In December, Black Forest Labs raised funding at a $3.25 billion valuation after signing deals to power AI image-generation features in Adobe and graphic design platform Canva. It has also tied up with leading AI labs like Microsoft, Meta and xAI to provide similar features in their products.
Nearly two years after its launch, Black Forest Labs may be taking a selective stance about who it will work with. In 2024, Elon Musk’s xAI uses Black Forest Labs to power Grok’s first image generator. That partnership put Black Forest Labs on the map but generated a lot of controversy due to the chatbot’s limited security measures. This ended months later when xAI developed an in-house AI image model.
In recent months, xAI approached Black Forest Labs about re-licensing the startup’s technology, sources familiar with the matter told WIRED. This time, Black Forest Labs declined, the sources said, finding it too operationally difficult to partner with XAI, which has a famously chaotic work environment. xAI did not immediately respond to WIRED’s request for comment.
In September, Black Forest Labs signed a $140 million multiyear deal to give Meta access to its AI image-generation technology.
These AI labs want to work with Black Forest Labs because its image generators are among the world’s best, ranking just below OpenAI and Google’s offerings on the third-party firm’s artificial analysis benchmarks. The startup also offers some of the most downloaded text-to-image models on Hugging Face, indicating that a lot of AI image tools on the market are likely powered by the free version of Black Forest Labs’ technology.
This is especially impressive given that the company has historically had far fewer resources than its competitors. This has led it to a more efficient line of research called latent propagation, which is essentially when an AI model first creates a rough blueprint of an image, and then draws in more detail.
“Latent propagation enabled us to offer very powerful models that took orders of magnitude less resources than our competing models,” co-founder Andreas Blattmann said in an interview with WIRED on HumanX’s stage this week.
Despite its success, Black Forest Labs believes that image building is only the beginning. Blattman said the startup plans to unveil a robot powered by one of its AI models later this year. (He didn’t say which company is making the hardware.) The effort is part of a larger opportunity the company sees to create AI that can understand the physical world and take action.
“Visual intelligence is much more than content creation. Content creation is the first step in this whole technology,” Blattman said. “The thing I’m personally really excited about—and this is a pattern at this conference—is physical AI.”
Black Forest Labs is also in talks with some hardware companies to power features in products like smart glasses and robots, sources told WIRED.
Building in the Black Forest
Blattman and his co-founders, Robin Rombach and Patrick Essar, made a name for themselves in 2021 by publishing some groundbreaking research on AI image models. In 2022, he was hired by Stability AI and released Stable Diffusion, a popular open source AI image generator, based on his prior research. But two years later, he announced his departure and launched Black Forest Labs.
Rather than move to San Francisco, the trio decided to maintain a headquarters near their hometown in Freiburg, Germany. Blattman said the decision has been critical to the company’s success.
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