Scale AI cuts 14% of workforce after Meta investment, hiring of founder Wang

Weeks aft Meta poured $14.3 cardinal into Scale AI and hired laminitis Alexandr Wang, the artificial quality startup is cutting 200 full-time employees, oregon 14% of its staff.

Scale AI's interim CEO Jason Droege, who took implicit for Wang, told employees successful a memo connected Wednesday that the startup ramped up its generative AI capableness "too quickly" and created excessively galore layers of "excessive bureaucracy." He said Scale AI remains a well-resourced and well-funded company.

"These changes volition marque america much nimble — enabling america to respond much rapidly to shifts successful the marketplace and lawsuit needs," Droege wrote successful the memo, which was viewed by CNBC. "This operation volition let america to amended service the customers we person contiguous and triumph backmost customers that person slowed down enactment with us."

Droege said Scale AI volition "significantly summation headcount" crossed its exertion concern units successful the 2nd fractional of the year, including wrong its enterprise, nationalist assemblage and planetary nationalist assemblage divisions.

Bloomberg was archetypal to study connected the fig of occupation cuts, which Scale AI confirmed to CNBC. 

Scale AI, founded successful 2016, is champion known for helping large tech companies similar OpenAI, Google and Microsoft hole information they usage to bid cutting-edge AI models. OpenAI has been winding down its enactment with Scale AI implicit the past year, and Google is besides reportedly cutting ties with Scale AI pursuing the company's woody with Meta, according to a study from Reuters.

Prior to the layoffs, Scale AI had a 1,400-person planetary workforce. Spokesperson Joe Osborne said affected employees person been provided severance. The institution is besides ending enactment with 500 contractors retired of thousands worldwide, helium said.

"We're streamlining our information concern to assistance america determination faster and present adjacent amended information solutions to our GenAI customers," Osborne told CNBC successful a statement. "We besides program to marque important investments and hiring crossed our endeavor and authorities AI businesses." 

Meta has been connected a multibillion-dollar AI hiring spree successful an effort to amended vie with rivals similar OpenAI. Meta CEO Mark Zuckerberg selected Wang to service arsenic the company's main AI officer, overseeing its caller enactment called Meta Superintelligence Labs. A tiny fig of Scale AI employees besides joined the company.

Droege wrote successful the memo connected Wednesday that, for the employees who are being laid off, "I privation to widen our deepest gratitude for their invaluable contributions and dedication to our company."

WATCH: What Meta’s Scale AI woody reveals astir the conflict for apical AI talent