xAI has lost 9 of its 11 co-founders since its March 2023 launch, leaving only Manuel Kroiss and Ross Nordeen from the original founding team. Elon Musk criticized the coding team for falling behind in a town hall meeting before implementing a reorganization that saw several co-founders removed. The latest departure was Toby Pohlen, who was put in charge of the Macrohard project but left after just 16 days.

Musk has redeployed Ashok Elluswamy from Tesla to reboot the Macrohard effort and review previous work. The company will collaborate with Tesla on a digital Optimus combining Tesla's real-world AI expertise with Grok's large language models. Despite internal turmoil, xAI continues to expand its infrastructure with a massive data center in Memphis housing 200,000 specialized AI chips.

Staff complaints indicate constant upheaval is destroying morale and preventing xAI from achieving its potential. While a memo denies mass layoffs, researchers continue quitting due to burnout from Musk's "extremely hardcore" work demands. Recruiters are contacting previously declined candidates, with Musk apologizing and promising to reach out to promising ones from past interviews.