And then there were two: Of the original 11 co-founders who launched xAI with Elon Musk three years ago, only two remain as the deep learning lab continues a staff overhaul to compete with Anthropic and OpenAI. According to Musk, this restructuring is by design.
“XAI wasn’t built right the first time, so it’s being rebuilt from the ground up,” Musk said said Thursday on social media platform, X. By most measures, things aren’t going so smoothly.
The most 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 developed by Anthropic and OpenAI, respectively. Musk said the company held a comprehensive meeting on Wednesday and predicted it would be possible by the middle of this year.
Coding tools are very important because they are where the money is. Although user growth at the start of the year was supported by the loose regulation of xAI’s Grok’s ability to generate sexual and even offensive imagery, coding tools are considered a key revenue-generating technology for AI labs. This makes xAI’s current lag in this area more than a perception problem; is a business problem.
The personnel overhaul extends beyond this week. A month ago, 11 senior engineers at xAI, including two co-founders, left the company Musk described the following changes as a reorganization to fit the larger business. This effort was apparently not enough: The Financial Times informed That SpaceX and Tesla executives parachute into the company to evaluate their employees and fire those who don’t.
The other two co-founders, Manuel Kroiss and Ross Nordeen, have their work cut out for them, along with Musk.
Musk is now casting a wider net for talent. On Thursday, he said at X that he and another college, Barry Akiscurrently under review applications for employment were rejected in the company, with an eye to contacting prospective candidates who should have the chance to interview. “I’m sorry,” Musk said, addressing his imaginary strangers.
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By comparison, LinkedIn says xAI has just over 5,000 employees, OpenAI has more than 7,500, and Anthropic has more than 4,700.
There is at least one encouraging sign on the recruiting front. Andrew Milich and Jason Ginsberg join xAI from AI coding tool company Cursor, where the two share responsibility for product engineering. Unlike XAI, Cursor depends on frontier labs to access the AI models it runs on. Their decision to join xAI may indicate the importance of direct access to LLM and the computational resources to run them, and shows that xAI’s main asset, its boundary model, is still attractive.
Either way, the pressure to deliver is as much external as it is internal. Now that xAI is part of SpaceX, and with a pending public offering of SpaceX shares, the cash-burning division is under pressure to demonstrate real adoption of Grok in LLM. (The stumbling AI division isn’t the story investors need for Musk to read.)
Longer term, Musk is betting on something bigger than coding tools. xAI’s Macrohard project — Musk is sure the name is a “funny reference to Microsoft” — aims to create an AI agent that can do anything a white-collar worker can do on a computer. Toby Pohlen, who was tapped to lead the project in February, left within weeks, according to Business Insider this week informed Macrohard was on break.
Musk’s response was to prepare another of his companies for the project. He first revealed that Macrohard is a joint effort with Tesla, which is developing a companion agent called “Digital Optimus,” a reference to Tesla’s Optimus humanoid robot. In Musk descriptionThe xAI language model would guide the Tesla agent in performing tasks.
It is ambitious; is also not unique. Instead, the vision isn’t far from what Perplexity—an AI-powered search engine—is doing with its new “Everything is a computerAn offering that aims to offer enterprise users a custom “digital proxy” that can perform their digital tasks. It also features what entrepreneur Peter Steinberger is currently working on at OpenAI after creating OpenClaw’s popular personal agents.
