Mercor, the $10 billion San Francisco-based AI data vendor, eliminated at least 50 full-time employees across several teams last week, people close to the company tell Gazetteer SF.
These people, all of whom spoke to Gazetteer anonymously to avoid legal retaliation from Mercor, said the cuts affected the engineering, product, and cybersecurity teams, plus possibly others. The cuts impacted salaried employees as well as full-time contractors in both the US and India.
“Mercor is growing faster than ever, which requires us to hold a very high bar for every role. As a result, less than 5% of the company left last week,” said Mercor spokesperson Heidi Hagberg in a statement to Gazetteer. “Mercor is profitable, and we’re still hiring across nearly every function.”
Before the cuts, Mercor’s global headcount hovered somewhere around 650 people, insiders said. Hagberg did not respond to Gazetteer’s request for confirmation of this figure or the total number of employees laid off last week.
Some of the impacted employees are still in the dark about why they were fired. On Thursday and Friday, the now-former employees received a two-sentence email informing them they had been terminated and directing them to email HR if they had any questions. The email, obtained by Gazetteer, did not include any reasons for the termination.
In addition to the email, Mercor scheduled face-to-face meetings with the now-former employees to discuss their termination, although some former employees said the reason behind the decision remained unclear to them. Many were escorted out of the office by security immediately following their meetings.
On Friday night, a software engineer named Pranav Patil posted on X about the cuts, saying the “layoffs” were due to “budget issues,” specifically that the company was spending too much money on large language models. Patil attributed the gossip to “friends at the company.”
The next morning, Mercor CEO Brendan Foody responded publicly to Patil on X, writing, “It wasn’t a layoff and had nothing to do with costs. We’re profitable, have $1B+ in cash, are growing faster than ever, and are hiring… The word layoff is inaccurate.”
In August, Mercor hired Temi Soleye as its new head of people. At an all-hands meeting where Foody introduced Soleye, whose career includes a seven-year tenure leading organizational strategy and culture at Palantir, Foody said that Mercor will become “talent obsessed,” according to one person present at the meeting. In September, Soleye posted on LinkedIn that her role at Mercor will focus, in part, on “keep[ing] the talent bar high.”
Mercor sources who spoke with Gazetteer were unsure if this sort of language was foreshadowing performance-based cuts, but one person noted that at least one of the engineers who was fired was considered by colleagues to be “a top performer.” Another former employee who was let go last week had recently been given a raise.
At a company all-hands meeting at Mercor’s headquarters on Fremont Street yesterday, Soleye spoke to the remaining employees. People familiar with the meeting said Soleye did not directly address the layoffs.
Founded in 2023 by Foody, Adarsh Hiremath, and Surya Midha, Mercor is one of the tech industry’s leading vendors of what is known as “human data.” Mercor contracts massive fleets of knowledge workers — lawyers, teachers, scientists, and so on — to label data for major AI firms like OpenAI and Google, which use it to train AI models. These gig workers are contracted by Mercor on a project-by-project basis, distinct from the non-salaried contract workers employed on Mercor’s internal teams. The gig workers were not part of the cuts.
Last year, the company announced a $10 billion valuation following a $350 million funding round, famously making Mercor’s three then-22-year-old co-founders the world’s youngest billionaires.
This summer, the company was reportedly in talks to raise its next funding round at a $20 billion valuation, Bloomberg reported in July.
Mercor has previously sold data to OpenAI, Anthropic, Google, and Meta, although the latter paused its contract with Mercor indefinitely after the startup suffered a major data breach. Mercor is currently facing at least seven class action lawsuits related to the breach.
In May, Gazetteer published an investigation into Mercor in which several former employees described a grueling and cutthroat culture inside the company. At the time, one former employee claimed Mercor’s “culture of speed over security” was as much to blame for the attack as the hacked gateway.
In that piece, a source noted that Mercor executives would frequently fire employees with no notice or severance.
The employees let go last week are set to receive severance, sources told Gazetteer.
