Snorkel AI, a Silicon Valley startup valued at $1.3 billion, has joined the growing list of artificial intelligence firms trimming staff amid an increasingly competitive and evolving industry landscape. The company, which emerged from Stanford University research and built its reputation by connecting AI labs with human expertise, confirmed that it laid off about 13% of its workforce this week.
According to the company, 31 out of roughly 240 employees were let go on Wednesday. The decision underscores both the opportunities and challenges facing AI infrastructure firms that sit at the intersection of cutting-edge research and the human labor required to refine it.
From Promising Growth to Strategic Refocus
Snorkel AI is one of several startups that has thrived on the back of the AI boom, positioning itself alongside names like Scale AI as a vital partner to tech giants racing to train and deploy new models. Its service centers on providing companies with access to human “experts” who assist in labeling and reviewing massive datasets, ensuring that machine learning models improve in accuracy and safety.
The company reached unicorn status earlier this year, securing a $100 million Series D funding round in May that pushed its valuation to $1.3 billion. High-profile partners such as Google and Anthropic appear on its roster, signaling the level of trust major AI players have placed in its platform. Yet, rapid growth often comes with difficult adjustments.
Snorkel AI explained that the layoffs were tied to a larger pivot toward its “data-as-a-service” business model. By shifting its focus in this direction, the company acknowledged that certain legacy operations were being deprioritized. “This unfortunately also means saying goodbye to some talented colleagues in these areas,” the company said in a statement. It added that while the decision was painful, the restructuring would allow Snorkel AI to concentrate resources where it could “have the greatest impact” and meet evolving customer needs more effectively.
Who Was Impacted
Internal documents reviewed in connection with the layoffs revealed that the cuts were unevenly distributed across teams. The hardest-hit group was the software engineering department, where 13 employees lost their jobs. Meanwhile, Snorkel AI largely spared its core AI teams. Of the 25 employees with “AI” in their job titles, only three were affected, and no applied AI engineers or research scientists were included in the reductions.
Senior leadership was not immune either. Departures included the global head of business development and the director of AI solutions engineering, signaling that the restructuring reached into the upper layers of the company’s organizational chart.
For Snorkel AI, these decisions seem designed to protect the roles most closely tied to AI research and customer-facing innovation while cutting back on areas considered less central to its future strategy.
The Bigger Picture: Strain Across the Data Labeling Sector
Snorkel AI’s move follows a trend of turbulence across the data labeling industry, which has become both indispensable and overstretched in the age of generative AI. The sector has long been characterized by heavy reliance on human gig workers — a paradox in an industry that aims to automate. While companies like Snorkel AI promised to streamline and automate data labeling, the relentless pace of AI development continues to demand vast human input, particularly for quality control and safety checks.
Scale AI, a better-known competitor, faced similar challenges earlier this year. In July, the company announced it was cutting 14% of its workforce along with 500 contractors. The layoffs came shortly after Meta acquired a 49% stake in the company and hired its CEO, moves that caused major clients, including Google, to withdraw. Scale AI admitted to overhiring during a period of intense growth and acknowledged that it remained unprofitable.
More recently, Scale AI cut additional contractors from a team tasked with probing AI systems for harmful outputs, raising questions about how sustainable the sector’s labor-heavy approach can be. Against this backdrop, Snorkel AI’s restructuring appears less an isolated event and more a symptom of a wider correction across the industry.
What Comes Next for Snorkel AI
While layoffs inevitably spark uncertainty, Snorkel AI remains well-capitalized and continues to position itself as a critical partner in AI development. Its pivot toward a “data-as-a-service” model signals an effort to move beyond basic data labeling toward a more integrated, recurring-revenue business. If successful, this could place Snorkel AI in a stronger position to weather the competitive and volatile AI services market.
The company emphasized that the layoffs were not a retreat from its mission but a refinement of focus. With global demand for AI systems still surging, Snorkel AI’s ability to balance human expertise with scalable services may determine whether it can convert its unicorn status into long-term stability.
As the AI sector matures, it’s becoming clear that data labeling and quality assurance — though less glamorous than model breakthroughs — remain essential. For companies like Snorkel AI, the challenge lies in navigating the fine line between growth and sustainability, all while ensuring that they continue to deliver the human oversight that underpins artificial intelligence’s rapid progress.
