Startups Weekly: Major Changes at the AI Heavyweights

Stability AI finds itself without a permanent CEO as Emad Mostaque, the founder and former chief executive, departs to pursue the decentralized AI dream. Mostaque’s exit leaves the unicorn startup under the interim leadership of co-CEOs Shan Shan Wong and Christian Laforte. Mostaque’s departure was marked by a dramatic proclamation on X, where he cited his desire to combat the “centralized AI” concern, emphasizing the issue of control over AI systems.

Meanwhile, Microsoft has executed a significant acquisition, acquiring the co-founders and a substantial portion of the team from Inflection AI, along with the rights to utilize their technology, in a deal valued at $650 million. The transaction, perceived by some as more akin to a ransom payment than a strategic merger and acquisition move, involves $620 million for access to Inflection’s technology and an additional $30 million to prevent potential legal action from the company. Reid Hoffman, a Microsoft board member and co-founder of Inflection, reassured stakeholders via LinkedIn that early investors would see a 1.5x return, with later investors receiving a more modest 1.1x return, although the financial details appear somewhat dubious. Describing a 1.5x return as a “good upside” may raise eyebrows among early-stage investors, who typically expect more substantial returns on their investments.

1. **Facebook’s Snooping Scandal:** Meta, formerly known as Facebook, has been caught engaging in a covert operation dubbed “Project Ghostbusters,” aimed at spying on Snapchat’s encrypted traffic. The objective was to decrypt user behavior data, potentially giving Meta a competitive advantage over Snapchat.

2. **Robinhood’s Gold Card:** Robinhood introduced its Gold Card, a credit card boasting numerous features that could rival the popular Apple Card. Available to Robinhood Gold members for a monthly fee of $5, the Gold Card offers cash back rewards ranging from 3% to 5% on all purchases.

3. **Nvidia and AWS as Accidental Heroes:** Nvidia and Amazon Web Services (AWS) have stumbled upon their core businesses, akin to a toddler discovering hidden cookies. AWS realized it could monetize its in-house storage and compute services, while Nvidia found that its gaming GPUs were unexpectedly well-suited for AI workloads, positioning both companies as potential industry leaders.