Grok, Is This True? Musk Says XAI Needs To Be 'Rebuilt' As Co-Founders Flee

Grok, Is This True? Musk Says xAI Needs to Be ‘Rebuilt’ As Co-Founders Flee

Last updated: 2026/03/15 at 5:29 AM

News Room Published 15 March 2026

Elon Musk’s xAI launched in 2023 with ambitions to take on OpenAI. But he now appears to be hitting the reset button on the startup.

On Thursday, Musk tweeted, “xAI was not built right first time around, so is being rebuilt from the foundations up. Same thing happened with Tesla,” which he took over from its original founders.

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It’s not a great sign for xAI, which has lost most of its original co-founders, including Guodong Zhang, who announced his departure yesterday. Business Insider reports that only two people of the original 11-member co-founding team are left, in addition to Musk. Perhaps to fill the void, two engineering leaders at AI coding provider Cursor announced they are joining xAI. Musk also says he’s digging through past job applications that the startup previously rejected. “Many talented people over the past few years were declined an offer or even an interview,” he wrote.

The rebuild comes after xAI was absorbed into SpaceX, which has grand ambitions to operate a network of orbiting data centers spanning up to 1 million satellites. To fund the project, SpaceX is preparing an IPO expected to generate tens of billions, which could be funneled into xAI.

Musk’s xAI, which technically owns and oversees X/Twitter, is perhaps best known for the Grok chatbot. But the startup faces major competition from OpenAI, Anthropic, and Google. It’s also stumbled into big controversies, like when it generated sexualized images of women and minors. At the same time, xAI has reportedly been burning about $1 billion in cash per month, raising concerns that it’ll eventually run out of money as it builds new AI data centers.

Last year, Musk also announced an ambitious effort to take on Microsoft through a project called “Macrohard,” which focused on creating AI agents capable of developing high-quality software. But it appears that is facing changes as well. On Wednesday, Musk indicated that Macrohard was merging with Tesla’s efforts to develop the software for the upcoming Optimus robot.

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“Macrohard or Digital Optimus is a joint xAI-Tesla project, coming as part of Tesla’s investment agreement with xAI,” he tweeted. The idea is to use xAI’s Grok as navigation software to help control the still-in-development Optimus bots.

“You can think of it as Digital Optimus AI being System 1 (instinctive part of the mind) and Grok being System 2. (thinking part of the mind),” Musk wrote, later adding: “In principle, it is capable of emulating the function of entire companies. That is why the program is called MACROHARD, a funny reference to Microsoft.”