“Stable Diffusion’s AI Benefactor: A Troubling History of Overstatement”

Stability AI: Beneath the Billion-Dollar Image

Emad Mostaque, the founder of Stability AI, has become a prominent figure in the generative AI space, thanks to his text-to-image generator, Stable Diffusion. However, Mostaque’s recent success is based on exaggeration and dubious claims, according to interviews with over 30 individuals who have worked with him.

Misleading Claims

Most notable among these claims is the fact that Mostaque has falsely claimed to hold a master’s degree from Oxford, according to interviews and subsequent reporting by Forbes. In addition, his hedge fund gained a banner year followed by poor performance that led to its shut down. The United Nations has also not worked with him in years.

Stability AI’s Source Code

Mostaque’s startup, Stability AI, gained prominence thanks to Stable Diffusion’s popularity, but the software’s source code was actually created by a different group of researchers. This fact was confirmed by Björn Ommer, the professor who led the research. Stability only came to know about Stable Diffusion after its release.

Elaborate Gambit

In order to build buzz around Stability, Mostaque made an elaborate gambit, supported by exaggerated claims and promises. He overstated his role in several major AI projects and embellished a quotidian transaction with Amazon into a “strategic partnership” with a significant discount. These mischaracterizations to investors include multiple fundraising decks that presented the OECD, WHO, and World Bank as Stability’s partners at the time, which all three organizations deny.

Delayed Wages and Payroll Taxes

Stability’s credibility crisis went beyond just misleading claims. Former employees reported that wages and payroll taxes were frequently delayed or unpaid. In addition, in 2020, the UK tax agency threatened to seize company assets due to unpaid taxes.

Tens of Thousands transferred out

At the same time, Mostaque’s wife, Zehra Qureshi, who was head of PR and later assumed a seat on the company’s board of directors, transferred tens of thousands of pounds out of the company’s bank account, according to several sources and screenshots of financial transactions viewed by Forbes. Stability spokesperson Motez Bishara, however, provided a defense: the spouses had been “making loans to and from the business” and that “any amounts owed from or to Mostaque and Qureshi were settled in full before the end of 2022.” In responding to a detailed list of questions, Mostaque shared a statement saying that Stability had not historically prioritized the “systems and processes” underpinning the fast-growing startup.

Doubts

Despite Silicon Valley’s sudden, insatiable appetite for AI startups, a number of venture capitalists have privately expressed doubts about Mostaque’s claims for months now. He seems to be struggling to raise hundreds of millions more in cash at a roughly $4 billion valuation.

A Billion-Dollar Gamble

Mostaque founded Stability in 2019 as an AI-powered data hub that global agencies would use to make decisions about Covid-19. It launched with a July 2020 virtual event but failed to get off the ground and was scrapped about a year later. Stability’s focus shifted several more times but it is Stability’s Stable Diffusion generator that has caused such a storm.

Conclusion

Despite the popularity of his text-to-image generator, Stable Diffusion, founder Emad Mostaque’s credibility has suffered due to misleading claims and a lack of performance. The source code for Stable Diffusion was created by a different group of researchers, and claims that Mostaque made regarding partnerships, discounts, and awards have been denied. Moreover, Stability’s credibility has been further reduced due to delayed wages and payroll taxes and tens of thousands transferred out, reportedly to the company founder’s wife.