This one looks different
The April jobs numbers surprised again, while Cloudflare's AI layoff seems to have different implications.
Hey there,
I have been getting versions of the same question from clients lately: "Okay, but are the AI layoffs actually real, or is AI the excuse?" They have read the skeptical takes, including in this newsletter. And they are starting to wonder if they are being too dismissive.
The honest answer this week is: one of them probably is.
Cloudflare cut 20 percent of its workforce on May 8, its first layoffs in 16 years, and the CEO said the quiet part out loud. Without quoting "optimizing for efficiency," or "investing in the future." Instead, he said AI usage at the company grew 600 percent in three months, and those specific jobs no longer exist in the same form. The company posted record revenue in the same announcement.
That is a different story from what Big Tech has been telling us. It deserves a different read.
Let’s get into it.
🌐 News Shortlist
1. April Added 115,000 Jobs. February Was Actually Worse Than We Thought.
Recap: The Bureau of Labor Statistics released the April Employment Situation on May 8. Employers added 115,000 jobs in April, more than double the 55,000 to 65,000 economists had forecast. The unemployment rate held at 4.3 percent. Health care led all sectors, followed by transportation and warehousing, and retail trade. Average hourly earnings rose 3.6 percent year over year. Federal government employment continued to decline. February's numbers were revised down to -156,000, from the initially reported -133,000. March was revised up to 185,000.
The headline number is good. Two consecutive months of upside surprises say the labor market has not broken the way many predicted. But the revision to February is the part worth sitting with. The month we thought was bad turned out to be significantly worse. This is how labor market data works: the headline runs everywhere on release day, and the revisions quietly change the underlying picture a few weeks later.
What the April report actually shows is a market that is adding jobs, but not evenly and not across the sectors most relevant to founders. Health care and transportation are structural. Retail reflects consumer spending that may or may not hold. The federal workforce is still contracting, and that talent is still entering the private market. If you are hiring in operations, program management, or policy, that pool is real and still underutilized.
The sectors that are not hiring, professional services, information, and financial activities, are where most people reading this newsletter do their business. For software, marketing, analytics, and operations roles, the April report tells you less than it seems. The market there is still tight in the ways that matter: the candidates you want are employed, cautious about moving, and getting more selective about what it takes to leave.
Advice:
The 115,000 number is real but narrow. If you are hiring in logistics, health care, or operations, conditions have improved. If you are hiring in professional services or tech, the headline does not tell you much about the talent you actually need.
2. Cloudflare Said the Quiet Part Out Loud
Recap: On May 8, Cloudflare announced it was laying off more than 1,100 employees, roughly 20 percent of its workforce, in the first mass layoff in the company's 16-year history. CEO Matthew Prince and President Michelle Zatlyn published a blog post explaining that AI usage inside Cloudflare had grown by over 600 percent in three months, with AI agents now handling tasks across HR, finance, marketing, and engineering. The CEOs stated explicitly that the cuts were not a cost-cutting exercise. Cloudflare reported record quarterly revenue the same week. Other companies announcing cuts the same week included Upwork, which cut 25 percent of its workforce; Coinbase, which cut 14 percent of its workforce; and PayPal, which announced plans to reduce headcount by 20 percent over the next two to three years.
Every other major AI-framed layoff we have covered this year has had a financial story underneath it. Oracle needed to fund $156 billion in infrastructure. Meta and Microsoft were converting payroll into AI capex. Amazon cut while AWS grew 24 percent. The pattern was clear: these were companies repricing labor to fund a capital spending race, and AI was the narrative that made it acceptable.
Cloudflare is different. It is a company with roughly 5,000 employees, not 100,000. It is posting record revenue, so financial pressure is not the explanation. And the CEO's statement is more specific than anything we have seen from a tech executive this year. Not "AI will reshape work over the next decade" but "AI usage inside our company grew 600 percent in three months, and these tasks no longer require the same headcount." That is a different claim. It might still be overstated. Executives describe their decisions in the best available terms. But the specificity is harder to dismiss.
What changes this week is the scale of the company making the claim. Big Tech making AI automation arguments is easy to discount because the financial incentives to make that argument are so large. Cloudflare, with 5,000 people, is closer to the companies that most founders are building or working at. When a company of that size cuts 20 percent during record revenue and attributes it specifically to internal adoption, it is worth treating as a real signal rather than a PR move.
The same week also brought cuts from Upwork, Coinbase, and PayPal, none of them Big Tech, all citing AI. The pattern is moving down market.
Advice:
Cloudflare is the first company at a relatable scale to have tied headcount cuts to documented internal AI adoption rather than to capital reallocation. If you have not audited which workflows AI tools now handle inside your own company, this week is a reason to do it before someone else's board asks you the same question.
3. Nubank Reports Today. The Number Matters More Than the Stock Price.
Recap: Nu Holdings, the parent company of Nubank, reports its first-quarter 2026 earnings today, May 14. Analysts project revenue of approximately $5 billion, representing nearly 53 percent year-over-year growth. Earnings per share are expected to be $0.20, a 67 percent year-over-year increase. The company ended 2025 with 131 million customers, making it the largest private financial institution by customer count in Brazil and a leading fintech across Mexico and Colombia. Nubank launched in 2013 with a credit card and no branches; it now serves roughly 15 percent of Brazil’s adult population.
The Nubank earnings report matters for a reason that has nothing to do with whether you own the stock.
When a company grows revenue by 53 percent annually and has 131 million customers, it is consuming a large amount of senior talent. Engineers, data scientists, product managers, risk analysts, and operations leads are all competing to work there. What Nubank pays, what it offers in terms of scope and growth, and what it expects from its people becomes the reference point for the senior tech labor market in Brazil. That is why these numbers matter to founders hiring remotely in São Paulo or Belo Horizonte, even if their company has nothing to do with fintech.
In the same week that US companies are announcing tens of thousands of job cuts, one of the world’s largest fintech companies is reporting 53 percent revenue growth, driven almost entirely by engineers, product managers, and operators trained in Brazil and Mexico. Nubank was not built by importing people from Silicon Valley. It was built by graduates of UNICAMP, UNAM, and Universidad de los Andes who chose to build something serious in their own region.
For founders who treat Latin America as a secondary market for affordable labor, this is worth revisiting. The talent pool that built Nubank is the same pool you are competing for.
Advice:
If Nubank's numbers come in strong today, expect salary expectations among senior technical professionals in Brazil to keep rising through 2026. Set your compensation benchmarks against what leading regional companies are actually paying now, not against what US companies paid two or three years ago.
That is it for this week.
Three stories that reward a closer read than the headline suggests. The jobs report looked good, but the revision and the sector breakdown tell a more complicated story. Cloudflare's cuts are the first of this cycle that appear to be about actual AI adoption rather than financial engineering, and that company is closer to your size than Meta is. Nubank's earnings are a proxy for how competitive the Latin American senior talent market has become, whether or not you work in fintech.
The talent decisions that hold up over the next two years will be made by people who read the revision, not just the headline.
That is what this newsletter is for. And it is what we help clients work through every week at lupahire.com.
Until next time,
Joseph Burns
CEO & Founder, Lupa