Elon Musk removes more xAI founders during restructuring ahead of potential IPO

Elon Musk has forced out additional xAI co-founders and employees as the startup reorganizes after being acquired by his aerospace company, SpaceX, ahead of a potential initial public offering.

xAI has been undergoing internal restructuring since mid-February after the merger.

Musk confirmed several staff departures during an all-hands meeting last month, after co-founders such as Tony Wu and Jimmy Ba left the company, reducing the original founding team from 12 members to six.

The founding team has now dwindled to two members as frustration mounts over xAI’s coding division, according to the Financial Times.

Guodong Zhang, leader of xAI’s Imagine team, told colleagues he was leaving after Musk blamed him for coding problems and removed his core responsibilities. Zhang announced his departure on Thursday.

Co-founder Zihang Dai also departed earlier this week.

The billionaire entrepreneur brought in executives from SpaceX and Tesla to audit xAI’s operations, resulting in the dismissal of several employees whose performance was deemed insufficient, the report stated.

In a Thursday statement, Musk said xAI missed out on strong talent in the past, and recruiters are now attempting to bring them back into the hiring process.

New hires from code-generation startup Cursor have joined the company, including Andrew Milich and Jason Ginsberg.

Tesla-style rebuild

Musk said xAI needed a rebuild similar to what happened at Tesla.

In 2018, years after Tesla went public, he announced a major reorganization to improve communication and reduce bureaucracy.

At the time, the company was facing financial pressures, including billions in cash outflows, a downgraded credit rating from Moody’s, and concerns from analysts that additional capital might be needed.

The xAI founder has indicated xAI was not constructed properly during its initial phase and requires reconstruction from its foundations.

Staff at xAI have expressed concern that the turmoil is eroding morale and preventing the company from achieving its full capabilities.

Researchers continue to depart due to exhaustion from Musk’s demands for an “extremely hardcore” work culture, while others have accepted superior compensation packages from competing firms.