Elon Musk has initiated a significant internal reorganization at xAI, leading to the departure of several co-founders and causing disruption within the company. According to reports, managers from Tesla Motors and SpaceX have been dispatched to audit the startup, reviewing employee performance and focusing on the quality of AI model training.
On Thursday, Musk stated on platform X that the initial structure of xAI was flawed and required a complete rebuild from the ground up, drawing a parallel to the early days of Tesla Motors.
Insiders revealed that the audit has resulted in the dismissal of underperforming staff. Some observers suggest that the scrutiny indicates xAI's products may be lagging behind competitors such as Claude Code and Codex.
The shake-up has led to the exit of co-founders including Zihang Dai and Guodong Zhang. Employees have expressed that frequent organizational changes have severely impacted morale and hindered their ability to perform effectively.
Although xAI sent an internal memo on Wednesday denying any large-scale layoffs, researchers continue to leave the company. Reasons cited include burnout due to Musk's demanding work expectations, more attractive compensation offers from rivals, and a growing number of vacant positions following the recent departures.
To address staffing shortages, xAI's human resources department has begun reaching out to previously rejected candidates, offering them improved salary packages to join the company.
Despite the internal instability, Musk continues to attract top talent from Silicon Valley. This week, xAI recruited two employees from Cursor to assist in revamping the "Grok Code Fast" product.
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