5 of 12 Co-Founders Gone: The Talent Exodus Threatening Musk's xAI Empire

Five of xAI's twelve co-founders have left the company. On February 10, 2026, co-founder Tony Wu's departure was confirmed, marking a new chapter in xAI's talent crisis. The CFO defected to competitor OpenAI after just three months, and the general counsel resigned after sixteen months.

Elon Musk envisions xAI as an AI empire to rival ChatGPT and Claude. The company raised $20 billion in Series E at a $230 billion valuation and is planning a merger with SpaceX to create a combined $1.25 trillion entity. But even the largest war chest is meaningless without the people to deploy it.

1. Five of Twelve Co-Founders Gone: The Core Is Shaking

The most alarming aspect of xAI's talent drain is the departure of co-founder-level key personnel. Five of twelve co-founders have already left.

Kyle Kosic was the first to depart in June 2024. In 2025, Christian Szegedy left in June to found his own AI startup Morph Labs, followed by Igor Babuschkin in August who departed to establish his own VC firm. In 2026, Greg Yang left in January due to health issues (Lyme disease), and Tony Wu became the most recent departure on February 10.

More than 40% of co-founders departing goes beyond simple attrition statistics. These are the people who co-designed xAI's technical direction and corporate culture. Their exodus signals that the organization's very identity is being shaken.

2. CFO Lasted 102 Days Before Joining OpenAI: The Reality of Extreme Work Culture

The figure who most starkly revealed xAI's work environment is former CFO Mike Liberatore. He posted on LinkedIn: "102 days—7 days per week in the office; 120+ hours per week." He left xAI after just three months to join competitor OpenAI.

General counsel Robert Keele also resigned after 16 months, citing that he didn't get to see his "two toddlers enough." Reports indicate that xAI's offices are equipped with sleep pods and tents—testimony to a work intensity that doesn't even allow time to go home to sleep.

In Financial Times reporting, an anonymous Musk advisor said: "The one constant in Elon's world is how quickly he burns through deputies. Even the board jokes, there's time and then there's 'Tesla time.' It's a 24/7 campaign-style work ethos." Extreme work intensity is Musk's trademark, but in the AI industry, it's producing the opposite effect—pushing talent away.

3. From Podcast Leaks to 500 Layoffs

xAI's personnel problems extend beyond voluntary departures. Sulaiman Ghori reportedly left or was fired after leaking xAI confidential information on a podcast—an incident suggesting problems with both internal security and corporate culture.

In September 2025, over 500 employees in the data annotation department were laid off en masse. The restructuring came as xAI pivoted Grok's training methodology toward a specialist tutor system. The layoffs were read as a signal that xAI was drastically changing course.

This instability affects remaining employees too. In an environment where colleagues keep leaving and entire departments vanish, it's difficult to plan a long-term career. The estimated 50%+ attrition rate is both a result and a cause of this anxiety.

4. Research Direction Conflicts and Musk's Political Shadow

Work intensity isn't the only reason people leave. Multiple former employees cite fundamental disagreements over research direction. Within xAI, tension reportedly existed between those who wanted to focus on commercial AI products (Grok) and those who prioritized fundamental research. Co-founder Szegedy launching his own research-focused startup can be seen as a direct result of this conflict.

Musk's political activities also accelerate departures. His public support of far-right groups in the US and Europe causes deep discomfort among employees. One former Tesla employee told the Financial Times: "Nobody that I know there isn't thinking about politics. If your moral compass is saying you need to leave, that isn't going to go away."

Top AI talent considers not just compensation but corporate values and research freedom. In this regard, xAI sits at a disadvantage compared to competitors like OpenAI and Anthropic.

5. Burning $1 Billion Monthly, Seeking Escape Through SpaceX Merger

xAI's financial structure explains the backdrop to its talent exodus. According to Reuters, the company recorded $1.46 billion in losses in the September 2025 quarter alone. It burns approximately $1 billion monthly while revenue sits at roughly $100 million. Grok 4 is in service and Grok-5 is under development, but meaningful monetization remains distant.

In this context, Musk announced the SpaceX-xAI merger on February 2, 2026—a mega-merger creating a combined entity valued at approximately $1.25 trillion. For xAI, the logic is access to SpaceX's stable cash flow and infrastructure; for SpaceX, enhanced AI capabilities.

But whether the merger can solve the talent drain remains uncertain. No matter how large the valuation grows, people will keep leaving if workplace culture doesn't change. The $20 billion raised in Series E didn't translate into talent retention.

6. xAI's Future in the AI Talent War

xAI's talent exodus is intertwined with the broader AI industry talent war. According to SignalFire's 2025 report, OpenAI employees are eight times more likely to leave for Anthropic than vice versa. The AI talent market is firmly a seller's market.

Meta reportedly offered an OpenAI researcher a package exceeding $200 million over several years, illustrating how compensation for top-tier AI talent has reached astronomical levels. Talent leaving xAI is scattering to OpenAI, their own startups, and VC firms. CFO Liberatore's direct move to OpenAI is symbolic.

Musk insists that "very few regretted departures" have occurred, but five co-founder departures can hardly be called 'very few.' If this trend continues, no amount of capital or computing infrastructure will help Grok catch up to ChatGPT or Claude.

Conclusion: What Money Can't Buy

xAI finds itself in a paradox: overflowing with capital but hemorrhaging people. Despite raising $20 billion and pursuing a SpaceX merger, the root causes driving co-founders away remain unaddressed.

The real weapon in AI competition isn't GPUs or data centers—it's people. Trapped in a triple bind of extreme work intensity, research direction conflicts, and political controversy, if xAI cannot break its vicious cycle of talent loss, Musk's AI ambitions may founder not on a lack of funding but on a lack of people.