AI may be red-hot, but Scale AI layoffs send shivers

In April 2021, data labeling service Scale AI had a $7 billion valuation and a CEO, Alexandr Wang, who was known in Silicon Valley as “the next Zuckerberg.”

But last night, an Insider’s report that the unicorn company had laid off 20% of its 700-person staff sent shivers down the spines of those who thought AI was generally immune to the current wave of tech layoffs — especially at this red-hot AI moment when news that Microsoft is reportedly in talks to invest $10 billion in OpenAI and buzzy generative AI startups like Jasper and Stability AI are boasting over $100 million raises.

AI layoffs at companies large and small

Of course, the truth is that those in AI and ML, even the most highly-skilled and specialized, are being laid off, both at buzzy startups and Big Tech. In November, Meta layoffs hit an entire 50-person team focused on infrastructure, even after CEO Mark Zuckerberg wrote that “we’ve shifted more of our resources onto a smaller number of high priority growth areas — like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse.”

At Twitter, Elon Musk laid off the company’s ethical AI team in November, but even its AI-focused ad team was not immune to layoffs just 5 days ago.

Argo AI, an autonomous vehicle startup, laid off 173 staff in October, after Volkswagen pulled the plug on the Pittsburgh-based company. And Pecan AI, an Israeli predictive analytics platform startup, laid off 30 of its 120 employees a few days ago.

AI job seekers and talent hunters navigate market

Both AI and ML job seekers and talent hunters are trying to navigate a market filled with hot AI hype with a side of chill.

Computer scientist Chip Huyen, cofounder of Claypot AI, runs a community for ML learners on Discord. She recently told VentureBeat that today’s market is “scary” for a lot of people.

“One of the most popular channels in our Discord right now is under career advice,” she said. And even at her startup, Huyen added that she is seeing “an influx of applications” from “very good candidates from very strong companies.”

And for enterprise companies, Big Tech and startup layoffs could suddenly mean an opportunity for CIOs to snap up top AI and ML talent.

“There may be opportunity to pick up some talent from the big tech layoffs [depending] on where you are, in what industry,” Janelle Hill, distinguished VP analyst at Gartner, told VentureBeat.

Scale AI employees look for their next act

For now, former Scale AI employees — who apparently discovered they were laid off when they were locked out of their computers — are picking up the pieces, albeit with generous severance (one employee posted on a Y Combinator listserv that they received “8 weeks severance + 2 per year. Equity immediate vesting. H1B’s given extra 4 months on payroll. VERY generous.”)

On LinkedIn, a former Scale AI employee named D. Kim posted that working at Scale “redefined what’s possible when you mix top-tier talent with an unstoppable work ethic.”

“Talented teams of engineers create new products overnight,” he continued. “New grads orchestrate massive operational efforts so flawlessly that you wonder how that’s possible with so little work experience, and further wonder who had the foresight to entrust them with those enormous responsibilities.”

Finally, he concluded, “Tomorrow is a new day, full of opportunities.”