All Eleven xAI Cofounders Have Left as Internal Chaos, Layoffs, and Identity Crisis Grip Elon Musk's AI Startup

Elon Musk's AI venture xAI — now renamed SpaceXAI following its merger with SpaceX — is in deep turmoil, according to a Bloomberg investigation. All eleven of the company's cofounders have departed, a mass exit that coincided with Musk's push to fold xAI into SpaceX ahead of the latter's IPO. Internally, the company slashed up to 30 percent of its workforce in March, with some employees reportedly fired without being formally notified, while an understaffed HR department left promising new hires in limbo. Morale took further hits after Grok was used to generate nonconsensual intimate images and a promised employee compensation scheme tied to tax-return data was never paid out.

Rather than competing at the frontier, xAI has reportedly been selling compute capacity to rivals including Anthropic and Google. Leadership's stated near-term goal — explicitly written into an internal memo by new president Michael Nicolls — was simply to match Anthropic's Claude, a chatbot that had become so central to the company's internal culture that Slack channels were named after it. Critics inside the company questioned whether Musk, whose track record is in hardware and manufacturing, has the depth to lead a frontier AI lab.