A number of XAI executives have left one after another due to management and financial differences! The finger is directed at Musk's adviser

The Zhitong Finance App learned that according to media reports quoting people familiar with the matter, several executives of Elon Musk's artificial intelligence (AI) startup XAI left their jobs after clashing with two of Musk's closest advisors because they were concerned about the company's management and financial situation.

According to the report, Musk, who is also the CEO of Tesla (TSLA.US), is the CEO of XAI and is responsible for the final decisions, but two advisors — Jared Birchall and John Hering — are responsible for xAI's daily operations. However, some XAI executives internally questioned how Jared Birchall and John Hering managed the company on behalf of Musk, believing that the company had no formal chain of command. Additionally, some departing XAI executives said they were concerned that some of the company's financial predictions were unrealistic. They are also internally questioning Musk's family office Exception's role in XAI's cash and accounting management.

In response, Musk's attorney Alex Spiro told the media: “Any suggestion that financial data is inappropriate is false and defamatory.” He added that the company's finances were audited by PricewaterhouseCoopers (PwC).

According to the report, a person close to xAI said that the company is confident in its financial predictions. A XAI spokesperson added that Musk “leads xAI with a firm vision and commitment, making it his top priority to advance artificial intelligence for the benefit of humanity.”

According to reports, several XAI executives have left their jobs in recent months, including Linda Yaccarino, former CEO of Company X, Mike Liberatore, XAI Chief Financial Officer Mike Liberatore, Igor Babuschkin, who worked for Google DeepMind and OpenAI and participated in founding XAI in 2023, and Robert Keele, the company's general counsel.

According to the report, Birchall, who has been in charge of the Musk family office for a long time, played a central role in XAI operations and financing. Investors include Andreessen Horowitz and Fidelity (Fidelity). John Hering's investment fund Vy Capital is also an XAI investor.

The report pointed out that differences between some executives and Musk's advisors over the management of the company have intensified, and even prompted Musk's ally Antonio Gracias to meet with executives to discuss related issues. Antonio Gracias is the CEO and founder of Valor Equity Partners, which initially invested in Tesla and also supports xAI.

Alex Spiro, on the other hand, said that the statement in the report that Antonio Gracias was “mediating some fabricated disputes” was “completely wrong.”

Since the departure of some of its executives, Valor Equity Partners has taken on a larger role in XAI management. Antonio Gracias has also participated in Tesla's crisis management, such as the Model 3 sedan production issues and Musk's acquisition of Twitter in 2022. Allegedly, Antonio Gracias became more involved in corporate affairs after leaving the government efficiency department in the summer.

A Valor Equity Partners spokesperson said, “xAI is in a hyperscale expansion phase, which is certainly tough, but we are very excited about its trajectory and speed, which is extraordinary.” The spokesperson added that xAI “performed well in terms of research, teams, infrastructure, and financing.” She also said that companies supported by Valor Equity Partners are generally growing rapidly and are “supporting Musk's deep personal commitment and extremely hands-on leadership in his company.”

Furthermore, according to reports, xAI completed $5 billion in debt financing and another $5 billion strategic equity investment in July this year. SpaceX also plans to invest $2 billion in xAI. The report said that in order to keep up with competitors such as OpenAI and Anthropic, xAI needs continuous financing and huge investment in data centers.

A person familiar with xAI added that the wealth of Musk and other major investors should ensure that the company has the capital to meet long-term business needs. Musk's lawyer Alex Spiro told the media: “Any claim that xAI has a financing problem is clearly false and defamatory — the demand for investment in the market far exceeds supply.” The report also said that Tesla shareholders are expected to vote on a proposal in November that would allow the company's board of directors to invest an unspecified amount in xAI.