xAI is undergoing a major leadership reshuffle that has reduced the number of its original co-founders from 11 to two as the company reorganizes to compete with rival AI developers. The remaining founders, Manuel Kroiss and Ross Nordeen, continue to lead the company alongside Elon Musk.
Musk said on the social media platform X that the company is being rebuilt after earlier organizational structures proved ineffective.
He said the company had not been constructed correctly initially and is now undergoing a foundational restructuring.
Recent Departures Add To Leadership Changes
The most recent departures include co-founders Zihang Dai and Guodong Zhang, who left the company this week.
Their exit followed criticism from Musk that the company’s AI coding tools were not keeping pace with competing systems such as Claude Code from Anthropic and Codex from OpenAI.
Musk said the company held an all-hands meeting focused on improving its competitive position in coding tools and predicted the company could close the gap by the middle of the year.
Coding assistants have become a central product category for AI companies because they are viewed as major revenue drivers for large language model developers.
Earlier Engineering Departures And Internal Restructuring
The leadership turnover extends beyond the latest departures. About a month earlier, 11 senior engineers left the company following internal restructuring.
The departures included two co-founders and were part of changes Musk described as necessary for scaling the business.
According to reporting from Financial Times, executives from SpaceX and Tesla have been brought in to review the company’s workforce.
The report said these executives were evaluating employees and removing those who did not meet internal performance standards.
Hiring Efforts Continue Amid Competition
Musk said he is also reviewing previously rejected job applications in an effort to expand the company’s hiring pool.
He said he and Baris Akis were examining earlier applications and reaching out to candidates who may not have received interviews.
According to workforce estimates from LinkedIn, xAI currently employs just over 5,000 people.
This places the company behind several competitors in staffing levels. OpenAI employs more than 7,500 people, while Anthropic has more than 4,700 employees.
Two new hires may help strengthen the company’s product development efforts. Andrew Milich and Jason Ginsberg are joining the company after previously leading product engineering at Cursor.
Cursor relies on models from external AI developers, whereas xAI builds its own large language models.
Pressure To Demonstrate Progress With Grok
The company faces pressure to show commercial progress with Grok.
Earlier in the year, the model drew attention for producing controversial imagery due to relatively permissive content restrictions.
However, industry analysts view coding tools as a more important source of revenue for AI companies.
The pressure is heightened because xAI is now integrated into SpaceX, and investors are closely monitoring the company’s progress ahead of a possible public offering of SpaceX shares.
Macrohard Project Faces Development Pause
Beyond coding tools, Musk has described a broader AI initiative known as the Macrohard project.
The project aims to build an AI system capable of performing many tasks typically handled by white-collar workers using a computer.
Toby Pohlen was selected to lead the project in February but left the company within weeks.
According to reporting from Business Insider, the Macrohard project has since been paused.
Musk said the initiative is now being developed jointly with Tesla, which is working on a related system called Digital Optimus.
Digital Optimus references Tesla Optimus. In Musk’s description, the xAI language model would guide the Tesla system as it carries out digital tasks.
Competition Growing In AI Agent Development
Other companies are also pursuing AI agents capable of performing digital tasks for users.
Perplexity AI recently introduced a system called Everything is Computer designed to provide enterprise users with automated digital assistants.
Meanwhile, entrepreneur Peter Steinberger has joined OpenAI to work on similar technology after developing personal AI agents through his previous company.
Featured image credits: Traders Union
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