Besides headlines about the majority of original cofounders fleeing the company, Elon Musk’s AI startup xAI has struggled to gain much media attention as of late — particularly as competitor Anthropic’s high-profile spat with the Pentagon continues to develop.
The Grok chatbot maker, which has been reeling from a flood of deepfake smut and child sexual abuse material (CSAM) following a “pivot to porn,” continues to grapple for relevancy. Following its merger with Musk’s SpaceX last month, even more of the company’s 12 cofounders announced they would be leaving the company on Thursday.
“Last day at xAI,” cofounder and image generation product lead Guodong Zhang tweeted. “Wild journey past three years but excited about next chapter.”
As of a month ago, half of xAI’s founding team of 12 individuals had resigned. As of today, that number has grown to nine, meaning that a mere three are left, as Bloomberg points out.
In the face of it all, Musk is admitting that the company is in deep trouble — and in need of a deep overhaul.
“xAI was not built right first time around, so is being rebuilt from the foundations up,” he tweeted Thursday afternoon. “Same thing happened with Tesla.”
It could also be a sign that Musk is willing to take his foot off the gas as his enterprises continue to grow intertwined. On Thursday, his EV maker gained government clearance to convert its xAI investment into a small stake in SpaceX, formalizing business ties, as Bloomberg reports.
SpaceX is expected to go public later this year at a staggering valuation of $1.25 trillion, which could bring plenty of scrutiny over xAI’s operations — and its persistent CSAM problem, which has already drawn attention from lawmakers.
In the early morning hours of Friday, Musk followed up, saying that he was going back to the well to fill the many empty roles.
“Many talented people over the past few years were declined an offer or even an interview [at xAI],” he wrote. “My apologies. “[xAI’s head of talent, Baris Akis] and I are going through the company interview history and reaching back out to promising candidates.”
The reshuffling had many taken aback.
“It’s that bad eh,” YouTuber Zack “Jerry Rig Everything” Nelson responded.
In an apparent effort to double down on AI coding, Musk hired two senior employees from AI coding startup Cursor, which is itself rumored to be in talks for a valuation of $50 billion.
Coding with the help of AI has quickly become a major talking point in Silicon Valley, emerging as a promising area of growth. Even early leader OpenAI has been trying to catch up with Anthropic’s Claude Code, which has made major strides in winning over enterprise clients.
xAI’s Grok, however, appears to have slid to a distant third. The company released “Grok Code Fast 1,” an allegedly “blazing fast” AI model that “excels at agentic coding,” in August.
Users found that the company appeared to have prioritized speed over deep reasoning, falling well behind Anthropic’s Claude — an apt metaphor for Musk’s leadership of the company.
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