Elon Musk’s xAI: Billion-Dollar Idea or a Boondoggle?

The anti-woke AI startup filed to raise up to $1 billion, eventually, but will it have a real shot at capturing a tangible slice of the AI market?

Joao-Pierre S. Ruth, Senior Editor

December 7, 2023

It has been a busy week in the AI trenches.

Cisco announced its AI Assistant for Security.

IBM and Meta teamed up to create the AI Alliance, bringing together some 50 companies, startups, and academic institutions to create more open models of AI.

Google joined the fray with its Gemini large language model.

Such moves were probably inevitable for the Big Tech crowd, which -- to be blunt -- had to move fast to demonstrate relevance in the suddenly popular generative AI (GenAI) market.

As this unfolds, it is also not much of a surprise Elon Musk continues to try to play on opposing sides of a topic. This week, Musk’s startup xAI filed with the Securities and Exchange Commission (SEC) to raise up to $1 billion -- however Musk also tweeted that the company was not seeking to raise more funding at this time. According to the SEC filing, some $134.7 million in equity in xAI has already been sold.

Most every company spent 2023 trying to find ways to leverage AI from a third-party or announcing what they developed in-house to get into this market. Musk, who co-founded OpenAI and then parted ways with the organization, once voiced concerns about AI after ChatGPT took off -- only to later launch xAI. In March, Musk lent his name to a group calling for a pause on AI research. Then in July, Musk launched AI startup xAI with a stated goal of delivering AI that would be less censored than what big tech companies offer.

But what does the AI landscape, which Musk wants to be part of, look like after ChatGPT’s one-year anniversary?

Grok, xAI’s rival to ChatGPT, is still in beta testing and is billed by Musk to be witty and rebellious. Basically, it is his uncensored, “anti-woke” offering to the GenAI scene. It might be curious to see how Grok defines “woke” since many people who claim to oppose that term tend to short circuit when asked to explain what it means.

At the moment, xAI’s plans seem to include making Grok initially available to paying Premium+ users of the platform formerly known as Twitter -- though it is unclear if that will happen across the board for that tier of users. It is also unclear if that would drive revenue compared to the cost of establishing and maintaining the Grok AI.

As often happens, Musk is making moves while keeping the masses somewhat in the dark about his potential endgame.

This episode of DOS Won’t Hunt takes a look at Musk’s AI strategy and how that might play out with his divisive behavior.

About the Author(s)

Joao-Pierre S. Ruth

Senior Editor

Joao-Pierre S. Ruth covers tech policy, including ethics, privacy, legislation, and risk; fintech; code strategy; and cloud & edge computing for InformationWeek. He has been a journalist for more than 25 years, reporting on business and technology first in New Jersey, then covering the New York tech startup community, and later as a freelancer for such outlets as TheStreet, Investopedia, and Street Fight. Follow him on Twitter: @jpruth.

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