# Mercor followed demand signals into AI data work

Markdown copy of https://realalpha.app/s/mercor-followed-demand-signals-into-ai-data-work/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [Brendan Foody](https://realalpha.app/builders/brendan-foody/) · Brendan Foody is co-founder and CEO of Mercor. · Co-founded Mercor, a labor marketplace supplying AI companies with expert data, paying tens of millions weekly.
- Host: Jordan Segall · Partner, Redpoint
- Show: Unsupervised Learning
- Episode: [Mercor CEO: Evals Will Replace Knowledge Work, AI x Hiring Today & the Future of Data Labeling](https://realalpha.app/v/SOZtz8IdI2w/), Jun 4, 2025
- Moment: 18:55 to 23:08 of the episode (4 min), playing on https://realalpha.app/s/mercor-followed-demand-signals-into-ai-data-work/; the episode from there: https://realalpha.app/v/SOZtz8IdI2w/?t=1135

## Quote

> “you need to just look for the **signs of the market**, where it's like, wow, there's like gold to be found”
> — [Brendan Foody](https://realalpha.app/builders/brendan-foody/) at [22:31](https://realalpha.app/v/SOZtz8IdI2w/?t=1351) · Unsupervised Learning

## Takeaways

1. A focused wedge can help a marketplace build network effects.
2. Mercor plans to expand from data work into broader hiring.
3. Follow urgent customer demand instead of forcing product-market fit.

## About this segment

Brendan Foody lays out Mercor’s path from data work to broader contractor and full-time hiring, then recalls how an early xAI meeting revealed a new market. His lesson: follow strong customer pain rather than force a market.

From “Mercor CEO: Evals Will Replace Knowledge Work, AI x Hiring Today & the Future of Data Labeling”, Jun 4, 2025. [Watch the full episode](https://realalpha.app/v/SOZtz8IdI2w/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[19:01](https://realalpha.app/v/SOZtz8IdI2w/?t=1141) I'd love to just hear you riff a little bit on, like, what's the sequencing of the company look like from here toward that vision? Yeah, well, I wrote our, like, secret master plan that goes over this a little bit. But the way I think about it is we have, like, the reason that marketplaces are generally hard to build is that they're very network effect intensive. And so the thing that makes them defensible also makes them hard to build.

[19:20](https://realalpha.app/v/SOZtz8IdI2w/?t=1160) And so it's important right now that we're very focused on drilling this wedge of huge amounts of demand that we have to expand the network effects, grow the marketplace, and focus on that right now. But then we're also starting to see a lot of demand for hiring high volumes of contractors from our existing customers at big tech companies, where they might need hundreds of data scientists or software engineers or whatever the role is for a particular domain outside of human data, which is really the exact same kind of request.

[19:49](https://realalpha.app/v/SOZtz8IdI2w/?t=1189) It's just a little bit more of a legacy market where you'd be going up against like the Accentures or Deloitte's of the world historically. And so leaning into that as like the second main focus and then expanding to all sorts of full-time hiring. But one of the key things is that like the lifetime of the business, we've been doing all of these, like even the first year of the business had nothing to do with human data.

[20:09](https://realalpha.app/v/SOZtz8IdI2w/?t=1209) It was just like hiring. contractors for our friends and for ourselves, many of which became full-time employees. And so it's much more continuous. And there's a lot of things that unify them and that we know that all companies want more candidates. They want to be able to hire them more quickly, and they want confidence that they'll perform well. And so if we just measure those things and improve them over time, that'll position us for every stage of the business.

[20:33](https://realalpha.app/v/SOZtz8IdI2w/?t=1233) Yeah. Was there a moment that it was obvious to you to lean into the human data side? It was just so abundantly clear, this is where to... Yeah, I remember it was while I was still in college. So I mean, the background of the business is I met my co-founders when we were 14 in high school. We were all this featured debate team together. They were like winning all the tournaments that I wasn't as good as them, but I was building companies. And then we started hiring people internationally at the IITs in India. Like we partnered with IT Krogpors Code Club. And we were amazed that there were these smart people, as you're mentioning, that weren't getting jobs. And we felt like we could hire them to build projects. Our friends wanted to pay us to hire them. We could take a small fee.

[21:08](https://realalpha.app/v/SOZtz8IdI2w/?t=1268) So we hustled a lot, bootstrapped that to a million dollar revenue run rate. We'd profited 80K after paying ourselves before dropping out, which I was like very proud of. But the parents still weren't satisfied with that, of course, until we fundraised money. But to your question, in August of 2023, one of our customers intro'd us to the co-founders of XAI while they were still working on the Tesla office.

[21:28](https://realalpha.app/v/SOZtz8IdI2w/?t=1288) And he said, Mercore has these really smart engineers in India that are phenomenal, like math and coding. And then like the XAI co-founder the next day got or one of them or two of them got on a call with me and our team and we're just like really excited. And then two days later, they had us into the Tesla office to meet with the entire XAI co-founding team, except for Elon. It was right before one of their meetings with Elon.

[21:53](https://realalpha.app/v/SOZtz8IdI2w/?t=1313) We were still in college, right? Like, this is insane. And we were just like, wow, why do they want what we've built so badly? And it's because there was this change that was happening so fast in the market that no one else had realized yet, right? And now, of course, we've scaled that up and are talking about it because we have critical mass of the market share. But that was the point. But they weren't ready for human data yet.

[22:21](https://realalpha.app/v/SOZtz8IdI2w/?t=1341) And so it wasn't until, call it like six months later, that we started working with a lot of the frontier labs and really scaling up the business. You could see the tidal wave coming. Yeah, yeah. I think like, one thing I've realized over time in founders looking for product market fit is that people try to force things too much sometimes. It's like, you need to just look for the signs of the market, where it's like, wow, there's like gold to be found and just like, drill after that. And because like, if it's hard to get like an initial sale, then it's going to be hard to scale up the process.

[22:52](https://realalpha.app/v/SOZtz8IdI2w/?t=1372) You need to rather, like, look at, like, what are the, like, the really strong pain points where the wealthiest companies will pay whatever it takes, right? And just, like, sniff those out and then lean into them.