Artificial intelligence Layoffs Startups

Stability AI Lays Off 10% Of Staff — Report

Illustration of pencil eraser erasing workers

This has been a tough week on the layoffs front for AI startups.

Troubled artificial intelligence startup Stability AI is laying off 10% — estimated to be about 20 people — of its workforce, per a report by CNBC.

The layoffs are just the latest hit for the artificial intelligence-driven visual art startup.

In 2022, Stability AI locked up a $101 million raise led by Coatue, Lightspeed Venture Partners and O’Shaughnessy Ventures. The company did not release a valuation at the time, but Bloomberg reported the new cash infusion valued the company at around $1 billion.

However, last spring Forbes reported Stability AI’s founder Emad Mostaque made exaggerated statements about both his own background and his generative AI startup. At the time, some AI researchers disputed the startup’s claims that it created the image generator Stable Diffusion, an open-source project developed by researchers.

It also was reported the London-based startup was looking to raise an additional $1 billion of capital at a multibillion-dollar valuation, but talks had stalled.

Then late last month, reports surfaced Mostaque left the company after an investor revolt.

The company said in an internal memo it was trying to “right-size” the business after a period of unsustainable growth, per the report.

Layoffs hit AI

Stability AI was not the first AI startup this week to announce layoffs.

Tome, a developer of a generative AI presentation tool launched a couple of years ago, cut about 20% of its nearly 60 people.

The cuts were first reported by Semafor and then confirmed by the company.

The company has raised more than $75 million across a few rounds. Its latest, a Series B, was led by Lightspeed Venture Partners.

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Illustration: Dom Guzman

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