When Joaquín Cuenca Abela first saw DALL-E, he knew his company needed to change. As CEO of Freepik, a platform that started as a search engine for free images and grew into a major provider of illustrations and vectors, he recognized that AI image generation would transform the creative industry.

"I remember DALL-E 1 - it was getting there but not quite. With DALL-E 2, I flipped," Cuenca Abela says. "I realized this technology would keep improving. To some extent, our company could become obsolete."

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Rather than resist the change, Freepik embraced it. The company, based in Málaga, Spain, assembled teams to work on AI models and build user-friendly products. They started with a text-to-image generator and gradually expanded their AI capabilities, developing workflows and eventually their own models.

This approach sets Freepik apart from competitors. While Shutterstock and Getty Images opted to work with external partners like OpenAI and NVIDIA, Freepik invested in building internal AI expertise. "They really didn't go themselves into iterating with this tech," Cuenca Abela notes about his competitors.

The pivot seems natural given Freepik's history of innovation. The company began as a vertical search engine for free images, built by three founders including Cuenca Abela, who previously worked at Google. When a major image provider asked them to remove their content, Freepik adapted by creating their own illustrations and vectors based on user search data.

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This business model helped Freepik gain popularity in emerging markets where users often can't afford premium stock images. With traffic levels two to four times higher than traditional stock photo sites, Freepik could offer lower prices while still paying market rates to creators.

On the ethical implications of AI art, Cuenca Abela takes a measured stance. Freepik uses third-party models trained with opt-out policies and is developing its own model using only licensed images. They share revenue with creators when their images are used for AI training, using the same revenue-sharing model as regular downloads.

"If people decide that opt-out is not an acceptable model, there is no AI. There's no ChatGPT, there's nothing," he explains. While acknowledging the current situation looks bleak for many illustrators, he suggests AI might ultimately increase demand for art by making it more accessible.

With over 500 employees today, Freepik's transformation mirrors larger changes in creative industries. As Cuenca Abela points out, the questions raised by AI art are just the beginning. "If you think about how many things AI can do, it's basically all white-collar jobs. We're going to have this conversation on a bigger scale."

Freepik's story shows how companies can adapt to technological disruption - by moving quickly, building internal expertise, and thoughtfully engaging with ethical challenges. As AI continues to reshape creative work, their experience offers valuable lessons for other organizations facing similar transformations.