xAI loses two more Chinese co-founders! 11 down to 9, only 2 remain, Musk admits he built it wrong the first time

xAI co-founder, two more left this week.

Excluding Elon Musk himself, a total of 11 founders have seen 9 depart, leaving only two.

On the same day, xAI recruited two product engineering leaders from AI programming company Cursor.

Elon Musk personally responded: “xAI didn’t get it right the first time; now we have to rebuild from scratch.”

11 founders, 9 gone, the founding team nearly wiped out

This week, the two latest co-founders to leave xAI are both Chinese.

Zihang Dai’s xAI badge on his X profile has disappeared. Before joining xAI, he worked at Google and holds a Ph.D. in Computer Science from Carnegie Mellon University.

Guodong Zhang just announced his departure. His role at xAI was more critical; he reported directly to Musk and was responsible for the core products Grok Code and Grok Imagine.

Earlier, Tony Wu left shortly after Guodong Zhang was given greater responsibilities.

Their departures are the latest in a series of mass resignations early 2026.

In January, Grok’s chief architect Greg Yang stepped down, citing Lyme disease diagnosed during his time at xAI as a result of “long-term high-intensity work.”

On February 10, former Google scientist Tony Wu, responsible for reasoning research, left.

Just a day later, February 11, Jimmy Ba, known for proposing the Adam optimization algorithm and previously responsible for AI tutoring features and Grok 4 development, also announced his departure.

By the end of February, Toby Pohlen, leader of the Macrohard project, also left.

Looking further back, senior Google scientist Christian Szegedy, who proposed the Inception network architecture, left in February 2025.

Igor Babuschkin left in August 2025 to establish a VC firm focused on AI safety.

The earliest departure, infrastructure head Kyle Kosic, moved to OpenAI in 2024.

After Dai and Zhang left, only Manuel Kroiss and Ross Nordeen remain of the 11 co-founders who started xAI with Musk in 2023.

Former employee reveals: Where’s the flat structure?

The mass departure of founders suggests high-level turmoil, but a recent long post by former employee Benjamin De Kraker on X exposes another layer of issues.

Kraker said he joined at a low level but was passionate about xAI. He has a significant following among influential AI figures on X, including Lex Fridman, Marc Andreessen, and others in tech, with Musk himself among them.

During his time, xAI repeatedly emphasized two things: the company has a “flat structure” and encourages employees to “take initiative.”

He decided to leverage his social influence to do something that aligned with the company’s culture—publicly soliciting suggestions to improve Grok from followers on X, when Grok was still in early version 2.0.

The response exceeded expectations. John Carmack, founder of id Software (a personal friend of Musk with 1 million followers), reposted the post, attracting many users to submit suggestions. The employee wrote scripts to collect and categorize these ideas, preparing a report to submit to superiors, ultimately handed to Musk.

Then everything took a sharp turn.

The next morning, he received a stern email from his direct supervisor, accusing him of a serious mistake and demanding “no further public solicitation of ideas to improve Grok in any form.”

His X account was immediately frozen without explanation. He was asked to delete the viral posts and hundreds of user-submitted suggestions.

He wrote in the post:

It’s confusing and upsetting. Similar things happen often—xAI employees come in excited and passionate, then get crushed by management that hates new ideas.

They fill xAI with middle managers and bureaucrats. This is one of the most corporate-ill places I’ve worked. I entered hoping Musk and xAI would win; I left feeling only sadness.

At the end, he added:

That supervisor has left. Everyone I knew at xAI has left.

Musk: We didn’t get it right the first time, starting over

In response to the mass exodus of founders, Musk said he would rebuild from scratch.

This aligns with his statement at the February all-hands meeting, where he told employees:

Because we’ve reached a certain scale, we’re restructuring to improve efficiency. When this happens, some people are more suited for the early stage of a company, and less for the later stage.

The restructuring has had immediate effects.

Since January, xAI has laid off dozens of employees, affecting the Macrohard project and Grok Imagine team. After Pohlen left, the Macrohard project stalled, and Musk later announced on X that xAI was collaborating with Tesla to push this forward.

On the product side, Musk also publicly admitted setbacks. During the March 12 Abundance conference, he said:

Grok is currently behind in programming. The reason I was late today is because I just finished a large all-hands meeting about coding, going through all the tasks needed to surpass competitors in coding. I believe we can do it.

Talent movement at xAI isn’t limited internally.

The talent tug-of-war between xAI and OpenAI has lasted over a year. Besides Kyle Kosic, the earliest co-founder to leave for OpenAI in 2024, key personnel like former Tesla software VP David Lau and infrastructure head Uday Ruddarraju have also been recruited by OpenAI.

In 2025, xAI sued OpenAI, accusing it of poaching former employees and stealing business secrets related to Grok, claiming OpenAI launched an “organized, unfair, and illegal campaign” to plunder xAI’s technology.

However, in February 2026, a California court dismissed the lawsuit for lack of sufficient evidence.

This restructuring coincides with SpaceX’s announcement to acquire xAI, with the combined entity valued at $1.25 trillion, leading to fundamental changes in organizational and equity structure.

On March 11, 2026, documents filed with the U.S. Federal Trade Commission revealed that Tesla had approved converting its approximately $2 billion investment in xAI into a small stake in SpaceX, less than 1%.

All signs point to the same direction:

SpaceX plans to launch an IPO as early as June 2026, raising up to $50 billion, with a target valuation exceeding $1.75 trillion. If successful, it would surpass Saudi Aramco as the largest IPO in history.

Talent is rapidly leaving, new hires are being urgently brought in, and capital is accelerating restructuring.

Musk responded to all doubts with one sentence: “Tesla was like this back then.”

Source: Quantum Bit

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