At the beginning of 2024, the future of Stability AI, the company behind image generator Stable Diffusion, was unquestionably dire. The departure of its founder and claims of mismanagement and mounting financial difficulties appeared to sound the once-successful company’s death knell. But less than a year later and under the helm of a new CEO, Stability AI has somehow managed to erase its debt, regain the trust of former investors and even add prominent figures like the director James Cameron to its board.
“We’ve seen extraordinary results in such a short period of time,” said Prem Akkaraju, who took over as Stability AI’s CEO in June while speaking at the Fortune Brainstorm AI conference in San Francisco yesterday (Dec. 9).
Despite making early waves in generative A.I., troubles quickly arose within the London-based company. Its founder and CEO Emad Mostaque was pushed out in March amid a wave of employee departures, claims of internal strife and lawsuits.
In the summer, however, a group of investors that included Eric Schmidt, former Google CEO and a prominent A.I. investor, and Sean Parker, Napster co-founder and former Facebook president, stepped in to appoint Akkaraju as CEO and give the beleaguered company a much-needed cash injection to the tune of $80 million.
The investor-spearheaded rescue mission even managed to strike a deal with Stability AI’s cloud providers and other suppliers to forgive $100 million of the company’s debt and an additional $300 million in future obligations. “We now have a clean balance sheet, we have no debt, we have nothing,” said Akkaraju, who added that growth is in the triple digits but declined to disclose revenue details. The company’s partners realized that Stability AI, whose Stable Diffusion models contributed to approximately 80 percent of all A.I.-generated images in 2023, was simply “too important to the ecosystem to fail,” according to the executive.
A star-studded board of directors
Armed with a clean slate and fresh funding, Stability AI’s new leader said his vision for the company going forward includes a focus on API revenue and enterprise licensing opportunities.
Akkaraju, 52, began his career in roles at JPMorgan Entertainment Partners and SFX Entertainment before eventually becoming as CEO of Weta Digital, a visual effects company that notably worked on Cameron’s famed Avatar films. Cameron joined Stability AI’s board earlier this year, noting his interest in the convergence of A.I. and C.G.I. image creation as the “next wave” in storytelling.
Akkaraju, who began working with Stability AI ahead of his CEO appointment in June, said he discussed the company’s potential with the acclaimed director during the early stages of his involvement. Both parties agreed Stability AI was “worth looking at,” said the CEO.
Another new addition to Stability AI’s board was Coatue Management, which rejoined the company’s board after exiting last year. Alongside other early investors like Lightspeed Venture Partner and Sound Ventures, the firm also decided to reinvest in the A.I. company. “They saw that progress being made,” said Akkaraju, who noted that even he has been surprised by the company’s comeback. “It wasn’t on my bingo card either.”