‘Not built right the first time’ — Musk’s xAI is starting over again, again

Source: TechCrunch

xAI’s Rebuilding Effort

“xAI was not built right the first time around, so it is being rebuilt from the foundations up,” Elon Musk said on Thursday on his social media platform, X (status). By most measures, the overhaul isn’t going smoothly.

The most immediate pressure is competitive. This week, xAI co‑founders Zihang Dai and Guodong Zhang left after Musk complained that the company’s AI coding tools were not effectively competing with Anthropic’s Claude Code or OpenAI’s Codex. Musk said an all‑hands meeting on Wednesday focused on how to catch up, which he predicted would be possible by mid‑year.

Coding tools matter because they’re where the money is. While an early‑year surge of users was powered by Grok’s lax regulation of sexual and abusive imagery, coding tools are seen as the key revenue‑generating technology for AI labs. xAI’s lag in this area is therefore a business problem, not just a perception issue.

Personnel Turnover

The personnel overhaul extends beyond this week. A month ago, 11 senior engineers—including two co‑founders—left the company (TechCrunch). Musk described the changes as a reorganization to suit a larger business. The effort proved insufficient: the Financial Times reported that SpaceX and Tesla executives have parachuted into xAI to evaluate employees and fire those who don’t meet the grade (FT).

The two remaining co‑founders, Manuel Kroiss and Ross Nordeen, along with Musk, now have their work cut out for them.

Hiring Initiatives

Musk is casting a wider net for talent. On Thursday, he said on X that he and colleague Baris Akis (status) are reviewing rejected employment applications (status) to reach out to promising candidates who should have had a chance to interview. “My apologies,” Musk added, addressing the pile of strangers he’d ghosted.

For comparison, LinkedIn reports that xAI has just over 5,000 employees, versus more than 7,500 at OpenAI and over 4,700 at Anthropic.

On the hiring front, there’s at least one encouraging sign. Andrew Milich and Jason Ginsberg are joining xAI from the AI coding‑tool company Cursor, where they held joint responsibility for product engineering. Unlike xAI, Cursor depends on frontier labs for access to the AI models it runs on. Their decision to join xAI may signal the importance of direct access to LLMs and computing resources—and suggests that xAI’s core asset, its own frontier model, remains an attractive draw.

Macrohard Project

Longer‑term, Musk is betting on something bigger than coding tools. xAI’s “Macrohard” project—Musk says the name is “a funny reference to Microsoft”—aims to create an AI agent capable of doing anything a white‑collar worker can do on a computer. Toby Pohlen, chosen to lead the project in February, left within weeks, and this week Business Insider reported that Macrohard was on pause (article).

Musk’s response has been to draft another of his companies into the project. He revealed that Macrohard is a joint effort with Tesla, which is also developing a complementary agent dubbed “Digital Optimus” (a reference to Tesla’s Optimus humanoid robot). In Musk’s description, the xAI language model would direct the Tesla agent as it performs tasks (status).

The vision is not unique. Perplexity’s new “Everything is Computer” offering aims to provide enterprise users a dedicated “digital proxy” that can orchestrate digital tasks (link). It also echoes work by entrepreneur Peter Steinberger at OpenAI after creating OpenClaw’s popular personal agents.