Startups Weekly: Big shake-ups at the AI heavyweights

There’s not that much news from me this week, but I’ve been doing a ton of prep for TechCrunch Early Stage taking place in Boston on April 25. It’s going to be a fantastic show, and you still have time to grab tickets at early-bird prices, if you’re quick.

Most interesting startup stories from the week

Stability AI bids adieu to its founder and chief executive, Emad Mostaque, who’s decided to chase the decentralized AI dream, leaving the unicorn startup without a permanent CEO. The company, known for burning through cash faster than a teenager with their first debit card, is now in the hands of interim co-CEOs Shan Shan Wong and Christian Laforte. Mostaque, in a dramatic exit, took to X to proclaim his departure was all about fighting the “centralized AI” bogeyman because, apparently, the real problem in AI isn’t rogue robots but who gets to control them.

Microsoft has orchestrated a heist worthy of a Hollywood plot, snagging the co-founders and much of the staff of Inflection AI, along with the rights to use their tech, for a cool $650 million. The deal, which to me seems more like a ransom payment than an M&A push, includes $620 million for the privilege of using Inflection’s tech and an extra $30 million to ensure Inflection doesn’t sue for Microsoft’s bold talent grab. Reid Hoffman, Microsoft board member and Inflection co-founder, took to LinkedIn to assure everyone that Inflection’s investors would sleep well tonight, with early backers getting a 1.5x return and later ones a modest 1.1x, despite the math not quite adding up. It’s pretty bold to describe a 1.5x return as a “good upside,” by the way — most early-stage funds would be pretty displeased.