And then there were 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 reshuffle staff to compete with Anthropic and OpenAI. This rebuild, Musk insists, is by design.
“xAI wasn’t built the first time, so it’s being rebuilt from the ground up,” Musk said he said Thursday on his social media platform, X. By most measures, it’s not going all that smoothly.
The most immediate pressure is competitive. 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 a plenary meeting Wednesday focused on how to cover it, which he predicted would be possible by the middle of this year.
Coding tools matter so much because that’s where the money is. While the surge in users earlier this year was fueled by xAI’s lax regulation of Grok’s ability to produce sexual and even abusive images, the coding tools are seen as the key revenue-generating technology for AI labs. This makes xAI’s current lag in this area more than a matter of perception. it’s a business problem.
The staff overhaul extends well beyond this week. A month ago, 11 senior xAI engineers, including two co-founders, left the company following changes that Musk described as a reorganization to fit a larger business. This effort was clearly inadequate: The Financial Times was mentioned that executives from SpaceX and Tesla have been parachuted into the company to evaluate employees and fire those who fail to make the grade.
The two remaining co-founders, Manuel Kroiss and Ross Nordeen, along with Musk, are done.
Musk is now casting a wider net for talent. On Thursday, he told X that he and another college, Baris Akisare currently under consideration employment applications were rejected at the company, with an eye to approaching promising candidates who should have had the opportunity to interview. “I apologize,” Musk added, addressing the crowd of strangers he had imagined.
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For comparison, LinkedIn says xAI has just over 5,000 employees, compared to more than 7,500 at OpenAI and more than 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 shared responsibility for product engineering. Unlike xAI, Runner depends on frontier labs to access the AI models it runs on. Their decision to join xAI may signal the importance of immediate access to the LLM and computational resources to run them — and suggest that the core of xAI, its own frontier model, is still attractive.
Either way, the pressure to produce results is both external and internal. Now that xAI is part of SpaceX and with SpaceX’s expected IPO, the cash-burning unit is under pressure to show real acceptance from Grok, his LLM. (A stumbling AI division is not the story Musk needs investors to read.)
Longer term, Musk is betting on something bigger than coding tools. xAI’s Macrohard project – Musk is convinced the name is “a funny reference to Microsoft” – aims to create an AI agent capable of doing anything an employee can do on a computer. Toby Pohlen, who was tapped to lead the project in February, left within weeks, and this week Business Insider was mentioned that McCrohardt was on hiatus.
Musk’s response was to draft 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 complementary agent called “Digital Optimus” – a reference to Tesla’s Optimus humanoid robot. At Musk’s descriptionthe xAI language model will direct the Tesla agent as it performs tasks.
It’s ambitious. it is also not unique. Instead, the vision is not far from what Perplexity – an artificial intelligence search engine – is doing with its new “Everything is computerOffering, which aims to provide enterprise users with a dedicated “digital broker” that can orchestrate their digital tasks. It also echoes what entrepreneur Peter Steinberger is now working on at OpenAI, after creating OpenClaw’s popular personal agents.
