In 2022, Elon Musk acquired and took Twitter Private under the brand X Corp. The primary asset of X Corp is the now renamed service X, but today, they have another item on the balance sheet, a slice of X.AI.
Musk posted on X tonight that X Corp investors will own 25% of xAI. It is important to break down who the investors are of X Corp. The answer is, that we don’t know, with the entity now private, the investors Musk enlisted to pay the US$44 Billion purchase price for Twitter are not publicly known.
Earlier this year, Musk announced he was creating yet another company X.AI and recently they started releasing their first product Grok, a large language model with humour, offering one big difference to the competition, it is trained on X data.
Grok is likely to be the first of many products and services from X.AI and given Grok is yet to reach an open Beta phase, the valuation of X.AI is unknown. What we do know is that they have acquired some great AI talent and an arsenal of AI training hardware.
Whatever the price tag of X.AI today, this will almost certainly grow over time, so owning any portion of it, especially a significant slice like one-quarter of it, will no doubt delight existing investors and potentially gain new interest in putting money into X Corp.
If X Corp investors own 25% of X.AI, that leaves the remaining 75% of which we do not know how this is divided up. It is likely that Musk retains a large percentage of the company, whoever may have needed to issue some shares in the company to score the talent they have to date.
One of the larger accounts on X, Brian Krassentiein proposed that X provide a path where earnings on X could be converted to shares. Musk replied reminding us that private companies can only issue up to 2,500 non-employee shareholders.
What I’d love to know is more about how the Musk companies interact. We know SpaceX and Tesla have had a long-running working relationship, where Tesla electric motors are used in parts of SpaceX vehicles, while SpaceX material science was leveraged to make a special aluminium for their Gigapress production that does not require the normal cooling and curation step of the process.
Those who own Tesla shares (public) will be interested to learn how the X.Ai relationship works as the AI innovation from X.AI is likely to benefit the cars in both infotainment and autonomy and much of the infrastructure learnings with Dojo are also likely to benefit X.AI.
I suspect the working relationship between Tesla and X.AI will be done with a $0 licensing agreement and some time exchange for resources, rather than any shares being traded between the two.