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Accused of fraud, plagiarism and unpaid wages, Stability AI founder Mostaque responded to media questions

2023-06-07 20:00

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Original Title: "<被骂拖欠薪水、夸大收入，AI 超级独角兽创始人手撕媒体>"

Original Source: Geek Park

Tree attracts wind. Now in the tech industry, the "biggest tree" is the AI startup company that has become a hot topic by riding the wave of large language models.

Outside of OpenAI, the hottest AI company is undoubtedly the one with a current valuation of over $1 billion, which is the AI team that investors are most bullish on. Emad Mostaque, the founder of Stability AI, has also become a new "golden boy" in Silicon Valley.

However, people always have a past. Recently, Forbes website published a long article, which exposed a lot of black materials about this globally renowned team, especially founder Emad Mostaque, through interviews with former employees, AI scholars and 13 other people related to the team, involving issues related to the founder's personal life, technology sources, and company management.

The article claims that Mostaque, the founder of Stability AI, exaggerated his role in major AI projects and instead directly utilized the research team's achievements from German universities.

The article also pointed out that he exaggerated his income and partnerships, and many investors have doubts about its sustainable development. In addition, there are cases of unpaid taxes and salaries within the company, and his wife has transferred funds from the company's account.

On the morning of June 5th local time, Mostaque quickly responded in his personal blog, refuting the accusations in the media article.

Mostaque said that it is not surprising to become a target of media attacks as the company's influence expands, and accused Forbes of "countless false accusations and distortions". At the same time, Mostaque also said, "Throughout my career, I have always quickly praised and credited the work of my collaborators. I apologize for any mistakes I have made and have been constantly striving to improve."

The following are the key questions raised by Forbes magazine and Mostaque's point-by-point rebuttal:

01、Questioning One: Technology Theft

Firstly, regarding the model technology issue, the source code behind Stable Diffusion is not from Mostaque personally.

Initially, a group of German scholars created an open-source image generator called Latent Diffusion. According to Professor Bjrn Ommer, who leads research teams at the University of Munich and Heidelberg University, the model was introduced in collaboration with a New York-based AI startup called Runway. At that time, the model was only trained on a few dozen NVIDIA GPUs.

In June 2022, Mostaque proposed to this group of German scholars that Stability could provide a supercomputer, which would undoubtedly benefit the performance development of Latent Diffusion for German researchers facing high computing costs, and was accepted. In August of the same year, a new model was launched, named Stable Diffusion.

At that time, the German professor Bjrn Ommer, who was studied by the leadership, said that when their image generation model was first born, Stability did not know the existence of the model. They joined later, and Stability's huge news propaganda department reshaped history for their own interests. Former employees of Stability also believe that this belongs to "putting other people's work under their own name".

During the financing process, Stability described Stable Diffusion as "our" model without mentioning the original researchers in Germany. A press release announcing the financing stated that "Stability AI is the company behind Stable Diffusion" without mentioning the creators.

Founder's rebuttal:

Regarding this, Mostaque responded on his personal blog, stating that the company has recognized their contributions on the website and Stable Diffusion's GitHub page.

02, Question 2:

Resume fraud and exaggerated publicity.

Emad Mostaque, the founder of Stability AI, is a British-born Indian entrepreneur who previously worked as a hedge fund manager. He claims to be a skilled programmer, but his background, technical abilities, and tendency to exaggerate have raised questions.

Forbes reported that Mostaque currently only holds a bachelor's degree, not the master's degree from Oxford University that he claimed.

Until the rapid development of generative AI, Mostaque saw an opportunity to reposition Stability as a unicorn AI company and told investors that he wanted to build a supercomputer to challenge giants like Google and OpenAI.

It is reported that Stability's supercomputer is built with thousands of Nvidia's most advanced GPUs and has received an 80% discount on Amazon's cloud computing services. It will be rendered as a "strategic partnership" with Amazon's regular transactions in the financing document.

However, Amazon's internal executives denied this claim, stating that there is no difference between Stability and other customers. Additionally, a Stability employee revealed that prior to receiving venture capital, Amazon threatened to revoke the company's access due to outstanding bills.

Additionally, Mostaque has claimed to be the "UN COVID-19 AI Director". According to former employees, under Mostaque's direction, promotional materials presented to investors listed the Organisation for Economic Co-operation and Development (OECD), the World Health Organization (WHO), and the World Bank as partners. However, all three organizations have denied any collaboration with Stability.

Founder's Response:

Resume Fraud

In response to Forbes' attack, Mostaque responded in his personal blog, "I did not attend the graduation ceremony to receive my degree certificate, so technically, I did not actually receive a bachelor's or master's degree. I have paid £60 to receive these certificates by mail and plan to complete the process next month. I hope to attend the graduation ceremony in person."

AWS Partnership

Regarding the partnership with Amazon, Mostaque responded on his personal blog, stating: "We have established a strategic business alliance with Amazon and AWS. As part of this strategic business alliance, AWS built a very rare dedicated computing cluster in August 2022 in accordance with Stability's requirements." "As we continue to scale, there have been some payment timing issues (especially considering offsetting factors), all of which were resolved in August."

World Health Organization Cooperation

Regarding the work with the United Nations on COVID-19, Mostaque responded in his personal blog that they had collaborated with these organizations on the CAIAC project. The CAIAC project ended before the summer of 2022, which is considered relevant experience but does not represent the current position.

03, Question 3: Husband and wife control the company, owe wages

According to 8 former employees, Stability has had issues with unpaid wages and taxes. Last year, the UK tax authority visited the company's office and threatened to seize assets due to unpaid taxes.

At the same time, the problems caused by "mom-and-pop shops" have also been questioned. Mostaque's wife, Zehra Qureshi, served as a public relations director and later became a member of the company's board of directors, transferring tens of thousands of pounds from the company's bank account.

Stability spokesperson responded that this is "mutual provision of loans to the company between spouses", and "any loans between Mostaque and Qureshi will be fully settled by the end of 2022". Qureshi stated through a lawyer's statement that she has been providing emotional and financial support for her husband's career since 2021.

Meanwhile, an employee revealed that the founder's wife was overly harsh on employees, causing some to be overwhelmed and even cry. The founder's wife also once claimed to be the company's chief operating officer, but a Stability spokesperson denied that she had ever held that position. Currently, the founder claims that his wife has left the company, but the organizational chart shows that she still serves as the "Foundation Director".

Founder's Response:

拖欠薪水
Translation:

Unpaid Wages

Regarding this issue, Mostaque responded in his personal blog that all outstanding wages and taxes have been compensated, and they have been working hard to strengthen and improve all of these processes.

"Couple's Shop" Issue

On these issues, Mostaque did not mention his wife in the response posted on his personal blog, only stating that he will "work hard to strengthen and improve our human resources processes."

04、Question Four: Exaggerating Income and Facing Financing Obstacles

The article states that there were due diligence gaps in Stability AI during the financing process. When Stable Diffusion quickly gained popularity, the company was able to secure $100 million in funding from venture capitalists in just six days.

When Stable Diffusion was launched less than two months ago, Mostaque claimed that the company's annual revenue exceeded tens of millions of dollars. However, insiders revealed that the actual revenue was less than 10 million dollars, and the company's burn rate far exceeded its income.

Many potential investors have expressed doubts privately about some of Mostaque's statements. The founder of Stability has been working to raise more funds at a valuation of around $4 billion.

From Mostaque's external statements, the company has no problems in terms of financing. However, according to a disclosure from a venture capitalist, Mostaque has been pitching a new financing plan of $400 million to them and other investors for several months, but has been rejected.

Founder's Response:

Regarding the issue of fundraising, Mostaque did not provide any further details on his personal blog, only stating that "like many other startups, we are still in discussions with strategic investors."

05、质疑五：版权难题难解

translates to

05, Question 5: Copyright issues are difficult to solve

in English.

Additionally, Stability is facing copyright infringement lawsuits, alleging that the model training violated copyright laws. There are two lawsuits awaiting court review.

In the collective lawsuit initiated by the Together Artists, Stability has filed a motion to dismiss the lawsuit on the grounds that the artists have failed to specify any specific acts of infringement.

"Let's ship so they can't ignore the good we do," wrote the founder of Stability AI at the end of the open letter.