DataRobot hits Troubled Waters

From fleeing executives to private selling of shares, the firm laid off 7% of its workforce
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Boston-based AI vendor DataRobot Inc., in May 2022, laid off 7% of its 1,400 workforce in a bid to cut company costs. Found in 2012, DataRobot is the world’s leading cloud leader that leverages AI to help customers turn data into value. Delivering over a trillion predictions for organisations worldwide, the company serves a third of the Fortune 50.

Addressing the layoffs, former CEO Dan Wright in an email to his employees, squarely blamed the company’s “extensive hiring strategy” and “changing market conditions” for the “difficult, but necessary” step. 

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An excerpt from the mail reads: “That level of investment is no longer sustainable for our business, particularly in the context of broader changes in the market, with investors now taking a harder look at efficiency and spending.” 

The first set of layoffs were conducted in 2020 due to the unpredictable economic situation driven by the pandemic. Although the firm had confirmed the layoff, it provided no information on the number of employees fired back then. 

Leader in AI and ML Platforms

Despite the current hurdles, the high-tech startup has been leading the AI space with its innovative services worldwide. DataRobot was named a leader in AI/ML platforms by Forrester Wave, receiving the highest score possible for overall performance and market approach within the strategy category.

The firm has continuously expanded its leading AI functionalities through transformational data science initiatives, making AI a competitive advantage. The report stated DataRobot’s rise from a niche automated machine learning (AutoML) player to a full-lifecycle AI platform through a combination of strategic acquisitions and organic hard work. 

As of April 2019, around 1 billion models have been built on the DataRobot AI Cloud platform. It was built as a comprehensive solution to unify industry-tailored AI capabilities and delivery for major industries, such as manufacturing, healthcare and retail organisations. The platform invented automated machine learning to automate tasks needed to develop AI and machine learning applications. 

Erin Sullivan, executive director at Steward Health Care, who built models on DataRobot Cloud to improve staffing at eight of their 36 hospitals, said, “We have data – a lot of data – and we want to use it to our advantage.” She says that the platform offers tools that help with taking historical data and manipulating it for business growth.

Turbulence in senior management

After the company prepared for the second round of layoffs, four senior executives decided to step down. The departing ones include CFO Damon Fletcher and chief go-to-market officer Tom Levey. They actively sold private shares, with the other two being chief product officer Nenshad Bardoliwalla and chief people officer Elise Leung Cole. 

With the latest rounds of layoffs and resignation, the leadership remains on shaky ground as of now. However, DataRobot’s AI strategist Ben Taylor was spotted partying at luxurious destinations, inviting criticism, barely hours after the firm decided to bid goodbye to its employees. 

Tweeting about the issue, Kevin McLaughlin, a reporter at The Information, said, “DataRobot has spent several million dollars on these events and its marketing partnership with McLaren Racing. In the all-hands today, Wright explained the contracts for these initiatives were signed last year with funding already committed.” 

Source: Twitter

The firm’s top five senior executives sold about $32 million worth of shares to investors, as the company’s private valuation peaked at $6.3 billion. Around 1,200 other employees who had worked at DataRobot for over a decade were left with no chance to sell their shares. 

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Between the internal turmoil of shares and layoffs, Wright stepped down from his role, appointing Debanjan Saha as the interim CEO. After his 17-month tenure at DataRobot, Wright decided to serve in an advisory role helping with the company’s growth.  

Source: LinkedIn

To make matters worse for the company, several female employees lodged complaints against male executives in the firm after co-founder and former CEO Jeremy Achin’s departure in 2021. They alleged sexist comments, favouring male employees for promotion, and threatening to fire the women who confronted the management. 

Battling unfavourable tides of late, the company had once paved the way in the space of AI, accelerating its delivery around the world. In July 2021, DataRobot drew $300 million in a Series G financing, with an overall value of $6.3 billion, more than twice the round in 2020. It has been a pioneer in offering tools for data scientists, who require the ability to manually customise the AI they’re building. As unsettling as it may seem, the churn of executives is certain to impact the whole industry, leaving an unfilled gap. 

Taking control of things, however, Debanjan Saha, interim CEO, DataRobot, highlighted how the company plans to reorganise and focus on innovation and delivering value for its long-term sustainable growth. Highlighting the need to take steps to adapt to changing market dynamics, including the workforce reduction in May, he says, “Like many of our peers in the tech industry, we rapidly expanded our go-to-market and business operations last year in preparation for an IPO. Clearly, market realities are very different today.” 

Source: LinkedIn

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Bhuvana Kamath
I am fascinated by technology and AI’s implementation in today’s dynamic world. Being a technophile, I am keen on exploring the ever-evolving trends around applied science and innovation.

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