Elon Musk is orchestrating a significant leadership shakeup at xAI, with additional co-founders and employees departing as the artificial intelligence startup integrates into his aerospace company, SpaceX. This restructuring follows xAI’s acquisition by SpaceX and precedes a potential initial public offering, according to reports from the Financial Times.
The internal overhaul began in mid-February after the merger was completed. During an all-hands meeting last month, Musk confirmed several departures, including co-founders Tony Wu and Jimmy Ba. This reduced the original founding cohort from 12 members to six. The Financial Times now reports the founding team has further dwindled to just two members, with frustration mounting specifically within xAI’s coding division.
Guodong Zhang, who led the “Imagine team”—a subgroup focused on advanced AI capabilities—informed colleagues he was leaving after Musk publicly attributed coding problems to him and stripped his core responsibilities. Zhang announced his departure on Thursday. Earlier in the week, co-founder Zihang Dai also exited the company.
As part of the audit, Musk brought in senior executives from SpaceX and Tesla to evaluate xAI’s operations. This review resulted in the dismissal of several employees whose performance was deemed insufficient, the report stated. In a Thursday statement on X (formerly Twitter), Musk acknowledged past hiring missteps, noting that xAI had previously declined many talented candidates. He and colleague Baris Akis are now revisiting the company’s interview history to re-engage promising individuals who were passed over.
Many talented people over the past few years were declined an offer or even an interview @xAI. My apologies.@BarisAkis and I are going through the company interview history and reaching back out to promising candidates. https://t.co/tvhipa1lu1
— Elon Musk (@elonmusk) March 13, 2026
Musk Calls for a Tesla-Style Rebuild
Musk has likened the necessary transformation at xAI to the major reorganization he implemented at Tesla in 2018. That earlier effort aimed to improve communication and slash bureaucracy amid severe financial pressures, including massive cash burn, a Moody’s credit downgrade, and widespread analyst concerns about capital needs.
According to Musk, xAI’s foundational structure was flawed from the start and now requires a ground-up reconstruction. Current and former staff, however, have expressed concern that the ongoing turmoil is decimating morale and hindering the company’s ability to compete at the highest levels of AI research.
Researchers have continued to leave, citing exhaustion from Musk’s demand for an “extremely hardcore” work culture. Others have been lured away by more lucrative compensation packages from rival AI firms. To stem the tide, xAI has begun hiring from external talent pools, including recent additions from the code-generation startup Cursor, such as Andrew Milich and Jason Ginsberg.
Context: Why the Turmoil Matters
The exodus of founding members and senior researchers poses a critical risk for xAI. In the fiercely competitive AI landscape—where breakthroughs often depend on deep, collaborative research—retaining institutional knowledge and top engineering talent is paramount. Musk’s history at Tesla shows he can execute dramatic turnarounds, but the human cost of such overhauls can be severe, potentially slowing development cycles at a moment when speed to market is crucial for an IPO.
Analysts suggest that integrating a high-potential but young startup like xAI into the complex machinery of a publicly-traded entity like SpaceX (should an IPO occur) requires delicate cultural and operational alignment. The current purge may be an attempt to instill discipline and accountability, but it also risks creating a climate of uncertainty that could undermine long-term innovation.
Disclosure: This article was edited by Vivian Nguyen. For more information on how we create and review content, see our Editorial Policy.
