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Troubled AI vendor DataRobot hit by more layoffs

The layoffs come after the former CEO quit amid criticism that he and top execs dumped stock as the company's financial outlook dimmed. The AI vendor is now in downsizing mode.

Battered by a volatile economy and management turmoil, AI vendor DataRobot was hit again by layoffs, firing 26% of its staff in its biggest downsizing to date.

The layoffs came after former CEO Dan Wright quit in May in the wake of internal criticism that he and other top executives sold company stock when they knew sales were down and the company's immediate financial prospects were dim.

This downsizing round by the privately held company, based in Boston, followed layoffs in May and in 2020. It also capped a period of dramatic growth that saw the 2012 startup attain a $6.3 billion market valuation in 2021 and raise more than $1 billion since its founding due to strong demand for its AI tools and machine learning platform.

"Their investors are asking them to hunker down for a down economy," said R. "Ray" Wang, founder and analyst at Constellation Research. "They are missing sales numbers and trimming."

Their investors are asking them to hunker down for a down economy. They are missing sales numbers and trimming.
R. 'Ray' WangFounder and analyst, Constellation Research

Upheaval at the once promising vendor shattered employee morale. Some employees left of their own accord, including Ben Taylor, DataRobot's former chief AI evangelist, who resigned in protest in a fiery letter to employees alleging "immoral" behavior by some in upper management. Taylor joined DataRobot competitor Dataiku on Nov. 17 as the vendor's first chief AI strategist.

This week's layoffs, confirmed by DataRobot in a statement and first reported in The Information on Aug. 23, are part of a "broader organizational restructuring," interim CEO and board member Debanjan Saha said in a LinkedIn post Thursday.

"Today we said goodbye to valued teammates," Saha said in the post.

As for employees who voluntarily resigned, "I think folks just quit as they don't feel confident about where the company is going or they are early-stage employees looking to join the next startup," Wang said.

Before its most recent troubles, DataRobot was seen as one of the most innovative independent AI vendors -- one that could challenge the dominance of the tech giants.

DataRobot has pursued a strategy of growth by acquisition, buying smaller tech vendors and assimilating their technology. The company also branched out to vertical industries such as finance and healthcare with specialized AI cloud platforms.

But the vendor's fortunes began to swing downward after the coronavirus pandemic struck in 2019, despite a surge in July 2021 when it raised $300 million.

In a blog post earlier this month, Saha hinted at the layoffs to come, writing that the vendor had "taken steps to adapt to changing market dynamics and put in place more cost discipline."

Wang put it more bluntly: "Their investors are asking them to cut."

TechTarget Editorial enterprise AI news writer Esther Ajao contributed to this story.

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