Stability AI Isn’t Very Stable, Defaults on AWS and Google Cloud Payments

Generative AI startup Stability AI, known for the deep learning, text-to-image model Stable Diffusion, has been grappling with mounting financial challenges. Its founder Emad Mostaque stepped down in March as CEO and board member. According to a report by Forbes, the company struggled to pay its cloud computing bills last year as development costs for its AI models skyrocketed.

The report painted a picture of a startup spiraling out of control financially. According to an internal October forecast, Stability AI was projected to spend a staggering $99 million on computing costs in 2023 alone to develop its AI models. The company was already falling behind on paying cloud providers like Amazon Web Services, with plans not to pay $8 million in outstanding August bills.

In total, Stability AI owed millions more to AWS, Google Cloud, and CoreWeave by late 2023. The exact amount currently owed is unclear. Mostaque had previously boasted that Stability’s AWS cluster ranked among the world’s top 10 supercomputers.

The company’s financial difficulties appear to have impacted an anticipated $50 million investment from Intel. Forbes reports Intel invested only $20 million, likely due to Stability’s instability.

Struggling to monetize Stable Diffusion, Stability AI reportedly considered reselling its computing power as a revenue stream. Internal documents projected this managed services offering could bring in $139 million in 2024 — 98% of anticipated revenue.

However, former employees claimed there was no real management involved, raising ethical concerns about potentially violating contracts with providers like AWS through unauthorized reselling activity. “This was some of the dirtiest feeling stuff,” one said.

In announcing his resignation in March, Mostaque cited a desire “to pursue decentralized AI.” He appointed COO Shan Shan Wong and CTO Christian Laforte as interim co-CEOs while the company looks for a permanent chief executive.

Information for this story was found via Forbes, TechCrunch, Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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