xAI loses half its founding team as $1.25T SpaceX merger looms

What's the deal? Half of xAI's 12-person founding team has now left the company. Co-founder Tony WuDealroom has a profile for this one. Try Dealroom → announced his resignation on Monday, followed less than 24 hours later by Jimmy BaDealroom has a profile for this one. Try Dealroom →, who led research and safety efforts. They join Igor BabuschkinDealroom has a profile for this one. Try Dealroom →,Kyle KosicDealroom has a profile for this one. Try Dealroom →, Christian SzegedyDealroom has a profile for this one. Try Dealroom →, and Greg YangDealroom has a profile for this one. Try Dealroom →— all departed within the past year.

The exits come days after Elon Musk announced SpaceX would acquire xAI in a deal valuing the combined entity at roughly $1.25 trillion, with plans to go public later this year.

Why now? Internal tensions have mounted as xAI races to catch up with OpenAI and Anthropic. Some staff say leadership overpromised to Musk on technical milestones, creating unreasonable demands. The MacroHard coding project — xAI's answer to tools like Claude Code — has reportedly fallen short of Musk's expectations.

The SpaceX merger has added pressure. Musk intends to take the combined group public as early as June, subjecting xAI to heightened scrutiny just as it restructures departments and shuffles leadership.

What could go wrong? xAI's Grok chatbot is under investigation in the US, UK, and EU over AI-generated explicit deepfakes. California Attorney General Rob Bonta called the spread of such imagery "shocking" and urged immediate action. Ofcom can fine the platform up to 10% of worldwide revenue if it finds violations.

The regulatory heat compounds reputational damage from earlier incidents, including Grok praising Hitler and posting antisemitic content last summer. Staff have faced public backlash while navigating Musk's relentless demands.

The signal: The exodus reflects a broader pattern in AI: founding teams cash out or burn out as startups scale. With xAI securing  billions in funding and a planned IPO looming, early contributors stand to gain significantly — incentivising departures.

But losing half the founding team raises questions about continuity. In a sector where talent is scarce and competition fierce, xAI must prove it can deliver on Musk's vision of "space-based AI" while stabilising its technical bench.

Sources:
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Reuters
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