Palo Alto CEO Takes on AI: The ‘Darwinian Moment’ is Here

Palo Alto Networks operates with a 21,000-employee workforce that faces a mounting skills challenge.

According to Nikesh Arora, CEO of Palo Alto Networks, 90% of enterprise employees “are not AI savvy” .

Nikesh makes the remarks during an appearance on the 20VC podcast, which interviews the world's greatest venture capitalists. He attributes the disconnect between available technology and employee capabilities to insufficient training courses.

The Palo Alto Networks workforce manages its own development under Nikesh's leadership model. He describes the current business environment as a “Darwinian moment” where companies must “figure out who’s really good” .

Enterprise response to skills shortage

Nikesh discusses the approaches taken by other technology firms in addressing the AI-skills gap. Many companies have opted for mass layoffs rather than workforce retraining programmes.

He references SoftBank, Coinbase and Block as examples of organisations that have cited AI as justification for job cuts, questioning this strategy in his podcast appearance.

The Palo Alto Networks CEO criticises the workforce management approaches of Coinbase CEO Brian Armstrong and Block CEO Jack Dorsey. He says companies in this category have reduced headcount drastically “because they’ve figured out there's no redemption”.

“They say, ‘I can’t train these people’. I’m going to just find the people who are going to come in and help me do this stuff.”

Natural attrition replaces layoffs

Palo Alto Networks uses natural attrition to address its skills gap rather than implementing mass layoffs. The firm allows workforce transformation to occur gradually as employees leave voluntarily.

Nikesh explains that the company recruits technical talent through hackathons. He estimates that within 12 months, between 20% and 25% of the team will have been transformed.

He says: “Give me three years, I’ll have hopefully enough AI savvy people working at Palo Alto.”

According to the company’s most recent 10-Q filing, Palo Alto Networks has added 5,423 total employees to its headcount between the end of fiscal 2025 and Q3 2026.

Workforce reduction predictions

Nikesh acknowledges that AI could determine future workforce growth patterns, potentially resulting in reduced headcount. He questions the necessity of maintaining hundreds of employees within certain departments.

The CEO cites marketing as one example. He notes that frontier models can already be trained alongside marketing strategies to understand company voice and tone.

He says: “My biggest problem in marketing is I have 600 people, but I'm not sure they all fully understand how to consistently deliver my tone of voice.”

His “rule of thumb” predicts that companies will operate with “half of the people” in roles including marketing, HR and finance within three years. Nikesh explains that AI applications could advance sufficiently to automate work in these departments.

During the podcast, he says employees at Palo Alto Networks already want to use AI resources to enhance marketing and HR operations.

“I think there’s this fallacy people believe we’re going to have less people working because AI is going to take over our jobs,” Nikesh says.

“I don’t believe that. I think what’s going to happen is you can’t imagine the number of people on my team who want more technical resources, more AI-savvy resources because they want to do exactly these things.”