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StabilityAI cofounder says CEO tricked him into selling stake for $100

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Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#121

Post by inetknght »

NoRelToEmber wrote: post #100
TrackerFF wrote: post #74

Earlier quoted context omitted.

Small story on these kind of takeovers, but on a MUCH, MUCH smaller scale: Back home we have this small newspaper that's been going on for 25 years. It's just a small 3 man operation, and it's just a weekly paper that covers local stuff in our small county. Most of their customers are expats and older folks. When they started out 25 years ago, they raised funds by selling private stocks. All in all, there are maybe 1…

> A couple of years ago some of the leading media companies in our country (Norway) started consolidating "power" by acquiring small local newspapers all over the country. This sounds like it should be a pretty big story. "Extremely dangerous to our democracy." On the other hand, it also sounds like it wouldn't be.

> "Extremely dangerous to our democracy."

Obligatory:

https://www.youtube.com/watch?v=QxtkvG1JnPk

https://www.youtube.com/watch?v=cSFqA_8x9jA

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#122

Post by busyant »

pyuser583 wrote: post #105
nobrains wrote: post #23

Earlier quoted context omitted.

There seem to be 2 problems here: 1. Giving another party 49% doesn't guarantee you will have retaining control. You having 51% shares does guarantee that. So, their strategy was flawed. 2. Not sure if regulations allow this, but to make it bullet proof they should have made a contract that the PR group will not go beyond 49%. Without either of the above, the company just did not do good diligence.

Having 51% control guarantees nothing. I know a guy who had 51% in the family company. His retired dad had, in exchange for money, deprived the 51% shares of their voting power. His dad then sold the shares on the local stock exchange. A couple months later, his CEO/son was fighting a hostile takeover of the family-run, but publicly traded company. So his son bought the 51% from the local stock exchange, thinking he…

> Having 51% control guarantees nothing.

Maybe. But something (literally) doesn't add up in the original story.

If the CEO had 51% and sold the 49%, there is no place for the PE firm to capture the 2%.

Unless there is convertible debt or some such thing. Or the story is overly-simplified in some other way.

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#123

Post by Al0neStar »

dpiers wrote: post #58

This story by itself might sound like sour grapes, but in combination with other reports about the CEO(1), I suspect bad news ahead for Stability's investors. It seems like a narcissist with a very 'dynamic' relationship with the truth chased the AI hype train and ended up with a bunch of money and attention due to a stupid VC. He pissed off the teams that invented Latent Diffusion and his partners at RunwayML in the…

2: https://decrypt.co/147191/no-human-programmers-five-years-ai...

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#124

Post by bhouston »

iambateman wrote: post #39

I was part of a group which ceded managerial control of a small business (think 100-500k/year) to a minority shareholder. This person was paid a professional salary to maintain the business, while we kept majority voting rights. We still had majority ownership until he decided he didn’t give a ** about our ownership claims and openly did his own thing. The problem is, no lawyer is going to take the case because the $…

It is confusing what when on here. If you hired him then you have a contract. Fire him. And if he doesn’t leave or return bank accounts or money get the police to charge him with trespass or thief depending. Also he has probably misappropriated money so find that and claw it back.

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#125

Post by anonylizard »

NoRelToEmber wrote: post #100
TrackerFF wrote: post #74

Earlier quoted context omitted.

Small story on these kind of takeovers, but on a MUCH, MUCH smaller scale: Back home we have this small newspaper that's been going on for 25 years. It's just a small 3 man operation, and it's just a weekly paper that covers local stuff in our small county. Most of their customers are expats and older folks. When they started out 25 years ago, they raised funds by selling private stocks. All in all, there are maybe 1…

> A couple of years ago some of the leading media companies in our country (Norway) started consolidating "power" by acquiring small local newspapers all over the country. This sounds like it should be a pretty big story. "Extremely dangerous to our democracy." On the other hand, it also sounds like it wouldn't be.

The era of small local newspapers is long over. Its like saying buying all the libraries would be a threat to democracy.

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#126

Post by blibble »

Spivak wrote: post #85
wongarsu wrote: post #68

Earlier quoted context omitted.

Zuckerberg (and a small group of other Meta shareholders) hold shares that have 10x as much voting power as normal shares. He has about 90% of those special shares, giving him a solid majority in most matters. Some other companies like Lyft or Alphabet have similar structures, but it is very unusual.

I'm actually surprised it's not more common. If I buy meta stock I have zero expectation of being able to sway company decisions. I just care that if they make money I make money.

it's not more common because the index providers cottoned on and now it's banned if you want to be in the index

and rightfully so

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#127

Post by NoRelToEmber »

anonylizard wrote: post #125
NoRelToEmber wrote: post #100

Earlier quoted context omitted.

> A couple of years ago some of the leading media companies in our country (Norway) started consolidating "power" by acquiring small local newspapers all over the country. This sounds like it should be a pretty big story. "Extremely dangerous to our democracy." On the other hand, it also sounds like it wouldn't be.

The era of small local newspapers is long over. Its like saying buying all the libraries would be a threat to democracy.

If it were simply "over", there would be no need to buy them.

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#128

Post by colechristensen »

arcticbull wrote: post #38
nobrains wrote: post #23

Earlier quoted context omitted.

There seem to be 2 problems here: 1. Giving another party 49% doesn't guarantee you will have retaining control. You having 51% shares does guarantee that. So, their strategy was flawed. 2. Not sure if regulations allow this, but to make it bullet proof they should have made a contract that the PR group will not go beyond 49%. Without either of the above, the company just did not do good diligence.

I believe the usual path in this type of situation is to dual-class shares, so you can retain voting control while selling beneficial ownership to others. I suspect the PE group would have, you know, rejected this arrangement given their plan.

there are also “poison pill” provisions to prevent takeovers in various ways such as providing minority owners the ability to purchase stock at very steep discounts if a certain event is triggered

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#129

Post by __loam »

dpiers wrote: post #58

This story by itself might sound like sour grapes, but in combination with other reports about the CEO(1), I suspect bad news ahead for Stability's investors. It seems like a narcissist with a very 'dynamic' relationship with the truth chased the AI hype train and ended up with a bunch of money and attention due to a stupid VC. He pissed off the teams that invented Latent Diffusion and his partners at RunwayML in the…

Yeah I've only ever heard he is a shady ass hole. He's definitely a coattail rider.

Re: StabilityAI cofounder says CEO tricked him into selling stake for $100

#130

Post by __loam »

Filligree wrote: post #69
ansk wrote: post #56

This dude very well may be better off with the 100 bucks at this point. The company is bleeding money at a ridiculous rate, so they're going to need to fundraise shortly. Given how little they have to show for their initial funding, they're going to struggle to attract any further investments. The initial investors already look like absolute clowns for giving a $1B valuation to a company whose primary selling points…

Let's be nice; they've released Stable Diffusion and now SDXL for free, which has completely changed the landscape on what can practically be done by individuals. Having an open foundation model for image-generation is a service to the world. It just isn't exactly obvious how it could possibly lead to profit.

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