Technology

An interesting piece but isn't this what VC investors do, not every play will result in a unicorn and those that do pay for the losses of those that don't. I expect more than a few billion will evaporate into vapourware as we crest this wave of generative ai hype.

So as understand it, they took someone’s image generation AI code, snookered two VCs into way over-investing, had no idea what to do then, and crashed.

The AI hype train was annoying a year ago. Now it’s just sad.

What has it transformed? Nothing - unless one counts the enshittification of image searches or cheap article graphics. It’s already eaten billions and still nothing.

Shit you could do good in the world with that money if you wanted to.

This is the best summary I could come up with:

And Mostaque’s pitch, that Stability AI provided an “open” alternative to privately held models like rival OpenAI, quickly attracted the backing of Coatue and Lightspeed Venture Partners, two of the tech industry’s most prestigious investors.

The story of how that relationship fell apart—to the point that in just one year, Coatue was demanding that Mostaque be fired—is a spectacular business debacle that may cost tens of millions of dollars, dozens of jobs, and the reputations of many of the principal actors involved.

But the whirlwind romance that brought together top-tier investors and a startup in the tech industry’s most promising sector is also a reminder of the hype, FOMO, and dangerous delusions currently fueling Silicon Valley’s love affair with artificial intelligence.

As the meetings continued, Mostaque said in an email that he was flying to New York for a week to woo funds and family offices, and he bragged to people in his circle about the interest he was seeing from Sequoia’s Pat Grady and Shaun Maguire—and even Microsoft CEO Satya Nadella, according to messages seen by Fortune.

“It was very hand-to-mouth,” one former employee recalled, describing Mostaque’s efforts to raise money from family, friends, and “anybody who would listen to him.” Stability had a payments backlog with AWS, and it wasn’t until Coatue and Lightspeed stepped in that “everything was in order” and it was fully paid off, the person said.

The letter, which was first reported by Bloomberg and independently confirmed by Fortune, specifically demanded information about compensation paid to Mostaque, Peter O’Donoghue, Scott Trowbridge, and Zehra Qureshi and asked that future bonuses and payments be approved by non-executive board members.

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