crucial role as the first line of defense for vulnerable communities, nonprofits are at risk of being left behind in the age of AI. Society is asking nonprofits to solve 21st-century problems with 20th-century tech. At the same time, they are up against sociopolitical headwinds, loss of funding, and existential battles.

We cannot expect nonprofits to invest in technological innovation unless we come together across sectors to provide them the resources. The engineers and the activists, the policymakers and the philanthropists. If AI is to be a force for good, we need to fund the tech, fund the future, and fund together.

An emerging, creative class of entrepreneurs — AI-powered nonprofits — represent one of the most promising fronts in social impact. While for-profit companies are building AI that’s fundamentally changing daily life and the global economy, AI-powered nonprofits are using the same tech to solve humanity’s most urgent challenges. They’re banding together to transform education. To advance economic empowerment. To change health outcomes. They are demonstrating resilience in ways the private sector alone cannot.

Take CareerVillage. Since 2011, CareerVillage has been on a mission to democratize access to career information and support those who need it most. Rather than shying away from hard questions about how AI will impact the labor market, CareerVillage is leaning in. Their AI-powered “Coach” platform helps job seekers navigate the changing labor market by offering mock interviews, resume support, career navigation, and more. Coach has already delivered personalized guidance to 50,000 learners, the majority of which have been youth from low-income households, students of color, and women.

But that’s just one example. New data from Fast Forward’s 2025 AI for Humanity Report, created with support from Google.org, finds that AI-powered nonprofits like CareerVillage are leading an early-stage transformation of AI in the nonprofit sector. We found that nonprofits are building AI solutions at every size and every stage. 40% of AI-powered nonprofits surveyed have been using AI for a year or less. And nearly a third (30%) have budgets of $500K or less.

It isn’t a surprise that the smallest, nimblest nonprofits are leading the way. Nonprofits have always looked for ways to do more with less. In this way, AI-powered nonprofits are similar to traditional nonprofits — they care about impact and efficiency. But AI-powered nonprofits are organized differently, and they have a different set of needs.

For one, AI-powered nonprofits need tech expertise in their C-suite and on their staff. Tech and data aren’t extraneous. They’re core program costs. It costs money to build the technology responsibly, and it takes time for impact to follow. This puts a lot of AI-powered nonprofits in a catch-22: needing capital to prove impact, but needing proven impact to unlock capital.

To that end, AI-powered nonprofits need support at every stage of the impact cycle: from research and development, to sustaining mid-stage growth — the point where many nonprofits otherwise stall — to scaling proven models.

Importantly, 84% of AI-powered nonprofit respondents said funding would most help them further develop and scale AI. This insight matters because the data shows a clear relationship between resources and reach. At the smallest budgets, AI-powered nonprofits are serving thousands, a median of just under 2,000 lives. By the time budgets cross $1 million, median reach jumps to half a million people. And at more than $5 million, AI-powered nonprofits are reaching millions of people — a median impact of 7 million lives.

To unlock their full potential, they need the support of coalitions, shared infrastructure, and cross-sector collaboration with technologists, policymakers, and funders.

There is no better example of this than Karya. The smartphone-based platform employs workers in rural India to complete AI data tasks to train large language models, like translation for less-commonly spoken languages. Karya seized an opportunity to flip the script on the AI economy — improving global technologies while enabling income and upskilling opportunities for over 100,000 workers.

Karya also licenses its technology to local governments and peer organizations. Using Karya’s Platform-as-a-Service model, Digital Green sourced speech data directly from farmers in Kenya to fine-tune an agricultural AI model. The localized model outperformed leading models on domain-specific tasks, proving that community-generated data can drive smarter, more relevant AI. Karya provided the technology, Digital Green led on-the-ground operations, and philanthropic funding helped bridge the two.

Partnership, even within the nonprofit sector, acts as a force multiplier. AI can unlock positive benefits for humanity, but we all play a role in making sure that happens.

Every once in a while, history presents us with moments that demand a fundamental shift in approach. This is one of those moments.

It starts with giving nonprofits a seat at the table.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not necessarily reflect the opinions and beliefs of Fortune.

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Business

Citadel’s shot at Andreessen Horowitz points to coming battle over DeFi and U.S. stock trading

Published

2 hours ago

December 8, 2025

Jace Porter

A quiet fight between two of the most powerful names in finance burst into the open last week. In a letter to the Securities and Exchange Commission, Citadel Securities complained that crypto interests are poised to damage the U.S. stock market and harm consumer protections with a pell-mell rush into decentralized finance (DeFi). The firm didn’t directly say who it regards as responsible for this state of affairs—but it’s enough to guess from the footnotes, which refer to the venture giant Andreessen Horowitz more than 10 times.

The source of the dispute is the fast-growing world of tokenized equities, which let users trade shares of popular companies but in a blockchain wrapper. The likes of Robinhood, Kraken, and even BlackRock are all dabbling in this technology, whose advantages include easy 24/7 trading and instant settlement. Holding stock on a blockchain also reduces middlemen, and expands opportunities to deploy equity-based collateral.

So what’s not to like? According to Citadel, the problem is DeFi platforms like Uniswap. Right now, traders use them to swap billions of dollars of crypto every day—and soon large volumes of tokenized Nvidia or Apple stock could be sloshing around these platforms, too. And if the SEC grants certain exemptions that Andreessen and its DeFi allies are seeking, Uniswap and others will get to operate as de facto brokerages—without taking on the legal responsibilities that go with that. These include displaying the price of every trade or ensuring customers get the best price. Citadel also warns of “fragmenting liquidity” as stock investing gets split between two parallel systems.

In response to the letter, the founder of Uniswap (one of Andreessen’s blue-ribbon portfolio companies) took to X to accuse Citadel of slandering DeFi in order to protect its lucrative role as the “king of shady tradfi market makers.” Other prominent names in crypto piled on as well, accusing the firm of trying to smother innovation.

At first glance, it appears both sides have a point. If tokenized stock trading breaks into the mainstream, it would threaten Citadel’s business model of paying firms like Robinhood for their orders and using that volume to make trading profits. So the company’s letter to the SEC is clearly based in self-interest. That said, Citadel’s concerns about liquidity are not unreasonable—if the pool of U.S. stocks is divided into two separate pools, doesn’t that make trading more expensive for everyone? Likewise, it’s fair to ask if the SEC would be wise to grant exemptions on investor protection rules that have historically served the public very well.

In reading the letter, it’s remarkable to read its claims that the likes of automated AMMs, block builders, validators and layer 2 blockchains are basically brokerages—less for the argument itself, than that Citadel and the SEC are discussing this stuff at all. It wasn’t long ago when only a handful of crypto diehards knew what these terms even meant. Now, they have become mainstream enough to be part of a non-crypto firm’s correspondence with the SEC, and there is no doubt they’re here to stay.

As for which side is going to prevail, it’s worth noting the fight pits two of the most powerful firms in the country against each other. On one side, there is Citadel, which is owned by Ken Griffin, one of the richest and most combative people in the country. On the other is Andreessen, an influential VC firm that doubles as a PR firm and lobbying agency with immense clout in Washington, DC. For now, it feels Griffin may be able to slow down the spread of tokenized equities but, as with any superior technology, he will be unable to stop it.

Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts

DECENTRALIZED NEWS

Binance’s new look: The world’s biggest cryptocurrency exchange announced Yi He as co-CEO, confirming her status as the most powerful woman in crypto, while also establishing a de facto corporate headquarters for the first time via major licenses in Abu Dhabi. (Fortune)

Alt-coin winter: The recent downturn has battered alts with the sector shedding $200 billion since market peak. Memecoins have been hit particularly hard, due in part to the sheer number of them, but also because they are competing with a growing number of other speculative opportunities like prediction markets. (Bloomberg)

If at first you don’t succeed: Coinbase plans to relaunch in India early next year. It first opened shop in 2022, but was forced to retreat a year later in the face of hostile regulators who blocked its access to the country’s national payments network. (TechCrunch)

Mining mischief: The Malaysian government is using drones and a cross-agency task force to go after thousands of illegal Bitcoin mining operations that hop from place to place, and have stolen over $1 billion of electricity. (Bloomberg)

Saylor selling? The fraught world of DATs got dicier as Strategy said it might sell Bitcoin as a last resort. The move comes as Strategy’s share price fell below mNAV as the firm faces looming dividend obligations—but there is also a case that Saylor’s corporate strategy wizardry means the firm will be just fine. (Fortune)

MAIN CHARACTER OF THE WEEK

Changpeng Zhao, cofounder of Binance.

Samsul Said—Bloomberg/Getty Images

CZ wins the main character title this week as his debate with goldbug Peter Schiff helped drive a flood of social media attention around the Binance founder who looks very much back in the crypto game.

MEME O’ THE MOMENT

Franklin the Turtle loves UDSC and USDT.

After the U.S. Treasury Secretary Bessent co-opted beloved children’s character Franklin the Turtle to pitch T-bills, it didn’t take long for CT to expand the meme to stablecoins.

Fortune Brainstorm AI returns to San Francisco Dec. 8–9 to convene the smartest people we know—technologists, entrepreneurs, Fortune Global 500 executives, investors, policymakers, and the brilliant minds in between—to explore and interrogate the most pressing questions about AI at another pivotal moment. Register here.

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