Stability.ai gets new CEO and investment dream team to start rescue mission

Troubled Stable Diffusion maker Stability.ai has finally named a new CEO as part of a turnaround plan that will see new investment and a star-studded cast of billionaire investors join its board.

The new CEO is Prem Akkaraju, who stepped down from his post as CEO of famous digital effects company Weta Digital (now Weta FX) in May 2022.  

But somebody clearly believes in Stability.ai. Joining the board will be Sean Parker, co-founder of MP3 music icon Napster. He was also Facebook’s first president, a role in which he was portrayed by Justin Timberlake in the 2010 movie, The Social Network.

Also on the new roster is industry veteran Eric Schmidt (known for various roles at Google including being its CEO, and before that as CEO of networking pioneer Novell), and experienced investor Robert Nelsen.

The investor group comprises Greycroft, Coatue Management, Sound Ventures, Lightspeed Venture Partners, and O’Shaughnessy Ventures.

The amount of money invested in Stability.ai 2.0 has not been revealed but third-party sources mention at least $80 million plus some negotiated forbearance on large debts owed to suppliers.

What’s eating Stability.ai?

Stability.ai lost its founder CEO Emad Mostaque in March, a critical moment for a company whose Stable Diffusion generative photorealistic AI text-to-image generator has only been around since August 2022.

In AI, new models appear at an incredible pace, with cash burn not far behind.

Mostaque’s resignation note offered no explanation for his decision, although he later tweeted his belief that the “the concentration of power in AI is bad for us all. I decided to step down to fix this at Stability & elsewhere.”

This can be interpreted as reiterating his belief that AI needs companies such as Stability.ai to counter the monopoly influence of big tech. It’s only mildly ironic, then, that the company is now adding figures to its board from precisely that background as part of its survival plan.

With intense competition in generative AI, Stability.ai’s battle is to retain market share for Stable Diffusion while diversifying into new areas such as the Stable Code AI code generation model that appeared in 2023.

There have also been controversies along the way, including an ongoing copyright infringement battle with Getty Images that alleges image scraping. Others took issue with Mostaque’s high-profile association with the Stability.ai brand, which became contentious enough that a departure at some point looked inevitable.

The new Stability.ai looks as if it will be a brand-new enterprise that just happens to have the same name and most of its founding ethos.

“I’m committed to the open-source principles that Stability AI was built upon. These principles have made Stability AI’s open models the most widely used foundational AI image models globally,” said Sean Parker in the investment announcement.

“The market opportunity in generative media — spanning images, video, 3D, voice and music — is just getting started.”