And then there are two: Of the original 11 co-founders who started xAI with Elon Musk three years ago, only two remain as the deep learning lab continues to restructure its workforce to compete with Anthropic and OpenAI. That restructuring, Musk insists, is by construction.
“xAI wasn’t built right the first time, so it was rebuilt from the ground up,” Musk said Thursday on his social media platform, X. By many measures, it’s not going so well.
The immediate pressure is competition. This week, xAI co-founders Zihang Dai and Guodong Zhang left the outfit after Musk complained that the company’s AI coding tools did not compete effectively with Claude Code or Codex, rival programming assistants made by Anthropic and OpenAI, respectively. Musk said the company held an all-hands meeting on Wednesday focused on how participation could be done, which he predicted would happen by the middle of the year.
Coding tools are very important because that’s where the money is. Although the increase in users earlier this year was enabled by xAI’s loose control of Grok’s ability to generate pornographic and even offensive images, coding tools are seen as the main money-generating technology for AI labs. That makes xAI’s current lag in this area more than a visual problem; it’s a business problem.
The staff overhaul extends beyond this week. Last month, 11 senior engineers at xAI, including two co-founders, left the company following changes that Musk described as restructuring to fit a larger business. That effort apparently wasn’t enough: The Financial Times reported that executives from SpaceX and Tesla parachuted into the company to screen employees and fire those who didn’t make the grade.
The two remaining founders, Manuel Kroiss and Ross Nordeen, along with Musk, have their work cut out for them.
Musk now casts a wider net for talent. On Thursday, he said to X that he and another college, Baris Akis, are currently reviewing rejected employment applications from the company, with a view to reaching promising people who should have the opportunity to interview. “I’m sorry,” added Musk, speaking to the crowd of strangers he had eaten.
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For comparison, LinkedIn reports that xAI has more than 5,000 employees, compared to more than 7,500 at OpenAI and more than 4,700 at Anthropic.
On the employment front, there is at least one encouraging sign. Andrew Milich and Jason Ginsberg join xAI from AI coding tools company, Cursor, where they were both jointly responsible for product engineering. Unlike xAI, Cursor relies on frontier labs to access the AI models it runs on. Their decision to join xAI may reflect the value of direct access to LLM and computing resources to implement it – and suggest that xAI’s main asset, its boundary model, is still an attractive draw.
Either way, the pressure to show results is as much on the outside as it is on the inside. Now that xAI is part of SpaceX, and with the expected public offering of SpaceX shares, the cash-burning unit is under pressure to demonstrate the real acquisition of Grok, its LLM. (The disruptive AI divide is not a story Musk needs investors to read.)
For a long time, Musk is betting on something bigger than coding tools. XAI’s Macrohard project — Musk is sure the name is a “joking reference to Microsoft” — aims to build an AI agent that can do anything a white-collar worker can do on a computer. Toby Pohlen, who was chosen to lead the project in February, left within weeks, and this week, Business Insider reported that Macrohard is standing down.
Musk’s response has been to name one of his companies in the project. He first revealed that Macrohard is a joint effort with Tesla, which is also developing a companion agent called “Digital Optimus” – a reference to Tesla’s Optimus humanoid robot. In Musk’s description, the xAI language model will guide the Tesla agent as it performs tasks.
It is ambitious; and it is not unique. Instead, the idea is not far from what Perplexity – an AI-powered search engine – is doing with its new offering “Everything is a Computer”, which aims to provide business users with a dedicated “digital representative” that can organize their digital activities. It also echoes what entrepreneur Peter Steinberger is working on now at OpenAI, after creating the popular OpenClaw agents.
