Musk Admits xAI Needs a Fresh Start! Co-founders Exit One After Another, AI Empire's Foundation Shaken

Elon Musk’s AI startup xAI faces a major talent exodus. Less than six weeks after the $1.25 trillion merger with SpaceX, Musk publicly admits the company “didn’t get it right the first time and is rebuilding from the ground up,” drawing high attention to the future direction of this AI giant.

Co-founders leaving one after another, only two remain

Recently, xAI has experienced a wave of co-founder departures. The latest reports indicate researchers Zihang Dai and Guodong Zhang have left the company. Last month, renowned researcher Jimmy Ba announced his departure on X, thanking Musk and saying he was “honored to have been part of the early days.” Tony Wu also announced his exit, followed by Toby Pohlen in late February.

This talent drain leaves only two of the original co-founders from 2023 still working alongside Musk.

Musk apologizes on X, admits losing many talents

Facing the talent loss crisis, Musk posted on X early Friday morning, admitting, “Over the past few years, many talented individuals were rejected during interviews or application stages at xAI, and I sincerely apologize for that.” He also said he would work with engineering recruitment head Baris Akis to review interview records and proactively reach out to promising candidates.

On the same day, SpaceX announced it had poached two engineers, Andrew Milich and Jason Ginsberg, from popular AI coding startup Cursor. The Financial Times also cited sources saying Musk, after witnessing the rapid rise of AI tools from OpenAI and Anthropic, has ordered xAI to cut staff.

SpaceX and xAI merger: Rocket empire valued at $1 trillion

According to documents obtained by CNBC, SpaceX and xAI completed their merger last month, with SpaceX valued at $1 trillion and the AI division valued at $250 billion, totaling approximately $1.25 trillion. Musk previously used xAI to acquire Twitter (now X) through a stock swap, announced last March.

Meanwhile, Tesla announced a $2 billion investment in xAI, linked to the earlier $20 billion funding round announced by xAI.

Grok controversy sparks investigations worldwide

xAI’s chatbot and image generation tool Grok are currently under investigation by multiple international authorities. The controversy stems from Grok allowing users to easily generate non-consensual sexual images, including altered photos or videos of real adults and children.

Despite this, Grok has still secured government contracts with the U.S. Department of Defense and the General Services Administration (GSA) under the Trump administration.

Infrastructure expansion and Tennessee plant plans attract attention

In recent years, xAI has invested billions of dollars in building power and data center infrastructure in Memphis, Tennessee. The company recently obtained permits in nearby Mississippi to establish one of the largest natural gas turbine power plants in the region, powering xAI’s data centers.

Tesla deeply integrates Grok, advancing robots and electric vehicles

As Musk’s primary asset, Tesla is collaborating closely with xAI across multiple fronts: Grok has been integrated into Tesla’s vehicle entertainment and navigation systems, and is used in developing the Optimus humanoid robot. Additionally, Tesla has sold xAI hundreds of millions of dollars worth of large-scale energy storage batteries for its data centers.

• This article is reprinted with permission from 《Chain News》
• Original title: “Musk Admits xAI is ‘Rebuilding from Scratch’: Co-founders Leaving One After Another, AI Empire’s Foundation Shaken”
• Original author: Elponcho