Half of xAI’s Founding Team Has Now Left. Musk Says It’s Fine.

When six out of twelve co-founders depart and nine engineers announce exits in a single week, “routine reorganization” starts to ring hollow.

Elon Musk is doing damage control. After a week that saw six of xAI’s original twelve co-founders leave—including two more just this week—the billionaire is framing the departures as necessary scaling adjustments rather than signs of trouble.

The timing couldn’t be worse: xAI is preparing for an IPO, facing regulatory scrutiny over Grok’s deepfake controversy, and was just legally acquired by SpaceX.

The Core Insight

At an all-hands meeting Tuesday night, Musk offered a familiar corporate explanation: “Because we’ve reached a certain scale, we’re organizing the company to be more effective at this scale. Actually, when this happens, there’s some people who are better suited for the early stages of a company and less suited for the later stages.”

Translation: we fired them.

He confirmed this explicitly on X: “xAI was reorganized a few days ago to improve speed of execution… This unfortunately required parting ways with some people.”

But the departing co-founders tell a more interesting story. Yuhuai (Tony) Wu, the reasoning lead, wrote: “It is an era with full possibilities: a small team armed with AIs can move mountains and redefine what’s possible.” Jimmy Ba, the research/safety lead, noted: “We are heading to an age of 100x productivity with the right tools. Recursive self improvement loops likely go live in the next 12 months.”

These aren’t the words of people pushed out for underperformance. These are people who believe they can do more outside a large organization than inside one.

Why This Matters

The talent war in AI is existential. When your co-founders leave to start competitors, you’re not just losing employees—you’re potentially creating rivals with intimate knowledge of your systems, your roadmap, and your weaknesses.

At least three of the departing engineers have announced they’re starting something new together. One, Roland Gavrilescu, is already hiring.

The context makes this worse. xAI isn’t just experiencing normal startup churn. It’s simultaneously:
– Preparing for an IPO
– Dealing with French police raiding X offices over Grok-generated deepfakes
– Navigating the Epstein document revelations affecting Musk personally
– Integrating with SpaceX after acquisition

Losing half your co-founding team during this period isn’t scaling pains—it’s a crisis.

The narrative on X became a meme. Users started jokingly announcing they too were “leaving xAI” despite never having worked there. When your departures become a joke format, you’ve lost control of the story.

Key Takeaways

• Half the founding team is gone — Six of twelve co-founders have departed in a relatively short period
• Nine engineers announced exits in one week — Including the reasoning lead and research/safety lead
• Multiple departures are starting new ventures — At least three are building something together
• Musk’s framing shifted from spin to admission — First “fit,” then explicitly “parting ways”
• The AI talent market enables this — In an era of “100x productivity with AI,” small teams can compete with giants
• Controversy context matters — These departures happen amid regulatory scrutiny, IPO prep, and personal scandals

Looking Ahead

The departing engineers’ rhetoric is revealing. They’re not leaving because xAI is failing—they’re leaving because they believe AI has made large organizations less necessary. Jimmy Ba’s prediction that “recursive self improvement loops likely go live in the next 12 months” suggests he sees a future where small teams with AI leverage can compete at the frontier.

If they’re right, this isn’t just a story about xAI. It’s a preview of how AI might disrupt the AI industry itself. When your best people believe they can build competitive systems with tiny teams, the value proposition of working at a large lab changes fundamentally.

Musk ended his X post with a pitch: “Join xAI if the idea of mass drivers on the Moon appeals to you.” He’s betting that moonshot ambitions will attract replacements for the departed talent.

But the people who just left were moonshot believers too. They just decided their moonshot might work better without xAI.

Based on analysis of TechCrunch reporting on xAI departures