On March 23, the AI image generation leader based in London, UKStability AI suddenly announced the resignation of its CEO Emad Mostaque.
Subsequently, Emad Mostaque announced on the social media platform X that he would devote himself to decentralized artificial intelligence (DecentralizedAI) after leaving his job.
Stability AI The company wrote in a blog post on its official website: Earlier today, Emad Mostaque resigned as CEO of the company and resigned from the company's board of directors to pursue decentralized artificial intelligence. The board of directors has appointed Shan Shan Wong, the company's chief operating officer, and Christian Laforte, chief technology officer, as interim co-CEOs of Stability AI. The company is actively looking for a permanent CEO. This leadership change marks an opportunity for Stability AI, the management team, the board of directors, and investors to work together to achieve a comprehensive vision for the company's next stage of growth.
News about CEO Emad Mostaque's departure was revealed as early as the end of last year.
At that time, foreign media reported that Stability AI was seeking to sell due to huge financial pressure, and CEO Emad Mostaque was also asked to resign by the company's important investor, US hedge fund Coatue.
Emad Mostaque’s statement on the social media platform X, “His shares in Stability AI account for the majority of the company’s voting rights, but he does not control the board of directors. The concentration of AI power is not good for everyone, so he decided to resign,” also seems to confirm the conflict between the board of directors and the management.
Became popular overnight
Stability AI is an AI image generatorStable DiffusionThe company behind it. In August 2022, the Stable Diffusion model was launched and quickly became popular for its amazing Wenshengtu ability.
Just days after the release of Stable Diffusion, Stability AI received $100 million in investment from Coatue and Lightspeed, with a company valuation of $1 billion.
Stability AI has always adopted an open source strategy. In May 2023, the company launched the Stable Animation SDK, a tool for generating 3D models based on text, similar to the previous Stable Diffusion model type, further enriching its technology product line. Subsequently, Stability AI announced the launch of the first official version 1.0 of Stable Diffusion XL, which further demonstrated its deep strength in the field of generative AI.
Not only that, Stability AI also announced an AI "small model" called Stable LM 2 1.6B in early 2024. The company calls this model "the most powerful small language AI model to date", showing its continued progress in the field of natural language processing.
On November 24, 2023, the company was selected into the "First Fortune Global 50 AI Innovators List". On April 18, 2023, the company was selected into the "2023 Hurun Global Unicorn List" with a corporate valuation of RMB 6.9 billion, ranking 1039th.
The big melon of "stealing credit" was exposed
Stability AI also faces challenges during its development.
According to a Forbes report last June, Stability AI has been slow to grow for most of 2023 and is facing the risk of bankruptcy. Although the company has tried to raise more funds, it has failed. Despite the $50 million in financing provided by Intel, Stability AI is still facing pressure from investors and has begun looking for potential acquirers.
What’s even more terrible is that Stability AI’s CEO Emad Mostaque was exposed in a big scandal regarding the ownership of the Stable Diffusion model.
According to Forbes, although Stable Diffusion is deeply bound to Stability AI, it is worth noting that the theoretical technical basis of the model, Latent Diffusion, comes from a 2021 paper jointly published by scholars from the University of Munich, Heidelberg University and researchers from AI video editing technology startup Runway, led by Professor Björn Ommer.
Stability AI provided computing resource support during the development of the Latent Diffusion model, but the model's development work was mainly completed by these academic institutions and companies.
Stability AI's CEO Emad Mostaque was accused of exaggerating the role of Stability AI in the development of Stable Diffusion through media publicity and other means, while obliterating the work of real researchers.
Previously, Professor Ommer's laboratory and Runway had stopped cooperating with Stability AI. It was also reported that a large number of core R&D personnel of Stability AI had resigned.
Lack of money
Like many AI startups, Stability AI is facing fierce competition and is burning a lot of money. It is in trouble because it can't make ends meet and can't raise new funds.
In terms of competition, in October last year, Stable Diffusion’s daily active users were revealed to have reached 10 million. As a direct competitor of Stable Diffusion, Midjourney’s active users exceeded 16.4 million as of November.
At the end of last year, foreign media revealed that the relationship between Stability AI and its investors had deteriorated because Stability AI adopted an open source strategy. While the company provided its models to customers for free, it was in trouble for how to obtain substantial revenue.
On the other hand, Midjourney has always adopted a membership payment model. Although Stability AI has also begun to try some membership payment models, the income is a drop in the bucket compared to the investment.
Judging from the income and expenditure data of Stability AI reported by the media, the company spends about US$8 million on costs and wages each month, but its revenue is only US$1.2 million, far less than the cost.
The dilemma facing Stability AI is becoming a reality for many AI startups. Ken Smythe, founder and CEO of New York venture capital firm Next Round Capital Partners, once predicted that 85% of AI startups will go bankrupt within three years, either because they are acquired by large companies or because they run out of funds.
After the concept of generative AI became popular, how to use big models to make money and survive has become an urgent problem that AI startups need to solve, even for star startups like Stability AI.