Startups Weekly: Major Changes at the AI Heavyweights Unfold

Welcome to Startups Weekly — your weekly roundup of the latest developments in the startup world. While there isn’t a plethora of news from me this week, I’ve been immersed in preparations Early Stage, set to happen in Boston on April 25. It promises to be an exceptional event, and you still have the opportunity to secure tickets at early-bird rates if you act fast.

Most interesting startup stories from the week

Stability AI bids farewell to its founder and CEO, Emad Mostaque, who is embarking on the decentralized AI pursuit, leaving the unicorn startup without a permanent leader. The company, notorious for its rapid cash burn, now sees interim co-CEOs Shan Shan Wong and Christian Laforte at the helm. Mostaque’s departure, announced on X, emphasizes his mission to combat the threat of “centralized AI,” highlighting the issue of control rather than rogue robots.

In a move reminiscent of a Hollywood plot, Microsoft orchestrates a lucrative deal, acquiring the co-founders and much of the team of Inflection AI, along with their technology rights, for a hefty $650 million. The transaction, which appears more like a ransom than a typical M&A maneuver, includes $620 million for utilizing Inflection’s technology and an additional $30 million to preempt potential lawsuits arising from Microsoft’s talent acquisition. Reid Hoffman, Microsoft board member and Inflection co-founder, reassures stakeholders on LinkedIn about the satisfactory returns for investors, despite the numbers seemingly not adding up. Describing a 1.5x return as a “good upside” raises eyebrows, as most early-stage funds would find such a return underwhelming.