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- 💰 xAI cofounder quits before IPO
💰 xAI cofounder quits before IPO
Plus: VCs admit AI replaced their teams, Meta forced to reverse policy
Reading time: 5 minutes
🗞️In this edition
xAI's Fourth Cofounder Exit Reveals What $1.25 Trillion Can't Buy
Sponsored Case Study: Dan’s 1-Year Transformation To 6-Figure AI Consultant
VCs Just Admitted AI Does Their Job Better
Meta Banned Rival AI From WhatsApp. EU Says Reverse It.
In other AI news –
ChatGPT Just Became an Insurance Distribution Platform
The Startup Sectors Growing Faster Than Anyone Expected
Why AI Users Can't Stop Working
4 must-try AI tools
Three departures this week revealed the same problem.
An xAI cofounder left days after the biggest merger in history. VCs published research that undermined their own business model. And Meta reversed a major policy within 48 hours of implementation.
The timing wasn't coincidence. Something shifted.
The three stories in this edition show what actually changed.
Source: CNBC
What's happening:
Tony Wu just became the fourth xAI cofounder to leave in two years. He announced his exit days after Musk merged xAI into SpaceX at a $1.25 trillion valuation.
"It's time for my next chapter," Wu posted. "A small team armed with AIs can move mountains." He didn't say where he's going.
That's five of twelve original cofounders gone. Kyle Kosic left for OpenAI. Christian Szegedy joined Morph Labs. Igor Babuschkin departed in August. Greg Yang stepped back last month citing Lyme disease.
The exits happened while xAI burned $7.8 billion in nine months building infrastructure. Musk merged it into SpaceX specifically to fund that burn rate with rocket profits.
Why this is important:
The timing reveals everything. xAI just secured unlimited capital. Days later, another cofounder walks.
This isn't about money. Former CFO Mike Liberatore lasted 102 days under 120-hour work weeks. General counsel called it "shoveling coal" before quitting. Two-thirds of Musk's direct reports have left since 2021.
Wu's exit quote tells the real story. "Small team armed with AIs" is the opposite of what xAI became. Massive burn rate. Regulatory battles. Space data center commitments.
OpenAI and Anthropic aren't losing cofounders. They're gaining xAI's. Leadership stability became competitive advantage while xAI lost institutional knowledge.
Comments from the editor:
The merger was supposed to solve capital constraints. It revealed the culture problem instead.
Wu left after seeing the roadmap. SpaceX profits funding xAI's burn doesn't change the work environment. It makes it permanent. The $1.25 trillion valuation locked in the conditions that drove him out.
When talented people choose between unlimited funding with unsustainable pace or competitive funding with sustainable culture, they're choosing survival.
SpaceX plans to IPO mid-year. Every cofounder leaving before that is a signal to investors. They're walking away from generational wealth because the cost isn't worth it.
Dan had no tech background and no business experience – just a love for AI and a hunch it could become something more. Through The AI Consultancy Project, he landed his first clients, found a niche, and built a real business. This case study breaks down his journey – the early stumbles, the system that worked, and how he made the leap.
Source: Business Insider
What's happening:
Venture capitalists just revealed they're using AI to replace their analyst teams. ChatGPT and NotebookLM now do the work that justified hiring three junior employees.
One VC admitted what used to require an entire afternoon now takes minutes. Upload a pitch deck, clinical papers, and competitor SEC filings. The AI cross-references everything instantly and flags inconsistencies analysts would miss.
Solo general partners are suddenly competing with Sequoia. One person with the right tools performs analysis that previously required a full research team. No junior staff. No infrastructure. Just prompts.
The confession came from rising-star VCs themselves. They're not hiding it anymore. The competitive advantage venture capital spent fifty years building just became available to anyone with a ChatGPT subscription.
Why this is important:
The admission reveals what venture capital actually was: expensive middleware between information and decisions.
VCs justified premium fees with "deep diligence" and "rigorous research." Turns out most of that was structured work AI handles better. Cross-referencing documents. Generating market primers. Synthesizing call transcripts. Comparing competitors.
The barriers protecting established firms just collapsed. Platform services that differentiated top-tier VCs became table stakes anyone can access. Solo GPs starting micro-funds now source deals, process information, and make decisions at the same speed as ten-person teams.
This isn't augmentation. It's elimination. The analyst layer that cost $200K per head didn't get more productive. It got replaced. Blue-chip firms built their brands on research depth individuals couldn't match. Now individuals match it with better tools than the firms have.
Source: Politico.eu
What's happening:
Meta banned rival AI chatbots from WhatsApp. ChatGPT, Perplexity, and others got blocked while Meta AI stayed.
Italy and the EU ordered Meta to reverse the ban immediately. Brazil followed. Regulators called it anticompetitive, Meta was locking competitors out of 3 billion users.
Meta claimed infrastructure strain. General-purpose AI bots generated massive message volume without fitting the Business API's revenue model.
Regulators rejected the excuse. Italy's antitrust authority said the ban could "limit market access" while harming consumers. The EU opened a formal investigation into abuse of dominant position.
Why this is important:
Meta tested whether platform control trumps competition law. The answer is no, at least in Europe.
This wasn't about infrastructure. It was about distribution. WhatsApp's 3 billion users are the largest AI distribution channel that exists. Meta tried to reserve it exclusively for Meta AI.
The regulatory response reveals the new battleground. AI companies don't compete on models anymore. They compete on access to users. Platforms controlling that access become kingmakers.
Europe forced a different model. Platforms can't leverage user bases to preference their own AI while excluding rivals. Meta already exempted Italy and Brazil. The precedent spreads globally.
ChatGPT Just Became an Insurance Distribution Platform – First insurer approved to sell directly inside ChatGPT. Distribution just moved to where 3 billion conversations already happen.
The Startup Sectors Growing Faster Than Anyone Expected – Legal tech raised $4B, robotics up 70%, defense tech at records. AI grabbed headlines but funding spread wider than expected.
Why AI Users Can't Stop Working – Eight-month study of 200 employees: AI made them work faster, take on more tasks, blur work boundaries. Productivity became exhaustion.
MyWaifus - Allows users to generate and customize anime-style characters
GetMax - An AI-powered content marketing assistant that helps businesses plan, create, and optimize their content strategies
Any Summary - An AI-powered tool that quickly summarizes long interview audio or video files
PlayHT - An AI-powered text-to-speech (TTS) tool that can generate realistic audio using synthetic voices
xAI's cofounder walked away from generational wealth. VCs admitted their moat was manual labor. Meta's platform control collapsed on contact with regulators.
The pattern: what looked permanent wasn't. Money can't fix culture. Barriers built on people break fast. Platforms don't control distribution.
The assumptions broke. This week just made it visible.
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