The original group of eleven cofounders who launched xAI with Elon Musk three years ago has now dwindled to just two, as the deep learning lab undergoes a significant personnel restructuring to better compete with rivals like Anthropic and OpenAI. Musk has framed this rebuilding as intentional, stating on his social media platform X that "xAI was not built right first time around, so is being rebuilt from the foundations up." By most accounts, this process has been challenging.

The competitive pressure is immediate. This week, cofounders Zihang Dai and Guodong Zhang departed after Musk expressed dissatisfaction that xAI's AI coding tools were not keeping pace with Claude Code from Anthropic or Codex from OpenAI. Musk indicated the company held an all-hands meeting on Wednesday to strategize on catching up, a goal he believes is achievable by mid-year.

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Coding tools are a critical focus because they represent a major revenue stream. While initial user growth for xAI's Grok was fueled by its permissive policies on generating sexual and abusive imagery, coding assistants are viewed as the essential moneymaking technology for AI labs. xAI's current lag in this area is therefore not just a perception problem—it's a serious business issue.

The personnel changes extend beyond this week. A month ago, 11 senior engineers, including two cofounders, left following what Musk described as a reorganization for a larger-scale business. This effort seems to have been inadequate, as reports indicate executives from SpaceX and Tesla have been brought in to assess and dismiss underperforming employees.

The two remaining cofounders, Manuel Kroiss and Ross Nordeen, along with Musk, face a considerable challenge. Musk is now broadening his search for talent. On Thursday, he posted on X that he and colleague Baris Akis are reviewing previously rejected job applications to identify promising candidates who deserved an interview, adding "My apologies" to those overlooked.

For context, LinkedIn data shows xAI has just over 5,000 employees, compared to more than 7,500 at OpenAI and over 4,700 at Anthropic. There is at least one positive development on the hiring front: Andrew Milich and Jason Ginsberg are joining xAI from the AI coding tool company Cursor, where they jointly led product engineering. Unlike xAI, Cursor relies on other frontier AI labs for its underlying models. Their move to xAI may highlight the value of direct access to large language models and the computing resources to run them, suggesting that xAI's core asset—its own frontier model—remains an attractive draw.

The pressure to deliver results is both internal and external. Now integrated into SpaceX, and with a potential public offering of SpaceX shares on the horizon, the cash-intensive xAI unit must demonstrate genuine user adoption of its Grok LLM. A struggling AI division is not the narrative Musk wants for investors.

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Looking further ahead, Musk is betting on a vision larger than coding tools. The "Macrohard" project—a name Musk insists is "a funny reference to Microsoft"—aims to develop an AI agent capable of performing any task a white-collar worker can do on a computer. Toby Pohlen, appointed to lead the project in February, left within weeks, and recent reports indicate Macrohard has been paused. In response, Musk has enlisted another of his companies, revealing for the first time that Macrohard is a joint effort with Tesla. Tesla is developing a complementary agent called "Digital Optimus," a nod to its Optimus humanoid robot. In Musk's vision, the xAI language model would direct the Tesla agent as it executes tasks.

This ambition is not entirely unique. It aligns closely with the direction of Perplexity, an AI-powered search engine, which is launching an "Everything is Computer" service to provide enterprise users with a "digital proxy" for orchestrating tasks. It also parallels work being done by entrepreneur Peter Steinberger at OpenAI, following his creation of popular personal agents for OpenClaw.