Elon Musk has initiated a second major reorganization of xAI within a month, resulting in the departure of most founding members. Only two of the original eleven co-founders remain as Musk orders a complete rebuild of the startup's AI coding tools.

Mass Departure of Co-Founders

Nine out of eleven original co-founders have now left xAI, including recent exits by Zihang Dai and Guodong Zhang.

Rebuilding from Foundations

Musk admitted xAI 'was not built right the first time' and is being completely restructured to compete with OpenAI and Anthropic.

Internal Turmoil

Staff members describe the company as 'flailing' due to constant upheaval and dissatisfaction with current AI coding tools.

SpaceX Merger Context

The instability follows a January 2026 merger with SpaceX that valued the combined entity at $1.25 trillion.

Elon Musk triggered a second reorganization of his artificial intelligence company xAI in March 2026, pushing out more co-founders as the company's AI coding tools failed to keep pace with rivals, according to reporting by the Financial Times and TechCrunch. Of the original 11 co-founders who launched xAI with Musk, only two now remain at the company, according to web search results citing TechCrunch. The latest departures include Zihang Dai and Guodong Zhang, who headed xAI's Imagine team. According to reporting cited in web search results, Zhang was told he was leaving after being blamed for issues with the coding product. Musk acknowledged the situation directly on X, his social media platform, stating that xAI was not built correctly from the start and must be reconstructed from its foundations. „xAI was not built right the first time” — Elon Musk via The Wall Street Journal

The departures follow a previous wave of exits in February 2026, when co-founders Tony Wu and Jimmy Ba resigned from the company, according to reporting from February 10, 2026. Staff at xAI have described the company as flailing due to what they characterized as constant upheaval, according to Ars Technica. The reorganization is linked to xAI's underperformance in AI coding tools, a segment where rivals including OpenAI's Codex and Anthropic's Claude Code have gained ground. The Next Web reported that Musk is effectively tearing down and rebuilding the company for a second time within the same month. The repeated restructuring has raised questions about organizational stability at a company that is less than three years old.

xAI was founded by Elon Musk in 2023. The company launched with 11 co-founders and has since developed the Grok generative AI chatbot as its flagship product. In January 2026, xAI merged with SpaceX in a deal that valued the combined entity at $1.25 trillion, described at the time as the largest U.S. corporate tie-up by value, according to the Wall Street Journal. By mid-February 2026, reporting noted that half of xAI's co-founders had already left the company over the preceding months as the firm lost ground to rivals in the generative AI space. According to the Person Registry, xAI is now a wholly owned subsidiary of SpaceX.

2 (co-founders remaining) — of 11 original xAI co-founders still at company

The broader context of the reorganization reflects intensifying competition in the AI coding tools market, where xAI's products have struggled to match the capabilities of offerings from OpenAI and Anthropic, according to multiple sources. Gizmodo reported that Musk has been drawing on a pool of previously rejected candidates as he attempts to rebuild the company's leadership and technical teams. The repeated restructuring, coming twice within a single month according to Ziare.com, has compounded internal discontent among staff who have publicly characterized the situation as disorganized. The company's merger with SpaceX, completed in January 2026, added further structural complexity to an organization already undergoing significant leadership turnover. No confirmed information is available on who the two remaining original co-founders are, based on source articles reviewed.