Today I have to announce the hardest change I’ve ever had to make at Scale. I have made the difficult decision to reduce the size of our team by 20%, which means saying goodbye to many talented Scaliens. If you are among those impacted, you will be contacted shortly with further details via your personal email as well as offered time for a 1:1 conversation with a manager today.

This was not a decision made lightly, and it’s one of many steps we are taking in order to ensure Scale is operating responsibly for the long-term health and success of the business.

I know that this is tough news for everyone, especially those impacted, and you likely have many questions, the most pressing of which I aim to answer for you now: How did we get here?
I take full responsibility for the decisions that have led us to this point. Over the past several years, interest from enterprises and governments in AI has grown rapidly. As a result, I made the decision to grow the team aggressively in order to take advantage of what I thought was our new normal.

For a time, this seemed to prove out—we saw strong sales growth through 2021 and 2022. As a result, we increased headcount assuming the massive growth would continue. However, the macro environment has changed dramatically in recent quarters, which is something I failed to predict. Many of the industries we serve, such as e-commerce and consumer technology, have been buoyed by the pandemic and are now experiencing a painful market correction. As a result, we need to prepare ourselves for a very different economic environment.

Given the uncertainty many of the industries we serve face, when I re-assessed our investment level against these market realities, it became clear that we needed to realign our investment to adjust to this new environment. While many other companies have made similarly difficult decisions recently, we spent months looking for ways to avoid it, but unfortunately we came to the conclusion that we needed to make these changes as well. How are departing employees being supported?
We want to be as respectful and supportive through this transition as possible. Some of the core details include:

Severance pay: We will pay the equivalent of at least 8 weeks of severance for departing Scaliens, with additional severance for those with longer tenure.

Healthcare: We’ll pay the cash equivalent of 3 months of existing healthcare premiums for U.S. Scaliens.

Equity: For those with equity, we’re waiving the 1-year equity cliff for Scaliens with less than 1 year of tenure. We will also offer a 3-year exercise window for Scaliens with less than 2 years of tenure.

Additional support: We’ll do our best to connect departing Scaliens with other companies and offer resume reviews with our recruiting leads. We will also provide immigration support for Scaliens on visas that require continued employment.

What other changes are we making?
We have looked across the company at ways to reduce spend and preserve as many roles as possible. As part of planning we have set significant operating expense reduction goals for each function, adjusted our hiring targets, and are re-assessing any new offices. We need everyone to do their part to stay cost-conscious and efficient when it comes to spending throughout the year.

What does this mean for Scale’s future?
While these changes are painful, Scale continues to be well-positioned within the undeniably consequential AI industry. Our technology has made massive strides in 2022, and the promise for AI to impact every industry has never been greater. At the same time, the core tenet upon which Scale was founded—that powerful AI systems are dependent on high quality data—still remains true. Each of the big AI breakthroughs (ChatGPT, GPT-3, DALL-E) have been made possible through extensive data collection and annotation infrastructure. The importance of our work will only magnify as our customers look to build AI systems that are more reliable, accurate, and powerful.

It has never been clearer that AI will transform every industry. Our national security work with the US and allied governments in building AI capabilities is critical, and we don’t expect that criticality to waver. We believe automation and AI will become a core focus area in this new environment. These themes continue to play out in the data we see—our growth rates are strong, we’ve seen tremendous early adoption of our newly launched Generative AI products, and our customers are continuing to see impactful results leveraging AI.

In the week ahead, we’ll share more on our strategy for this year and beyond, and how our remaining team and streamlined operations will help achieve this.

In the meantime, I want to extend my gratitude to every single Scalien who is leaving us today. Your contributions have helped move the world of AI forward.