Elon Musk’s xAI Cuts 500 Jobs, Bets on 10X Growth in Specialist AI Tutors

Elon Musk’s artificial intelligence startup, xAI, has reportedly dismissed more than 500 employees from its data annotation division, the team responsible for training its flagship chatbot, Grok.

The move, first revealed by a news agency, underscores Elon Musk’s shift from relying on “generalist AI tutors” to building a new workforce of highly skilled specialist tutors, with plans to increase hiring by 10X.

This development signals a major restructuring within xAI, highlighting both the volatility and ambition driving Musk’s AI race against rivals like OpenAI, Google, and Anthropic.

Why xAI Cut 500 Jobs

Data Annotation Team Restructured

Employees were notified via email late Friday evening that the company was trimming its generalist tutor workforce. These workers played a critical role in teaching Grok by annotating data, categorizing responses, and contextualizing information to ensure the chatbot produced intelligent and engaging replies.

xAI’s Official Response

While the company declined to comment directly, it referred to a post on X, emphasizing that it was expanding recruitment across specialized domains and would “grow its specialist AI tutor team by 10X.”

Impact on Workers

• Laid-off staff were told they would continue to be paid until the end of their contracts, or at most until November 30.

• Internal access was revoked immediately, with Slack accounts of at least nine senior employees deactivated over the weekend.

• Some affected staff were part of the 1,500-strong AI tutoring unit, earning between $35 and $65 per hour, according to xAI’s careers page.

• A manager whose access was cut previously supervised leaders in the annotation team and had prior experience with Tesla’s Autopilot division.

What Do AI Tutors Do?

AI data annotators feed Grok with training examples, review responses, and classify data to help the system learn nuance. However, the role has been controversial. Earlier this year, Business Insider reported that some tutors were asked to scan their faces for AI training purposes, raising ethical concerns.

Musk’s Style: Tough Reviews & Flux

Several employees revealed that they were called for one-on-one evaluations, during which supervisors grilled them about their contributions and value to the company. This approach aligns with Musk’s reputation for rigorous and sometimes harsh internal reviews.

The timing is also notable, as it follows the exit of Mike Liberatore, xAI’s finance chief, who left quietly at the end of July after a brief stint — reflecting a pattern of high turnover across Musk-led companies.

Musk’s AI Ambitions: From Layoffs to Expansion

Launched in 2023, xAI positions itself as a counterweight to Big Tech, particularly criticizing what Musk sees as Silicon Valley’s flaws: “excessive censorship and lax safety standards.”

Its chatbot, Grok, has gained fame for its witty, rebellious personality. While the layoffs seem disruptive, Musk’s team insists the restructuring is a strategic recalibration designed to enhance Grok’s sophistication by shifting focus from generalists to domain experts.

Conclusion

The layoffs at xAI may appear as a setback, but Musk’s broader plan paints a different picture. By trimming a large portion of generalist annotators and aggressively hiring specialist tutors, xAI is doubling down on improving Grok’s capabilities and long-term competitiveness. However, the churn within the company raises questions about sustainability, employee morale, and Musk’s demanding leadership style. As xAI evolves, its ability to balance innovation with stability will determine whether Grok can truly stand out in the global AI arms race.