Box founder Aaron Levie sparked a debate on X this week, claiming that many tech CEOs are suffering from an "AI psychosis." Levie argues that senior leaders sit too far from the "last mile" of work—coding, debugging, contract review—and mistake early AI experiments for fully automated solutions. "CEOs are uniquely prone to AI psychosis because they're sufficiently distant from the last mile of work that still has to happen to generate most value with AI," he wrote.

The warning arrives amid a wave of layoffs that has already claimed 115,430 jobs at 152 tech companies in the first five months of 2026. That figure nearly matches the 124,636 cuts recorded across 275 firms in all of 2025, according to Layoffs.fyi. Many of the affected firms point to AI as a justification, even as analysts question the depth of the technology's impact on productivity.

One high‑profile example comes from ClickUp CEO Zeb Evans, who announced a 22 percent staff reduction after deploying roughly 3,000 AI agents to handle internal tasks. Evans insists the move is not about cost savings but about reshaping the workforce into a group that monitors and fine‑tunes AI agents, creating what he calls a "100x org." Critics note that the promised efficiency boost remains unproven.

Academic research underscores the gap between expectation and reality. A meta‑analysis published in UC Berkeley's *California Management Review* found no robust link between AI adoption and aggregate productivity gains. The National Bureau of Economic Research reported a "productivity paradox," where perceived gains outpace measured ones. MIT researchers, examining thousands of AI agents, concluded that the bots still fall short of human‑quality output on many tasks. They project that by 2029, large language models may achieve 80‑95 percent success on text‑based tasks, but true superiority over humans could take several more years.

Harvard Business Review adds another layer, noting that when AI empowers every employee to produce more, bottlenecks shift to executives who must approve the output. OpenAI's experience last year showed how rapid, unchecked AI use can spiral out of control, raising questions about whether CEOs are prepared for the new dynamics.

Levie, a vocal AI advocate with 2.7 million followers, backs his claims with personal investment in AI startups and a series of optimistic blog posts. He urges CEOs to "use AI a ton" to understand both its upside and its limits, hoping the industry will emerge with a realistic appreciation of the technology.

The clash between AI optimism and the stark numbers of layoffs suggests a period of reckoning for the tech sector. As firms continue to experiment with agents and automation, the balance between hype, measurable productivity, and workforce stability will likely define the next wave of industry transformation.

This article was written with the assistance of AI.
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