Basic data labeling tasks like tagging images and sorting text are becoming obsolete, said the CEO of a $2.2 billion AI training company.
“The days of companies labeling data are over,” Turing CEO Jonathan Siddharth said on Monday’s episode of the 20VC podcast.
“Data needs have changed a lot,” Siddharth said. Early models relied on annotators to tag images, classify text, and perform simple tasks that could be outsourced at scale. Today’s systems, such as agent models and reinforcement learning architectures, require more complex data, he added.
“It’s more real-world data, data that’s about how real humans do knowledge work,” Siddharth said, adding that major institutes would like to work with AI training companies that could be “active research partners.”
“This is the age of the research accelerator,” he says.
Siddharth said AI training companies need to focus on building reinforcement learning environments (simulated mini-worlds) that replicate human workflows across various industries.
To do that, Siddharth said, AI training companies need to hire human experts in various fields.
Turing announced in June that it had raised $111 million in Series E funding at a valuation of $2.2 billion. Earlier this year, the AI training company announced annual revenue of $300 million in 2024, nearly triple the previous year.
Rise of companies that label AI data
AI data labeling startups have garnered huge valuations over the past year.
In June, Meta acquired a 49% stake in Scale AI, valuing the company at more than $29 billion. Melkor announced in October that it had signed a funding deal that values the startup at $10 billion.
The AI training boom is also driving rapid growth in the freelance workforce. Business Insider reported in September that several freelancers and contractors said they were making thousands of dollars a month doing AI training work, although the work was precarious and unpredictable. Business Insider spoke to more than 60 data labelers about their experiences on the job.
The demand for AI training has also created an underground market for access to these platforms. Business Insider reported Monday that it discovered more than 100 Facebook groups selling unauthorized access to real and fake contractor accounts. Although reselling accounts is prohibited by AI training companies, scammers and opportunistic gig seekers are making money by taking advantage of the growing demand for AI training gigs.
