How much longer with Stability AI last?

Sink or Swim

For months now, the company behind the Stable Diffusion AI image generator has been publicly falling apart — and now it's conducting mass layoffs.

As CNBC reports, Stability AI — the creator of the image generator — laid off 20 people this week as the company attempts to "right-size" its business model in the wake of the publicity-garnering exit of its former CEO Emad Mostaque last month.

In an email to employees, the company's new co-CEOs Shan Shan Wong and Christian Laforte said that Stability needs to "restructure parts of the business, which will sadly mean saying goodbye to some colleagues."

Though 20 people isn't a lot by the standards of other mass layoffs in the tech sector, it represents 10 percent of Stability's global workforce — and represents further turmoil for the embattled firm, which has for the better part of a year been falling into chaos related to Mostaque's alleged resume fabrications, strange behavior, and shoddy business practices.

Both before and after his March ouster, the onetime CEO was portrayed in media reports as erratic and terrible with money.

In a Bloomberg report from last August, it was alleged that Stability, under his watch, owed a vendor $70,000. It gets worse from there: in a report released by Fortune just a few days after he left the company, insiders claimed that in December 2022, Mostaque disappeared so thoroughly that his wife was left texting employees about his whereabouts and claiming that he'd left the house in his pajamas.

99 Problems

Beyond the 20 newly-laid-off employees, Stability also lost several of its top hires in the weeks and months leading up to its former CEO's exit. Among them were three of the five German researchers who'd pioneered the image generator's underlying tech. Those resignations, in turn, occurred just a few weeks after Midjourney, Stability's rival image generation firm, accused it of using its images without permission.

Wang and Laforte, who previously served as chief operating office and chief technology officer, respectively, are now left with what strongly appears to be a sinking ship — though their statement to employees, at very least, maintains a brave face.

"We recognize the challenges we face, but we have a plan in place," the co-CEOs' email reads. "Through the hard work and commitment of this team, we are making progress every day, moving us steadily in the right direction."

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