In June 2023, Forbes published an article questioning Mostaque's credibility and the company's capabilities, which further strained the relationship with investors. As the company's cash position dwindled, Coatue and Lightspeed left the board and called for Mostaque's resignation. Despite the challenges, Mostaque managed to retain control of the board due to his majority voting power. However, the vote of no confidence in his leadership made it difficult for the company to progress in the competitive text-to-image generation sector.
Key takeaways:
- Emad Mostaque, the founder and CEO of Stability AI, resigned from the company he founded after a pressure campaign by investors and questions about his credibility. The company, which was valued at $1 billion in 2022, was one of the early players in the generative AI field.
- Stability AI's first product was image editing software called DreamStudio, which sat on top of Stable Diffusion, a powerful open source AI model. The company's pitch of providing an "open" alternative to privately-held models quickly attracted prestigious investors like Coatue and Lightspeed Venture Partners.
- However, the relationship between Mostaque and the investors began to crack almost immediately. When Mostaque was absent, employees had to scramble to communicate with investors, who had recently invested more than $100 million into the company.
- By the end of 2023, the relationship between Mostaque and his investors officially turned antagonistic. Both Coatue and Lightspeed left the board, and Coatue called for Mostaque to step down and to undergo sale negotiations. Despite this, Mostaque managed to retain board control due to his majority of the voting power.