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Elon Musk has ordered another round of job cuts at xAI after growing frustrated with the poor performance of its coding product, forcing out several more cofounders and parachuting in “fixers” from SpaceX and Tesla to audit the startup, according to staff complaints and internal sources . The constant upheaval is destroying morale and preventing the two-year-old company from achieving its potential .
Quick Overview
The Latest Overhaul
Cofounder Exodus
The turmoil has pushed out two more cofounders this week:
- Zihang Dai, one of the most senior technical staff members, departed after publicly acknowledging xAI was behind on coding
- Guodong Zhang, who ran pre-training of Grok models, left after being blamed for coding product issues and relieved of duties by Musk
After these departures, only Manuel Kroiss and Ross Nordeen remain of the 11 cofounders who helped Musk set up xAI in San Francisco in March 2023 . Previous exits included Greg Yang, Tony Wu, Jimmy Ba, and Toby Pohlen .
SpaceX/Tesla Fixers Move In
Managers from SpaceX and Tesla have been seconded to review xAI employees’ work and have fired some after deeming their efforts inadequate . One area of focus has been the quality of data used to train models—a key reason its coding product lagged behind Anthropic’s Claude Code or OpenAI’s Codex .
Why This Matters Now
Competitive Pressure
Musk has dialed up the pressure after merging SpaceX with xAI in a $1.25 billion deal, as he attempts to meet a June deadline for what could be the biggest stock market listing in history . However, xAI’s Grok chatbot and coding product have failed to gain traction with paying users or businesses .
At a recent town hall, Musk criticized the coding team for falling behind . He later admitted at a summit: “Grok is currently behind in coding” .
“Macrohard” Project Chaos
Toby Pohlen, a former DeepMind researcher, was put in charge of the “Macrohard” project to build digital agents that Musk said could replicate entire software companies. Musk called it the “most important” drive at xAI . Pohlen left 16 days later .
Musk has now redeployed Ashok Elluswamy, head of AI software at Tesla, to reboot the effort and review previous work . Tesla and xAI will work together on a “digital Optimus” combining Tesla’s real-world AI expertise with Grok’s language models .
Staff Morale Crisis
Employees complain that constant upheaval is destroying morale :
- Researchers continue quitting due to burnout from Musk’s “extremely hardcore” work demands
- Others leave after receiving better offers from rivals
- A memo was sent denying mass layoffs—but departures continue
One departing researcher, Haotian Liu, posted that he had “burned out” .
The Recruitment Paradox
The layoffs and departures have left xAI with many roles to fill . Recruiters have been contacting unsuccessful candidates from previous interviews, often offering better financial terms .
Musk acknowledged the problem on X: “Many talented people over the past few years were declined an offer or even an interview at xAI. My apologies.” He said he would review interview history and reach back out to promising candidates .
Despite the chaos, Musk still attracts top talent. This week, xAI poached Andrew Milich and Jason Ginsberg from popular AI coding app Cursor to help improve the “Grok Code Fast” product .
Musk’s Explanation
“xAI was not built right first time around, so is being rebuilt from the foundations up. Same thing happened with Tesla,” Musk posted on X .
His broader vision remains ambitious: launching AI data centers into space, building factories on the Moon, and colonizing Mars .
