Stability AI under pressure as senior staff leave

August 10, 2023

Stability AI

Stability AI, the company behind the Stable Diffusion image generator, is going through some turbulent times as senior executives leave the company.

When excitement around the company peaked it was able to attract skilled staff from big tech companies like Amazon, Adobe, and Google. As optimism faded and reports surrounding the credibility of its CEO surfaced, Stability AI saw the back of at least 6 top executives including its head of research and COO.

While reports have stated that key staff left Stability AI in late July, the company has inferred that the staff members were let go rather than leaving of their own volution. 

Stability CEO Emad Mostaque said, “Of course there’s churn,” and added that it was to be expected when there wasn’t a good “cultural fit” between the company and employees.

The “culture” of the company has apparently been strongly influenced by Mostauqe’s Blue Sky thinking and often outlandish claims

In June Forbes published an article based on interviews with current and former employees as well as investors. The article said that Mostaque lied about a number of things including his education, partnerships, and even the fact that Stable Diffusion wasn’t actually developed by Stability AI.

In late 2022, Stability AI was able to raise around $100 million as excitement grew around its Stability Diffusion generative AI model.

It has since valued itself at $4 billion but hasn’t managed to raise investment to match that valuation. The company says that it isn’t looking to raise funding at the moment.

One of Stability AI’s investors, Peter Diamandis, said, “It is difficult to raise money when you’ve got articles like Forbes coming out.” 

Someone else who is looking to get some money is Cyrus Hodes, co-founder of Stability. Hodes has filed a lawsuit agains Mostaque for apparently tricking him into selling his 15% stake in the company for $100.

He says Mostaque lied to him when he said the company was “essentially worthless” while secretly working on Stable Diffusion. Three months after selling his shares the company was valued at $1 billion.

Stability is also in a legal battle with Getty Images and some artists that claim the company stole their work to train its models.

Does Stability have a path to profitability?

One of Stability AI’s critical attractions to investors was its strategy of making its models open-source. This was an exciting direction to take in the face of proprietary models like those from OpenAI and Google.

But with Meta taking a similar approach, Stability AI’s offering has perhaps lost a little of its unicorn status.

Stability AI’s continued focus on building foundational AI models is what keeps potential investors interested in their offering. The company has also just announced its new product, StableCode, a neural network LLM that can write code.

Will it find a paying market for StableCode with Google having recently released its Project IDX AI coding product? It’s hard to say.

The list of research areas on Stability’s blog seems like they’ve got some interesting products in the pipeline and they’ve just released a Japanese LLM.

Mostaque doesn’t seem to be slowing down in communicating his Blue Sky ideas and making bold claims. It’ll be interesting to see if investors are willing to overlook his eccentricities and buy into his dreams.

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Eugene van der Watt

Eugene comes from an electronic engineering background and loves all things tech. When he takes a break from consuming AI news you'll find him at the snooker table.


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