Looks like Stable Diffusion is having some major trouble finding its footing.

AI Hole

From fundraising more than $100 million at the end of 2022 to hemorrhaging top talent by mid-2023, Stability AI — the firm that funds and supports development of the open source Stable Diffusion image generator — has had a helluva year.

As Bloomberg reports, the San Francisco-based AI firm has had a bevy of issues, from accusations that its CEO Emad Mostaque doesn't know how to run a business to claims that the company hadn't paid a $70,000 bill.

Chief among Stability's difficulties is its talent exodus. This summer alone, the firm has seen resignations from its chief operating officer, chief information officer, head of research, and VP of engineering, just to name a few.

Though Mostaque insists that "churn" is a common practice in startups while trying to establish "cultural fit" between employee and company, interviews with several former and current people involved with the project say the CEO's lofty vision often doesn't match up to the reality of his day-to-day ability as a business leader.


A particularly eyebrow-raising claim, per multiple unnamed Bloomberg sources, is that the 40-year-old CEO has claimed he was employed as a spy for the British government. He also insists that he's spoken to more than one prime minister about building AI for nation-states.

This Bloomberg report isn't the first time the CEO's apparent propensity for embellishment has been in the news. Earlier this summer, Forbes published an exposé that highlighted his "history of exaggeration," and in its opening lines notes that Mostaque's claim that he has a master's degree from Oxford didn't hold up to scrutiny.

The latest reporting does note that there are multiple lawsuits against the company that seem to pinpoint Mostaque as the problem. Perhaps most salient is the suit filed last month by Stability AI cofounder Cyrus Hodes, who claimed the CEO convinced him to sell his 15 percent stake in the company for $100 after insisting that the company is "essentially worthless" — a suit that the firm has said is "without merit."

Big-picture salesmen are, of course, a dime a dozen in Silicon Valley. In some ways, it's difficult to distinguish what sets Mostaque and Stability apart from, say, Elon Musk.

Case in point: in a statement to Futurism, a Stability representative said that because the company "is in the innovation business," it is "well aware that any time a new path is taken in any field, there will be critics and skeptics."

"That reality is no different for the field of generative AI, which has taken the world by storm because of its potential to be the greatest disruptor of our time," the statement continued. "Stability AI is the only independent multi-modal AI company in the world. We remain focused on developing the best open language and image models for millions of users worldwide, and our work is just beginning."

Lofty vision is one thing, though, and losing a bunch of executives within a few months of each other is another. In the end, the real question will be whether Stability can continue to differentiate the software when Midjourney and OpenAI's DALL-E are looming large.

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