Company slashes engineering team by 75%, says AI is breaking its business model

Tailwind CSS just cut three-quarters of its engineering team, and the reason reveals a strange contradiction at the heart of the AI boom.

Adam Wathan, the company’s founder, dropped the news in a GitHub thread that was already tense. Someone had submitted a pull request to make Tailwind’s documentation more accessible to AI models. Wathan closed it, explaining that his company had just laid off most of its staff the day before.

The irony here is that Tailwind CSS has become wildly popular, partly because AI coding tools love it. The framework reportedly gets 75 million downloads each month. But that success isn’t translating to revenue anymore.

Here’s what’s happening: developers used to visit Tailwind’s documentation regularly while building websites. Those docs were also where the company promoted its paid products. Now, AI models trained on those same docs just answer questions directly. Traffic to the documentation has dropped 40% since early 2023. Revenue is down nearly 80%.

Wathan clearly mentioned that the framework is “growing faster than it ever has” and “bigger than it ever has been,” but there’s now “no correlation between making Tailwind easier to use and making development of the framework more sustainable.”

The contributor who submitted the pull request argued that making docs AI-friendly would be “complementary not replacement.” Others piled on, suggesting Wathan was being hostile to the open source community. One person accused him of hiding the real reason: Tailwind offers an AGENTS.md file to sponsors that helps AI tools use the framework better.

Wathan pushed back on that. He explained that the sponsorship file is just personal opinions and best practices, not the full documentation. He said he wants to add AI-optimized docs eventually, but can’t prioritize it while fighting to keep the business alive.

Some developers expressed support and bought Tailwind sponsorships. Others got nasty. GitHub moderators eventually locked the conversation after it “spiraled.”

The whole situation highlights a bigger question nobody has really answered yet: how do companies that built their businesses on documentation and tutorials survive when AI absorbs all that knowledge and serves it up for free? Tailwind built something useful, gave it away, and now the same technology that made it popular is breaking the business model that funded its development.

Wathan says he’s trying to figure it out. For now, he’s just focused on making sure the remaining staff gets paid.