Elon Musk is playing catch-up in the AI race by ramping up his recruiting efforts for xAI, after investors valued the 10-month old startup at an eye-watering $24 billion.
Even though Musk cofounded ChatGPT creator OpenAI in late 2015, he left the project after a disagreement with management and now finds himself in the rare situation of lagging behind competitors.
But candidates need not apply for an xAI role if they disagree with Musk's brand of politics, since the entrepreneur hopes to differentiate xAI and its large language model (LLM) Grok from the Google Geminis of the world he feels are infected by a left-wing bias.
“Join xAI if you believe in our mission of understanding the universe, which requires maximally rigorous pursuit of the truth, without regard to popularity or political correctness,” the mogul posted on his social media platform on Monday.
Elon Musk said that if he gets 25% voting control of #Tesla, he will be comfortable with making Tesla the worldwide leader in AI. But how will that work if he owns xAI, which is also aiming to be the leader in AI? Wouldn’t there be a conflict of interest? https://t.co/Zwj6tvathL
— Tesla and Doge (@TeslaAndDoge) May 27, 2024
It came a day after venture capitalists, including Sequoia and Andreessen Horowitz, stumped up $6 billion in cash despite Grok not currently being included in the ranks of the top LLMs alongside OpenAI’s GPT, Anthropic’s Claude, Meta’s Llama, and Google’s Gemini. Investors are continuing to line up for Musk, even after his Twitter investment has cost minority investors like Fidelity to report it has lost almost three-quarters of the value of its stake.
Nevertheless, Musk chose a controversial juncture to fundraise for xAI. Amid a slowdown in EV sales, the Tesla CEO has begun pivoting his carmaker away from its core mission of transitioning the world to sustainable transport. He now strives to lead the industry in what he calls real-world AI: self-driving cars and humanoid robots.
That means Musk’s two companies may end up competing with each other for computing power and skilled labor, a fact recently highlighted last month when a Tesla manager quit to join xAI. Musk claimed the employee was going to leave anyway so he was not responsible for the brain drain, but it sparked concerns.
Neither am I. I would like this matter resolved.
— Tesla and Doge (@TeslaAndDoge) May 27, 2024
Fears over a conflict of interest
Musk has been accused of treating Tesla like one of his privately owned companies where he can shift resources at will, as testimony in his pay deal case revealed earlier this year. A Delaware court in part voided his record compensation package from 2018 precisely because of claims that governance at the company is an afterthought, with the Tesla board sometimes only informed after Musk has already made a decision.
“There’s rarely been as egregious a flaunting of independent shareholder governance as this,” New York City comptroller Brad Lander, who oversees five public pension funds with $242 billion in assets, told Fortune.
Tesla did not respond to a request from Fortune for comment.
CEO who already owns a $15b stake in competitive AI company demands $50b in compensation or else he will go and start a competitive AI company? 🤔
— Rob Schmied (@rschmied) May 28, 2024
At the Tesla shareholder meeting on June 13th, Musk will find out whether investors will once again approve the compensation deal that grants him the right to acquire 304 million shares worth $54 billion for $23.33 each, an 87% discount to the current stock price.
Lander already signaled he would reject the board’s proposal, while proxy advisor Glass Lewis recommended this weekend all other investors do as well.
Many of his supporters fear Musk would no longer feel sufficiently motivated to run Tesla in the event of a no vote, and would shift his focus to xAI, SpaceX, and social media platform X, formerly Twitter.
