Elon Musk has begun the process of consolidating his assets, allocating $2 billion from Tesla to support xAI, while SpaceX has acquired the latest startup. According to the founder, this cooperation is intended to facilitate the creation of data centers for artificial intelligence in space. However, Musk has expressed dissatisfaction with xAI's performance and initiated a cleanup within the team to restore order in the company.
This information comes from several major publications, including Bloomberg and Financial Times. According to the latter source, Musk has launched staff reductions at xAI and sent consultants from SpaceX and Tesla to conduct an audit and address issues that are hindering the company's development. The founder believes that the successes of competitors such as OpenAI and Anthropic put xAI at a disadvantage, and with SpaceX's planned IPO by June, it is necessary to quickly restore order in xAI.
Musk partially confirmed the changes at xAI through his page on the social network X: “xAI was originally created incorrectly, so it is now being re-evaluated from scratch. This has already happened with Tesla”. It is worth noting that after acquiring Twitter, renamed X, he also sent a team from Tesla to reorganize the management of this new part of his business empire.
According to Financial Times, a team of executives from SpaceX and Tesla was sent to xAI for an audit, resulting in some employees being laid off due to insufficient productivity. The audit particularly focused on the quality of the data used to train xAI's AI models. The layoffs also affected high-ranking team members. This week, two more co-founders left the company: Zihang Dai and Guodong Zhang, who held significant positions in the startup. As a result, only two of the 11 founders remain at xAI, besides Musk: Manuel Kroiss and Ross Nordeen.
Last week, during an all-hands meeting at xAI, Musk criticized the team for a lack of success compared to competitors in the AI field and presented a reorganization plan following the layoffs of several co-founders. Former DeepMind researcher Toby Pohlen was appointed head of the Macrohard project, aimed at establishing automatic code generation, but Pohlen did not last more than 16 days in this position.
He was replaced by Ashok Elluswamy, who is responsible for AI software development at Tesla. He will leverage Tesla's experience in developing software for autopilot and robots to optimize the large language models of the Grok chatbot. xAI employees express dissatisfaction in private conversations about the constant reshuffles and layoffs, which negatively impact morale and hinder the company's potential.
Musk is actively developing xAI's computing infrastructure, particularly with a data center built in Memphis containing over 200,000 accelerators, with plans to increase that number to 1 million in the future. Last year, xAI merged with the social network X, and now data from this network is used to train the Grok chatbot. Recently, xAI employees were notified that mass layoffs are not anticipated, although many AI specialists continue to leave the company as they are not willing to work under the conditions proposed by Musk or receive more attractive offers from competitors.
The number of job openings at xAI is increasing, and recruiters sometimes return to candidates who were previously rejected, offering them higher salaries. Musk supported this approach and confirmed that former applicants could expect a second chance at employment. xAI is also attracting key specialists from other companies in the industry. This week, Andrew Milich and Jason Ginsberg joined Musk's startup from Cursor to improve a product called “Grok Code Fast.” Musk welcomed them on his social network X, noting that “space data centers and launch catapults on the Moon will be incredible.”
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