Stability AI's CEO Emad Mostaque Resigns

Emad Mostaque, the CEO and co-founder of the prominent AI startup Stability AI, has resigned from his position and the company's board. The move comes amid reports of investor pressure, staff departures, and Mostaque's controversial statements.

Stability AI, best known for its popular image generation tool Stable Diffusion, announced the leadership change in a blog post late Friday. Chief Operating Officer Shan Shan Wong and Chief Technology Officer Christian Laforte will serve as interim co-CEOs while the company searches for a permanent replacement. The startup, valued at $1 billion in 2022, has been a key player in the generative AI boom, expanding into text and video AI features.

However, the company has recently faced challenges. Reports suggest that Stability AI explored selling itself as investors pressured management over its financial position. The startup, which was spending an estimated $8 million a month as of October 2023, had unsuccessfully attempted to raise new funding at a $4 billion valuation.

Mostaque, a colorful figure in the AI world, co-founded Stability AI in 2019 after various roles in hedge funds and crypto projects. He attracted controversy as CEO, with another co-founder, Cyrus Hodes, suing him and the company in 2023, alleging he was duped into selling his stake before a major fundraising round. Mostaque and Stability AI disputed the allegations.

The CEO has faced criticism for making grand statements about the company and his own background.

Over the last year, tensions escalated between Stability AI and some of its largest investors, with Coatue Management calling for Mostaque to step down. The startup also saw significant high-level turnover in recent months.

In a series of posts on X (formerly Twitter), Mostaque stated that he decided to step down to pursue decentralized AI, asserting that one can't beat "centralized AI" with more "centralized AI." He wrote, "The concentration of power in AI is bad for us all. I decided to step down to fix this at Stability & elsewhere."

Jim O'Shaughnessy, Chairman of the Board at Stability AI, thanked Mostaque for his leadership and commitment to the company and the open-source movement. "As we search for a permanent CEO, I have full confidence that Shan Shan Wong and Christian Laforte, in their roles as interim co-CEOs, will adeptly steer the company forward in developing and commercializing industry-leading generative AI products," he said in the company's announcement.

Stability AI's leadership change comes on the heels of another major shakeup in the AI industry this week. Inflection AI, a startup that had raised about $1.5 billion, announced that two of its co-founders and several staff members had joined Microsoft, which led the startup's most recent funding round.