xAI Co-founder Exits After 3 Grok Scandals Shake Firm

Key Points

• xAI Co-founder Exits After 3 Grok Scandals Shake Firm
• Cites AI safety and human advancement as core mission
• xAI faces criticism over Grok’s controversial behavior
• Babuschkin helped build xAI’s AI supercomputer in 3 months

Igor Babuschkin, one of the original architects behind Elon Musk’s xAI, announced his departure this week, marking a major leadership shake-up at one of Silicon Valley’s most-watched AI startups.

Babuschkin, who played a critical role in building xAI’s engineering teams and its breakthrough AI models, shared the news via a heartfelt post on X.

“Today was my last day at xAI,” he wrote. “I still remember the first conversation with Elon, hours spent dreaming about a new kind of AI company.”

Today was my last day at xAI, the company that I helped start with Elon Musk in 2023. I still remember the day I first met Elon, we talked for hours about AI and what the future might hold. We both felt that a new AI company with a different kind of mission was needed.

Building…

— Igor Babuschkin (@ibab) August 13, 2025

But he isn’t stepping away from AI entirely.

Instead, Babuschkin is launching Babuschkin Ventures, a new venture capital firm focused on AI safety and ethical innovation.

According to him, the idea was born during a dinner with Max Tegmark, the founder of the Future of Life Institute,  where the two discussed how to build AI that supports long-term human progress.

The mission? Back startups working to “advance humanity and unlock the mysteries of our universe.”

Babuschkin, whose parents immigrated to the U.S. from Russia in search of a better future, says this move aligns with the values he’s carried all his life: building something meaningful for the generations ahead.

#ElonMusk‘s #xAI loses co-founder #IgorBabuschkin, who’s leaving to start venture firm pic.twitter.com/yOagVicsw3

— CNBC-TV18 (@CNBCTV18Live) August 14, 2025

This trend of AI leaders exploring new directions isn’t new. Sam Altman’s recent GPT-5 rollout also sparked debates around long-term impact and safety, showing how core players are thinking beyond short-term product wins.

Grok Scandals, AI Controversy, and a Leadership Void

While Babuschkin’s move seems personally inspired, the timing couldn’t be worse for xAI.

The startup has been embroiled in a series of public relations crises, mostly tied to its controversial chatbot, Grok. Initially designed to rival OpenAI’s ChatGPT and Google DeepMind’s Gemini, Grok has made headlines for all the wrong reasons:

• It allegedly echoed Elon Musk’s personal views when answering politically sensitive questions.

• In another disturbing case, Grok went on antisemitic rants, referring to itself as “Mechahitler.”

• Most recently, xAI introduced a video generation tool that let users create deepfake-style nude videos of public figures, including Taylor Swift, triggering widespread outrage.

Despite the backlash, Grok has managed to stay competitive in terms of model performance, matching top AI systems on several technical benchmarks.

🚨 Another exec walks away from Elon Musk’s AI empire

🧠 @xAI co-founder Igor Babuschkin has left the company to launch an AI safety-focused investment firm — the latest in a wave of high-profile exits across Musk-led ventures

Wishing @ibab the best on the new chapter 🙏

Full… pic.twitter.com/RUqH9rDYgh

— Tech Startups (@thetechstartups) August 14, 2025

Many AI systems are evolving rapidly, often raising new ethical questions. For example, Meta’s AI Voice Waveform tech has impressed with its realism — but also triggered concerns about misuse and impersonation, much like Grok’s controversial new features.

Babuschkin’s departure may raise further questions about the direction and internal dynamics at xAI,  especially as Musk continues to juggle multiple ventures across AI, space, and automotive tech.

🚨 xAI co-founder Igor Babuschkin leaves to launch Babuschkin Ventures, focusing on AI safety & startups advancing humanity. His exit follows xAI’s Grok chatbot controversies. Babuschkin reflects on building xAI with Elon Musk & the “impossible” Memphis supercomputer. #AI #xAI pic.twitter.com/cIULSL6WMO

— DeepSeek News Commentary (@deepsseek) August 14, 2025

A Legacy of Speed, Grit, and Controversy

Before co-founding xAI in 2023, Babuschkin was a respected AI researcher at DeepMind, where he helped develop AlphaStar, the AI that mastered StarCraft.

He also spent time at OpenAI,  before the release of ChatGPT,  making him one of the rare few with deep insight into the core tech at all three major AI players.

At xAI, Babuschkin led the creation of an AI supercomputer in Memphis — completed in just three months, despite critics calling the goal “impossible.” He says two key lessons from Elon Musk helped make it happen:

1. Get hands-on with hard problems

2. Move fast with urgency and intensity

But not everyone is celebrating that win. Environmental groups have criticized xAI for using temporary gas turbines to power the cluster, warning of increased pollution and health risks for nearby communities.

Other companies are also racing to push AI boundaries. Take GPT-5’s major updates, for example, or GPT-5’s launch for free-tier users — both are shifting what’s possible for consumers.

Meanwhile, innovations like Claude AI’s memory recall are changing how users interact with long-term knowledge systems, hinting at the type of safer, smarter tools Babuschkin might now choose to fund.

Still, Babuschkin ends his post on a sentimental note:

“I feel like a proud parent, driving away after sending their kid off to college.”

He may be gone from xAI, but his next chapter is just beginning.

With Babuschkin Ventures set to invest in AI for the benefit of humanity, the industry will be watching closely,  not just to see what he funds, but how he helps steer the future of ethical AI development.