Scale AI just laid off approximately 200 full-time employees (14% of its 1,400-person workforce) and 500 contractors, according to the company.
This comes after Meta invested $14 billion into Scale AI last month as part of a blockbuster AI deal that included the hiring of Scale’s ex-CEO, Alexandr Wang, to lead its new Superintelligence group and the purchase of equity in almost half the data labeling startup.
The company is ‘restructuring’ its GenAI group, according to an email from Scale’s interim CEO, Jason Droege, obtained by Business Insider. The GenAI organization is a core part of Scale that manages its work on some of the best-known AI chatbots like xAI’s Grok and Google’s Gemini.
The move was abrupt, one source told BI, with employees shut out of systems and deactivated from Slack even before they woke up.
Questions about Scale AI’s long-term sustainability have swirled since Meta’s investment, with some of Scale’s biggest clients like Google abruptly halting projects in the wake of the deal. The company has also faced questions around the security practices of its training documents, as revealed through Business Insider’s reporting.
Scale remains well-funded and is committed to growth and hiring hundreds more employees in different sectors, the startup told BI.
“As a result of this restructuring, some members of this org will be leaving Scale today,” the email reads. “To ensure a smooth process and give people the necessary space, please do not come into the office.”
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The source told BI that the Meta investment weakened Scale AI’s core leadership, with not only Alexandr Wang departing but also key VPs, chiefs of staff, and researchers.
Laid-off ScaleAI employees will be paid as normal through September 15, and then receive a minimum of four weeks of additional pay if they sign the company’s severance agreement, per a separate email to the affected employees obtained by BI.
“We’re streamlining our data business to help us move faster and deliver even better data solutions to our GenAI customers,” Scale AI spokesperson Joe Osborne told BI. “We also plan to make significant investments and hiring across our enterprise and government AI businesses.”
Here is the full email from Scale AI’s CEO Jason Droege to Scale AI’s employees:
Hi team, After reviewing our company and its operations, I’ve made the decision to restructure several parts of the GenAI organization. I believe these changes will best position us for the long-term, make the org more efficient, and allow GenAI to focus on the biggest and most profitable opportunities. As a result of this restructuring, some members of this org will be leaving Scale today. To ensure a smooth process and give people the necessary space, please do not come into the office. All impacted FTEs will receive an email to their personal email address by 8am PT and badge and IT access will be removed. For those not impacted, I will share more details later this morning on the restructuring and our path forward. I know news like this is tough, but please know how grateful I am for the work this team has done. Whether you’re directly affected by these changes or not, every one of you has helped build Scale into the company it is today and the accomplishments it has made. Thank you again.