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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 co-founders and parachuting in “fixers” from SpaceX and Tesla to audit the start-up.
The latest overhaul of the two-year-old start-up 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 $1.25bn 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 centres into space, build factories on the Moon and colonise Mars.
Musk has relentlessly pushed the heavily lossmaking AI start-up 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 matters.
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 co-founders. 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 co-founders who helped Musk set up xAI in San Francisco in March 2023.
Last month, Musk criticised the coding team for falling behind in a town hall meeting that was posted online. He detailed a reorganisation 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 important” 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 centre in Memphis with more than 200,000 specialised AI chips, which he plans to expand to 1mn 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 lay-offs on Wednesday, the people said. However, researchers continue to quit because of burnout because of Musk’s “extremely hardcore” work demands or after receiving better offers from rivals, multiple people familiar with the departures said.
The lay-offs 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 centres and mass drivers on the Moon will be incredible.”
