Domestic Spanish course platform Domestika has entered a new phase of reductions after receiving a significant investment more than a year ago. In a marked downsizing, the company let go of 89 employees, impacting nearly half of a recent staff reduction process.
These layoffs build on earlier cuts from the previous year, when about 70 positions were eliminated, including 150 in Spain, according to workers on the ground. The mass dismissals occurred without an employment regulation file, prompting about thirty affected staff to join a single lawsuit seeking annulment. A settlement was reached during the subsequent act agreed by both sides.
At that period Domestika employed roughly 800 people globally, with 369 in Spain at the end of 2021. The company rents staff in Spain through two entities, DMTSK and Estudios de Grabación Digital. The latest ERE targets the first entity, which currently lists around 200 workers in the country.
Beyond the initial rounds, Domestika signaled a strategic pullback from external markets, first in Europe and then in the United States, Mexico, Colombia, Argentina and Brazil. Insiders describe a shift from unicorn status and broad international presence to a more localized footprint in Spain. After landing a funding milestone of a hundred million, and despite the pandemic-era online education surge, Domestika reached a valuation of about 1.3 billion dollars and joined the club of multibillion-dollar unicorns in the Spanish market.
The ERE marks more than a year of workforce tightening at the company. Meanwhile, demand for online courses cooled in the post-pandemic period, and venture funding for tech startups tightened amid rising interest rates and broader economic uncertainty. Data from Crunchbase show a 53% worldwide drop in the first quarter of 2023.
And yet, some attribute the layoffs to artificial intelligence developments.
How much does ChatGPT have to do with it?
Several outlets reported that Domestika planned to fire around half its staff while ChatGPT, an AI tool capable of producing well-structured essays, was gaining attention. Journalists described this moment as one of the early signs that AI could disrupt business models—though the situation is more nuanced, as insiders explain.
According to workers at La Vanguardia, 22 of the affected staff are interpreters whose duties could be automated, while nine are content creators who would lose work if automated text generation tools take over. In this view, ChatGPT would affect roughly a tenth of the employees facing layoff.
Sources describe the company’s messaging as emphasizing efficiency and versatility. They note that the marketing head, Daniel Villegas, began using AI to draft material and asked editors to polish and upload it, a process that was already underway when the initial rounds of layoffs hit the content team.
In April 2022, ChatGPT was not publicly available nor widely discussed in AI circles, and Domestika had already begun layoffs of content specialists. A large team once stood at around 30-40 people, with staffing levels near full capacity; the wave of layoffs and the arrival of new leadership shifted the content strategy toward a broader plan.
The public release of an AI chat in November of the previous year coincided with the entrance of a new marketing head. Officials say ChatGPT was not the root cause but a contributing factor, enabling more content to be produced and distributed quickly.
When asked about the relationship between performance and AI, CEO Julio Cotorruelo emphasized that no direct link had been established and that the company would not speculate on the exact cause. People familiar with internal discussions remember a video call where the company’s prospects were described with a Titanic metaphor, signaling a looming obstacle rather than a mere AI issue.
“It has nothing to do with artificial intelligence,” these observers insist. “It reflects the company’s broader situation.”
Beyond the uncertainty created by year-long layoffs and market retrenchment, staff worry about the production schedule for course creation, which ends in July. One employee notes that the plan is unusually long and organized, typically spanning nine months, and there are signs that production activities have slowed or paused.
Rumors circulate that Domestika could be seeking a buyer, with Skillshare mentioned as a potential bidder in the U.S. market. However, CEO Cotorruelo strongly denied any ongoing talks to sell the company.
In a July interview, Cotorruelo suggested that investor funds had moved from growth to profitability, implying that future reinvestment would depend on sustained profitability or tighter spending. The company’s global results remain publicly inaccessible due to its multi-country structure.
Will Domestika fire 89 people to rely on ChatGPT? The company argues the layoffs are a broader consequence of the market and internal needs, not a straightforward substitution by AI. Observers say the same: the AI angle is part of a larger narrative about a company reassessing its path amid shifting market dynamics.