The AI Takeover Unfolding in Lady Gaga's Greenhouse

Introduction

In February 2024, Lady Gaga co - hosted a party at her $22.5 - million oceanside estate in Malibu with Sean Parker, the billionaire founder of Napster and first president of Facebook. The event was to mark the launch of a skin - care nonprofit. Amid the candlelit ambiance, with a string quartet playing (Grammy - winning, naturally), an unexpected turn of events was brewing that would have far - reaching implications for the AI and Hollywood landscapes.

The Encounter at the Party

Prem Akkaraju, a close friend and business partner of Parker, was present. Having known each other since Parker's Facebook days and Akkaraju's time in the music industry, they had a history of business ventures. At the party, Akkaraju sat next to an investor in Stability AI. The investor revealed that despite the early success of the text - to - image generator Stable Diffusion, launched by Stability AI in 2022, the company was on the verge of collapse, "within days of not having options." The investor suggested that Akkaraju should transform Stability into a Hollywood - friendly AI model.

The State of Hollywood and the AI Promise

The US film and TV production had declined by about 40% since 2022 due to rising production costs, overseas competition, and labor disputes. AI was seen as a potential savior, promising to speed up production and cut costs. For example, automating tasks like dialog translation, frame - by - frame visual effects addition, and microphone editing. However, the industry's unions had gone on strike in part to ensure that generative AI wouldn't replace union jobs soon. Despite this, major studios and streaming services were eager to develop AI strategies, and numerous startups were working on relevant tools.

The Rise and Fall of Emad Mostaque at Stability AI

The Founding and Success

Emad Mostaque, a former hedge fund manager, founded Stability in 2020 with the mission to "build systems that make a real difference" in solving society's toughest problems. By 2022, he aimed to create a cloud supercomputer for a generative AI model. Offering the supercomputer to academic researchers working on an open - source text - to - image system, they launched Stable Diffusion in August 2022. It was an instant hit, gaining 10 million users in two months. The model's openness was key to its success, allowing researchers to extend and fine - tune it. By October 2022, with only 77 employees but a large community, Stability AI raised $101 million in a seed round and became a unicorn.

The Downfall

However, success brought scrutiny. In January 2023, Getty Images sued Stability AI in London and the US for allegedly using 12 million proprietary photographs for model training. Then, in June 2023, Forbes published an article alleging that Mostaque had inflated his credentials and misrepresented the business. Additionally, the company reportedly owed millions to Amazon Web Services. As a result, investors lost confidence. By the end of 2023, key executives and researchers had left, and Mostaque finally departed on March 22, 2024, shortly after Lady Gaga's party.

Akkaraju and Parker's Takeover

Akkaraju and Parker wasted no time in taking over Stability AI, installing Akkaraju as CEO and Parker as board chairman. They did not communicate with Mostaque, despite his offer of support. They aimed to remake the company, facing increasing competition. In September 2024, Runway signed a major deal with Lionsgate, pushing the AI - fication of Hollywood forward. Moonvalley also reported that over a dozen major Hollywood studios were testing its model.

Akkaraju's Strategy

Akkaraju decided that Stability would no longer compete with OpenAI and Google in building frontier models. Instead, it would create apps on top of existing models, reducing computing costs. He negotiated a new deal with cloud computing vendors, clearing the company's debt. Investors like Coatue returned. Akkaraju positioned Stability as a software - as - a - service company for Hollywood, with the goal of augmenting filmmakers' existing tools, not generating films. He emphasized having the creator at the center, highlighting James Cameron's presence on the board.

The Irony of James Cameron's Involvement

A decade ago, Cameron opposed Parker and Akkaraju's streaming platform, the Screening Room. However, after they took over Weta Digital, which developed virtual cameras for Cameron's projects, a friendship formed. Now, Cameron is on the board of the AI company they run.

The State of AI in Hollywood

Copyright and Data Issues

In June 2024, Getty dropped its copyright infringement claims in the UK as the trial neared a close, while the US trial is ongoing. Akkaraju stated that the company sources data from publicly available and licensed datasets, and fine - tunes with client - provided data.

Technical Limitations

While AI is being used in the "previz" process, it has limitations for feature films. Text - to - image generators often lack the required quality, and there are issues with consistency. Filmmakers need higher resolution, repeatability, and controllability. For example, an AI - generated shot for Netflix was rejected due to insufficient resolution.

Industry Adoption

Despite limitations, some filmmakers are experimenting with AI. Jon Erwin used generative AI in Amazon's House of David, reducing costs and speeding up production. However, he hasn't been able to use Stability's tools at scale. The taboo on studios admitting AI use is softening, as Netflix's Ted Sarandos announced that gen AI final footage was used in one of its series, speeding up production and cutting costs.

Stability AI's Offerings

Stability AI is developing tools like a virtual camera that can turn 2D images into 3D and replicate camera moves. However, the tools are in their early days. For example, the drop - down menu for camera moves needs improvement. The conversation also touched on how AI is automating tasks like rotoscoping, raising concerns about job losses in Hollywood.

The Broader Implications

The AI revolution is already transforming Hollywood. While Akkaraju and Parker hope their takeover of Stability AI will succeed, the impact of AI on employment in the industry remains a concern. The bank - teller analogy, often used by techno - optimists like Eric Schmidt, has its flaws as the number of bank tellers has been declining since around 2015.

Update: 8/20/2025, 4:45 PM EDT: WIRED has corrected the spelling of Jon Erwin's name. WIRED has also clarified details about Stability AI's training data, as well as its investors, and removed a reference to Stable Diffusion 1.5.

Let us know what you think about this article. Submit a letter to the editor at [email protected].