Lady Gaga probably wasn’t thinking that a coup would unfold in her greenhouse. Then again, she was cohosting a party there with Sean Parker, the billionaire founder of Napster and first president of Facebook.
It was February 2024, and the singer had invited guests to her $22.5 million oceanside estate in Malibu to mark the launch of a skin-care nonprofit. One of the organization’s trustees was her boyfriend, whose day job was running the Parker Foundation. In the candlelit space, beside floor-to-ceiling windows that looked out over the Pacific, Parker’s people mingled with Gaga’s, nibbling focaccia and branzino alla brace to music from a string quartet (Grammy-winning, of course).
Prem Akkaraju, one of Parker’s close friends and business partners, arrived in a tailored suit, his thick hair coifed to perfection. The two men had known each other since Parker was at Facebook and Akkaraju was in the music industry. Over the years, they’d tried unsuccessfully to launch a movie streaming platform together and—much more successfully—had taken over a renowned visual effects company. Lately they had been talking about starting an AI venture.
That evening at Gaga’s, Akkaraju found himself sitting next to an investor in Stability AI, the company that launched the wildly popular text-to-image generator Stable Diffusion in 2022. Despite its early success, Stability was “circling the drain,” the investor recalls. It was “within days of not having options.” He told Akkaraju: “You should take Stability and make it into the Hollywood-friendly AI model.”
Hollywood did seem to be in need of a friend. Since 2022, the number of films and TV shows made in the United States had dropped by about 40 percent, thanks to ballooning production costs at home, competition from overseas, and long-running labor disputes everywhere. AI promised to bring the numbers back up by speeding production and slashing costs: Let computers automate the grunt work of translating dialog, adding visual effects frame by painstaking frame, and editing boom microphones out of a zillion shots. Maybe one day they could even write scripts and act! Two of the industry’s biggest unions had gone on strike in part to obtain assurances that generative AI wouldn’t replace union jobs in the near term. But every major studio and streaming service was racing to figure out its AI strategy, and a host of startups—Luma, Runway, Asteria—was working on tools to pitch them.
Akkaraju saw the opportunity in front of him. Stability AI had the technology. It just needed that Hollywood finish. As far as he could tell, there was only one problem. Didn’t the company already have a CEO?
When Emad Mostaque, a former hedge fund manager, founded Stability in 2020, the company’s mission was to “build systems that make a real difference” in solving society's toughest problems. By 2022, the system Mostaque felt he needed to build was a cloud supercomputer powerful enough to run a generative AI model. OpenAI was gaining traction with its closed-source models, and Mostaque wanted to make an open source alternative—“like Linux to Windows,” he says. He offered up the supercomputer to a group of academic researchers working on an open source system where you could type words to generate an image. The researchers weren’t going to say no. In August of that year, they launched Stable Diffusion in partnership with Mostaque’s company.