“Wasn’t built right”: Musk vows to rebuild xAI amid cofounder exodus
Elon Musk’s artificial intelligence startup xAI has recently faced mounting challenges, including the departure of most of its founding team and growing concerns about the company’s future direction. While public attention remains focused on other AI developments, xAI has struggled to keep visibility in the fast-changing AI industry.
The company, best known for developing the Grok chatbot, has been dealing with several controversies and internal shifts. Among the most notable developments is the continued exodus of its founding members. Of the 12 original cofounders, nine have now left the company, leaving only two aside from Musk still involved. The latest departure came when Guodong Zhang, cofounder and product lead for image generation, announced his exit after three years at the company.
The growing number of departures has raised questions about the company’s stability. Reports earlier indicated that roughly half of the founding team had stepped down, but the number has now increased significantly. In response, Musk acknowledged that the company needs major structural changes.
According to Musk, xAI was not initially built correctly and is now being rebuilt from the ground up. He compared the situation to Tesla’s early years, when the electric vehicle company also underwent significant restructuring before achieving success.
At the same time, Musk’s business ventures are becoming increasingly interconnected. Recently, Tesla received government approval to convert its investment in xAI into a stake in SpaceX, further tying the companies together. This comes as SpaceX prepares for a potential public offering later this year at a valuation estimated at $1.25 trillion.
The restructuring effort also includes a renewed hiring push. Musk stated that xAI leadership is reviewing past hiring decisions and reaching out to previously rejected candidates in order to fill newly vacant positions.
In parallel, the company appears to be strengthening its focus on AI-powered coding tools, an area that has become highly competitive in Silicon Valley. Musk recently recruited two senior employees from the AI coding startup Cursor, which is itself rumored to be seeking a $50 billion valuation.
Despite these moves, xAI still faces intense competition. Rivals such as Anthropic and OpenAI continue to advance rapidly, particularly in enterprise-focused AI coding systems. xAI released a coding model called Grok Code Fast 1, which aims to deliver extremely fast AI-assisted programming. However, early user feedback suggested that the model prioritizes speed over deeper reasoning capabilities, leaving it trailing behind competitors like Anthropic’s Claude in overall performance.
As the AI race intensifies, xAI’s leadership shake-up and restructuring efforts will likely determine whether the company can regain momentum in an increasingly competitive field.
