The departure of Stability AI’s CEO is a message to AI startups | TechCrunch Minute

So why would the CEO of a billion dooll AI startup jump ship well we're finding Out right now the news is this late last Week the founder and CEO of stability AI Ahmad mustto made the shock announcement That he was stepping down from his role And the company's board now stability AI Is behind the popular product stable Diffusion which creates images based on User prompts and you've probably heard Of it this is not a small company it Raised nine figures worth of capital During its life including a $11 million Back in late 2022 and 50 million more From Intel in late 2023 a popular Product big dollars what could go wrong Well around the time when it raised from Intel its head of audio work quit over Conflicts with the company's use of Copyrighted training data just to pick An example losing several Executives However was just one issue facing the Company its finances were the other Things got so bad that last year it's Backer coou called for the CEO to resign As theany considered a sale now the CEO's managing style was criticized by Some as were some of his claims Including that he had once worked as a Secret agent now a startup CEO that can Spin A Yarn and prove a bit fast moving For normal corporate standards is hardly A shock but it does seem that stability Did have some rather unique issues one

Of which was as we said its finances Back in mid 2023 SEMO reported that Stability AI had burned through a big Portion of the $100 million that it had Raised before and more recent reporting Indicates that the company was only Bringing in a fraction of the $8 million It was spending each month which means The company was going to need more Capital to keep going and sure the money From Intel helped but at that pace of Burn it was going to need even more That's not a great place to be as a CEO If your investors are already publicly Unhappy now MTO said that he stepped Down to work on what he calls Decentralized AI which we presume will Have a strong open source component and That's all well and good he also said That he wasn't forced out because he Still has voting control of the company I'm sure his investors love that but his Exit did leave stability scrambling it Had to appoint two Executives as interim Co-ceos which is never a very stable way To run a business was this just The Saga Of a Founder that wound up over their Heads sure but it's not just that There's also the financial side of the Company to consider and what it can tell Us about the state of the AI market Today here's my question how much Revenue can AI companies that don't have Access to the deepest backers hope to

Generate in the near term they need that Revenue because the cost of building AI Models are very clear however the Revenue picture is a little bit less so Now the stability story is a startup Story but it's also a saga that can tell Us about how hard it's going to be to Compete in the world of AI today when so Many startups with big Tech backers have Already raised billions it also tells us That just having neat Tech that people Like is far from enough to succeed in Today's modern AI race


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