Elon Musk’s AI startup, xAI, has grabbed attention after suddenly laying off around 500 workers, which is around a third of its data annotation team. This was the company’s largest division, crucial for training AI systems. American influencer Amanda Goodall, also known as “JobChick,” shared her thoughts on X (formerly Twitter), summarising the unusual way the layoffs happened.

In her post, Goodall wrote, “Thursday night (last night), workers were told to drop everything and do the tests”.

From generalist employees to niche domain experts

According to reports, the company is now shifting its focus from generalist employees to niche domain experts. Areas targeted for hiring include STEM, coding, finance, law, media and even more unconventional categories like Grok “personality and behavior” experts and surprisingly, “shitposters and doomscrollers.” Goodall noted the unusual nature of these categories, saying: “Yes, seriously…. that is what’s being reported as some of the quirky categories.”

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The process for layoffs also drew scrutiny. Employees were reportedly informed on Thursday night to stop their ongoing work and complete tests. By the following evening, about 500 had their Slack accounts deactivated, received layoff notices via email, and were told they’d be paid through November 30, but lost access to company systems immediately, Goodall explained.

Questions have also arisen about leadership within the reorganised teams. She noted that the new team lead, Diego Pasini, is a college undergrad currently on leave from Wharton, prompting some employees to ask about experience, process and transparency. 

Goodall posed a broader question on X, highlighting potential implications of this approach. “Will this become the new ‘sort & cull’ approach for cutting teams and conducting layoffs? 24-hour notice that starts with a test?, she wrote”.

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Leadership shake-up 

The layoffs come at a shaky time for xAI. Earlier this month, The Wall Street Journal reported that finance chief Mike Liberatore had quit after only a few months. His sudden exit raised more doubts about the stability of Musk’s AI project.

Musk started xAI in 2023 to challenge giants like OpenAI, Microsoft and Google. He has often criticised them for “censorship” and for having weak safety rules. xAI introduced Grok as a more open chatbot and has already raised billions to support its plans.