E76: Elon vs. Twitter
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You got like moisture zer all of your face, even moisturizing.

I am, i'm, my skin is so dry I just got ever be having food poisoning. And I D der let off .

camera deep shit.

You look like .

the fucking .

and creep keeper. And I look five and Young and felt because I do a little king care routine.

okay, take off and embarrassed.

don't need to tell me how. Sex is a fucking in good move, just a lot of fifteen cents. Why you so .

fucking and happy dumb down praise jesus. yeah. It's a good friday. If the markets are closed.

mont portfolio can go down and it's truly a good friday. Your portfolio will rise again .

and he's be resurrected.

We man.

We open sources to .

the fans and we.

Nowadays he works in DNA, but in the nineties old Carried about was the m dma, the duke of DNA, the titan of tampa, shepherd of the soy boys. He turns water into one and dollars into them. He's a fully o for coolio result in of science of self. David freeburg welcomed.

I have never done drugs, just for the record.

but go on now. Of course not. Of course, none of your behavior problems in high school had to do.

Yeah, Jason.

no, absolutely no. Not this morning. He's the VC who loves brain, helps tell the sleeves off your vd.

He's in fraud with Green wall. He eats uppers for supper the raiders himself. David sax.

right?

Thank you. You're welcome that are I come around the band that time peace? What does he do? IT reminds him of how much more money he has than you sweaters word six times Laura piana is above his line. You're supervillain with that one thousand nine hundred and eighty five sac chia he beach chilling there is that loves Sparks just like .

june's love crack. He's your dictator to my fly. Have to that works.

I'm like becoming the m and m of intros. I mean, i'm i'm rymzov's that's really solid. I got to say i'm work in shopping IT shout out technic. And one person on twitter of a hundred gave anything.

I moving into my spring's weather season, my swing's Better collection.

Oh, wait, hold on a second. I just got a call. Oh yeah, confirm me. Know what gives a fuck?

I can crack is the king of the name. And this matters .

to exactly one person.

no. The person selling you the treaders? No, that's that. I think if you took a poll on twitter, there's a lot of people .

who silly having let's get to all the news, so much news going on.

all the news. Where should we start on the trying .

to think about IT? Was there any news topic this week? Because obviously the war in ukraine has obviously got everybody in america. Oh, wait, no, i'm sorry that that's not important anymore. Or onto the next thing.

Only one issue .

you on put in a bid to buy twitter outright on thursday and take the company private to deal with forty three billion dollars. The most breaking news when we're taping this on fridays at eleven I am when we typically tape this, is that the board of directors, you know, the professional board directors.

has decided they would like to get personally suit.

I mean, this is the most the same thing. I woke up and read this, and I was like, okay, they are creating a poison pen up a poison pill that's going to give twitters existing shareholders the ability to buy more shares. If elon hits fifteen percent of the company at a discount, you might explain the concept of a poison pill just generally speaking, and then give us sure, because everybody knows what's going on.

But like here we are in this. What if I don't know if this is the same thy thinking of the saga or it's a second, but where do you think we are in the saga and then what happens on monday? And it's describe a poison pill.

A poison pill is basically a defensive maneuvre that a board of directors uses to prevent a hostile takeovers. And basically, the simple way IT works is IT allows the board to create enormous amounts of new shares and effectively delete the potential hostel acquire so that IT becomes economically unfeasible for them to get enough shares to get control.

The way that they do that is that they basically give everybody except a person that crosses a certain ownership threshold. So that use twitter as an example. So the twitter poison pill basically says that if you get to fifteen percent, you're essentially locked out from a right that then everybody else has.

That effectively allows them to buy another share of stock, and I think it's a fifty percent discount. And so what IT does IT IT create an incentive to essentially almost double the fully deluded chairs outstanding of the business. And what that does, that makes IT almost impossible for the person with fifteen percent to then go and acquire what's necessary to get to fifty percent.

There are different kinds of poison pills. There's things that you can do with that. There's things that you can do with equity, but that's the thing that that twitter did.

I think them if anybody y's interested in IT, nick, maybe you can just bring IT up but you can google on wikipedia. There's a phenomenal article um called reveling versus mechanical on forbes and metro. Forbes was the holding company of this, a very prolific deal maker in the seventy, eighty and ninety y's one person. And what happened was he was A C O of a company called pentridge de. And pentridge de made an unsolicited hostile take over a bid for reveller, which may make up and basically you know there was like forty to forty five bugs to share.

The board instituted all these poison pills, the Price kept up scaling than a private equity firm stepped in, also tried to compete for the asset all along the way there was um in option and against that essentially what um what what um onto problem did was uh suu reva, which went to deliver a court and from IT basically came the current framework of law that we use in the situation. And basically what IT means is that board directions have these for duchy obligations to their shareholders. And in some cases, these are very broad fiduciary applications, meaning do the right thing.

But in some really narrow circumstances, all of that collapses. And their soul focus is to get the best Price and what a director and a border director typically wants to do in a situation like this is not end up in that second bucket. They want to keep all their options available.

They don't necessarily want to sell to one person. They're probably going to assume they are going to get fired from the board. They wanted stay on for different reasons. Is that a and so right now, what twitter and their advisers are trying to do is basically saying that first bucket have all of the options available to them and not be forced to run an auction.

And I think what elon will try to do is essentially use the public pressure that's going to build and the existing shellers who own stock at forty summer dollars a chance to basically get know uh, a twenty percent pay day by selling at the elon for fifty four box for fifty three, whatever the Price was. And the twitter board now will have to justify how whatever they come up with is Better than this because then if they don't and they're still exercising these broad for ducey obligations, you know, one thing i'll tell you as a public company direction, tor IT is a horrendous process when you get sued and these guys will be in court for years. And the the incremental pressure that this twitter board has is that they can be held personally liable here. So I think it's getting very complicated.

very okay. On that note of personal liability, we have directors insurance. So does that dot cover dot cover have there been examples of this happening? Yeah dino .

insurance is is kind of like DNA insurance is their director and officer insurance is is a way of protection that we all have as public company directors. We actually .

also have IT as private.

Yeah, but the the amount of coverage changes. But what i'll tell you is DNA coverage tends to be relatively enormous because the risk profile doesn't really you include these kinds of television. And now what you're talking about is ten to fifteen billion dollars of equity value that's going to either get created for existing shareholders or get taken away.

And typically, what courts will do is that they will look at the amount of money and they will start to think about, you know, compensate and ununited damages as a function of how much money was, was made or lost. And so you're talking about a realm of of risk. Now for these directors.

that's well beyond what dino covers so much. You have to find damage. So if the board found a Better offer, great. But if this thing goes down on monday, you want cells of shares and IT goes down to thirty. Now you have the opposite effect.

Go have freebies. So I say two things. One is all in all these cases, by the way, the board is denied ed by the company. So the individual board member, I don't know if there's ever been a point in history when an individual board members had to pay out of pocket for liability associated with their actions as a board member and as a Fishery, I accept when they've done something to benefit themselves outside of the company.

Now in this case, the the job of the board is to use their best judgment to do what they believe to be in the best interest of creating them the most value possible for the ders. It's very simple when the stock Price is at thirty and someone'll give you fifty box to say, oh, we'll obviously getting fifty boxes in the best interests of the Sherry oders. Let's assume know that you're on that board and you know about some super secret plan that you believe in the next thirty days is going to get the stop Price to sixty. And your belief in that plan and your understanding of that plan gives you a good, rational for having a debate as a board that this deal doesn't make sense. At fifty, we should hold out until we finish our plan over the next thirty days, get the stock up to sixty and then we'll see if someone comes in and says, hey, i'll give you a more than than sixty could .

be something on the product road map ate.

This is the complicated point. It's not just about the current share Price. And there is a history in the eighties and nineties, a early nineties, when stocks would drop tremendously for market volatility reasons, or or very so, some bad news event, or someone quits the board, mro, and all of a sudden the stock Price rops.

And you have a hostile buyer that says, oh my god, this company look super cheap. I'm going to come in and buy a wallet cheap and i'll offer him a premium to the current share Price. And the share Price recently may have been much higher than the Price is being offered.

And the board says, you know what, we're going to get back to that share Price because the marketing pick up again, the the things we're working on are onna grow us out of this whole. And so it's very hard for us to sit here as and I know that I want everyone here on this, the zoom, to suspend your ali elon and belief that elon will do a Better job just for one second. And just think about the board members.

They've all been working on quarterly plans for t gic plans and set the current C E. O. And as a board for twitter, that gives them a point of view that says may give them a point of view that says, hey, you know what, we can get back to seventy box to share.

So remember, he was only a few months ago, twitter stock was trading at seventy. The stock Price drop with market compression we've all experience and the new on come along and set. I'll offer you guys fifty four bucks and the boards like way a few months ago.

We at seventy, we have all these great things working on. And i'm just trying to paint the other side for everyone that this is not just like a clear but obvious deal. It's their judgment at this point that they should get more for the stock given where they think the company said anywhere. The door .

eventually get alright. Go to u sacks. You heard from freeburg to suspenders belief that the greatest on the planet running two of the most important companies is not more qualified to run twitter. R, yeah.

i'm not going to suspend my let me make the case for the clear cut. For the clear cut case here.

let me just say something. He could be Better at running this company. But the year, okay, he will be Better, Jason. But the shareholders don't benefit from that because he .

buys the they're getting .

fifty four dollars of cash. They do not have any ownership in twitter after elon takes over. That's the deal that's on the table. So if I, as a shareholder, get fifty four old as a cash, I don't care if you want does a Better job bwin ing twitter down the road because I have no interest.

Someone that that one fact check that he said he wants to bring along. That's a thing .

he said that's not actually. Proposal, right? So as a board member, I have to look at the proposal on the table, which is, I gotta fifty four dollars a cash k for my work and give up all the upside sex of.

like is going to explode enough. Look, here's the reason why for you shi duties exist. Let us explain where this concept comes from.

There is fundamental a principal agent problem. This is what is known as um between stock holders and the people running the company. So in other words, the owners of the company are the stock holders.

Okay, they appoint agents, managers to run the company for them. But those managers can be conflicted. They have an incentive not just to get the highest share Price for the stock holder, but to pocket personally as many benefits they can. And the whole reason why future duty was invented is to prevent that agency problem.

So if the board members or the C A, the company are just looking out for themselves and try to pocket personal benefits, excessive compensation or turning down and offer to solve the company for a much higher Price, that would be a breach their futures duty, because they are looking out for themselves. Prog knows that if ian buys this company, he is out of a job. His head is on the chopped block.

He is fired right away. You on has made that clear, he said in this letter on this S C, following on thursday, I have no confidence in the, in the management, the company. If i'm unable to buy the whole thing and take a private, I will dump all my shirts.

It's all or nothing for him. So paroe is interested in preserving his job. If eon wins this battle, paroe is going to have the shortest executive career since pope got poisoned.

Okay, to borrow line from wall street. So he isn't sentience, ed, to fight this thing, whether it's in the interest of shareholder or not. Now .

border.

I think they're the same. These are guys who love the power they derive from being on the board. We know twitter has enormous cultural power. These guys, they enjoy all the benefits they get.

They probably do get some compensation beyond the board, but they enjoy being in this very exclusive club that wheels enormous power over our culture, and they have no incentive to give that up. And by the way, how much of the coming do they really own? You know, not that much.

If you look at the wealth of the people on twitter's board, and we know all the people on twitter's board, their wealth is significantly greater than whether twitter stocks cells for sixty or seventy. So and I think that we all know that these are all sophisticated actors. They are all high integrity people. We all personally know many of the people on twitter's board.

I don't think that you .

know look, maybe there's no because .

it's different. Listen, when we're on a board OK among plenty of boards, we own a huge percentage of the company. So when somebody makes a takeover of or to buy one of our companies, we are thinking like socks ders.

we're fundamental align E E.

these people on the board in in the game that they have. Most of them are these directors who are disappointed. And IT is is like a club.

These guys is all big back .

scrat club guys.

twitter. That is what this is shaping up to be as the nexus of power. And who controlled .

the power of twitter? I one hundred .

percent agree. X, i've always believe what I think because I said, or whoever IT was, that the board should be represented by the bigger shareholders, the folks who actually have skin in the game, the folks who actually care about the share Price, know having some nominal number of shares issue to you as a board member of the public company. Showing up, padding each other in the back could certainly, generally speaking, leads to non founder let companies ultimately dying um because there is no motivation and incentive and drive for anyone.

Let me take the other side partially um I think you're mostly right um I would never join a public company board that I did a significant piece of right and I and I have never right now the reason to be on a public company board is that unlike a private company, the single biggest advantage there are many disadvantages of being public. But the single biggest advantage of being public is that you have a lower cost of capital.

So if you have an ambitious company, an ambitious leader and an ambitious plan to build an compound value, you cannot do IT privately forever. You must do IT in the public markets because there's just an infinite amount of capital that's available and an infinite amount of ways in which you can raise capital relative to you being private. So with that being said, when you are public, I think the best boards are the ones that are a sort of fifty, fifty split between the biggest shareholders and people who are very much experts in a handful things.

And I just want to be specific in a pupa company board, you have to have a lot of focus these days on things like governance IT um because you have to attest to these financial statements, right? Cyber security becomes a huge one because you have to disclose these risks. And so I think that IT really behaves boards to have a few experts who can share those committees.

Um compensation tends to be another one, as David mentioned, that can be a real hot button. But there are experts you can find they're not going on a large piece of the company, but they're gna do a really good job of managing those things that minimized is risk for the business so that then the rest of all of of the board, which are the large shareholders, can really use their influence and strategic understanding of the business to build a huge equity value. When those things come together, you have great outcomes.

But I I really agree with you if you stack the board and you know, we we've had this issue, public boards in amErica got perverted over the last sort of last few decades to being these little baddies of status that people would color. And now, you know, we're starting to see a real push back on what's called over boarding, right, where these distinguish folks will pick up five, six, seven boards. All of a sudden.

That's the fastest way to make three, four, five, six million dollars. How can you sit on five or six company public company boards? It's impossible.

And that exactly think those people get a pointed to boards by standing up .

to the to the opp.

a safe vote.

So let me ask you guys a question. What do you think is the right thing to do as companies that go public mature and their ownership based disperses. So you know in europe and asia, many companies go public.

Families owe them for very long period of time. As you guys know, they remain significant owners. They don't sell off the shares in the U. S traditionally, as companies have gone public, the shares, the founders, the gino investors, because we've a lot of venture capital in this in this country historically compared to other countries.

So those owners end up selling off their shares and they get dispersed and a long tail of owners and up ponting, the ball of the shares. How do you think those companies can be best represented on the board given that there isn't concentrated owner ship in public companies, generally mature public companies in the U. S. Like twitter, the largest you know owner is vanguard with five investment, and then jack orsi only on two percent. What do you guys think is the right thing to how do you create good alignment with board members that could be Better, you know, a place and Better suited here?

Well, I think one of the ways that you do IT is that when somebody wants to step up and acquire concentrated position because I have a plan for the company, you don't stand the way and completely thought .

that your job is to assess their plan because job is to assess the dollars you're getting paid today for your shareholder and then whatever they are gonna with that is there thing? But are you getting a fair Price? Is IT.

Iran is willing to put master skin in the game in order to basically fix this company and get the best value.

We all agree, but that's not about the shareholder sex.

Like I agree with you, I think you should own and run this poisoning pill for a second. okay? So elon comes in. He starts buying up at the stock. The premium he is proposing is something like a fifty thousand percent premium from when he arted accumulating percent.

Fifty four percent is like a thirty eight person from the time, from the time, from the time he basically made the offer. And by the way, the stock is going right back to the previous level. If they turned down this proposal, okay, so he's made them a good offer.

okay. Now I think you would be acceptable for the board to say, okay, this offer is attractive, but we need to shop this. We're going to run a process and we're going to see who else is out there. If there's nobody Better than you know, why would we take this?

There's one thing that left over that you didn't mention the thing that's left over, you're right. They absolutely have a responsibility, lie to shop and find the best Price. But what's left over is their judgment that the companies started and and get above that level, that they have the ability and the right to do that.

And the responsibility to do that is aboard. This happens all the time. The problem, the board, the board can look at the deal and they can say, you know what, we believe that the this business in the future is gonna worth a lot more than we're being offered for.

Cause the problem with that .

argument is that this is what activist firms use all the time in rivers. The inverse of the argument is more powerful. You've been a director with preview into all these confidential plans that is effectively caused this company to tread water for five years.

Why should we believe you now? And that argument is way more credible than actually you can really trust us this time. Because if you look at the ten year of all these folks know the last sea change that happened on the twitter board was when alot pushed to add, I think, two or three drug.

Yes, yeah. But in the absence of that, I think David is largely right. These are status games. And when status games ultimately play out over years, they either play out in the stock Price, one, one where the other. And in this case, what's true is that this is a language ing stock that is largely been going side ways independent of anything that's been happening.

What about the faction that less than ninety days ago, IT was trading at seventy .

dollars during the covet bum and everybody was betting stocks? I mean, like history freeburg IT was sixty nine a gun on? Just do you have to give some context? January third, twenty fourteen, the stock was trading at sixty nine dollars. The fact that I got a ridiculous bump like the entire market did during the Robin hood's stalk's you know hey day daring covert means nothing. I was .

not exactly that's .

exactly .

what I if you could actually point some alpha, meaning there is a strategic missed APP or something that happened that was fixed ble. A Better example would be like to to say that there to say that, that twitter instead was not a technology company but a farma, because this example would be easier to understand. The stock is at sixty nine dollars and you get some interm results from your face.

Three trial people misread IT and the stock tags. Meanwhile, the stock market, broadly speaking, is at the same level. You could say, well, that negative alpha can actually be fixed because of our strategic plan. But what taxi said is more true in this case. In this case, what's irrefutable able is that there has been a broad base draw wed down in the mark.

There is nothing that you can point to that as this is something inside of twitters control to get the stock back to sixty nine dollars, meaning sixty nine three months ago is actually thirty eight or forty dollars today were ten apples to apples, even comparison. So from there, the real question is this twenty or thirty percent premium to this. Can you actually show a plan? I think the right thing for twitter's board to do, just to be very precise, is the following.

They have to take elian offer and they have to create a go shop. I will go and try to get a Better Price. They won't be able to.

And the reason they want to be able to is not a single person who is capable of stepping up with forty three billion dollars would ever get IT through regulatory master. Not going to happen, in my opinion. And anybody with the forty three billion who could buy IT will never take IT on meaning, could come cast, show up, sure.

Could, uh, disney show up? They'll never even look at IT. no. There the people for whom the rated apple pay, google mazo no, bro.

I think probably right.

So I think ally on.

thank .

you. We're going to create a go shop. We will try to find the best offer. I don't think any offer comes in.

But then I think what they can do, free book, is if there is this magical plan to shoot rainbows out their eyes, they should actually put that to a shareholder vote and let people decide. And I think that's a really fair thing to do. That also allows them the credibility in the area cover to say, look, we actually have been working on a plan. We think that, that will create an amazing amount of shareholder value, and we just want shareholder to be able to see that compared to elan's offering.

Decide for themselves who's the White night, if anybody I heard comcast, we know that big tech can do because the company and never go to the next topic and the next new ones here. sex. You have anybody a financial player, anybody who is a dark course in your mind.

somebody you I think that could be disney jack is on the board of disney has a lot of relationships.

Are they tried to buy bobbi r said he bail on IT. Listen.

I think there's a lot of companies that could be interested in twitter. And I think you you create the period to shop at to see. And by the way, listen, and I think this administration does not want to see twitter become a free speech company again.

And so the political winds will blow towards letting I think twitter be acquired by a big tech company. Even if that means big tech, it's bigger. So I think that I think they will put lacon on pause to allow google to buy .

this company. If that's what .

IT comes down to. You're kidding me.

Your conspiracy there .

is that I want to come keio, put your thun on the scale and let google buy this .

thing so that the dams can own .

IT the limbs can. Still, I ended stead of having elon stated goal. I guess what David saying is, instead of having elon stated goal of having a free speech platform at scale exist on the internet, which they may believe is even the bigger threat to political power, they'd rather IT go into the hands of companies that .

will act we easter than at least on the margins. Thun.

before two evils.

you believe that .

inspiron, their .

point .

of I persons I.

I, I.

I, I.

I, you, I, I you guys revenue twitter IT may not be that impressive relative to enterprise of companies and others. But and I want to be really clear, I am not arguing against this deal. I'm trying to give you guys the perspectives that we all have A A really kind of honesty dialogue about this, why this board may actually stand on their own two feet and win with shareholders by saying, you know what, look, our revenues been going up.

We're continuing to grow revenue were continuing to grow usage on the platform. We've got all these products that we're working on. There's a real reason that we're going to make more than fifty four dollars a share over the next twelve to eighteen months as we start to deliver this year's numbers and we start to deliver these products, features that we've all been sharing and talking about in the progress we've been seen.

And that's that's honestly, I think the most likely kind of middle ground here is this board has enough to stand on by looking at the fact that IT doesn't matter, the stocks come up and down. What matters is that they've been, in their minds, steadily improving the business and continuing to improve the business. And IT is an iconic asset that the market should oh not a single person. And yi, and I think that's gonna part of .

the case that may make two points. First, the problem with freeburg's argument is that there's no limiting principle to this. Any board and any time could always claim that they have seen the magical plan and therefore they can reject the bid.

You're right, by the way. The problem with IT, and particularly in this case, we have to look at the track record of this management team, which is barely exists, but also this culture at twitter. Okay, this is a company, that language for years, the culture, look, this culture a decade, this culture has been. So adapt that in response to else take over off, they gave all the employees a day of rest because .

that's a real cron. Monthly bases were .

so stressed out, the boys so stressed out, they told the state at home, and take IT easy OK. this. This is a way you don't know.

the emotional labor IT takes to deal with this.

This team is a week OK and it's soft and week and you on we give the whole company in animal and fix this thing. And that .

is why they don't want .

him taking over list, invoke some magical plan that they don't have, that they never come up with and they would never come up with because this is a big excuse. So they're not out of a job. okay.

But now let me I never got to make the second point. Let me just to feel head thing. So listen, what is this story really about? It's about free speech.

It's what is about for elan. He said in this takeover and then at the speech he gave at ted that, listen, this is not about economics. For me, twitter needs to be the open town square.

IT is the marketplace for ideas. We're going to make IT a free speech platform. We're going to open source the algorithm.

People know when they're being cancelled. They know why they were taking down. Is that algorithmic? Was that a human intervention? This is what is about for you is also what it's about.

It's also what is about for all the elites. For everyone observing this, for everyone is criticizing IT. Listen, look at the look at the reactions.

We we have to talk at all about the historical reactions to all of this news that happened. I mean, there was A F fantastic, uh, tweet here. Well, business insider said that elon must attempt to buy twitter represents a child new thread.

Billionaire tros taking over social media. This is one problem. Back in two thousand and thirteen business insiders, headline was billionaire jeff buzz washing post bike Marks a fascine cultural transition in america.

So these guys are completely hypocritical. When is a billionaire that they like? They praise IT is a billionaire oring free speech.

They oppose IT. That was going on. You had jeff .

jarvis with this instance. You have job .

saying today on twitter, feels like the last evening in a berlin nike club at the twilight of Y R. Germany mean somehow these people think that the reinstitution, the restoration of free speech is somehow like the the end of one mark germany. And then I think probably the best example was this tweet by max boot, where he says that for democracy to survive, we need more content, moderation, I E censorship, not less so in the warped mind of all of these elites in the media, the corporate media, they think that for democrat to survive, they need more censorship.

The worst thing the democrats ever did is gave the republican party free speech. That was our issue. How we gave IT to you guys is just in same.

By the way, this is your bias in evaluating this deal. I want to point that out. You talk about the board's bias.

You do have a bias on on and that's not really the question at hand. The question at hand is fifty four thousand is the fair Price to pay for this company. I know this is also about free speech. There is another country that's that's not sorry, agree, not the deal, but that is why e lions buying the company. I agree, I agree, I agree, is not doing just pointing that we we all criticize the board and we all criticize them for not taking the deal were motivated generally because we want to see the deal happen.

We want to see you on. I couple things. First of all, the stock is basically the same Price that was in december of twenty thirteen.

right?

right? So what happened .

the market today.

that time he went absolutely up to the right in a violent manner, right?

So if you had a strategy to not grow and you deploy IT, could you actually achieve this performance?

So i'm just saying that's just an objective fact that we have to keep in mind what whatever has happened has collectively not worked. And IT is IT is systematic, meaning the underperformance is not a quarter, is not in a month. But whatever has happened here collectively inside this business has not been working for nearly a decade.

okay. So just getting all the emotion out, that's a fact, right? okay. And so at some point, people will say, well, the D I don't know is Better than the devil I do know, because devil I do know is destroying money for me. At a horrific rate, which if you look at how the S M P S compound is twenty thirteen verses now I mean, my gosh, if you had done a spread trade of long the S M P and short twitter, you have made a fortune.

How about long tesla? Short twitter? Well.

i'm just trying to give the just general market. I'm just try to give you the general market math, right? Any individual .

right? So I think we all are on the correct economic thing have happened here, which is that the twitter board should run a process. They should see if there's a Better bit out there.

If there is, you play for the bigger bid, make you long come up on the Price, okay? But if there's not a Better bid, elon's offer is the best on the table. I think you take IT, that's what economically should happen, but it's not gonna en. And the reason is not going to happen is not because of superior economics or a magical plan is going because the the the board members on this country club, they call a board their interests to stay on that board process, and all the elite observers in the media, all the people, once one censorship to remain in place. That is what's going on.

Give me once I ask one question. So OK, you have a lot of bit going. You have a little bit bit recovering like forty thousand. If I send them going to buy out all your bitcoin for forty five thousand, would you take IT? Well.

as it's a different situation because you can't you can't make an offer for that .

and is a nice here's a difference. There's no principal .

agent problem in that context. I know.

but you have .

a point of you big .

on I know forget about the structure. I'm coming to you and i'm saying hex I for forty five thousand.

What's your answer is .

a forty and then put IT to a every single shareholder ah and by .

the way, freeze ook, there's no limits on your ability to go on the open market and by bitcoin. So if you do want to try and acquire a one hundred percent of bitcoin gone on the open market .

and acquire IT limit .

s yeah exactly. I go do that, but there are huge list, big limits on the ability of you want to go on the open market and just keep buying a all f witter. Now with this poison pill, now this poison pill theyve stopped IT.

Do you agree with the poisons and pill? freeburg? Jack out, hang out. I want to explain why that is because this is really important for a corporate governance perspective. So people understand what you're saying is right.

But the job of the board is to look out for the interests of all shareholder, particularly minority shareholders, people that own a small stake in the company. So if someone came along, let's a private equity firm owned sixty percent of a public company, the board can chest active my interest of the private equity firm. They have to protect the smaller shareholders.

And so their job is to say, is their upside for the smaller shareholders that their vote should matter more. And that's why we have aboard to have that judgment debate and to decide. And i'm not arguing against you as much as i'm explaining what goes on in the lawyers and meeting the board.

This is what their telling. I think there your job is to look for all shredders so elon can go out and buy a bunch of shares. But if he doesn't have thirty percent of the shares, the board has to represent the interest for those thirty percent.

right? But I I think I think what what also works and what Normally good boards will do. And I don't know whether twitter willer will not do this, but i'm assuming these are you they'll do the right thing here um because we do know most of them um they should probably get a fairness opinion.

I'm sure a golden is doing evaluation as we speak. But again, when you factor in what's happened to this stock over the last decade and when you factory the market data today, it's I think you're going to have a very hard case to make that there is a path to an outcome that's a lot bigger in an obvious way here. And I don't think that, that's gonna pass a lot of muster.

And so the the problem that this board will have is justifying the alternative of not taking this. I think it's going to be harder than you think. yeah.

And I think it's going to create an enormous amount of backlash where me know there is a probably a lot of shareholders that would probably want to get out. You have to understand like why are van gardening all these guys owning twitter? They have to owner through these E T S that they've created in which that's right. They don't necessarily .

have to think I and so you .

they're out to just basically so when you really boil IT down how many concerned interested shareholders are there? Well, his elon is clearly the largest there, you know. And then after that, it's probably only thirty or forty percent of the total outstanding equity.

I bet jack has a really I bet jack as the links in and what's going to happen here, you know his point of view on this transaction and whether not elon to be the stead of this business going forward and whether this is a fair Price for him is going to sway a big part of how this process is gonna.

Jack, two percent over nine percent.

yeah. Point is, I think jack going to be a big opinion setter .

in board is because I think the ticket and just to give you guys a number to react to here, twenty twenty one revenue is five billion to have eight thousand employees back of the envelope, six hundred twenty five thousand dollars per employee in revenue. Just looking at google, which is the greatest ever created, perhaps in terms of efficiency.

As we talked about, one hundred thirty five thousand employees in revenue is two hundred and fifty seven billion, which puts them at two close to two billion, two million per employee. How many people sacks on an Operational basis as this business actually need to run efficiently? eight.

Yeah, you could fire half those people are more to be absolutely no impact the business. In fact, they're probably run Better because right now, they they .

probably got two people. You're my guy. You did amor, you're in charge and you the .

job for .

ten percent i'm .

done Operating .

company is i'm .

sick of IT .

if if you are fans .

gotten like .

real work this time where where we can share. I think IT was six years ago. Five years ago, I didn't approach twitter with a another large investor, but IT was more of a friendly activist thing. And David was our nominated C.

E. O. That place apart.

Now after that meeting, which was a little the p of engineering, and C, T, O quit the next day, I remember .

just the reporting. And to .

sex equity, IT really, really made this point. Storms like .

the MBA, I mean.

you get in and flattering, but i'm done, i'm done .

Operating.

I'm so ow go on zoom calls .

a couple of times a day is on the I think .

elan would figure, I think he would going to figure that out. I mean, he is obviously .

extremely, but who he's .

got a lot of people we can probably plug in there, you know that might stand of the way that things work at tesla and job space. Ex is he's got some terrific Young talent who he appoints to this sort of project manager or product manager positions yeah and they and he's got like twenty of the reporting team and they run the company doing whole sequence of projects in parallel.

So he has like a bench a deep like on is the new ge back more and g when all the talent is to go there. Ella got so much incredible talent in his bench, he get parachute t in some amazing Operators there and clean up that. Let me tell the incredible.

the AI team on that self driving team, which you've met, and i've seen their work like, you know, in private. And it's so impressive that if he took one of the AI people working on selves driving and drop them into twitter and one, they would solve the butt problem, the span problem, in thirty days with one. And you've got forget sent three, they would solve IT in the weekend. The fact that they can solve spam and bots and other michigan ago .

on of that company is a crazy x by sort of a there will be less problematic content on that site with elon .

running IT.

Why there is the less? Because he gave all the boss .

who in the braggin ing all arms. The problem is they don't want the boss to go, because the only sign of life in their business is spammers. And you know, all these fake accounts being created. So they're scared to take that twenty percent hit.

but the to be cleaner without IT. But but looked, Jason, I really think that part of the promise our conversation today is that we're reviewing this whole elon verse twitter thing purely in economic into some degree Operational terms when really I think this is also in the logical and cultural battle .

or struggle to that do.

And this is why it's really captured the imagination of the public there. Look, what is the, if you're to the zoom out thirty thousand foot view, the big struggle of our time, politically and culturally is popular versus alit us. Okay, that's a big battle that's happening.

Elon is one of the rare billionaire res who is sort of anti aletes. He pokes fun at their parties all the time is why they call him control. okay? He wants to restore free speech.

Somehow the elites are now on the side of censorship. Like max boot said, they believe that in order to protect democracy, they need more censorship. What they really mean is to protect their control over democracy. They need censorship.

why? Because they are great. Way out number, there's more popular ale us. So if the more democractic this country becomes, the more they are going to lose power and be kicked out, that is why they are so fiercely resisting the restoration of twitter as a free speech platform. IT means the .

end of their cultural power, the aioc headline in capsules that to a tea um I gave you guys the link that you can show the world's richest man, someone who used to be compared to marvels iron men is increasingly behaving like a movie supervillain commanding, seemingly unlimited resources with which to finance his mischief making I mean, what like are you really? Are you serious? This is the same guy journal.

I mean, this is the same guy that's that's doing more on climate change and has been doing IT, you know, twenty years ago when IT wasn't popular and satellite but I I said this before and space travel, I and I said this before. But I just want to say again, I think if he does get a control of twitter and there is. A strong, reliable moral force for free speech.

I think that's actually gonna be his biggest contribution to society because independent of all these other things, you know, we want sort of this political philosophy of democracy and capitalism to roughly work together. And I think IT sits on top of this fundamental idea that you can say what you think without retribution. And it's only there you can actually seek out different opinions and try different ideas and say things, and most importantly, make mistakes.

And right now, we we have such a high cost for making mistakes that I just shut so many people down and out. And if he does that, that's actually a really big deal, I think. Uh, global.

you know what that exist? Headline could have such a that could said elon mask spend significant portion of his fortune to restore trust in public square by open sourcing, open hold on, open sourcing the API and allowing transparent A A moderation. Jason in tek.

Jason, they can because they lose power if .

elon wins and gets .

controlled to IT .

don't make a lot of money. What they have is some degree of status, but more importantly, they have influence. That's why they do those jobs and the fact matter and their influences and enhances when other people don't have the right to speak.

And the reason why elon is a supervillain in their eyes is because even to give the people their right to free speech back, that is what this is really about. And they are ultimately opposed to that. Now, ten years ago, twenty years ago, every member of the press would have defended the first amendment.

They saw fem of speech, fem of the press as anonyma fundamental tor republic today. They don't believe that anymore history has been inverted. Green will actually had a great paragraph .

about this if I just from .

the fact right look, I mean, i'm he said, is that somehow these are they somehow inverted history? So now they believe that IT is not censorship, does the favor tool of fascist tires and thora against, even though every fascists and despot in history, you censorship is a key means to make any power, but they instead believe that IT is free speech, free discourse and free thoughts that are the instruments or oppression.

So that is what this is about. But but the irony is that these elites now believe in the use authoritarian toxics to preserve their cultural power. That's that's about all the things.

conflicting harassment on a platform or hearing opinions they don't like with, you know, like actual censorship. There is gonna be harassment, sadly, in the world. And you can build tools to mitigate that.

I mean, I one of the things I don't understand, you know I don't enough, you know, this feature they added last year, so where you can say only your followers can reply, you know, all these people are complaining about harassment. I never see any of them say my followers can reply. If they did, they would never have anybody reply who they didn't want to reply.

The problem would be solved. Okay, lots more to come on this topic. I wanted to get final .

topic for us.

Well, well, I mean, IT is might .

be perfect .

topic force because you freedom of speech, you have markets, you have governance. I mean it's just everything entrepreneurship I just want to end with ah we're hear thirty days from now. What is your majority case?

What is your majority probability here of what happens? Give IT a second. What is the stock trading at and whose running the company in thirty days? Sax, your first here.

here's was going to happen. This goes back to my ten foil theory. I think one of two things is gna happen OK.

First of all, elon is going to be thwarted by these folks. He's not going to get controlled. This company there.

The vested interest and stopping him by the board, by the new CEO and by the corporate media and and and the political needs is too great. They will find a way to stop him. okay? And one of two things is onna happen.

Either the poison pill will win and twitter stock will be down in the dumps thirty days. Now it'll be the same Price that was when around that Price is going to be back in the dumps. And at a mos point, all these bar members are can be sued, justified ably.

So because they did not pursue the best of the company. Or this is one of the possibility that they will find a buyer for twitter. And the way they will defeat elon will be to find another buyer.

And you know, the same were greater Price. And they will place twitter in the hands of another company who they regard as culturally safer, because that company buys into the regime of censorship. And IT might be disney, IT might even be google. I am telling you, I think that if google were the company to step up, the administration would ultimately support that deal rather than you on getting the company. And I think they to stand down in that instance.

let to go through.

We will find out, and I tell you, and thirty days, we will find out how rigging this game is and how deep the corruption goes, because they will do anything to stop elon from requiring this company if IT means, via their fiduciary duty or violent.

the anti trust law. Okay, they got alex on, let's go free.

But I mean, I am not.

What is the majority case in thirty days?

And which conspirator toral as sex?

I don't think that. I think we have .

a board of rational actors. I really do. I think that they are gona do what they think is in the best interests of shareholder.

In terms of Price per share, I think that they are gonna Operate. There are all super smart, super ethical, high integrity people on the board right now. Would i'd like to see you on own and Operate twitter personally? Yes, I would.

Why I think he's going to be a Better Operator. He's going to make that product Better. I think you make the business Better.

I think it's going to be he's gonna have a much more rational view on moderation, uh, that I think i've been lost over the last couple years. And I think you will innovate in ways that we haven't seen in that business in many years. I D excited for him to know that business as a user of two other, this awesome.

But I don't think I think the boards can act. Actually, they're na try to find the best Price. They're na reject his offer.

I don't think he's going to up the offer significantly to the point to get to get IT done. They're going to go out on a long strategic process three months for now. We're still going to be run that process.

That process is not going to be done. No one's gonna a real answer. You always going to trade off and do something else. And this whole thing kind .

of fading into the .

will be trading where in three months, thirty five OK.

What is the majority case here? Thirty days, ninety days for now?

I think the the thirty days is we're kind of kind of still be here. Um I don't think much is gna get figured out in the next thirty days. Now in the next ninety days, I don't think you're going to see a Better offer.

Um I don't think anybody wants to buy this down to fire because you have to understand this time fire is too fall right? On the one hand, you have a whole user usage boat and harassment problem and then you have an internal you know, issue around culture and motivation and all of this other stuff. And so you have to be really prepared to step in and deal with both of these two issues in a really definitively, I think that, that i'm not sure that corporate boards and companies and CEO have a stomach for all of that.

So I don't think there's a Better, Better. But I think within ninety days, they're gonna probably first try to reject IT. I'm not sure that, that's in the best reducer interests of shareholders.

In fact, I don't think IT is. And I think to reject that would be more a sign of ego than a sign of logic. And then I think they are going to get suit and are going to be improved in last suits for years.

So no cell happens. The stock languages again, steel mate disaster. Well.

I think I think by saying IT, look I mean, if you look at the stock like a simple stock market, analysts would say whenever there's a merger announced rated like x Price, right? Like look at microsoft and activision, that's a Better example. You know microsoft announced that the stock was that like you know fifty seven and fifty eight dollars a year microsoft says were going to buy activision, I think, for ninety five dollars to share, right? And if you notice, the stock hasn't gone to the ninety five.

Now typically merger arb, merger arbitrage happens is that the stock goes to one two dollars of the acquisition Price right away in almost immediate, or goes to within five or ten dollars or five ten percent, and then IT bleed towards the M A Price as the deal gets closer. The certainty. So when there's a big gap, what the market is voting is that the deal not going to happen.

And so when you look at the gap, microsoft, activision, IT kinds ys, it's gna take a long time and there's a risk IT doesn't happen. Similarly, if you look at this sweater thing, why did you go to fifty three box a share? It's because a lot of people think that the boards.

I can do the right thing, the fix.

So conspiratorial sex ously. Do you listen to all Jones?

The fix is happening in plain sight freeburg just to set IT. Why is the Price close to three, four dollars? Listen, when a deal is going to go through, the Price goes right up to like below that Price.

the Price is well, the reason the Prices are going up is there is no buyer who wants to asset.

It's going to be years to know.

I think there is a fire who wants IT.

even if you thought that there another buyer that was going to a higher Price. The the the money good thing to do is for people to basically buy that equity, to .

basically bleed .

into the acquisitive at all. In my opie is a concerted belief that the board is gonna reject the offer.

got even if there was another offer.

And and what they didn't want to do is by the stock at fifty, have the thing all of a sudden get announced. As you know, we're not going to take IT elon dumps and shares all the people that about the stock at fifty, hoping it'll go to fifty four, but all of a sudden lose a lot of money because the sock and said be a thirty four. So the fact that the stock basically didn't move is essentially the markets way of voting. This is a head fake. We you should take the offer, the boards not going to end the stocks gna tack back to its other its its original Price.

My prediction is the. Board tries to fight IT stock collapses, nobody thinks going to get done along lowers his offer and he wins IT by the end of the year and give him .

a lower offer. You didn't like kick always with the up.

Now we're going .

to mine now after forty nine, and he goes down two dollars every quarter until you guys we ask the end is trading thirty. I lower my offer.

James, if you want to just finish with this at the the the revelant story, IT was actually kind of cool, forceful. Little comes in to try to basically give like a White night bid. And what ronal prom did was basically say, i'm just going to, you know, topic every bid was pretty bother topic.

Every big enforcement would be at one. You know, problem would be at fifty one. Fifty will go to fifty four, fifty five, you know? So and he exhausted force and little, and eventually they are just through their hand up. They said, we can.

We can do this anywhere. I want to make a couple of movie recommendations because I tweet a couple things barberry again in wall street and you know, tweet these things and they get, no, like, I think people just don't watch old movies came out. They came out the nineteen and eighties, one of the all time great movies today, probably the best movie .

business have .

made saying wall is A T.

V.

movie. James gook.

Next level I.

Hey everybody, we decided to split this epic episode into two parts, one, two parts. We get you all the elon twitter discussion out as soon as possible for your friday night viewing pleasure. Stay tuned for episodes seventy six point five.

This part two coming out in just a few hours, gonna talk about the global food crisis, china's plan for food storage, geopolitics, including the french election. And we had a bunch of all, in sum, tok, everything is heading up. So stick.

With us.

Rainman give.

We open sources to the fans and .

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