AI data labeler Handshake buys Cleanlab, an acquisition target of multiple others

Handshake, a startup known for its AI data labeling services, has successfully acquired Cleanlab, a company specializing in data label auditing. This strategic move aims to enhance the quality of data provided to foundational AI model developers. Founded in 2013, Handshake initially focused on connecting college graduates with job opportunities. However, about a year ago, it pivoted towards human data labeling to support AI companies. Cleanlab, established in 2021, has developed innovative software that significantly improves the accuracy of data generated by human labelers. The acquisition is primarily an acqui-hire, bringing nine key personnel from Cleanlab into Handshake’s research division, including its co-founders—Curtis Northcutt, Jonas Mueller, and Anish Athalye—all of whom hold PhDs in computer science from MIT. The financial details of the deal were not disclosed, but acqui-hires often prove beneficial for founders in terms of compensation. Cleanlab has amassed $30 million in funding from prominent investors such as Menlo Ventures, TQ Ventures, Bain Capital Ventures, and Databricks Ventures. At its peak, the company employed over 30 staff members, who are recognized for their expertise in developing algorithms that can identify erroneous data without needing a secondary human review. Sahil Bhaiwala, Handshake’s chief strategy and innovation officer, emphasized the importance of data quality in AI, stating that their in-house research team is dedicated to identifying weaknesses in their models and improving the data they produce. He noted, "The Cleanlab team has been focusing on this problem for years." Northcutt, the CEO of Cleanlab, mentioned that their company attracted acquisition offers from multiple AI data labeling firms. Ultimately, they opted for Handshake because competitors like Mercor, Surge, and Scale AI often utilize Handshake’s platform to recruit experts in various fields for their labeling efforts. He remarked, "If you’re going to pick one, you should probably pick the source, not the middleman." Handshake was last valued at $3.3 billion in 2022 and is projected to achieve a revenue run rate of $300 million by the end of 2025, with expectations of reaching a high hundreds of millions in revenue this year. The company has collaborated with eight leading AI labs, including OpenAI, to provide essential data for their projects.