But the company CEO appears unperturbed. He has a simple explanation. “xAI was not built right first time around, so is being rebuilt from the foundations up. Same thing happened with Tesla,” he said in an X post last month.
It is an unusual and surprising admission, especially from a founder not known for taking criticism kindly (at least in public), and it comes as xAI works to regain stability after a wave of departures.
The exits
xAI has lost eight cofounders since January, including Manuel Kroiss, Ross Nordeen, Guodong Zhang, Zihang Dai, Toby Pohlen, Jimmy Ba, Tony Wu, and Greg Yang. Kroiss and Nordeen were the last to leave.
Most departures began shortly after SpaceX’s merger with xAI ahead of what could become one of the biggest IPOs in history.
In February, Musk reorganised xAI and introduced a new structure. Since then, several leaders overseeing key products, ranging from coding tools to image generation, have also left the company.
Also Read: Elon Musk elevates Indian-origin trio to leadership roles in xAI overhaul
What’s driving the exits
The reasons appear to run deeper than routine restructuring issues.
For instance, Zhang, who led xAI’s Imagine team, reportedly decided to step down after being held responsible for problems in the coding product and being removed from his main responsibilities by Musk, according to the Financial Times.
In another case, Ba’s exit is said to have followed internal pressure within the technical team over the push to rapidly improve AI model performance.
Some researchers also left due to exhaustion linked to Musk’s “extremely hardcore” work culture, while others were reportedly drawn away by more attractive offers from rival firms.
Meanwhile, former employees speaking to The Verge say dissatisfaction had been simmering for a while inside the company. One ex-staffer described xAI as being trapped in a perpetual “catch-up phase”, constantly following what OpenAI had already shipped the previous year instead of pushing into genuinely new territory.
Another source said: “Trying to do what OpenAI was doing a year ago is not how you beat OpenAI.”
Additionally, concerns around safety also surfaced repeatedly. The Verge report said several former employees claimed there was no real functioning safety team left at xAI. One of them stated: “Safety is a dead org at xAI.”
Notably, the post-restructuring organisation chart shared by Musk did not include any dedicated safety team.
What is Musk’s plan?
Despite the churn, Musk is pushing ahead rather than slowing down. Musk said that he is revisiting old resumes and even apologised to those whom he passed over.
In a post on X, Musk said: “Many talented people over the past few years were declined an offer or even an interview @xAI. My apologies. @BarisAkis and I are going through the company interview history and reaching back out to promising candidates.”
He also brought in two high-profile hires: Jason Ginsberg and Andrew Milich, who helped scale Cursor from zero to $2 billion in annual recurring revenue.
They are expected to work on xAI’s coding products, an area where Musk himself admitted at the Abundance Summit that “Grok is currently behind,” according to the report.
Competitive gap remains
Even with a large funding base and high valuation, xAI still faces a clear gap with rivals in scale, users and product reach.
Last month, Bloomberg reported that Elon Musk’s xAI is sending engineers directly into the offices of potential corporate clients in an effort to win business away from competitors OpenAI and Anthropic.
The challenge is clear: xAI trails behind rivals like OpenAI and Anthropic in both adoption and product maturity. Closing that gap will be crucial before the potential IPO.
And this fact is not lost on Musk either. He has acknowledged the challenge, even as he remains confident about the company’s long-term prospects.
In an X post last month, he said, “xAI will catch up this year and then exceed them all by such a long distance in 3 years that you will need the James Webb telescope to see who is in second place”
