Only two of the original eleven co-founders who launched xAI with Elon Musk three years ago are still with the company, as the deep learning lab continues a significant staff overhaul aimed at better competing with rivals like Anthropic and OpenAI. Musk asserts this restructuring is deliberate.
“xAI was not built right first time around, so is being rebuilt from the foundations up,” Musk posted Thursday on his social media platform, X. However, the process appears to be facing considerable challenges.
The immediate challenge stems from intense competition. This week, xAI co-founders Zihang Dai and Guodong Zhang exited the firm after Musk expressed dissatisfaction with the company’s AI coding tools, which he felt were not adequately competing with Claude Code or Codex, developed by Anthropic and OpenAI, respectively. Musk indicated that a company-wide meeting on Wednesday focused on strategies to catch up, a goal he believes is achievable by mid-year.
Coding tools are crucial because they represent a significant revenue stream. While an initial surge in users for xAI’s Grok was fueled by its permissive stance on generating sensitive content, coding assistants are considered the primary revenue generators for AI labs. This makes xAI’s current deficiency in this area a critical business concern, not just a matter of public perception.
The workforce restructuring at xAI has been ongoing. A month prior, eleven senior engineers, including two co-founders, departed the company following changes Musk characterized as a reorganization to support a larger business strategy. This effort seemingly proved insufficient, as The Financial Times reported that executives from SpaceX and Tesla have been brought in to evaluate employees and dismiss those who do not meet expectations.
The remaining co-founders, Manuel Kroiss and Ross Nordeen, alongside Musk, face a demanding task ahead.
Musk is now expanding his search for talent. On Thursday, he announced on X that he and a colleague, Baris Akis, are reviewing rejected job applications at xAI, intending to contact promising candidates who might have been overlooked for an interview. Musk also offered his