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- Only two of the original 11 co-founders who launched xAI with Elon Musk remain at the company after a wave of departures and internal restructuring.
- xAI is under increasing pressure to compete with AI coding tools developed by OpenAI and Anthropic, which are seen as major revenue drivers in the AI industry.
- The company is rebuilding its technical teams while pursuing ambitious projects such as Macrohard, aimed at developing an AI agent capable of performing a wide range of digital office tasks.
xAI, the artificial intelligence company founded by Elon Musk, is undergoing a significant internal overhaul as several of its early leaders depart and the company attempts to strengthen its position in the rapidly evolving AI industry.
Of the original 11 co-founders who launched xAI alongside Musk three years ago, only two remain. The departures are part of a broader restructuring effort that Musk says is intended to rebuild the company from the ground up.
In a post on his social media platform X, Musk acknowledged the changes, stating that the company is effectively being reconstructed after its initial structure failed to meet expectations.
Growing Competitive Pressure
The most immediate challenge facing xAI is competition. The company is working to catch up with leading AI labs such as OpenAI and Anthropic, particularly in the development of AI-powered coding assistants.
This week, two xAI co-founders, Zihang Dai and Guodong Zhang, left the company after Musk criticized the performance of its AI coding tools. According to Musk, the tools have not yet reached the level of competing products such as Claude Code from Anthropic or Codex from OpenAI.
Musk said the company held an internal all-hands meeting to discuss how to improve its technology and close the gap with competitors, expressing confidence that progress could be made within the coming months.
Coding Tools as a Key Revenue Source
AI coding assistants are widely considered one of the most commercially valuable products in the artificial intelligence sector. While xAI initially gained attention through its Grok chatbot, experts believe coding tools represent the real revenue opportunity for AI laboratories.
As a result, the company’s current lag in this area is viewed not only as a technological challenge but also as a potential business concern.
Broader Internal Changes
The recent departures follow earlier restructuring efforts. Just a month ago, 11 senior engineers — including two co-founders — left xAI as part of organizational changes Musk described as necessary to support a larger and more scalable business.
Reports also suggest that executives from Tesla and SpaceX have been involved in reviewing employees and evaluating team performance within the company.
With only two co-founders remaining — Manuel Kroiss and Ross Nordeen — the leadership team now faces the task of rebuilding the organization while maintaining momentum in the competitive AI landscape.
Expanding the Talent Search
Musk has indicated that xAI is widening its search for new talent. In a recent post on X, he said he and colleague Baris Akis are reviewing previously rejected job applications in an effort to reconnect with promising candidates who may have been overlooked during earlier hiring rounds.
Comparing Team Sizes Across AI Labs
According to LinkedIn data, xAI currently has just over 5,000 employees. By comparison, OpenAI employs more than 7,500 people, while Anthropic has more than 4,700 staff members.
New Hires From Cursor
Despite the challenges, xAI has recently attracted experienced engineers. Andrew Milich and Jason Ginsberg, formerly responsible for product engineering at AI coding startup Cursor, have joined the company.
Cursor relies on external AI models from major labs, while xAI develops its own large language models. Their move to xAI may reflect the growing importance of direct access to AI models and the computing infrastructure needed to run them.
Pressure to Deliver Results
The company also faces increasing pressure to demonstrate tangible results. With xAI now integrated into the broader SpaceX ecosystem — and with speculation surrounding a potential future public offering of SpaceX shares — investors are likely to expect strong performance from the AI division.
In particular, the adoption and commercial success of xAI’s large language model, Grok, will be closely watched.
The Macrohard Project
Looking further ahead, Musk is betting on an ambitious project known as Macrohard. The initiative aims to develop an AI agent capable of performing many of the digital tasks currently handled by white-collar workers on computers.
However, the project has already encountered challenges. Toby Pohlen, who was appointed to lead Macrohard earlier this year, left the role within weeks, and reports suggest the project has been temporarily paused.
Musk has since revealed that Macrohard is being developed jointly with Tesla. Tesla is also working on a related concept called “Digital Optimus,” named after its humanoid robot project.
Under Musk’s vision, xAI’s language models would guide the Tesla-developed agent as it carries out digital tasks on a computer.
While ambitious, the concept reflects a broader industry trend. Other companies are pursuing similar ideas, including AI-powered digital agents designed to manage and automate complex workflows for users and businesses.
