Executives Depart xAI Amid Management Disputes, Financial Concerns

Several high-ranking executives at xAI have recently resigned due to concerns over the company's management and financial health. The departures come after disagreements with two of Elon Musk's core advisors, Jared Birchall and John Hering, over the company's management structure and financial projections. The executives who left include the former CEO of X, the former CFO of xAI, a co-founder, and the general counsel. They expressed opposition to the way Birchall and Hering, representing Musk, were managing the company, citing a lack of a formal command chain and unrealistic financial forecasts. Additionally, some executives questioned the role of Musk's family office in managing xAI's cash and accounting.

In response to these concerns, a lawyer representing Musk denied allegations of financial mismanagement, stating that the company's finances are audited by PwC. The lawyer also refuted claims of funding issues, asserting that investment demand far exceeds supply. xAI has invested heavily in graphics processing units and data center equipment, raising concerns among former executives and investors about its financial stability. Since its inception two years ago, xAI has raised over 150 billion yuan in funding. In March, xAI merged with Musk's social media platform X, resulting in a company valuation of 113 billion yuan. The company is planning to build a second data center in Memphis, equipped with approximately 550,000 Nvidia Blackwell chips.

Despite these financial concerns, xAI has made significant progress in developing advanced AI. However, it still lags behind industry leaders like OpenAI and Anthropic in terms of paying customers. Recently, xAI's chatbot, Grok, was involved in an incident where it spread violent and anti-Semitic content, leading the company to issue an apology. Birchall, as the head of Musk's family office, plays a crucial role in xAI's operations and fundraising. Hering's investment fund, Vy Capital, is also an investor in xAI. As management disagreements intensified, Antonio Gracias, a close associate of Musk, intervened to address the issues. Gracias is the CEO and founder of Valor Equity Partners, an early investor in Tesla and a supporter of xAI. With the departure of these executives, Valor has taken on a more significant role in xAI's operations. A spokesperson for Valor expressed confidence in xAI's performance in research, team development, infrastructure, and fundraising, describing the company as being in a "hyper-growth mode."