During a recent company-wide meeting, Elon Musk unveiled his ambitious plans for xAI, his two-year-old artificial intelligence startup, which is intensely pursuing industry leaders.
True to his long-standing vision for AI, Musk spoke to his employees about creating “maximally truth-seeking” systems. He even hinted at a future competitor to Microsoft, humorously dubbed “Macrohard.”
“Our mission is uniquely focused on truth,” Musk declared during a 90-minute presentation. He cautioned that forcing AI to propagate falsehoods risks ushering in a “dystopian future.”
Following a public disagreement with President Trump in June, the 54-year-old billionaire has intensified his work on xAI, the company behind the Grok chatbot, which recently secured a valuation of $120 billion. Musk, who views government issues as intractable, is convinced that AI will fundamentally transform society. He also maintains that xAI’s innovations will ultimately benefit his other ventures, including Tesla and SpaceX.
This past summer, Musk reportedly dedicated the majority of his time to xAI’s Palo Alto headquarters. Sources familiar with the company’s operations revealed that he worked intensely for days on end, often staying overnight at the office, a habit observed in his other companies.
Musk’s intense focus on xAI sparks concerns about the attention he’s allocating to his other ventures. This comes amidst efforts by Tesla’s board to approve a massive, trillion-dollar pay package, believing it will incentivize him to boost the automaker’s performance. On Monday, Musk assured the public via X, stating, “Daddy is very much home,” and outlining a schedule that included significant time at Tesla and xAI’s data center.
However, despite—or perhaps due to—Musk’s singular dedication, xAI experienced a turbulent summer. Insights from 12 individuals closely involved with the company, combined with Musk’s recent presentation, reveal the billionaire’s primary focus since stepping back from his cost-reduction efforts in Washington.
Musk has rapidly restructured xAI, initiating an aggressive recruitment campaign for engineers while simultaneously ousting several high-profile researchers. Others departed voluntarily, reportedly due to concerns that xAI was prioritizing sensational, often offensive, products—such as its chatbot producing problematic content and flirtatious AI companions—over genuine scientific advancement.
Meanwhile, xAI is investing billions in technology without a clear revenue stream. While Grok, xAI’s chatbot, boasts 64 million monthly users, as stated in Wednesday’s meeting, this pales in comparison to OpenAI’s ChatGPT, which garners approximately 700 million weekly users. Nevertheless, Musk confidently predicted that xAI’s offerings would boost advertising revenue on his social media platform, X, fivefold to $10 billion annually.
Neither Mr. Musk nor a spokesperson for xAI responded to requests for comment.
xAI was established by Musk in spring 2023, co-founded with Igor Babuschkin, a former researcher at prominent labs like OpenAI and Google DeepMind. Musk also brought in Ross Nordeen, a veteran lieutenant from Tesla and X. Babuschkin then assembled the broader team, which included University of Toronto professor Jimmy Ba and Google researcher Tony Wu.
Even before Meta began offering substantial compensation for AI talent, Musk successfully recruited many of xAI’s early researchers with annual pay packages reportedly worth millions, according to two sources involved in the initial recruitment drive.
During a 2023 meeting at SpaceX headquarters in Texas, attended by the 11-person founding team and Musk, he criticized ChatGPT’s market dominance as being too “woke.” His ambition was to develop a rival AI that better reflected his own political ideology.
Musk secured billions in funding for a massive data center in Tennessee, equipped with 100,000 specialized Nvidia chips. Upon its opening in September 2024, it became one of the world’s largest supercomputers dedicated to AI development. He also mandated the hiring of 100 engineers within 100 days, effectively doubling the company’s workforce. By February, xAI had developed an AI system that matched the performance of other top chatbot technologies in standard benchmarks.
In May, Musk reportedly communicated to over 100 employees via a group chat that he found Grok to be excessively “woke.”
That same evening, an engineer modified Grok’s code as a direct result. This led the chatbot to inappropriately inject South African politics into unrelated discussions on X, including false claims of “genocide” against white citizens. This controversial behavior triggered an urgent internal effort to rectify the error, which the company publicly attributed to an “unauthorized modification” by an employee, omitting any reference to Musk’s prior directive.
Shortly after a farewell event with Mr. Trump in early June, Musk attended Symposium, an exclusive tech entrepreneur gathering hosted by Founders Fund at a luxury Montana resort.
During the event, Musk largely kept to himself, even avoiding his rival, OpenAI CEO Sam Altman. However, he engaged in extensive discussions with a select group, including Founders Fund head Peter Thiel, primarily focusing on the trajectory of artificial intelligence.
Immediately afterward, Musk arrived at xAI and effectively wrested control from the two researchers previously managing daily operations. He reportedly removed Ting Chen, head of Grok’s image and sound training, and Aakash Sastry, who led AI video generation. Dr. Ba, an early employee, saw his responsibilities reduced, while Mr. Babuschkin transitioned to a non-management position.
Musk then appointed Mr. Nordeen and Dr. Wu to oversee xAI’s products. Their strategy involved making Grok’s responses more provocative, hoping to generate buzz and achieve viral status on X.
This approach led to another significant PR crisis. In July, following a code update, Grok generated antisemitic content, including praise for Adolf Hitler and assertions that individuals with Jewish surnames were prone to spreading online hate, even referring to itself as “MechaHitler.” Company engineers swiftly intervened to prevent any recurrence of such offensive outputs.
Weeks later, xAI launched “SuperGrok Heavy,” a new AI service priced at $300 per month, and introduced a line of whimsical AI bots designed for virtual romantic interactions.
These ‘romance bots’ caused considerable friction among some researchers, who felt xAI was deviating from its core scientific objectives. Several reportedly expressed intentions to leave the company over these developments.
Sasha Luccioni, an AI researcher at Hugging Face, commented, “Most A.I. researchers are primarily motivated by deep research and solving complex problems. The current trajectory of xAI appears less attractive to the AI community I’m familiar with.”
In late July, Musk and xAI’s finance chief, Mike Liberatore, successfully secured $10 billion in funding, partly through an investment from Musk’s rocket company, SpaceX. However, half of this capital is structured as debt, requiring future repayment.
Just two months later, Liberatore departed xAI to take a finance position at rival OpenAI. Throughout the summer, xAI also saw the exit of Mr. Babuschkin, its general counsel, and several other crucial personnel. Numerous leading researchers have since moved to competitors such as Meta and OpenAI.
During the Wednesday meeting, Musk remarked, “I’ve never witnessed anything more intense than A.I. recruiting.” An HR manager further elaborated on recruitment incentives, detailing referral bonuses of 5% of salary for each new hire and a competition with prizes like a private jet trip to witness a SpaceX launch.
While Musk remained silent on xAI’s revenue figures, he reaffirmed his commitment to developing a Microsoft rival, playfully named “Macrohard,” which would leverage Grok for software development. He also announced “Baby Grok,” an AI product aimed at children aged 2 to 12.
Musk and his team underscored xAI’s synergistic ties with his other companies, highlighting that Grok is already the voice of Tesla’s Optimus humanoid robots, currently in development for factory and business automation.
Recently, Musk has publicly backed a Tesla shareholder proposal urging the electric automaker to invest in his AI startup. Shareholders are slated to vote on this proposal in early November.
On Wednesday, Musk pointed out the proximity of Tesla’s offices, just a short walk from xAI.
“xAI’s location here is strategic, being directly across from Tesla,” he stated. “My bold prediction is that Optimus will eventually surpass the productivity of the entire global economy, with its output of goods and services far exceeding what everyone on Earth currently produces.”