Musk Shifts Resources to xAI: Talent, Chips, and Funds
Musk owns a vast "business empire". Besides xAI, he has several companies including electric car company Tesla, space transportation startup SpaceX, brain-computer interface startup Neuralink, and social media platform X. Evidence suggests he has "grand" plans for xAI and is transferring resources from his various companies to xAI.
Last month, in an interview with Canadian psychologist Jordan Peterson, Musk said: "xAI is a fairly new company, so we have a lot of catching up to do compared to companies that have been around for 5, 10 or 20 years."
So far, xAI has hired at least 11 Tesla employees, 6 of whom are from the autopilot team. This team mainly researches AI-driven autonomous driving technology, which Musk has called crucial to Tesla's future.
Regarding talent flow, he said hiring xAI employees from his other companies is a way to "prevent valuable engineers from going to competitors."
Musk has also reallocated GPUs reserved for Tesla to xAI and X. He explained: "Tesla has no place to use NVIDIA chips, they would just pile up in warehouses."
The vast amount of visual data collected by Tesla can be used as a resource to train xAI models. In last month's earnings call, Musk said: "Tesla has learned a lot from xAI. This helps advance full self-driving and helps build new Tesla data centers."
xAI also leases GPUs from X and has access to X's real-time data.
According to sources cited by foreign media, X has contributed $250 million worth of computing power to xAI, whose chatbot Grok is only available through subscription on X. Meanwhile, xAI engineers are tasked with fixing X's issues and using xAI's models to improve X's features.
In March, Igor Babuschkin, one of xAI's chief engineers, said integrating Grok into X was "a good option."
When raising investments, Musk also leveraged xAI's connections with his other companies. Some xAI investors revealed they were told xAI could use data from Musk's other businesses to train its large language models, and these connections were part of what attracted them to invest.
Musk has previously been questioned by investors about his management style. But due to the strong performance of Tesla and SpaceX, some investors supporting xAI said they hope to get a piece of SpaceX itself or the "next SpaceX" by funding Musk's latest project.
Musk is also promoting potential collaborations between his different companies. In July, he posted a poll on X asking users if Tesla should invest $5 billion in xAI, saying it was "just to test the waters, as any such move would require board and shareholder approval."
After X users approved the move with 67.9% of the vote, Musk said: "Looks like public approval, I will discuss with Tesla board."
Sued by Multiple Shareholders, Not the First Time Transferring Assets
Tesla and xAI each have different AI "ambitions," putting the two companies in an awkward position when competing for resources. In addition to selling electric cars, Tesla is also developing fully autonomous driving software and humanoid robots.
Some investors are concerned that as Musk shifts talent, hardware and other resources to xAI, these other businesses will be affected. Although Musk has claimed this sharing benefits investors in all his companies, his actions have still sparked investor lawsuits and been used as arguments against Tesla giving him a compensation package worth tens of billions of dollars.
At least three Tesla shareholders have filed lawsuits claiming that transferring resources to xAI harms their interests. These cases are currently pending.
These lawsuits accuse Musk of violating his fiduciary duty by transferring resources like talent to xAI, seeking damages and demanding Musk transfer his stake in xAI to Tesla. For example, one shareholder lawsuit targets the reallocation of GPUs between the two companies, stating: "Musk is creating enormous value in xAI, but at Tesla's expense."
Musk does not have majority ownership in the publicly traded Tesla. In contrast, his other private companies may have more leeway, but he still needs to be accountable to investors in these companies.
The difference is that investors in these companies are less likely to take legal action against him. After all, for a private company that may only have 10 shareholders who all know each other, a phone call might solve the problem.
Regarding Musk's various asset transfers, Brian Quinn, a law professor at Boston College, considers them problematic, saying, "Every time he 'plays' with these companies' resources, he's dealing with other people's money. He can't treat all assets as his personal assets."
Scott Cummings, a law professor at UCLA, said: "The law doesn't prohibit people from having fiduciary duties to multiple companies, but it does prohibit actions that benefit one company at the expense of another."
In fact, this is not the first time Musk has transferred resources between his different companies. For years, he has been using his multiple companies to help each other, including space transportation startup SpaceX, brain-computer interface company Neuralink, tunnel maker Boring, social platform X, car company Tesla, and xAI.
In 2022, Musk acquired the company then known as Twitter, and subsequently brought in employees from across his "business empire" to help with the transition. In court testimony, Musk said Tesla engineers were "voluntarily helping briefly after hours."
Valuation Second Only to OpenAI, Grok Becomes Strong Rival to ChatGPT
Founded in July last year, xAI has surpassed a $24 billion valuation in just one year, becoming the second highest-valued AI startup after OpenAI.
While the founder's halo is certainly dazzling, on the other hand, xAI's rapid development is inseparable from the product itself.
In November last year, just 4 months after its establishment, xAI launched its first chatbot Grok, powered by xAI's self-developed Grok-1 model.
According to reports, xAI first trained a prototype large model Grok-0 with 33 billion parameters, and after two months of iteration, Grok-1 was finally born. Its benchmark scores are higher than Llama 2 70B and GPT-3.5, but there is a certain gap compared to GPT-4.
Grok's main selling point is not powerful performance, but its witty humor and willingness to answer any question. Unlike traditional chatbots like ChatGPT, its style is "rebellious" like Musk himself, answering some "sharp" questions that other AIs would probably refuse to answer - such as seriously telling you how to make cocaine and listing detailed steps.
In March this year, after repeatedly accusing OpenAI of not being "Open" enough, Musk announced that Grok-1 would be open-sourced, directly releasing the basic model weights and network architecture. Subsequently, new versions Grok-1.5 and multimodal large model Grok-1.5V were released within a month.