ScaleAI that lost its CEO to Mark Zuckerberg's Meta announces layoffs, cuts ties with some of its biggest customers; read memo to staff

ScaleAI, the artificial intelligence startup has announced significant layoffs weeks after Meta’s $14.3 billion investment and departure of CEO Alexandr Wang, who is now leading Meta’s Superintelligence Labs. The company has announced that the layoffs are part of strategic restructuring and will affect the employees of the Generative AI division. In a memo to the employees, the company has confirmed that it is laying off 200 full-time employees which accounts to 14% of its workforce. Along with this, it also has to let go of 500 global contractors. “We ramped up our GenAI capacity too quickly,” CEO Jason Droege wrote. “It created too many layers, excessive bureaucracy, and confusion about the team’s mission”.In a memo to the employees, CEO Jason Droege confirmed the layoffs. The company has revealed that the Generative AI division is reduced from 16 pods to 5. The affected employees were locked out of systems and slack channels before receiving severance details. Here is the full email from Scale AI's CEO Jason Droege to Scale AI's GenAI 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.Despite the layoffs the company insists it remains well-funded and plans to hire hundreds in the second half of 2025, targeting enterprise, public sector, and international markets.