Generative AI Stars Stability AI's Popular Text-to-Image Generation Model Stable Diffusion Required for Large-Scale GPU Clustering also seems to have contributed in part to the failure of former CEO Emad Mostaque - because he couldn't find a way to pay for those GPUs.
According to exhaustive reports citing company documents and dozens of people familiar with the matter, the British model-building company allegedlyVery highInfrastructure costs drained the company's cash reserves, leaving it with just $4 million as of last October.
Stability leases infrastructure from Amazon Web Services (AWS), Google Cloud Platform, and GPU-focused cloud operator CoreWeave, reportedly spending about $99 million a year. That doesn't include the cost of maintaining the AIStartups54 million in payroll and operating expenses needed to run the program.
Source Note: The image is generated by AI, and the image is authorized by Midjourney
What's more, it looks like a significant portion of the cloud resources paid for by Stability AI were made available to anyone outside of the companies interested in Stability's models. One outside researcher quoted in the report estimated that a now-canceled project had access to at least $2.5 million worth of computing resources over a four-month period.
Stability AI's infrastructure spending doesn't match revenue or new funding. The startup's 2023 sales are projected to be just $11 million. According to the report, Stability owes AWS $1 million on its July 2023 bill and has no intention of paying its $7 million August bill. Bills for Google Cloud and CoreWeave are also reportedly not fully paid, with debt to both companies amounting to $1.6 million as of October.
This failure was blamed on Mostaque's failure to develop and execute a viable business plan. The report also claimed that the company failed to close deals with clients such as Canva, NightCafe, Tome, and the Singapore government, which had considered customizing the model.Stability's worsening financial woes eroded investor trust and made it difficult for the generative AI company to raise additional capital. Mostaque reportedly hoped to secure $95 million in aid at the end of last year, but ended up with only $50 million from Intel. Only $20 million of that was allocated, a significant funding gap considering the processor giant plans to launch a 4,000 Gaudi2 accelerator-poweredsuperThe key customer for computers is Stability.
Intel's lower than expected underinvestment is notonlyA case of a failed fundraising effort. Mostaque reportedly pushed a fundraising plan in July 2023 that aimed to raise $50 million in cash and $75 million in computing facilities from companies like NVIDIA, Google and Intel.
Those plans quickly went bust, with reports that a meeting between Mostaque and NVIDIA CEO Jen-Hsun Huang ended in fiasco. As for Mostaque himself, he denied that any such meeting ever took place.
By the end of 2023, Lightspeed, a venture capital firm, allegedly raised the alarm when it realized that Stability's poor cash flow position had not been disclosed in advance. The VC firm also urged Stability's board to sell the troubled company. But despite reports that the AI developer was looking for a buyer, it ultimately did not sell.
By December, the startup moved to Stable Diffusion's commercial subscription model, with prices starting at $20 per month. Behind the scenes, however, Stability is said to be considering another revenue-boosting strategy: reselling its computing resources as a managed service.
The plan is apparently to resell Stability's GPU debt, which could bring in $139 million in 2024 - assuming doing so doesn't violate its contract with AWS. A similar plan is said to be in place to resell its GPU capacity at CoreWeave to venture capital firm Andreessen Horowitz.