Stability AI CEO Emad Mostaque Explains The Open-Source Company’s “Business Model”

Stability AI has already become one of the pioneers of the open-source AI movement with releases such as Stable Diffusion and the more recent StableLM, but the company also has a plan to remain financially viable.

Stability AI CEO Emad Mostaque has explained what the company’s business plan is during a Twitter AMA. “Dozens of major companies want models they own based on their own data and want to pay us to do it We will be able to do that for every modality and nationality and sector. It’s a pretty good (business) model,” he told a user when asked what their revenue source would be.

“This is our business model for folk that keep asking: Stable models are benchmark open source of every modality based on open data. We’ll have sectoral/commercially licensed ones via our partners eg AWS to your data. We also build custom models for largest cos & govt,” he added.

It’s not entirely unexpected that Stability AI has thought of a potential business model — CEO Emad Mostaque is a former hedge fund manager, so it’s likely that he’ll be keeping a close eye on the firm’s finances. He had initially bootstrapped the company, but has now raised $101 million from investors including Coatue and Lightspeed Ventures at a valuation of $1 billion.

But Stability has a unique structure. “Nobody has any voting rights except our employees — no billionaires, big funds, governments or anyone else with control of the company or the communities we support. We’re completely independent,” Mostaque had previously told Techcrunch. “We plan to use our compute to accelerate open source, foundational AI,” he had added.

Stability AI now says it will continue to develop foundational models, but will charge companies and corporations for specific models trained on their data. It sounds good enough in practice, but the company would do well to be careful — OpenAI had started off with similarly noble plans of keeping AI research open, but within years of being founded, ended up with an entirely closed structure, and now operates essentially as a subsidiary of Microsoft. It remains to be seen how Stability AI’s monetization plans play out, but creating both open source software and company-specific models within the same structure seems fraught with some potential complications.