And then two remained: Of the 11 original co-founders who started xAI with Elon Musk three years ago, only two remain as the deep learning lab continues a staff turnover to compete with the likes of Anthropic and OpenAI. That reconstruction, Musk insists, is intentional.
“xAI wasn’t built right the first time, so it’s being rebuilt from the ground up,” Musk said Thursday on his social media platform, X. By most measures, it’s not going well at all.
The most immediate pressure is competitive. This week, xAI co-founders Zihang Dai and Guodong Zhang left the team after Musk complained that the company’s AI coding tools did not compete effectively with Claude Code or Codex, rival programming assistants created by Anthropic and OpenAI, respectively. Musk said the company held an all-hands meeting on Wednesday that focused on how to catch up, which he predicted would be possible by the middle of this year.
Coding tools are very important because that is where the money is. While the surge in users earlier in the year was fueled by xAI’s lax regulation of Grok’s ability to produce sexual and even abusive images, encryption tools are seen as the key revenue-generating technology for AI labs. That makes xAI’s current lag in this area more than a perception issue; It’s a business problem.
The staff turnover will continue well beyond this week. A month ago, 11 xAI senior engineers, including two co-founders, left the company The next changes Musk described as a reorganization to adapt to a larger business. That effort was apparently insufficient: The Financial Times reported that SpaceX and Tesla executives have parachuted into the company to evaluate employees and fire those who don’t make the grade.
The two remaining co-founders, Manuel Kroiss and Ross Nordeen, along with Musk, have their work cut out for them.
Musk is now casting a wider net for talent. On Thursday, he said in X that he and another colleague, Barry Akisare currently reviewing rejected job applications in the company, with a view to reaching out to promising candidates who should have had the opportunity to be interviewed. “My apologies,” Musk added, addressing the crowd of strangers he had fooled.
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For comparison, LinkedIn reports that xAI has just over 5,000 employees, compared to over 7,500 at OpenAI and over 4,700 at Anthropic.
On the hiring front, there is at least one encouraging sign. Andrew Milich and Jason Ginsberg join xAI from AI coding tools company Cursor, where they both had joint responsibility for product engineering. Unlike xAI, Cursor relies on frontier labs to access the AI models it runs on. Its decision to join xAI may indicate the importance of direct access to LLM and the computing resources to run them, and suggest that xAI’s core asset, its own frontier model, remains a draw.
Either way, the pressure to show results is both external and internal. Now that xAI is part of SpaceX, and with a SpaceX public offering planned, the cash-burning unit is under pressure to demonstrate real buy-in to Grok, its LLM. (A shaky AI division is not the story Musk needs investors to read.)
In the long term, Musk is betting on something bigger than coding tools. xAI’s Macrohard project (Musk is convinced the name is “a fun reference to Microsoft”) aims to create an AI agent capable of doing anything a white-collar worker can do on a computer. Toby Pohlen, chosen to lead the project in February, left after a few weeks, and this week Business Insider reported that Macrohard was on pause.
Musk’s response has been to incorporate another of his companies into the project. He revealed for the first time that Macrohard is a joint effort with Tesla, which is also developing a companion agent called “Digital Optimus,” a reference to Tesla’s humanoid robot Optimus. in musk descriptionthe xAI language model would direct the Tesla agent while performing tasks.
He is ambitious; It is not unique either. Instead, the vision is not far off from what Perplexity, an AI-powered search engine, is doing with its new “everything is computer“, which aims to offer business users a dedicated “digital proxy” that can orchestrate their digital tasks. It also echoes what entrepreneur Peter Steinberger is now working on at OpenAI, after creating the popular OpenClaw personal agents.
