Scale AI, a San Francisco startup, recently celebrated a $14.3 billion investment from Meta Platforms, Inc. (NASDAQ:META). Shortly afterward, it laid off 14% of its total staff.
The Details: The artificial intelligence company confirmed Wednesday that it is reducing its workforce by 200 full-time employees.
Among those unscathed is Scale AI’s founder, billionaire Alexandr Wang, who Meta tapped to lead its AI efforts.
Scale AI's interim CEO, Jason Droege, who stepped into the role after Wang's departure, acknowledged in a memo to staff that the company expanded its generative AI operations too rapidly and developed unnecessary bureaucracy, according to CNBC.
Droege emphasized that Scale AI remains financially strong and well-resourced, despite the cuts.
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Droege wrote that these organizational changes are designed to help the company become more agile and better prepared to respond to evolving market demands.
"This structure will allow us to better serve the customers we have today and win back customers that have slowed down work with us," Droege wrote in the memo.
Droege added that Scale AI intends to boost hiring significantly in the latter half of the year, especially in its application, enterprise and public sector divisions.
At the time of these layoffs, Scale AI employed about 1,400 people globally. Scale AI spokesperson Joe Osborne said that departing employees will receive severance packages. The company will also discontinue work with 500 contractors worldwide.
Osborne added that the company is restructuring its data business to provide improved solutions for its generative AI customers. The plan is to invest heavily and hire in its enterprise and government AI sectors.
Why It Matters: Meanwhile, Meta has been aggressively hiring AI talent to better compete with industry rivals like OpenAI. CEO Mark Zuckerberg chose Wang to lead Meta's newly established Meta Superintelligence Labs as chief AI officer. Only a handful of Scale AI employees have joined Meta as well.
Meta also recently recruited two prominent researchers from OpenAI—Jason Wei and Hyung Won Chung—to join its new superintelligence lab.
This recruitment is part of Meta's broader strategy. The Facebook parent is reportedly making compensation offers as high as $300 million over four years.
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