Elon Musk’s xAI lays off hundreds of employees tasked with training Grok, reports

Elon Musk’s AI startup xAI has laid off at least 500 employees from its data annotation team—the group responsible for training Grok, its chatbot—according to an exclusive report from Business Insider. Workers were informed late Friday by email that their contracts were being terminated, with access to company systems cut off immediately.

The team hit hardest was xAI’s largest: the generalist AI tutors who label and contextualize raw data so Grok can better make sense of the world. Employees were told they’d continue receiving pay through the end of their contract or until November 30.

“xAI laid off about a third of its data annotation team, reducing staff by about 500 workers. The layoffs follow a strategic shift to prioritize specialist AI tutors over generalist roles,” Business Insider reported.

The move reflects a pivot in strategy. In a recent post on X, xAI said it planned to grow its specialist AI tutor team by “10X,” signaling that while generalists are being cut, hiring for more advanced roles is ramping up.

“After a thorough review of our Human Data efforts, we’ve decided to accelerate the expansion and prioritization of our specialist AI tutors, while scaling back our focus on general AI tutor roles. This strategic pivot will take effect immediately,” the company wrote in the layoff email. “As part of this shift in focus, we no longer need most generalist AI tutor positions and your employment with xAI will conclude.”

The shake-up comes amid broader turbulence. xAI’s finance chief, Mike Liberatore, left in July after only a few months in the role, according to the Wall Street Journal. Around the same time, reports surfaced that the company was in talks to raise an additional $12 billion to bankroll its expansion.

Launched in July 2023, xAI is Musk’s bid to challenge Big Tech’s approach to artificial intelligence. Its founding team includes veterans from OpenAI, DeepMind, Microsoft Research, and Tesla—engineers who helped build landmark projects like GPT-3.5, GPT-4, and AlphaCode. Musk has positioned the company’s mission as one to “understand the universe,” though for now, its challenges are closer to home.

The cuts mark a major reshuffle for the startup. The data annotators who helped build Grok’s foundation are gone, even as xAI insists it’s preparing for a new phase of hiring and fundraising.