Snorkel AI, a venture-backed enterprise emerging from Stanford University that has grown into a unicorn with a valuation of $1.3 billion, confirmed this week that it has undertaken a significant workforce reduction, dismissing approximately 13% of its staff. The company, which has carved out a distinctive place within the artificial intelligence ecosystem by bridging the work of machine learning enterprises with the nuanced insights of human subject matter specialists, disclosed the cuts to Business Insider. This move places Snorkel within a broader industry trend that has swept across AI startups specializing in data labeling, curation, and training services.
The firm’s trajectory has been closely linked to the rise of other rapidly expanding ventures such as Scale AI, which likewise provide vital human-in-the-loop services to technology companies racing to refine their increasingly complex models. Based in the innovation hub of Silicon Valley, Snorkel AI has presented itself as a central player in this sector. Earlier this year, in May, it announced the completion of a substantial $100 million Series D funding round, an investment that propelled its valuation to the $1.3 billion mark and aligned the company more firmly with elite partners, including household names such as Google and Anthropic. Despite these achievements, 31 of Snorkel’s approximately 240 employees were dismissed on Wednesday, underlining how even well-capitalized startups must continuously recalibrate their operational priorities.
The leadership at Snorkel attributed the layoffs to a deliberate organizational pivot, explaining that the company is redirecting its strategic attention toward what it describes as its “data-as-a-service” model. This new emphasis entails a gradual deprioritization of some legacy business lines that, while important in the company’s early stages, no longer align as closely with its evolving vision. Given this change in focus, the company admitted that parting with certain employees—talented individuals whose work had once formed the backbone of these earlier initiatives—was regrettably unavoidable. In its official statement, Snorkel stressed its gratitude for the contributions of the departing staff and assured that measures were being taken to support them during the transition process. The company emphasized that this restructuring would allow it to concentrate resources on areas where it could deliver the most substantial value to customers in an increasingly competitive market.
Founded only a few years ago, Snorkel formally launched to the public in 2020 with an ambitious promise: to streamline and partially automate the costly process of labeling datasets, a task traditionally requiring vast amounts of manual labor. Such labeling is crucial to the functioning of AI systems, given that these models depend on carefully annotated datasets for effective training. As competition accelerates among AI laboratories striving to release ever more advanced models, demand for high-quality labeled data, coupled with expert review, has skyrocketed. Snorkel sought to fill this niche by presenting itself as a solution that combines automation with expert human guidance. While the recent layoffs sound a discordant note, documents reviewed by Business Insider suggest that the company largely safeguarded roles most closely tied to its AI-driven mission. Specifically, the data indicates that positions directly identified with applied AI engineering and scientific research were largely protected.
At a more granular level, however, the restructuring disproportionately impacted software engineering teams. Thirteen individuals from that group were dismissed, more than any other discipline within the company. By contrast, employees carrying titles that reflected direct engagement with AI research and application—25 in total—were mostly retained, with only three subject to termination. This distinction underscores the company’s effort to preserve its technical core while trimming parts of the organization it perceives as less immediately aligned with its long-term competitive strategy. Notably, though, the layoffs were not confined solely to junior positions; even senior leadership was affected. Among those departing were the firm’s global head of business development and its director of AI solutions engineering, suggesting the adjustments reached across different levels of hierarchy and influence.
This downsizing must also be interpreted within the wider context of turbulence in the data-labeling sector. Snorkel is not alone in revising its workforce; notably, Scale AI—a highly visible competitor and one of the dominant players in the field—implemented broad cuts earlier this year. In July, Scale AI announced the dismissal of 14% of its direct staff, amounting to roughly 500 people, as well as a sizeable group of contractors. That decision coincided with structural changes within the company, including Meta’s purchase of nearly half of the business and the recruitment of Scale’s chief executive by the social media giant. These developments destabilized relationships with several significant customers, among them Google, who chose to re-evaluate their partnerships. In defense of its actions, Scale AI cited overexpansion and market headwinds, admitting simultaneously that it was operating without profitability. Further reductions followed in the months thereafter, including the termination of contractors engaged in particularly sensitive tasks such as probing AI systems for potential risks and harms.
Taken together, these developments illustrate the precarious balance AI startups must navigate. Even well-funded firms riding the peak of industry enthusiasm are compelled to adapt quickly to economic uncertainty, heightened competition, and shifting client expectations. Snorkel AI’s latest restructuring is, therefore, less an anomaly and more a reflection of larger systemic waves coursing through the AI landscape—waves that reward agility and careful prioritization, while punishing excess expansion or reliance on outdated operational models.
Sourse: https://www.businessinsider.com/snorkel-ai-layoffs-silicon-valley-unicorn-cuts-workforce-2025-9
