xAI Announces Major Restructuring Following SpaceX Merger as Co-Founders Exit
Because he couldn’t get OpenAI, he started xAI together with 11 others – and ultimately acquired this company through the merger with SpaceX recently: Following the acquisition by SpaceX, xAI announced a comprehensive restructuring that comes with the departure of several employees. CEO Elon Musk justified the measures with the necessity to adapt the organizational structure to the company’s rapid growth.
New organizational structure with four core teams
In a 45-minute all-hands meeting that xAI published on X, Musk presented the new structure. The company will henceforth be divided into four main areas:
- Grok chatbot (including voice features)
- Coding systems for the app
- Imagine video generator
- Macrohard project for computer simulation and business modeling
Toby Pohlen, who will lead the Macrohard project, explained: “It should be able to do everything on a computer that a computer can do. Rocket engines should be fully designed by AI.”
Departure of founding members
The reorganization led to the departure of several employees, including co-founders Jimmy Ba and Tony Wu. Previously, Igor Babuschkin, Kyle Kosic, Christian Szegedy, and Greg Yang had already left the company. Musk described the departures as a consequence of the structural changes.
“When a company grows, especially as quickly as xAI, the structure must evolve. This unfortunately required the separation from some employees. We wish them all the best for their future endeavors.” At the same time, Musk emphasized that xAI was hiring new employees “aggressively.”
Business figures and usage data
During the meeting, executives presented current figures on company performance. Nikita Bier, product chief at X, announced that the platform had exceeded one billion dollars in annual recurring revenue from subscriptions.
For the Imagine tool, those responsible cited impressive usage figures: 50 million generated videos per day and over six billion images in the past 30 days. However, these figures are in the context of controversies surrounding AI-generated explicit content that circulated on the platform during this period.
Background of the merger
The reorganization comes just days after the announcement of the merger between SpaceX and xAI. In the pure stock transaction, SpaceX was valued at one trillion dollars and xAI at 250 billion dollars following the merger. SpaceX plans its IPO this year. xAI was founded in 2023 by Musk and eleven other individuals to compete with OpenAI and Google. The stated goal was to “understand the true nature of the universe.” By now, 6 of the 12 founding members have left the company again.
Parallel to the restructuring, xAI faces regulatory investigations in multiple jurisdictions. Authorities in Europe, Asia, and the United States are examining whether the company violated regional regulations after Grok enabled the mass creation and distribution of non-consensual explicit images.
Future vision: Space-based data centers
At the end of the presentation, Musk reaffirmed his vision of space-based data centers. He went even further and sketched the idea of a lunar factory for AI satellites, including an electromagnetic catapult for launch. With such infrastructure, Musk said, one could build AI clusters that utilize significant portions of total solar energy or even expand to other galaxies.
