IgniteTech CEO Lays Off 80% of Workforce Over AI Resistance, Stands by Decision Two Years Later

Eric Vaughan, CEO of enterprise-software company IgniteTech, made one of the most drastic decisions of his career in early 2023: he laid off nearly 80% of the company's staff because they refused to adopt generative AI fast enough. Two years later, he remains steadfast in his decision, telling Fortune that he would do it again, despite the immense difficulty involved [1]. The move, which unfolded over the course of 2023 and into early 2024, saw the replacement of hundreds of employees without disclosing exact numbers [1]. Vaughan described the decision not as a goal, but as a necessity for survival in the face of what he viewed as an existential shift brought on by AI [1].

Vaughan’s vision for IgniteTech was clear: everything would now revolve around artificial intelligence. He mandated that all employees—regardless of their role—dedicate their efforts to AI projects. Mondays were dubbed “AI Monday,” and for a period, employees could only work on AI-related tasks. The company reimbursed for AI tools, provided prompt engineering classes, and brought in external experts to push the message. However, the initiative met with resistance, especially from technical staff, who were the “most resistant” to the change. Many feared AI would replace their roles or were frustrated with the tools provided [1]. This resistance, according to Vaughan, ultimately led to the decision to replace the majority of the workforce [1].

According to a 2025 enterprise AI adoption report by WRITER, a platform that helps companies integrate AI, one in three workers reported they had “actively sabotaged” their company’s AI rollout, with 41% of millennial and Gen Z employees doing so [1]. Kevin Chung, WRITER’s Chief Strategy Officer, noted that this resistance was not just fear of technology but a broader frustration with unclear strategy and ineffective tools from leadership [1]. These insights align with Vaughan’s experience, where he found belief in AI to be a harder sell than skill development.

The reorganization of IgniteTech involved not just mass layoffs but a complete cultural shift. Vaughan and his team launched a massive hiring initiative for “AI Innovation Specialists,” applying across departments including sales and marketing. Key hires included Thibault Bridel-Bertomeu, who became the chief AI officer and led a full reorganization of the company [1]. In this new structure, every division reported into the AI organization, regardless of domain, to avoid duplication and maximize knowledge sharing. WRITER’s survey supports this approach, noting that 71% of C-suite leaders reported AI applications were being created in silos, and nearly half said employees were left to figure out generative AI on their own [1].

The results of this transformation were significant. By the end of 2024, IgniteTech had launched two patent-pending AI solutions, including a platform for AI-based email automation. Financially, the company remained strong, with EBITDA near 75% and a major acquisition of Khoros completed. Vaughan credited AI with enabling the company to build customer-ready products in as little as four days, a stark contrast to the slower pace of the past.

Vaughan’s story highlights both the challenges and the potential of aggressive AI adoption. His approach addresses many of the issues identified in the WRITER survey, including lack of strategy, misalignment between IT and business, and the absence of internal champions for AI. However, it also raises questions about the cost of such a transformation and whether it is sustainable or replicable elsewhere.

Joshua Wöhle, CEO of Mindstone, a firm that provides AI upskilling services, contrasts Vaughan’s approach with examples like Ikea and Klarna, where reskilling existing staff was prioritized over replacement. Klarna, a Swedish fintech company, faced backlash after reducing its customer support staff with AI, only to rehire some workers later. Klarna clarified to Fortune that it had not laid off employees but had shifted to an outsourced model that reduced workload by the equivalent of 700 full-time agents. The company now uses a hybrid approach that combines AI with human support, with plans to rehire select staff for a pilot program [1].

Wöhle argues that the tech sector’s history of hyping technologies—such as NFTs and blockchain—has led to a “boy who cried wolf” problem, where workers now distrust AI promises. He notes that most people avoid learning if they can and that AI resistance is often rooted in workflow inertia. It takes more than just tools; it requires a cultural shift and buy-in from the workforce [1].

For Vaughan, the key takeaway is that AI is not just a technological shift but a cultural and business one. He acknowledges the difficulty of his approach and does not recommend others follow it exactly, but he insists that transformation requires alignment. “Everybody’s got to be in the same boat, rowing in the same direction,” he said. Otherwise, progress is impossible [1].

Source: [1] 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 (https://fortune.com/2025/08/17/ceo-laid-off-80-percent-workforce-ai-sabotage/?itm_source=parsely-api)