Lensa, an AI picture app developed by Prisma Labs, noticed its reputation skyrocket with the introduction in November of its “Magic Avatar” function that turned selfies into pictures that strikingly resembled skilled digital artwork.

Catie Dull/NPR

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Catie Dull/NPR

Lensa, an AI picture app developed by Prisma Labs, noticed its reputation skyrocket with the introduction in November of its “Magic Avatar” function that turned selfies into pictures that strikingly resembled skilled digital artwork.

Catie Dull/NPR

A Belarussian millionaire dwelling in Cyprus. A dinner with the CEO of Snap. A six-figure patent troll case.

They are all a part of the historical past of Prisma Labs, a largely obscure synthetic intelligence startup that spent years underneath the radar till November, when the corporate launched “Magic Avatars.”

The function in Prisma’s Lensa app has allowed hundreds of thousands to show mundane selfies into dazzling AI-generated animated portraits of fairy princesses and astronauts. And it has introduced in tens of hundreds of thousands of {dollars}.

Now, Prisma is making an attempt to capitalize on the magic.

Company executives are scrambling to provide you with methods to increase the excitement. That has included partnership talks with main corporations like Disney and Marvel, NPR has discovered.

At the identical time, Prisma is grappling with its previous. It’s not the primary time the little-known startup has taken the web by storm, but a historical past of stumbles and a protracted collection of failed acquisition discussions haunts the corporate because it makes an attempt to stay a formidable participant within the app world.

NPR talked to half a dozen folks with shut ties to the corporate, a 90-person operation run out of Cyprus, to deliver the corporate’s shadowy historical past into clearer view.

Commanding outsize energy at Prisma now’s a Belarussian tech entrepreneur behind a collection of well being and wellness apps together with Flo, a period-tracking service, however he has saved his ambitions for the corporate tightly guarded.

Back in 2016, the final time Prisma launched an AI-powered picture app that captured a worldwide viewers, firm executives have been flying to Beijing to Silicon Valley for conferences with tech titans that confirmed eager curiosity within the firm’s potential.

No acquisition offers have been ever inked.

Company insiders cite a patent troll lawsuit, an organization tradition that didn’t mesh with extra established tech corporations and, not less than within the U.S., anti-Russian skepticism as elements within the rush of curiosity finally dissipating.

Prisma is hoping this time is completely different.

The launch of Magic Avatars rocketed to the highest of App Store charts after being downloaded greater than 20 million instances. For $3.99, customers might create 50 photorealistic and ethereal avatars of themselves as if drawn by skilled digital artists — normally with a flattering twist.

The idea was easy: the app scrapes billions of publicly-available pictures from the net and processes them by way of an open-source algorithm often called Stable Diffusion.

So was the attraction. A gusher of money poured in, at the same time as Lensa confronted criticism about how female bodies and dark skin have been portrayed, in addition to arguments about whether or not the technology steals artists’ work. The promise and potential pitfalls of AI wizardry was being taken in by 1000’s of individuals every day, as everybody gazed in surprise at AI pictures sporting their faces.

“They hit on an interesting combination of two things: an approachable interface and how many people online like to explore alternative versions of themselves,” stated Max Kreminski, a researcher on the University of California, Santa Cruz, who research inventive functions of AI.

Examples of pictures generated by Lensa’s Magic Avatars function, which debuted in November and has been used tens of hundreds of thousands of instances.

Prisma Lab’s Lensa App

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Prisma Lab’s Lensa App

Examples of pictures generated by Lensa’s Magic Avatars function, which debuted in November and has been used tens of hundreds of thousands of instances.

Prisma Lab’s Lensa App

The economics of the app delivered a fats return.

It solely prices the corporate about 50 cents to course of one pack of Magic Avatars, which individuals pay not less than $3.99 for, “so there’s a great margin,” in response to one insider.

Prisma Labs made greater than $70 million from the app in November alone, an organization official estimated.

The single-biggest expense is the immense computing energy required to course of the avatars, in response to an insider who estimated that half of the income from Magic Avatars was paying, primarily, for electrical energy.

The firm wouldn’t touch upon particular figures, however stated it depends on Amazon Web Services’ servers to energy the function.

Company executives say customers’ selfies are deleted from its servers after the avatars are made, however that the selfies are used as knowledge to coach the app’s algorithm.

From Russian Big Tech to viral AI picture app

Five males from Russian Big Tech joined forces in June 2016 to discovered Prisma: Alexey Moiseenkov, Oleg Poyaganov, Ilya Frolov, Andrey Usoltsev and Aram Hardy.

As a scholar on the Moscow Institute of Physics and Technology, Frolov had taken a category from Moiseenkov, a former product supervisor at Mail.ru, which owns a social media website much like Facebook. Moiseenkov was impressed by his scholar’s concept to attempt to make an AI-powered picture app and they also teamed up with Poyaganov and Usoltsev, who each beforehand labored at Yandex, the most well-liked search engine in Russia.

Hardy, one other former Mail.ru worker, was introduced on to deal with advertising and marketing.

With a shoestring staff of simply 9 folks, they created a success app that provided easy-to-use modifying instruments and filters so folks might make their images resemble well-known artworks. Tech publication the Verge called it the perfect app of the yr in 2016, declaring that “Prisma will make you fall in love with photo filters all over again.”

Even although the app might apply filters to images instantaneously, a buffering time was added to make customers really feel like the method was extra “magical,” in response to one former prime worker of Prisma, who stated “we thought users wanted to feel like there was magic happening.”

A spokeswoman for Prisma disputes this, saying the processing time mirrored the AI system working in actual time.

In its newest app, Lensa, processing Magic Avatars can take hours to complete. People with data of the app say that isn’t the results of trickery, however a window into the computing energy mandatory to provide the photographs. The course of “requires an astonishing amount of calculation,” the Prisma spokeswoman stated.

At the peak of its 2016 success, the corporate encountered some bother. It was hit with a pricey lawsuit: An app developed by a North Carolina man known as “Prizmia for GoPro” modified its title to “Prizmia” and sued for trademark infringement.

While a federal choose in Delaware eventually ruled in favor of Prisma greater than a yr after the swimsuit was filed, it value the corporate $600,000 in authorized charges and sapped a major quantity of the scrappy firm’s assets, in response to an organization supply who was concerned within the case, who described the Prizmia proprietor as a patent troll.

The kicker? The plaintiff had provided Prisma to accept $400,000.

“Which we thought was ridiculous at the time,” the supply stated. “But it ended up being more affordable than our legal defense.”

As the lawsuit unfolded, tech suiters nonetheless got here knocking.

Many stalled acquisition talks

According to an individual concerned within the negotiations, Chinese tech giants Tencent and Bytedance held acquisition talks with Prisma’s founders. Facebook and Google additionally have been in discussions. No deal ever materialized. Apple, too, engaged with Prisma round this time, and the talks met the identical destiny.

“There were some troubles. Visa issues and so on,” Hardy, a Prisma co-founder, advised NPR. “So the whole discussions just faded.”

The CEO of Snap, which makes Snapchat, Evan Spiegel, met with Moiseenkov and expressed curiosity simply earlier than Snap went public in 2017, two sources advised NPR. But earlier than a suggestion could possibly be prolonged, talks broke down over visa points associated to shifting Prisma’s small Moscow staff to the U.S.

It is just not clear why Prisma was by no means in a position to hammer out an settlement with any of the corporations, however one early investor stated the joy concerning the app was extraordinary, making the dearth of stable gives all of the extra disappointing.

“This level of interest was extremely unusual,” stated the corporate supply, who believes that headlines on the time about Russian interference within the 2016 election led to hesitation about buying a Moscow startup, not less than among the many American tech corporations.

Prisma tried to pivot to changing into a business-to-business firm within the intervening years, however the effort by no means took off.

Moiseenkov has since left the corporate, handing the CEO reins to Usoltsev.

Last yr, in March, Usoltsevf laid off 30% of the employees and advised staff they must relocate to Cyprus, or exterior of Russia.

“We were told potential investors didn’t want to work with Russians,” stated one former Prisma worker, noting that the announcement was made weeks after Russia invaded Ukraine.

“They said an acquisition would be harder if we stayed in the country,” the ex-employee stated.

The firm confirmed the layoffs and observe to employees to NPR, however stated the strikes have been pushed by financial sanctions leveled towards Russia within the wake of its struggle in Ukraine.

Belarussian tech investor largest Prisma investor

Belarussian investor and former Mail.ru govt Yuri Gurski now owns the vast majority of the corporate’s shares. Gurski operates the startup Palta, the maker of a collection of well being and wellness apps together with Flo, Simple Fasting, and Zing Fitness.

Back in 2016, Mail.ru additionally invested in Prisma Labs. Since 2021, its chief govt, Vladimir Kiriyenko, has been deemed a Russian oligarch and was sanctioned by U.S. and European authorities following Russia’s invasion of Ukraine. But Mail.ru not has any possession of Prisma.

Palta bought Mail.ru’s shares in addition to former CEO Moiseenkov’s stake within the firm, giving it greater than 50% management. Neither Gurski, nor some other consultant from Palta, responded to requests for remark.

Prisma Labs now has about 90 staff, most of whom are based mostly in Cyprus, the place Gurski additionally lives.

The firm was integrated in Sunnyvale, Calif., however an individual concerned in that course of stated the Sunnyvale location is just not far more than a P.O. Box.

Lensa eyeing model partnerships

Prisma insiders say many on the firm are dashing to maintain the momentum of Magic Avatars alive to keep away from repeating historical past.

“It’s trendy now, but will people use it four months from now? If it’s anything like what happened in 2016, everyone will forget about them by then,” stated an investor who has backed the corporate for years.

Prisma is eyeing potential collaborations with main manufacturers that may need to soar on the AI second.

According to a number of folks with data of the talks, it has held discussions with Disney and Marvel about teaming as much as permit customers to show their selfies into characters from the 2 franchises, although one supply indicated {that a} deal doesn’t seem imminent.

Kreminski, the AI researcher with the University of California, Santa Cruz, stated dozens of startups are constructing inventive instruments on prime of the Stable Diffusion know-how that Lensa is utilizing — to not point out different spectacular AI picture turbines rising in reputation, like DALL-E2 and Midjourney — so standing out goes to take far more than a viral avatar function.

“It’s a super frothy space. There are so many people trying to capitalize on this technology right now,” he stated. “And I don’t know if the existence of past success means there will be future success.”