‘Not built right the first time’ — Musk’s xAI is starting over again, again

Elon Musk's AI venture, xAI, is in a state of radical reconstruction, with Musk admitting the company was 'not built right the first time' and needs to be rebuilt 'from the foundations up.' This overhaul has led to a massive personnel exodus; of the 11 original co-founders who started the lab three years ago, only two—Manuel Kroiss and Ross Nordeen—remain. The latest departures include co-founders Zihang Dai and Guodong Zhang, who left after Musk complained xAI's coding tools were not effectively competing with rivals like Anthropic's Claude Code or OpenAI's Codex. Executives from Musk's other companies, SpaceX and Tesla, have been brought in to evaluate employees and fire those who don't meet the new standard.

The immediate business pressure is acute. While early user growth for xAI's Grok model was driven by lax content moderation, coding tools are seen as the key revenue generator for AI labs, making xAI's lag a critical problem. Musk has predicted the company could catch up by mid-year. In a bid to salvage talent, Musk and colleague Baris Akis are personally reviewing piles of rejected job applications. There's a glimmer of hope with the hiring of Andrew Milich and Jason Ginsberg from the AI coding tool company Cursor, signaling that xAI's core model and compute resources remain an attractive draw. However, with xAI now part of SpaceX and a public offering anticipated, the cash-burning unit is under intense pressure to show real progress, especially after the reported pause of its ambitious 'Macrohard' agent project.