Musk’s last co-founder reportedly leaves xAI

Two remaining co-founders at Elon Musk’s AI startup xAI have left the company, according to a Business Insider report.

The report said Manuel Kroiss told people he was departing, and Ross Nordeen left days later, after earlier departures appeared to have reduced xAI’s co-founder group from 11 to two.

Kroiss led xAI’s pretraining team, and Nordeen worked as Musk’s “right-hand operator,” and it added that Nordeen previously worked at Tesla and helped plan large layoffs at Twitter after Musk bought it in 2022.

Musk recently said xAI was being rebuilt “from the foundations up,” and Business Insider reported that SpaceX has acquired xAI, as SpaceX, xAI, and X sit under one corporate umbrella.

🔗 Source: TechCrunch

🧠 Food for thought

Implications, context, and why it matters.

The rebuild was triggered by specific product failures and a clash over AI strategy

Elon Musk said xAI was “not built right first time around” after he grew frustrated with the performance of its coding product 1.
The AI agent effort called “Macrohard” then stalled; its chosen leader, Toby Pohlen, resigned after 16 days in the role 2.
The company paused the project after finding “numerous flaws” in a model that relied on analyzing static screenshots 2.
Musk pressed the xAI engineering team to follow an approach similar to Tesla’s Full Self-Driving (FSD) development, which processes continuous video streams 2.

xAI’s turmoil creates new risks for a potential SpaceX IPO

The restructuring clouds SpaceX’s recent acquisition of xAI, valued at $250 billion 3. It has also fueled speculation about a mid-2026 SpaceX initial public offering (IPO) 3.
Musk’s admission that xAI was “not built right first time around” may create new disclosure pressure for any public offering 1.
The timing overlaps with a shareholder lawsuit alleging Musk improperly diverted resources such as talent and graphics processing units (GPUs) from Tesla to xAI 2.
The merger used a complex, tax-free reorganization. Uncertainty about its status could slow investor diligence ahead of what could be one of the largest IPOs ever 3.