Emad Mostaque’s Stability AI Exaggerated Links With Global Agencies, Delayed Salaries: Report

It’s still early days in the AI hype cycle, but there is already chatter of scams and impropriety.

Stability AI founder Emad Mostaque often exaggerated his company’s achievements, and delayed salaries to employees, a bombshell Forbes report has claimed. More damningly, the report says that Mostaque’s wife, who was on Stability AI’s board of directors, also withdrew money from the company. Meanwhile Emad Mostaque, who’s quite active on Twitter, has shared a post explaining his own version of events.

Forbes’ article claims that Mostaque has a history of exaggerating his own achievements. It says that while Mostaque has claimed that he has an MA from Oxford, he only has a Bachelor’s degree from the university. Mostaque has often projected himself as a successful hedge fund manager, but Forbes says that after a year of good performance, the fund that Mostaque was managing had wound down its operations.

The article also says that Mostaque doesn’t sufficiently credit the original German researchers for the creation of Stable Diffusion. Bjorn Ommer, the professor who led the research that eventually became Stable Diffusion, says that Emad Mostaque didn’t even know about the research until it was created. “They jumped on this wagon only later on,” he says.

The article also goes on to state that Mostaque had exaggerated Stability AI’s linkages with global agencies, which were listed on its pitch decks. But a UNESCO spokesperson said that the agency had had no linkages with Stability AI, and only only involved with its earlier avatar of collecting and using AI data. Other agencies, such as OECD, WHO and World Bank, said they had no record of any association with the company.

Perhaps most damningly, Forbes reports that Mostaque’s wife, withdrew tens of thousands of dollars from the company. On business cards, she had listed herself as the company’s COO, but apparently didn’t perform the function. She later was also on the board of the company. Stability AI also had trouble paying salaries, and employees often reported that their salaries were delayed.

Forbes claims that Emad Mostaque’s exaggerations — and the ensuing AI hype — helped Stability AI raise $100 million from investors including Lightspeed Ventures and Coatue Ventures. Mostaque himself claims that the investment happened in 6 days flat, and Forbes suggests that investors didn’t do sufficient due-diligence before backing the company.

Mostaque, for his part, had some impassioned responses to the story. He categorized himself as a minority founder, and claimed that Forbes had made fun of his son’s autism (Forbes had pointed out that Mostaque had claimed to have helped his son’s autism by using AI techniques, which he has not elaborated on). He also shared a detailed email which he’d sent to Stability AI’s employees.

Mostaque claims that he technically neither has a BA or MA from Oxford, because he didn’t collect the degrees from the university (He doesn’t clarify if he was indeed enrolled in an Master’s degree). He says that while Stability had delayed the salaries of some employees, they were looking to fix things going forward. He also said that while he and his wife had withdrawn money from the company at some point, they’d reconciled all accounts a year ago. Mostaque also says that he’d prominently mentioned the origins of Stable Diffusion on its website.

Since the story has come out, there has been a gamut of reactions in the AI world. Someone came out and said that Stability had offered to sponsor their hackathon, but they later discovered they were giving just $6 in credits per participant. Others have drawn parallels with other tech CEOs who weren’t all that they claimed to be, including Sam Bankman Fried and Elizabeth Holmes.

While it might be early to put Emad Mostaque in the same league — his company does seem to run an open-source product that is used by millions of people — the piece does raise some important questions. As the piece points out, Mostaque doesn’t have a background in AI, but seems to have chased quite a few fads — he was first in crypto, then turned to data analysis during Covid, then pivoted to NFTs, and finally made it big by providing funding for an external research project. It remains to be seen how the future of Stablity AI and Emad Mostaque turns out, but the article should serve as as cautionary note to anyone getting overly caught up with the AI hype — the basic necessities for due diligence and background checks still remain very much in place.