The large GPU clusters required to train Stable AI's popular text-to-image generative model, Stable Diffusion, also appear to be at least partially responsible for former CEO Emad Mostaque's downfall. Masu. The reason is that he couldn't find a way to pay for it.
Exorbitant infrastructure costs have drained British model makers' coffers, leaving the industry with just $4 million in cash by October last year, according to a wide-ranging exposé citing company documents and dozens of people familiar with the matter. It is shown that it was a dollar.
Stability rents infrastructure from Amazon Web Services, Google Cloud Platform, and GPU-centric cloud operator CoreWeave, at a reported cost of about $99 million annually. This is in addition to his $54 million in wages and operating expenses needed to keep the AI startup afloat.
Additionally, a significant portion of the opaque resources paid by Stability AI appear to have been given to someone other than a startup interested in experimenting with Stability's models. One outside researcher cited in the report estimates that he was provided at least $2.5 million worth of computing over a four-month period to the now-canceled project.
Stability AI's infrastructure spending was not commensurate with revenue or new funding. The startup's revenue for the 2023 calendar year was projected to be just $11 million.
The company's financial condition is apparently in such dire straits that it allegedly underpaid its July 2023 AWS bill by $1 million and had no intention of paying its August bill of $7 million. There is. Google Cloud and CoreWeave have also not been paid in full, with debts to both companies reportedly reaching $1.6 million as of October.
It's not clear whether these bills were ultimately paid, but the company, once valued at $1 billion, decided to file a complaint with the British government rather than skimp on American pay and risk legal penalties. He is reportedly considering delaying tax payments.
The cause of the failure was Mostak's inability to formulate and execute a viable business plan. The company also failed to secure contracts with customers such as Canva, NightCafe, and Tome, as well as the Singapore government, which was considering a custom model, the report claims.
It is claimed that Stability's financial woes have worsened, eroding investor confidence and making it difficult for the generative AI darling to raise additional capital. According to reports, Mostaque was hoping to implement a $95 million lifeline late last year, but he was only able to raise $50 million from Intel. Of this, only $20 million was paid, indicating that the processor giant has a vested interest in stability and that the AI industry has made him a major customer for 4,000 supercomputers equipped with Gaudi2 accelerators. This was a significant shortfall considering what was expected to happen.
It wasn't just Intel's smaller-than-expected investments that fundraising efforts failed to raise money. According to reports, Mostak has advanced a financing plan to raise $500 million in cash and $750 million in computing equipment from Nvidia, Google, Intel and others in July 2023.
Those plans quickly fell apart, with Forbes noting that a meeting between Mostak and NVIDIA CEO Jensen Huang ended in disaster. Mostak denied that any such meeting took place.
By late 2023, venture capital firm Lightspeed had reportedly discovered the poor state of Stability's cash flow, which had apparently not been disclosed before, and sounded the alarm expressing shock. . The VC firm also asked Stability's board to sell the struggling business. However, despite reports that the AI developer was shopping around for a buyer, the sale did not go through.
By December, the startup had moved commercial use of Stable Diffusion to a subscription model starting at $20 per month.
But behind the scenes, Stability is said to be considering another strategy to support revenue: reselling computing resources as managed services.
The plan was apparently to resell Stability's GPU receivables, which could bring in $139 million in 2024, assuming it doesn't violate its contract with AWS. A similar plan is said to have been developed to resell CoreWeave's GPU capacity to VC firm Andreessen Horowitz.
To make matters worse, it is claimed that Stability was also having trouble retaining staff. In November, Ed Newton Rex, who led the development of the text-to-speech model, resigned in protest of industry claims that training on copyrighted material was fair use. Last month, Stability said goodbye to several key researchers who helped develop its signature model, stable diffusion.
The situation came to a head late last month with Mostak. revealed He resigned, saying on social media that “the concentration of power in AI is bad for all of us,'' and that he had decided to resign to solve this problem at Stability and other companies. Stated.
Stability AI is now under new management, with COO Shan Shan Wong and CTO Christian Laforte serving as interim co-CEOs until they assume their roles more permanently.
Despite the change in management, Stability's future remains uncertain. Even if the industry manages to turn its finances around, it still faces multiple copyright infringement lawsuits filed by Getty and other artists. They claim their work was used without permission to train the company's signature models. ®