Top Anthropic Dark Horse Musk Decides to Turn xAI into Anthropic

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(Source: Alphabet List)

Elon Musk’s AI startup xAI has recently experienced a series of intense personnel changes. Of the 11 co-founders from three years ago, only Manuel Kroiss and Ross Nordeen remain in the company. Among the original 11 co-founders, six Chinese nationals, by spring 2026, had already left:

Greg Yang, diagnosed with Lyme disease caused by insect bites, resigned at the end of January to become an “informal advisor”;

Jimmy Ba, known for AI optimization research, and Tony Wu, proficient in AI reasoning, announced their departures within two days in early February;

Guodong Zhang, focused on AI image generation, and Haotian Liu, specializing in multimodal AI research, announced their departure this Thursday; Zihang Dai also announced his departure on Friday.

Elon Musk responded on social media, expressing regret: “xAI didn’t give enough opportunities for industry talent to interview and join. We’re now reviewing past interview records with HR to see if we missed any outstanding candidates.”

Many Chinese reports, citing this tweet with the phrase “I am sorry,” have titled articles like “Elon Musk issues a self-criticism decree” or “Elon Musk changes his ways,” but they misunderstand Musk’s implied meaning and are unfamiliar with the typical temperament of the world’s richest person.

This statement is part of a series of updates: Musk repeatedly emphasizes the development of office AI agents by “Microsoft,” states “xAI initially didn’t do well, now we’re starting over. Tesla did the same,” and announces new hires.

When these comments are read in context—considering Musk’s personality and recent industry developments—it becomes clear that Musk isn’t admitting fault but shifting blame:

xAI has not produced a better competitor than Claude Cowork; the fault lies with the employees who left. I was under the impression that the original team could work without further recruitment, but now I’m working hard to turn things around.

01

In recent years, the concept of AI agents has become a public hotspot every first quarter and a feature integrated into major AI companies’ products every third quarter.

xAI naturally cannot miss this trend. In late August 2025, Musk announced the registration of a new trademark for “Microsoft” and the launch of a new project. The goal is to use the large language model Grok as a foundation, deploying hundreds of specialized AI agents. These agents will perform tasks like coding, software testing, understanding user requirements expressed in natural language, and generating images, audio, and video.

Musk said, “The ‘Microsoft’ project aims to simulate human interaction with office software through these specialized AI agents working together in virtual machines until AI replaces office software entirely. ‘Microsoft’ produces software services that can be fully simulated by AI,” and “We want to automate not just tasks but entire enterprises.”

These visions sound very similar to the descriptions of Claude Cowork by Anthropic and OpenAI’s Operator, as they are all meant to produce similar types of products.

However, the “Microsoft” project has yet to deliver a product that Musk publicly promised.

The only related progress is that in mid-September 2025, Musk showed that the “Microsoft” logo had been painted on the roof of his Colossus II supercomputing cluster.

At the same time, xAI announced layoffs of over 500 general data annotators, about one-third of its data annotation team at the time.

These moves are significant and convey at least two messages:

1. Musk has allocated sufficient computing resources for the new project;

2. Grok, as a chatbot, performs well, but the focus will shift to AI agents, so there’s no need for daily annotation of over ten thousand social media chat samples anymore.

But without a final product, these subtle signals are meaningless.

At the start of 2026, Claude Cowork was launched, accomplishing what Musk had promised last year but hadn’t yet achieved. According to his old friend and current competitor Altman’s famous quote, “Elon believes he will save the world, but also believes only he can save it, and others can’t,” Musk couldn’t accept this reality and started to become visibly anxious.

On March 11, 2026, Musk admitted at a public event that “Grok is now behind in coding,” and stated he is “focusing massive resources, with the entire team working on AI coding. One day, Grok will surpass competitors in coding, and I am doing everything I can to make that happen.”

This statement is the key to understanding Musk’s many actions in 2026.

In early February, SpaceX’s acquisition of xAI was to provide more funding for the AI project.

According to Tesla’s Q4 2025 financial report, Tesla committed to investing $2 billion in xAI. As the leading private aerospace and satellite communications company, SpaceX’s investment will surely be even larger.

Musk directly merged his most profitable company, SpaceX, with xAI, simplifying finances and boosting valuation, reaching a combined valuation of $1.25 trillion.

In early February, rumors circulated that Musk was dissatisfied with the “Microsoft” project and Grok’s image generation capabilities.

On February 12, during a company-wide meeting, Musk confirmed these rumors. He announced a major restructuring of xAI, dividing the company into four main departments:

• Grok chatbot for general consumer services;
• Grok Code for programming-related tasks;
• “Graphics” department for AI-generated videos and images;
• “Microsoft” for office AI agents.

Musk explained on social media: “xAI is growing rapidly, and the organizational structure must keep pace, just like a living organism adapting to its environment. Unfortunately, this also means layoffs, and I wish everyone a smooth future.”

Caption: Organizational structure and leadership of xAI after restructuring

On March 11, Musk announced on social media that the “Microsoft” project would merge with Tesla’s internal “Digital Pillar” project, which is part of Tesla’s investment agreement in xAI.

According to Musk’s tweet, the “Microsoft” project’s core concept and philosophy now align with the “Digital Pillar,” which differs significantly from his description last year:

Grok is the central control system, deeply understanding the real world and issuing commands to the “Digital Pillar.” The “Digital Pillar” processes real-time screen images and mouse/keyboard actions within five seconds. Grok resembles the rational part of human thinking, while the “Digital Pillar” resembles instinctive intuition.

02

This overview reveals that every organizational change in xAI and every mention of the “Microsoft” project in 2026 results in the departure of co-founders. After two or three such cycles, all Chinese co-founders have left voluntarily.

The departure of Jimmy Ba and Tony Wu closely followed the major restructuring in February. Before official announcements, Musk had already laid off many of their team members.

This week, Toby Pohlen, Guodong Zhang, Haotian Liu, and Zihang Dai left one after another, coinciding with Musk’s public announcement of the merger of “Microsoft” and “Digital Pillar.” This indicates that Tesla’s project team has outperformed xAI’s, and Musk has essentially rejected the original “Microsoft” project team.

Their resignations are not only due to their work being undermined but also because directly dealing with Musk is not healthy for their well-being.

Musk’s style is very much like the domineering CEO often depicted in Chinese internet fiction. For the world’s richest person, “Long Ao Tian, the American division” is not a joke but an objective description of his personality.

According to insider reports, since Musk’s falling out with Trump and his withdrawal from the “Government Efficiency Department” in mid-2025, he has been personally involved in the company’s daily operations, and xAI employees have experienced this firsthand.

Their descriptions are quite familiar to Chinese audiences: “Always tense and unpredictable, like a fire drill at all times”:

Frontline employees work 12-16 hours daily, with no response window of 30 minutes in work group chats.

Musk personally added 300 people to a work group. Regardless of progress or status, if Musk mentions something, someone must immediately follow orders. Even if engineers have ongoing tasks, they must drop everything to handle Musk’s requests. What exactly Musk will ask for is anyone’s guess.

Musk shares screenshots of conversations with friends in work groups, and engineers must fix issues like Grok’s image generation flaws mentioned jokingly by Musk’s friends.

A player of the game “Baldur’s Gate,” Musk’s chatbot team has to borrow staff from other departments and disrupt workflows to fix unsatisfactory answers related to the game. If not handled well, planned model updates will be delayed because Musk refuses to release them.

A player of “League of Legends,” Musk’s AI team must teach Grok to play the game; otherwise, he’ll be dissatisfied.

Compared to Musk’s “996” work culture, respecting workers’ rights, it’s practically a model of labor rights. No wonder even Chinese employees can’t stand it. Tweets from xAI co-founders reveal that dealing directly with Musk can be exhausting.

Greg Yang subtly said Lyme disease was hard to diagnose, but after developing a fever, he “felt more exhausted than colleagues and for longer,” prompting a thorough diagnosis. This implies that the fatigue of colleagues served as a control group, helping him diagnose his illness in time.

Haotian Liu said, “I’ve burned out. I know I can’t maximize happiness in life right now.”

Toby Pohlen was even more blunt, responding publicly to Musk’s demand for “extreme effort”:

“When xAI first started, we self-organized and sought solutions to daily problems. Talented and motivated people don’t need to be pushed; they love solving problems. Writing papers, developing codebases, releasing products—these are our sources of happiness. We don’t need external challenges or goals; we naturally seek and create higher ones. A top-tier gamer wouldn’t waste time on beginner tutorials. A team of such excellent people will see extraordinary achievement as a given, not a command to be issued.”

In short, Toby Pohlen is essentially telling Musk off: “Don’t tell us what to do; you’re just slowing us down.” They are all “strong individuals who don’t need drugs or caffeine, relying solely on adrenaline to launch products within 36 hours.”

In fact, xAI employees weren’t the first to leave because of Musk. In fall 2022, after Musk’s acquisition of Twitter, SpaceX employees leaked that:

Thanks to Twitter employees shifting Musk’s attention, our work environment has finally calmed down a bit. We no longer have to deal with Musk’s capricious demands, nor spend weeks redesigning rocket parts just because he finds them “unsightly,” nor launch rockets knowing they might explode because he dismisses safety concerns.

Now, the departure of executives and key personnel from Musk’s companies isn’t a setback but a resume highlight: working directly for Musk proves their capability; failing to continue working under him probably isn’t their fault.

After all, according to Musk’s older colleagues, he’s extremely difficult to please.

Jim Cantrell, a co-founder of SpaceX in late 2001 who resigned after just half a year, said:

“There are two versions of Elon: the nice guy and the nightmare. You never know which one you’ll encounter. The nice Elon is witty, charming, full of ideas. The nightmare Elon yells, criticizes employees, blames others, works overtime without end. The fault is always with the employees or the world; he never admits his own mistakes.”

Market analysts see the current AI industry as similar to the internet industry 30 years ago. The giants are just starting to compete, and xAI still has a chance without any real setbacks.

After all, if a company’s internal memo talks about “building a conscious sun” or “space data centers,” it still has enough funding and drive. With stable core staff and a more friendly attitude toward humans, it could become even more powerful.

But Musk won’t change his temper. As he said on a TV show in 2021: “I just want to say to everyone I’ve offended: I reinvented the electric car, I’m about to send people to Mars with rockets. Do you think I’m a normal, pleasant guy?”