Elon Musk Says xAI Must Be Rebuilt From Foundations as Co-Founders Continue Exodus

Grok, Is This True? Musk Says xAI Needs to Be 'Rebuilt' As Co-Founders Flee

Elon Musk's xAI launched in 2023 with ambitions to take on OpenAI. But he now appears to be hitting the reset button on the startup. On Thursday, Musk tweeted, "xAI was not built right first time around, so is being rebuilt from the foundations up. Same thing happened with Tesla," which he took over from its original founders. It's not a great sign for xAI, which has lost most of its original co-founders, including Guodong Zhang, who announced his departure yesterday. Business Insider reports that only two people of the original 11-member co-founding team are left, in addition to Musk. Perhaps to fill the void, two engineering leaders at AI coding provider Cursor announced they are joining xAI. The rebuild comes after xAI was absorbed into SpaceX, which has grand ambitions to operate a network of orbiting data centers spanning up to 1 million satellites. To fund the project, SpaceX is preparing an IPO expected to generate tens of billions, which could be funneled into xAI. Musk's xAI, which technically owns and oversees X/Twitter, is perhaps best known for the Grok chatbot. But the startup faces major competition from OpenAI, Anthropic, and Google. It's also stumbled into big controversies, like when it generated sexualized images of women and minors. At the same time, xAI has reportedly been burning about $1 billion in cash per month, raising concerns that it'll eventually run out of money as it builds new AI data centers. Last year, Musk also announced an ambitious effort to take on Microsoft through a project called "Macrohard," which focused on creating AI agents capable of developing high-quality software. But it appears that is facing changes as well. On Wednesday, Musk indicated that Macrohard was merging with Tesla's efforts to develop the software for the upcoming Optimus robot. "Macrohard or Digital Optimus is a joint xAI-Tesla project, coming as part of Tesla's investment agreement with xAI," he tweeted. The idea is to use xAI's Grok as navigation software to help control the still-in-development Optimus bots. "You can think of it as Digital Optimus AI being System 1 (instinctive part of the mind) and Grok being System 2. (thinking part of the mind)," Musk wrote, later adding: "In principle, it is capable of emulating the function of entire companies. That is why the program is called MACROHARD, a funny reference to Microsoft."

Musk Pledges to Rebuild xAI as Another Co-Founder Departs

Elon Musk said he intends to rebuild his artificial intelligence startup, xAI, after a series of departures sparked uncertainty about the company's employee turnover and trajectory. "xAI was not built right first time around, so is being rebuilt from the foundations up," Musk said in a post on his X social media platform Thursday. The announcement coincides with more high-profile exits from xAI following its merger last month with Musk's SpaceX. Guodong Zhang, an xAI co-founder who oversaw its image generation product, announced Thursday that he has departed the company. Haotian Liu, who worked closely with Zhang, has also left xAI, citing burnout. Another founding member, Zihang Dai, is also no longer at the company, according to a Business Insider. Dai and xAI did not respond to requests for comment. The rapid exits mean that no more than three of the 12 original xAI co-founders, including Musk, are left at the three-year-old company. On Thursday, Musk hired two senior employees from Cursor, a leading AI coding startup that is currently in fundraising discussions at a $50 billion valuation. Musk admitted at a conference earlier this week that xAI is behind on coding, a key focus for rivals like OpenAI and Anthropic PBC. Musk has been working on the hiring push with Baris Akis, a close ally who's leading talent recruitment at xAI. "Many talented people over the past few years were declined an offer or even an interview at xAI. My apologies," Musk posted on X. "Baris and I are going through the company interview history and reaching back out to promising candidates."

Musk ousts more xAI founders as AI coding effort falters, FT reports

March 13 (Reuters) - Elon Musk has triggered a fresh wave of job cuts at his AI firm xAI, with more co-founders pushed out amid his dissatisfaction with the underperformance of the startup's coding division, the Financial Times reported on Friday. Musk last month overhauled the management of xAI, ahead of a planned initial public offering that could rank among the largest ever, after merging the company with his rocket firm SpaceX. He bought in "fixers" from SpaceX and Tesla (TSLA.O), opens new tab to audit xAI, who let go of several employees whose work was deemed inadequate, according to ⁠FT. Co-founder Guodong Zhang, head of xAI's Imagine team, told colleagues he was leaving after being blamed for issues with the coding product and relieved of his primary duties by Musk, the report said, citing two people familiar with the decision. He confirmed his departure in a post on X on Thursday. Zihang Dai, another co-founder, reportedly left xAI earlier this week. The exits leave the three-year-old AI company with only two of its 12 co-founders who helped Musk set up xAI in March 2023, according to the ⁠report. SpaceX, which purchased xAI to create a $1.25 trillion company, did not immediately respond to a Reuters request for comment. XAI staff have complained that the upheaval is damaging morale and standing in the way of it reaching full potential, the FT report said. Researchers continue to leave ⁠because of burnout because of Musk's "extremely hardcore" work demands or after receiving better offers from rivals. Recruiters have been contacting candidates who had previously been rejected to extend job offers, often with ⁠improved financial terms, the report said. "Many talented people over the past few years were declined an offer or even an interview at xAI. My apologies," Musk said ⁠in an X post on Friday, adding that he will reach back out to promising candidates. xAI bought in Andrew Milich and Jason Ginsberg from code-generation startup Cursor on Thursday. Reporting by Juby Babu in Mexico City; Editing by Arun Koyyur Our Standards: The Thomson Reuters Trust Principles., opens new tab * Suggested Topics: * Artificial Intelligence * ADAS, AV & Safety * Software-Defined Vehicle * Sustainable & EV Supply Chain

Elon Musk says xAI must be 'rebuilt' as co-founder exodus continues, SpaceX IPO awaits

Less than six weeks after Elon Musk merged SpaceX and xAI in a deal he valued at $1.25 trillion, the world's richest person is acknowledging that his artificial intelligence startup "was not built right first time around, so is being rebuilt from the foundations up." Musk took to X, which is now owned by SpaceX, to make the comment after a number of xAI's co-founders recently hit the exits. The most recent came this week, when Zihang Dai and Guodong Zhang reportedly left the company. Last month, influential researcher Jimmy Ba announced his departure in a post on X, thanking Musk and writing that he was, "Grateful to have helped cofound at the start." That came after Tony Wu said he was leaving. Toby Pohlen followed them out the door later in February. The xAI exodus, which leaves Musk with only a pair of people who started the company with him in 2023, comes as SpaceX prepares to go public sometime this year in what will likely be a record IPO, should it take place. In merging SpaceX with xAI last month, the reusable rocket company was valued at $1 trillion and the AI part of the business was tagged at $250 billion, according to documents viewed by CNBC. Musk previously used xAI to acquire his social network X, formerly Twitter, in another all-stock transaction announced last March. On Thursday, SpaceX said it hired two programmers from red-hot AI coding startup Cursor, Andrew Milich and Jason Ginsberg. The Financial Times reported on Friday, citing people familiar with the matter, that Musk has ordered a round of job cuts after seeing the rapid success of coding tools from generative AI rivals OpenAI and Anthropic.

Elon Musk Is Dipping Into the Rejected Candidates Pile After Admitting xAI 'Was Not Built Right'

Just a few weeks after using his company SpaceX to acquire his AI company xAI, Elon Musk admitted that the latter "was not built right." That's exactly what people want to hear while you're pitching possibly the largest initial public offering ever. On X (another company he owns), Musk said that he was in the process of rebuilding xAI, the company responsible for Grok, "from the foundations up." The thing is, there's not much of the foundation left at this pointâ€"and it's not because Musk has been cleaning shop. Just 10 of 12 people who originally founded the company alongside Musk still remain, and it lost multiple founders in the last month alone following the merger with SpaceX. So it's less that Musk has stripped the place back down to the studs and more that he walked into the boardroom one day and found it empty. Regardless, the CEO says the company is building back up, and it's taking a second look at people it previously passed over. "Many talented people over the past few years were declined an offer or even an interview at xAI. My apologies," Musk wrote, before stating that he is "going through the company interview history and reaching back out to promising candidates." Whether that's truly a recognition of having the wrong hiring processes or a tacit admission that you've burned through your first choices and are now pleading with the backup options is up for interpretation. Either way, xAI will have to work on its talent retention with this new crop of hires, because the company has a real habit of burning through people. Developer Benjamin De Kraker recently recounted his experience at the company, which he was initially excited about joining but said he left feeling "sad." Per De Kraker's account, Musk's bluster about xAI having a "flat structure" where anyone can contribute was little more than a marketing pitch. Inside the company, he claimed to have been stifled by "middle managers and busybodies." He also said that after soliciting people on X for ideas on how Grok could be improved, he was told to delete the post, and his account on X was suspended. (Interesting that the punishment would reach across whatever boundaries may exist between Musk-run entities.) De Kraker also went out of his way to respond to a post asking if the way xAI was run ultimately led to founders quitting. "It was not random," he replied. Given Musk's managerial style and his need to put his finger on the scale with Grok to make sure it's not "woke," it doesn't seem like the working environment is going to improve at xAI, no matter who he brings in, as long as he's still in charge. But hey, at least he can just keep moving money around between his companies to keep it afloat.

Elon Musk Orders Sweeping Layoffs as xAI Fails to Catch Up

In a Thursday tweet, Elon Musk said he was looking to rebuild his AI startup xAI "from the foundations up" after admitting it wasn't "built right first time around." The news comes amid a major exodus of cofounders, with a striking majority of them jumping ship over the last year. Amid the resulting leadership vacuum, the Financial Times reported on Friday that Musk had omitted a key detail in his latest missives on his social media platform. According to the paper's sources, he's ordered a round of sweeping layoffs at the company after becoming frustrated with a lack of progress on its AI coding software. Many roles are reportedly being scrutinized. Musk reportedly ordered higher-ups from Tesla and SpaceX, the latter of which xAI was folded into earlier this year, to conduct audits and weed out anybody deemed to be underperforming -- likely not what staffers, who were already complaining of burnout, wanted to hear. The news comes just over a month after Musk announced he had "reorganized" xAI, admitting that it "unfortunately required parting ways with some people." The pressure is on. Following SpaceX and xAI's merger, the space company is looking to go public at a staggering valuation of $1.25 trillion. But keeping up in the heated AI race is proving far more difficult than Musk may have anticipated, given his decision to rework the entire thing mere months ahead of the biggest stock market listing in history. Coding, in particular, has become a major focus, with Musk poaching two senior employees from AI coding startup Cursor. According to the FT, staffers have grown concerned that the training data of xAI's chatbot Grok was lacking, causing it to lag far behind Anthropic's popular Claude Code and OpenAI's Codex. "Grok is currently behind in coding," Musk said at a conference earlier this week, as quoted by Business Insider. "The reason I was late for this was that I was just in a giant sort of all-hands on coding, going through all the things that need to happen to essentially exceed our competitors on coding, which I think we'll do." Musk's messaging surrounding the company's AI product has been opaque. In August, the mercurial CEO announced the company's latest AI project, "Macrohard," a tongue-in-cheek jab squarely aimed at competitor Microsoft. Musk also said that he was combining Tesla and xAI's efforts to develop a "digital Optimus," a nod to the carmaker's humanoid robot. The man who was leading the "Macrohard" effort, former DeepMind researcher Toby Pohlen, left the company just 16 days after being put in charge of the project late last month. Where that leaves the future of xAI's coding tool remains to be seen. Apart from being pushed out by Musk, who's now trying to reboot the company from scratch, inside sources told the paper that people are quitting because they're burnt out, an unsurprising development given the CEO's infamously brutal micromanagement style. Insiders told the FT that the revolving door of talent was destroying morale. "My next priorities: sleep for more than 8h, write down all the things I've learnt (I have a list), and then think about what I want to do next," Pohlen wrote.

Musk admits xAI 'not built right' -- weeks after Tesla invested $2 billion

Elon Musk admitted today that xAI, his artificial intelligence venture, "was not built right first time around" and "is being rebuilt from the foundations up." The admission comes just six weeks after he had Tesla pour $2 billion of shareholder money into the company. The timing is remarkable. Tesla disclosed the $2 billion xAI investment in its Q4 2025 earnings report on January 28. Days later, SpaceX acquired xAI in a deal valuing the combined entity at $1.25 trillion. Now Musk is telling the world the thing he just sold to his own public and private investors was broken. The "not built right" admission didn't come out of nowhere. xAI has been hemorrhaging talent at an alarming rate. Of the 12 people who co-founded the company with Musk in 2023, only two -- Manuel Kroiss and Ross Nordeen -- remain. The departures accelerated dramatically in February 2026. Jimmy Ba, a University of Toronto professor whose research was critical to Grok's development, resigned amid reported tensions over demands to improve model performance. Tony Wu left the same week. Igor Babuschkin, Kyle Kosic, Christian Szegedy, Greg Yang, Zihang Dai, Guodong Zhang, and Toby Pohlen have all departed in rapid succession. At an all-hands meeting in February, Musk suggested the exits were deliberate, claiming that some people are "better suited for the early stages of a company and less suited for the later stages." But losing 10 of 12 co-founders isn't a natural evolution, it's a collapse of the founding team. Several of the departing engineers are reportedly starting a new venture together, which tells you everything about the internal dynamics at xAI. Here's what makes this especially concerning: every person who owns an S&P 500 index fund is now exposed to this mess. Tesla invested $2 billion in xAI's Series E round on January 16, acquiring preferred stock at a valuation of roughly $230 billion. When SpaceX acquired xAI weeks later, that $2 billion converted into a minority SpaceX stake. Tesla shareholders are already suing Musk for breach of fiduciary duty over xAI's founding, arguing he diverted AI talent and resources away from Tesla to benefit his private company. Musk admitting that xAI was fundamentally broken, weeks after extracting billions from Tesla and SpaceX to prop it up, adds a new layer to those legal challenges. Did SpaceX investors get full disclosure that xAI needed to be "rebuilt from the foundations up" before the $1.25 trillion mega-merger closed? Did Tesla's board understand what they were buying into? These are questions that regulators and shareholders will be asking. Musk has lost his entrepreneurial magic. For years, the bull case on anything Musk touched rested on a simple narrative: the man has a golden track record. PayPal, Tesla, SpaceX, a string of world-changing successes that justified premium valuations and extraordinary trust from investors. That narrative is crumbling. Twitter, now X, had lost roughly 70% of its value after Musk's $44 billion acquisition and before he proped it back up to $44 billion through his own self-dealing with the xAI merger. Tesla's Robotaxi rollout has been a disaster, with a single vehicle providing limited unsupervised drives in Austin almost a year into the program. "Full Self-Driving" remains a misnomer nearly a decade after Musk promised coast-to-coast autonomous driving "within a year." And now xAI, presented to investors as a frontier AI lab worth $250 billion, needs to be rebuilt from scratch. According to Arc AGI, xAI is significantly lagging behind Google, OpenAI and Anthropic in both performance and cost: Musk is not batting 1,000 anymore. He's running multiple companies simultaneously while serving on-and-off as a senior advisor in the Trump administration, and the quality of execution across his empire is suffering for it. You can't run Tesla, SpaceX, xAI, X, Neuralink, The Boring Company, and DOGE while maintaining the obsessive focus that made SpaceX and early Tesla successful. We've been covering the xAI-Tesla entanglement for months, and every new development makes the situation worse for Tesla shareholders. The sequence of events here is damning. Musk founded xAI despite Tesla's own AI efforts after selling part of his stake in the succesful automaker to finance his Twitter acquisition. He then convinced Tesla's board, which he effectively controls, to invest $2 billion of shareholder money into xAI. He had SpaceX acquire xAI at a $250 billion valuation, creating the largest merger in history. He announced a joint "Digital Optimus" project to justify the investment. And now, six weeks later, he admits the whole thing was built wrong and needs to start over. This isn't the Elon Musk who nearly went bankrupt to save both Tesla and SpaceX in 2008. That Musk was laser-focused on two companies and willing to stake everything on making them work. Today's Musk is spread across half a dozen ventures, distracted by political power, and using his publicly traded company as a piggy bank for his private ventures. The 10 co-founders who left xAI, many of them world-class AI researchers, clearly saw the problem before the rest of us did, and likely took a deal through the SpaceX merger. This self-dealing is completely unacceptable, especially when it involves siphoning billions from a publicly traded company that millions of people are indirectly invested in through index funds.

Elon Musk Admits xAI "Wasn't Built Right" -- and Is Rebuilding the Company From Scratch

Elon Musk says that xAI "wasn't built right the first time," and is now being "rebuilt from the foundations up." Musk made the comment in an X post, in reference to the news that two product and engineering leads at AI coding company Cursor, Jason Ginsberg and Andrew Milich, had joined xAI. According to The Information, the pair joined specifically to help the organization catch up to competitors Anthropic and OpenAI in coding. The admission from Musk comes just over a month after SpaceX acquired xAI in an all-stock deal that valued the AI company at $250 billion. It also follows a string of departures from xAI by employees and senior leaders, including most of the company's original 12 co-founders. Guodong Zhang, a co-founder who previously led efforts to improve Grok's coding abilities, posted on March 12 that it was his last day at the company. According to the Financial Times, Musk has recently brought in "fixers" from Tesla and SpaceX to audit xAI, and Zhang told colleagues that he was leaving after being relieved of his main duties by Musk. The FT also reported that another co-founder, Zihang Dai, also left the company earlier this week.

Musk ousts more xAI founders as AI coding effort falters, FT reports - The Economic Times

Elon Musk has triggered a fresh wave of job cuts at his AI firm xAI, with more cofounders pushed out amid his dissatisfaction with the underperformance of the startup's coding division, the Financial Times reported on Friday. Musk last month overhauled the management of xAI, ahead of a planned initial public offering that could rank among ⁠the largest ⁠ever, after merging the company with his rocket firm SpaceX. He bought in "fixers" from SpaceX and Tesla to audit xAI, who let go of several employees whose work was deemed inadequate, according to FT. Cofounder Guodong Zhang, head of xAI's Imagine team, told colleagues he was leaving after being blamed for issues with the coding product and relieved of his primary duties by Musk, ⁠the report said, citing two people familiar with the decision. He confirmed his departure in a post on X on Thursday. Zihang Dai, another cofounder, reportedly left ⁠xAI earlier this week. The exits leave the three-year-old AI company with only two of its 12 co-founders who helped Musk set up xAI in March 2023, according to the report. SpaceX, which purchased xAI to create a $1.25 trillion company, did not immediately respond to a Reuters request for comment. XAI staff have complained that the upheaval is damaging morale and standing in the way of it reaching full potential, the FT report said. Researchers continue to leave because of burnout because of Musk's "extremely hardcore" work demands or after receiving better offers from rivals. Recruiters ⁠have been contacting candidates who had previously been rejected to extend job offers, often with improved financial terms, the report said. "Many talented people over the past few years were declined an offer or even an interview at xAI. My apologies," Musk said in an X post on Friday, adding that he will reach back out to promising candidates. xAI bought in Andrew Milich and Jason Ginsberg from code-generation startup Cursor on Thursday.

Musk pushes out more xAI co-founders amid coding division struggles By Investing.com

Investing.com -- Elon Musk has initiated another round of job cuts at his artificial intelligence company xAI, with additional co-founders departing as Musk expressed dissatisfaction with the startup's coding division performance, the Financial Times reported on Friday. Last month, Musk restructured xAI's management ahead of a planned initial public offering that could be among the largest on record. The management overhaul came after Musk merged xAI with his rocket company SpaceX. Musk brought in personnel from SpaceX and Tesla to conduct audits at xAI. These auditors terminated several employees whose work was considered inadequate, according to the Financial Times. Co-founder Guodong Zhang, who led xAI's Imagine team, informed colleagues he was departing after Musk blamed him for problems with the coding product and removed him from his main responsibilities, the report said, citing two people familiar with the decision. Zhang confirmed his exit in a post on X on Thursday. Zihang Dai, another co-founder, left xAI earlier this week, according to the report. The departures leave the three-year-old artificial intelligence company with only two of its 12 original co-founders who helped Musk establish xAI in March 2023. This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

xAI in Internal Crisis: Elon Musk Suggests a Complete Rebuild

Elon Musk's artificial intelligence start-up is weathering a period of turbulence marked by the departure of co-founders and controversies surrounding its Grok chatbot. The entrepreneur acknowledges that the company must be deeply reorganized. Less than six weeks after the merger between SpaceX and xAI in a deal worth $1.25 trillion, Elon Musk admitted that the artificial intelligence start-up needed to be "rebuilt from the ground up." He announced this via the social network X following a series of departures among the company's co-founders, notably Zihang Dai and Guodong Zhang. These exits follow those of Jimmy Ba, Tony Wu, and Toby Pohlen in recent months. Out of the founding members present at the creation of xAI in 2023, only two now remain alongside Musk. This instability comes as SpaceX prepares for a potentially historic IPO. In the recently announced merger, SpaceX was valued at $1 trillion and xAI at $250bn. Meanwhile, the company is recruiting new engineers, including Andrew Milich and Jason Ginsberg from the start-up Cursor, while simultaneously cutting positions after observing the rapid progress of programming tools developed by OpenAI and Anthropic. Elon Musk also acknowledged that some talented candidates had been overlooked during recruitment and said that he is reviewing old applications to re-establish contact with them. xAI is also facing several controversies related to its chatbot and image generator Grok, which has been accused of allowing the creation of non-consensual sexual images from real photos. Despite these controversies, the company has secured contracts with US government agencies and continues its investments in energy and data infrastructure, particularly around Memphis. Tesla is collaborating closely with xAI by integrating Grok into its vehicles and providing energy storage systems designed to power the company's data centers.