xAI, the artificial intelligence company co-founded by Elon Musk, is undergoing a significant shake-up. Nearly half of its founding team has departed in recent months. Yuhuai (Tony) Wu, the last of the original co-founders, suddenly announced late Monday night that he was departing the company. Wu’s exodus marks an important moment for xAI. The company must be looking toward an initial public offering (IPO) amid a tumultuous period in its own backyard.
The company’s vision is to create advanced orbital data centers and leverage next-generation AI capabilities. It’s been criticized for its image-generation tools, which fueled an explosion of deepfake porn on its site. This incident has resulted in slow-moving but real legal consequences, raising questions about the future of the company’s operations and its compliance with regulations.
The leadership shakeups at xAI have been dizzying, with five of the twelve founding team members already departing the company. Recent high-profile departures such as infrastructure lead Kyle Kosic, who joined OpenAI in mid-2024. Christian Szegedy, a long time veteran of Google, departed the company in February of 2025. Igor Babushkin left in August to establish a venture firm, while Microsoft alum Greg Yang departed last month due to health issues. These exits have caused alarm. This last criticism ties into a broader concern that xAI could struggle to retain fundamental AI talent as it prepares for a public offering.
Elon Musk’s leadership approach has been singled out as a reason that might inspire the tumultuous turnover permeating the company. As the company heads toward its IPO and into the public eye, the scrutiny is certainly increasing. If it wants to continue to be competitive in this rapidly evolving AI world, it needs to keep those people in-house.
Wu also looked back on his exit, noting, “I know that it’s time for my next chapter.” He emphasized the transformative potential of small teams in the AI sector, noting that “it is an era with full possibilities: a small team armed with AIs can move mountains and redefine what’s possible.”
Whether xAI can overcome these difficulties remains to be seen, but initial months will be instrumental in determining where it leads. The successful integration of new leadership and strategies will be essential as the company seeks to solidify its position in the market and address the ongoing concerns surrounding its technology and practices.
