Stability AI Gets New CEO, Restructuring Amid Turmoil

Stability AI, known for its image generation platform Stable Diffusion, will now be led by Prem Akkaraju as its new CEO, according to a Monday report from The Information. Akkaraju is the former CEO of visual effects company Weta Digital.

Stability AI’s founder and first CEO, Emad Mostaque, resigned in March to focus on his new startup Schelling AI. Chief Operating Officer Shan Shan Wong and Chief Technology Officer Christian Laforte had been running the company in the interim.

This leadership change is part of a broader restructuring effort that comes amidst financial struggles, a controversial software release, and intensifying competition in the AI industry.

Akkaraju is stepping into his new role at a critical time for Stability AI. The company, which achieved a $1 billion valuation in 2022, according to Bloomberg, has been grappling with mounting debt. The firm generated less than $5 million in revenue in Q1 2024 and reported losses exceeding $30 million in the same quarter, according to Reuters, which added that the company currently owes nearly $100 million to cloud computing providers and other creditors.

CNBC separately reported in April that Stability laid off 10% of its staff to reduce costs.

Besides the layoffs, several key figures have departed the company in recent months, including Robin Rombach, one of Stable Diffusion’s original developers, and former CTO Tom Mason. Other notable departures include Joe Penna, who was actively involved in the development of SDXL, and Alex Goodwin who—along with pseudonymous colleague “ComfyAnonymous”—who left to launch Comfy.org to focus on broader generative AI developments, using ComfyUI as a common interface.

Stability AI has also faced challenges with its recent launch of SD3, its latest image generation model.

The company introduced a new licensing model alongside SD3, aiming to generate more income from commercial users of its software. The new license required users to pay a recurring fee for a “Creator License” if they profited from the model and apply for an “Enterprise License” if they generated over 6,000 images per month.

This new licensing model was a departure from the company’s previous open-source approach and was met with significant backlash from the AI community. Citing legal issues, CivitAI, the world’s largest Stable Diffusion repository, has since permanently banned SD3 content.

The ban not only limited the reach and potential of SD3, but also damaged Stability AI’s reputation within the AI community. The new model’s poor understanding of human anatomy didn’t help.

In addition to appointing Akkaraju as CEO, The Information said the company received a “bailout” from a group of investors, described as a “recapitalization” that could affect Stability AI’s valuation. Among the investors is Sean Parker, co-founder of Napster and Facebook’s first president, who will become the chairman of Stability AI’s board, the outlet reported.

Stability AI did not immediately respond to a request for comment from Decrypt.

Edited by Ryan Ozawa.

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