Elon Musk’s artificial intelligence venture, xAI, has reportedly lost its final two original co-founders, according to a new report. This development marks a significant leadership shift for the startup as it undergoes a foundational rebuild and integration into Musk’s broader corporate structure. The departures of Manuel Kroiss and Ross Nordeen, first reported by Business Insider on March 28, 2026, suggest deep internal changes at the company Musk founded to compete with OpenAI and Google.
Leadership Vacuum at xAI
Business Insider reported that Manuel Kroiss, who led xAI’s pretraining team, informed colleagues of his departure. The outlet then reported that Ross Nordeen, described as Musk’s “right-hand operator,” left the company on Friday, March 25. Both executives reported directly to Musk. This follows earlier reports that nine of the startup’s eleven original co-founders had already exited. The implication is a near-total turnover of the founding team in a relatively short period.
Also read: Altman testifies Musk once proposed handing OpenAI to his children during safety dispute
Nordeen’s background is particularly notable. He reportedly joined xAI from Tesla and was involved in planning the major layoffs at Twitter following Musk’s acquisition in 2022. His operational role was seen as critical. Kroiss’s technical leadership on the pretraining team was equally vital for developing the company’s core AI models. Their simultaneous exits create a substantial void.
Musk’s “Rebuild from the Foundations Up”
The co-founder exodus coincides with Musk’s own stark assessment of xAI’s early trajectory. He recently stated that xAI “was not built right [the] first time around” and is now “being rebuilt from the foundations up.” This public admission is rare for Musk and signals a strategic pivot. Industry watchers note that such a fundamental rebuild often follows technical roadblocks, strategic disagreements, or a need to align with new corporate priorities.
Also read: Google and SpaceX in talks to launch orbital data centers, WSJ reports
What this means for investors and the AI sector is a period of uncertainty for xAI. The company’s flagship product, the Grok chatbot, was launched with much fanfare. A foundational rebuild could delay future model iterations or shift the company’s research focus entirely. Data from PitchBook shows that xAI was valued at roughly $24 billion in its last funding round. Leadership instability at this level can affect that valuation.
The SpaceX Factor and Corporate Consolidation
This leadership change is not happening in isolation. xAI was recently acquired by SpaceX, Musk’s aerospace company. This move brings SpaceX, xAI, and the social media platform X under a single corporate umbrella. According to reports, SpaceX itself is planning an initial public offering. The integration of xAI into this structure suggests Musk is streamlining his assets, possibly to create a more cohesive technology conglomerate ahead of a public market debut.
The consolidation raises questions about xAI’s independence and mission. Will its AI research be directed more specifically toward SpaceX’s goals in aerospace and robotics? Or will it remain a general AI lab? The departure of co-founders could be a consequence of this new strategic direction under SpaceX’s ownership. According to analysts at Wedbush Securities, “Musk is rationalizing his portfolio. xAI’s tech is likely seen as a force multiplier for SpaceX’s long-term ambitions in autonomy and simulation.”
Broader Context in the AI Talent War
The reported departures occur during an intense battle for top AI talent. Companies like OpenAI, Anthropic, Google DeepMind, and Meta are aggressively recruiting researchers and engineers. Losing senior leaders can make it harder for xAI to attract and retain the expertise needed to compete. According to data from Revelio Labs, attrition at AI startups has increased by 15% year-over-year as established tech giants ramp up their investments.
However, Musk’s companies have historically weathered high-profile departures. Tesla and SpaceX have seen executives come and go while continuing to execute on ambitious goals. The key question is whether Musk has already identified or hired replacements who align with his new vision for xAI. The rebuild he described may involve a completely new technical and operational team.
What’s Next for xAI?
The immediate future for xAI appears to be one of transition. With its founding team largely gone and a proclaimed rebuild underway, the company’s roadmap may be in flux. The integration with SpaceX provides financial stability and computational resources but may also impose new constraints. The focus might shift from building a standalone chatbot competitor to developing specialized AI for SpaceX’s engineering challenges.
This could signal a move away from direct consumer-facing AI products. Alternatively, Musk may be clearing the deck to install a hand-picked leadership team that can execute a more aggressive, integrated strategy across his companies. The lack of comment from xAI, as noted by TechCrunch, is standard but leaves many questions unanswered. The coming months will be critical for understanding the new shape of Musk’s AI ambitions.
Conclusion
The reported departure of Elon Musk’s last xAI co-founders, Manuel Kroiss and Ross Nordeen, marks a decisive moment for the startup. It underscores a period of profound restructuring, following Musk’s admission that the company needs a foundational rebuild. This leadership vacuum, combined with xAI’s acquisition by SpaceX, points to a strategic realignment of Musk’s AI efforts within his larger corporate empire. The moves highlight the volatile nature of the AI industry’s talent space and the relentless pressure to adapt. The future of xAI now depends on Musk’s ability to successfully rebuild its team and mission from the ground up.
FAQs
Q1: Who are the xAI co-founders who reportedly left?
According to a Business Insider report, the final two original co-founders, Manuel Kroiss and Ross Nordeen, have departed Elon Musk’s AI startup, xAI. Kroiss led the pretraining team, and Nordeen was Musk’s key operations executive.
Q2: Why is this significant?
This means all eleven of xAI’s original co-founders have now reportedly left the company. It creates a major leadership gap during a period when Musk says xAI is being “rebuilt from the foundations up.”
Q3: How does this relate to SpaceX?
xAI was recently acquired by SpaceX. The departures are happening as xAI is integrated into Musk’s broader corporate structure, which also includes X (formerly Twitter). SpaceX is reportedly planning an IPO.
Q4: What did Elon Musk say about xAI’s current state?
Musk stated publicly that xAI “was not built right [the] first time around” and is now undergoing a fundamental rebuild. This suggests strategic or technical pivots at the company.
Q5: What could this mean for xAI’s future?
The company’s direction may shift. With new ownership under SpaceX and a new leadership team, its focus could move from consumer AI like the Grok chatbot to more specialized AI research supporting SpaceX’s goals in aerospace, robotics, and simulation.
Be the first to comment