Tiger Global-Backed Scale AI Just Laid Off 20 Percent of Its Staff

  • Scale AI laid off 20% of its workforce this morning, Insider learned.
  • The startup uses machine learning to label data that companies can feed into AI models.
  • Scale AI has raised over $600 million from investors including Tiger and Y Combinator and was valued at $7 billion.

It may be a new year, but it’s all the same for the tech industry, which has long felt the heat in the form of declining revenues and job cuts.

Controversial artificial intelligence data management startup Scale AI, which was last valued at $7 billion in 2021, laid off 20% of its workforce Monday morning, Insider learned, the company said in a blog post. Confirmed layoffs.

Founded in 2016 by Alexandr Wang and Lucy Guo, Scale AI was a member of the prestigious accelerator program Y Combinator’s Summer 2016 cohort. The startup uses machine learning to label and classify large amounts of data, allowing companies to feed this data into AI models. Scale AI customers include Harvard Medical School, PayPal, Brex, OpenAI, and Toyota.

Scale AI attained unicorn status in 2019, following a $100 million Series C led by Founders Fund, with aggregate funding from Index Ventures, Coatue, Tiger Global, Accel, Dragoneer, and other prominent investors. raised $602.6 million in

Scale AI’s impressive rise to fame has made co-founder Wang the youngest self-made billionaire in the world, according to Forbes. Wang himself became known in Silicon Valley as “the next Zuckerberg.”

Prior to the layoffs, the startup employed about 700 people, according to Pitchbook.

According to one former employee who told an insider, and multiple LinkedIn posts made today by the former staffer, the employee learned he had been fired this morning when he found himself locked out of his computer at work. Then I found a message in my personal email account that my work had been cut. A former employee saw a devastating message after waking up to care for her 2-year-old son.

Employees also need to notify Scale’s HR team and work with the startup’s IT department to recover the information before they are permanently locked out in order to access personal documents on their work computers. said the former staff member.

After 150,000 jobs were created in a brutal 2022, the tech industry continues to take its toll, according to tracker site layoffs.fyi. As the tech boom of the pandemic comes to an end, startups are returning to Earth after a period of reckless funding and untenable valuations.

A former Scale AI employee told Insider that she suspects there will be layoffs after the startup recently freezes hiring and delays scheduling biannual reviews with staff, which usually take place in the beginning and middle of the year. said he did.

Despite the bleak big picture outlook, many saw a year of eye-popping valuations like marketing startup Jasper’s unicorn price tag and research lab OpenAI’s $29 billion valuation. Later, I believed that the red-hot field of AI would not be affected by the tech industry’s problems. The Wall Street Journal reported.

But the layoffs at once-Silicon Valley darling Scale AI seem to suggest otherwise. In fact, this could be a lesson for his much-talked-about AI startup.

In a blog post announcing the layoffs, Wang, the company’s CEO, wrote that Scale AI is hiring heavily given its enthusiasm for the product.

“Over the past few years, there has been a rapid increase in interest in AI by businesses and governments. I decided to let it grow,” Wang wrote. director.

Wang added that he failed to predict the recession over the past few quarters that has affected startup customers in the e-commerce and consumer technology sectors.

Do you have information about layoffs and other troubles at your startup? Contact reporter Samantha Stokes (sstokes@sinsider.com and encrypted message 646-389-7866) and Stephanie Palazzolo (spalazzolo@insider.com and encrypted message 979-599-8091).

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