Stability AI’s Emad Mostaque is out following an investor mutiny and staff exodus that left the one-time tech darling in turmoil

Stability AI Chief Executive Officer Emad Mostaque has resigned from the British artificial intelligence startup — a move that follows quarrels with investors and waves of senior staff departures. 

Chief Operating Officer Shan Shan Wong and Chief Technology Officer Christian Laforte will serve as interim co-CEOs, the startup said in a blog post late Friday. Mostaque is also leaving the company’s board. 

In a post on X, Mostaque wrote that he made the decision to resign, and that he would focus on solving the problem of the concentration of power in AI. 

Stability is best known for Stable Diffusion, a popular image generation tool that helped kick off tech’s current AI frenzy. The startup has also expanded into generative AI features for text and video. An early hit with investors, Stability was valued at $1 billion in 2022.

More recently, the startup has hit roadblocks. Bloomberg reported that Stability had explored selling itself as investors pressured management over its financial position. The startup had presented itself as an acquisition target in the fall, and held early-stage deal conversations with multiple companies, according to people familiar with the matter. Stability also saw significant high-level turnover in the last year. 

Mostaque, a larger-than-life presence in the AI world, co-founded the startup in 2019 after various roles at hedge funds and crypto projects. In the following years, he attracted considerable controversy as CEO. Another co-founder, Cyrus Hodes, sued Mostaque and Stability in 2023. Hodes alleged that he was duped into selling his stake in the startup months before a major fundraising round. Mostaque and the company disputed the allegations.

The CEO also attracted criticism for at times grand statements, speaking about the company or his own track record in a manner that could stretch belief. For example, multiple people interviewed by Bloomberg News last year said the CEO told them that he once worked as a secret agent for the UK government.

Reached for comment about his resignation via text message, Mostaque joked, “I have returned to being a secret agent,” adding a shushing emoji.  

Tensions escalated last year between Stability AI and some of its largest investors, rising to a point where Coatue Management called for Mostaque to step down in a letter to management, Bloomberg reported. Meanwhile, several more senior staffers have continued to leave the company in recent months. 

Stability AI has been a recognizable player in the generative AI world, a technology that has enchanted audiences with the ability to create images and text based on just a few words of prompting. Stable Diffusion is popular for its photo-realistic images, and is a competitor to OpenAI’s Dall-E image tool. 

Yet while such products have gained popularity, they’ve also prompted skittishness, particularly as the 2024 election season heats up. Convincing computer-generated images of everything from Pope Francis in a puffer jacket to former President Donald Trump fleeing FBI agents have stoked concerns about AI’s role in the proliferation of deepfakes.

Source: Fortune