Staff complain that xAI is flailing because of constant upheaval is currently attracting attention in the technology world.
Experts believe this development may influence how digital platforms evolve
over the coming years.
Staff complain that the constant upheaval is destroying morale.
Elon Musk has ordered another round of job cuts at xAI after growing frustrated with the poor performance of its coding product, forcing out several more cofounders and parachuting in “fixers” from SpaceX and Tesla to audit the startup.
The latest overhaul of the 2-year-old startup follows the success of Anthropic and OpenAI, whose AI coding tools have shaken up the software industry, multiple people familiar with the decisions said.
Musk has dialled up the pressure after merging SpaceX with xAI in a $1.25 billion deal, as he attempts to meet a June deadline for what could be the biggest stock market listing in history. The world’s richest man has said his goals are to launch AI data centers into space, build factories on the Moon, and colonize Mars.
Musk has relentlessly pushed the heavily loss-making AI startup to catch up with rivals, but so far its Grok chatbot and coding product have failed to gain traction with paying individual users or businesses.
“xAI was not built right first time around, so is being rebuilt from the foundations up,” Musk posted on X on Thursday. “Same thing happened with Tesla.”
SpaceX and Musk did not immediately reply to requests for comment.
Managers from SpaceX and Tesla have been seconded to review xAI employees’ work and have fired some after deeming their efforts inadequate, said two people with direct knowledge of the matter.
One area of focus has been the quality of the data used to train the models, a key reason its coding product lagged behind Anthropic’s Claude Code or OpenAI’s Codex.
The review has pushed out two more cofounders. Zihang Dai, one of the most senior members of the technical staff, who had publicly acknowledged that xAI was behind on coding, departed this week.
Guodong Zhang, who had run pre-training of Grok models, told colleagues that he was leaving after being blamed for the issues with the coding product and relieved of his primary duties by Musk, two people familiar with the decision said. He confirmed that Thursday was his last day in a post on X.
After the departures, only Manuel Kroiss—known as “Makro”—and Ross Nordeen will remain of the 11 cofounders who helped Musk set up xAI in San Francisco in March 2023.
Last month, Musk criticized the coding team for falling behind in a town hall meeting that was posted online. He detailed a reorganization after several other co-founders had been removed, including Greg Yang, Tony Wu, and Jimmy Ba.
Toby Pohlen, a former DeepMind researcher, was put in charge of the “Macrohard” project to build digital agents that Musk said could replicate entire software companies. Musk said it was the “most significant” drive at the company. The name is a “funny” reference to Microsoft, the billionaire added. Pohlen left 16 days later.
Musk has redeployed Ashok Elluswamy, head of AI software at Tesla, to reboot the Macrohard effort and review the work done previously. Musk said that Tesla and xAI would work together to develop a “digital Optimus” that would combine the car and robot maker’s real-world AI expertise and Grok’s large language models.
Staff complain that the constant upheaval is destroying morale and preventing xAI from achieving its potential.
Musk has built a vast data center in Memphis, Tennessee, with more than 200,000 specialized AI chips, which he plans to expand to 1 million GPUs over time. It also benefits from the data fed in by his social media network X, which was merged with xAI last year and now promotes the Grok chatbot.
Employees were sent a memo denying that there would be mass layoffs on Wednesday, the people said. However, researchers continue to quit because of burnout from Musk’s “extremely hardcore” work demands or after receiving better offers from rivals, multiple people familiar with the departures said.
The layoffs and departures have left xAI with many roles to fill. Recruiters have been contacting unsuccessful candidates from previous interviews and assessments to offer them jobs, often on better financial terms, the people said.
“Many talented people over the past few years were declined an offer or even an interview at xAI. My apologies,” Musk posted on Friday morning. He said he would be “going through the company interview history and reaching back out to promising candidates.”
Musk still has the ability to recruit top Silicon Valley talent. This week, xAI poached two staff from popular AI coding app Cursor—Andrew Milich and Jason Ginsberg—to help improve the “Grok Code Fast” product.
Musk welcomed them in a post on Thursday, adding: “Orbital space centers and mass drivers on the Moon will be incredible.”
Why This Matters
This development highlights the rapid pace of innovation in the technology sector.
Companies are constantly pushing boundaries in order to stay competitive.
Analysts suggest that such changes could influence future product design,
user expectations, and industry standards.
Looking Ahead
As technology continues to evolve, developments like this may shape the next
generation of digital services and consumer experiences.
Industry watchers will continue to monitor how this story develops and what
impact it may have on the broader technology landscape.