The information describes the AI startup Mercor, which achieved a $10 billion valuation by employing tens of thousands of low-pay white-collar contractors to train AI models. The statement also raises a broader critique about wealth inequality within the AI industry, suggesting that the industry's most vital work is done by low-paid laborers while a few executives, like OpenAI's Sam Altman, accumulate massive fortunes.
Mercor's business model and valuation
Pivot to AI training: Founded in 2023 as an AI recruiting firm, Mercor pivoted in 2025 to focus on providing expert human feedback for AI model training.
$10 billion valuation: In October 2025, Mercor secured a funding round that valued the company at $10 billion, a fivefold increase from its February 2025 valuation of $2 billion.
High-demand services: Mercor provides expert human feedback, or "human-in-the-loop evaluation," which is considered mission-critical infrastructure for training advanced AI models.
Customers and scale: The company's clients include major AI labs like OpenAI and Anthropic. It manages a network of over 30,000 contractors, paying out over $1.5 million daily (50 dollars a day per worker. That is a joke.)
“Mercor, a startup that has become a critical component in the ecosystem improving top AI models, finalized a new funding deal that would value the company at $10 billion, people familiar with the matter said.
That is five times the value the company had in February before it pivoted to one of the more lucrative arenas in the artificial-intelligence boom: hiring thousands of white-collar professionals to train the very machines that could one day replace and augment their work.
Mercor, which counts OpenAI and Anthropic among its customers, is set to raise $350 million, the people said. Co-founded in 2023 by three college dropouts, Mercor manages 30,000 contractors around the world who label images, write sentences and provide expert feedback to help AI chatbots learn how to think and speak like humans.
Its rapid rise underscores the AI frenzy gripping venture-capital firms, where investors are eager to offer funding to founders at sky-high valuations because of fear of missing out on the next AI tech giant.
Menlo Park, Calif.-based venture firm Felicis, which led Mercor's last funding round, will lead this one as well, some of the people said. Existing investors like Benchmark and General Catalyst will also participate.
Brendan Foody, 22 years old, Mercor's chief executive, met his two other co-founders, Adarsh Hiremath and Surya Midha, while in high school in the Bay Area. Hiremath is the chief technology officer at Mercor, while Midha this month said he was transitioning from chief operating officer to chairman. All three co-founders dropped out a few years into college to start Mercor. Soon after leaving school, they became Thiel Fellows, a program created by venture investor Peter Thiel that funds companies started by college dropouts.
Mercor initially started as a human resources and recruiting startup. It used AI to automate resume screening, match candidates with the best role and screen candidates. It mostly focused on technical jobs, ranging from software engineers to mathematicians.
As part of this work, the company inadvertently compiled a mass network of specialized workers that the biggest AI companies have become eager to tap to train increasingly sophisticated chatbots and keep up in the AI race.
As AI companies sought to improve their models, Mercor quickly scaled up to hire contractors who could evaluate the quality of chatbot answers.
To meet the needs of AI companies, Mercor began expanding its network of contractors to include lawyers, doctors, bankers and journalists. To support this strategy shift, Mercor recruited Uber's former chief product officer, Sundeep Jain, as its first president in May.
The value of its network came into focus after Meta Platforms in June paid $14 billion for a 49% stake in Scale AI, one of the most well-known data-labeling startups. That pushed Scale's valuation to an astounding $29 billion. As part of the deal, the company's co-founder and CEO, Alexandr Wang, moved to the social-media giant to help lead its AI efforts.
Some of Scale's customers and competitors raised concerns about the startup's ability to remain neutral and protect customer data after Meta's investment. As a result, the deal became a major boon for rival Mercor: Its revenue has quadrupled since Meta invested in Scale, according to some of the people familiar with its business.
The war for talent and business among data-labeling startups reached a fever pitch last month when Scale sued Mercor, alleging the company stole trade secrets. It also sued a former Scale employee, who had left to work for Mercor.
A spokeswoman for Mercor said the company would let the case play out through the legal process.
Doctors can now moonlight as data labelers, earning $170 an hour and working a minimum of 20 hours a week in a six-week contract. Tasks include evaluating medical-related answers from AI and reviewing AI-generated medical studies, according to a contract listing posted by the company.” [1]
1. Startup Key to AI Achieves $10 Billion Valuation. Au-Yeung, Angel. Wall Street Journal, Eastern edition; New York, N.Y.. 28 Oct 2025: B1.
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