--:-- Scott Galloway: Well, the only framing that requires more nuance is that it's not going to be a billion dollars. The breakup fee is really moot here. A breakup fee, and I'm going way back to my two years in investment banking where I didn't write or draft purchase agreements, but I proofed them to make sure every number and every comma was correct, but you do absorb what they say. And a breakup fee is essentially if an exogenous event takes place that puts the deal out of the reach of both parties, such as regulatory intervention. The officiast came in and did something. Or he was unable to pull together the financing for this type of transaction. Then it's a billion-dollar breakup fee. That is almost a moot point here. And that is this is going to cost him a lot more than a billion dollars. Because what he has claimed is that they have violated covenants. One is an information covenant. Another is a, God, I forget something about an axe covenant, which is basically he's saying that people left. The information covenant is almost never exercised. It's usually just there to ensure an orderly transfer of key information. They don't burn the place down. But this is what's going to happen in court. And that is the wonderful thing about our court system is when people have to put their hand on a Bible and risk going to jail if they don't tell the whole truth and nothing but the truth. Most of the truth, if not all the truth, comes out. And here's the truth as evidenced by every goddamn thing that has happened here and we have been saying over and over. You have an individual who decided he really wanted to own Twitter. And he gave them a price that was greater than anyone else was willing to pay. and the board had no choice but to accept an offer of $54.20 a share. And then you have a board here, the board of Twitter, that is chaired by a guy named Brett Taylor, who I have met but I don't know well. But I'm going to go out on a limb here and speculate that anyone who is co-CEO to Mark Benioff pretty much reeks of competence. Yes, he's very competent. And my guess is read the situation and said, okay, we have this manic individual who was overpaid for the company, dear company counsel, make sure this purchase agreement is hermetically sealed. It is so airtight. Like, if you were to put marijuana in this agreement- May I make the point? I'm sorry, go ahead. There is no such thing as hermetically sealed. Like, I think this is what Elon's betting on, is that hermetically or not, he will not, this will be bad. Twitter is going to, he's playing chicken with Twitter, and they're going to blink first. That is, I think, what he's doing here. I don't know about you. He's absolutely wrong. Am I doing? They have no reason to be worried here. They have nothing but upside taking him to a chance report. I don't know. They'd be in court, dragged down, people leaving. Nope. You know, that stock going down. And then what if he comes back with a tender offer or something like that? Like, he could make so much trouble for him. He agreed to pay $54.20 a share. The natural level of the stock right now is $20. The employees will like the prospect that when you sign an agreement and agreements are upheld which they often are in court and they need to be to have a functioning economy and he has no outs here If you read the edge case his lawyers have tried to make that he has violated a covenant and not only that, when you violate a covenant, it doesn't immediately trigger the end or breakup of the deal because you then have to show that their violation of this covenant has created a material— I want to talk strategically. I get it. I want you to talk, why is he doing it? Very simple. He must think he could win. No, no, no. This couldn't be more simple. In a moment, a month of mania, he committed to paying $54.20 a share for something that is now worth $20 and he wanted out. He can't afford this deal. and he's fucked. He's over his skis. He has spent too much money on a credit card and the bill is coming due and he's trying to figure out a way to not have to pay the credit card. Yeah, by blaming bots. The bots thing is so nonsensical. The way this behavior is so nonsensical, it reminds one of election lies. Oh, the bots, oh, the bots, oh, the bots. And in court- It's such endless bullshit. In discovery, everyone's saying, oh, and I just don't agree with, oh, Twitter doesn't want to go through this process. Twitter has handled themselves clean as a fucking whistle here. He demanded information, a firehose of information on the bots. They gave him everything he wanted and more. Who's going to look really shitty in Discovery is Elon Musk. And it's going to become increasingly clear that this whole bot thing was nothing but a lie in an attempt to get out of a deal and an agreement that is legally binding. And it's not going to be a billion dollars. Right now, right now, what he owes Twitter based on this ridiculous legal claim that they violated covenants that somehow exonerate him from showing up to his specific performance clause, which is also in this deal, is the difference between $28 billion and $45 billion. He owes shareholders $17 billion here, minus the $3 billion he has in, and the stock's probably going to crater at Twitter. This guy could be looking at a $20 billion judgment.
--:-- Kara Swisher: All right. I'm going to put an alternative viewpoint. A lot of Wall Street people, I was on a lot of TV today, and they were all like, I wouldn't want to be in Twitter's shoes. This guy's playing chicken with them. He's going to drag it out. It's bad for their business. There's no buyer in sight, although Jeff Bezos was raised by me. Like, why not? Why doesn't he, like, weigh in here as the white knight? He's been enjoying Twitter of late. But most of them felt that this is problematic for Twitter. This is their biggest asset right now. It's not their business, but this contract with Elon Musk. So but that's I think I don't know what you're right. And they're going to enforce it. They feel it's bad for Twitter that he could drag this out and he doesn't care. And so he's going to go for shit the moon essentially. Twitter will go about their business and they'll no longer have this guy shitposting about them. And they can tell everyone to get shitpost. They can tell everyone to get back to work. And and the stock will crash. and everyone who has options is going to say to Brett Taylor and the law firm, go get them because they might get $17 per share from this guy. There's something much bigger at stake here, and that is if we don't have agreements that entities on both sides of those agreements are legally liable to live up to unless there is a legally viable reason that absolves either party of fulfilling on that contract, which there is not here, then you do not have a functioning economy. If firms start signing agreements or to buy houses or to adopt children or to— Scott, it's already happening in politics. Trump violates law after law after law, and then they all go along with him in their wake. The Republicans haven't turned it around. You know what I mean? The arc of American justice is jagged, but it bends towards the righteous. And this guy, this is my next prediction here is this was 280 characters bridge too far for this guy. He is going to be hit really hard because discovery is going to reflect poorly on him. I am going to take your word for it. I get this. But you're not surprised. So let's listen to the times you were right. See, let's give that first on April 14th. When we just learned about the deal, you already weren't sold. Let's listen. I mean, within about five fucking minutes, it's pretty obvious. This is a ridiculous bullshit offer. And let's walk through all the reasons why. It is cheap. Let's break it down. All right, break it down. You think it's a game? I think, I don't know. This is read the filing. My best and final offer. Okay. Yeah. Let me tell you how many deals end up at the initial price. None. All right. Next example, May 12th, you said this. The deal is off. He will come up with reasons, something around woke or conservative, or he'll try and reprice the deal. There's a specific performance clause in these deals. He'll definitely have to pay the breakup fee. All right. And Scott, just yesterday, again. Elon Musk has been quiet about the deal Kara because it already a figment of it already in this rearview mirror He wants nothing to do with it He tasked his lawyers with getting him out of the deal for the least amount of damage possible I saw the most ridiculous statement. Someone was, I forget who it was, was saying that, oh, that Twitter doesn't want to go through this case because it will reveal in Discovery their behavior during the process. And I'm like, well, you're right. Someone's going to look really bad in Discovery here, but it's not going to be Twitter. All right. Well, OK, so you're saying he's in big, hot water, Delaware Chancery Court, hot water, hot water, right? Correct? This is going to be one of the most famous court cases in business history. And the Delaware Chancery Court has to say that agreements matter. Otherwise, why do we have a court? Why do we need judges if they're not going to uphold agreements? So he has come up. If you look at the covenants, he says have been violated. It is it is edge of edge case. It's laughable. And then when they do discovery and they start calling up people outside of his lawyers where he does not have, they do not have attorney-client privilege, they're going to go, it's going to become pretty obvious. He knew about the bots. He's actually benefited from the bots. And he realized that as the market was crashing, he had agreed to pay $54 for something that was worth $20 and he wanted out. Yeah, this certainly wouldn't be happening if the market wasn't crashing. That does not, that does not exonerate you. That does not let you off the hook. So he will be legally liable in my view. And the court will say, we have to uphold agreements. Otherwise, the whole economy could fall apart. So then what does he do? Then what does he do? Appeal, appeal, appeal. Well, this is what I think is going to happen. So if you look at what happened today in the stock market post the announcement, Twitter's stock went down and Tesla's went up because people say, because Tesla's shareholders go, thank God this was a distraction. He can go back to taking that big brain of his and focusing on Tesla. I believe, and don't trade on this because I get it wrong a lot, but I believe on Monday or Tuesday when the market absorbs what is likely to happen here, they're going to absorb a few things. One, he is about to get hit very hard by the Delaware Chancery Court. It might take months. It might even take 12 or 24 months. He is going to owe billions, maybe even $15 or $20 billion. when this stock, if this stock goes to 20 or 15, and they're like, you agreed to buy it for 54 bucks, and there's no reason why you shouldn't be held accountable to buy it. And the court will say, and he'll say, okay, I don't have the money. And they'll say, yeah, you do. You just have to sell Tesla stock. And then Tesla shareholders are going to realize, this guy's got to come up with 10, 15, $25 billion in damages, and there's only one way he can do that. There's only one stock he can sell to raise this money. No, he wouldn't have to declare bankruptcy. He would just have to sell a shit ton of Tesla stock. You know, interestingly, one person who knows him very well said it may have been a feint to try to sell Tesla shares unencumbered at a high price. Because he did sell a whole bunch before this, before the decline. And so it allowed him under the cover of buying Twitter to sell Tesla shares and diversify himself. Because now he's got all this cash, right, lying around. And so it's an interesting situation that he was able to do that. That's one thing people said. The second thing that I thought was interesting is someone who knows him said his family did not want him to be pursuing this and felt like he was going through a demon period. I'm sorry, which family is that? Elon's family was not for this and thought it was part of his demonic part. You know what I mean? Like they use the word demon. A lot of people near him use that word. He has demons and he goes through these periods. And so they said that they wanted that most of the people close to him wanted him to stop. We're trying to get him out of the man. Anyone with an IQ over 80 who has his ear would have said, why are you doing this? This makes no sense. You're overpaying. You're distracting. Why are you doing this? Yeah. But why is he using this cockamamie excuse? Just say, just give him the billion dollars and say, I made a mistake? Kara, that's the point. He's not on the hook for a billion. The billion-dollar number, forget you ever heard it. It's no longer valid here. He's on the hook for $45 billion, minus the market cap of the company when the judgment comes through, because those are the damages. If I agree, if I sign an airtight contract to buy your car, and I show up, or we sign an airtight contract for me to buy your car for a certain amount of money, and you show up with a car, and I don't show up with the money, and the car, you can only get $10,000 for the car and I agreed to buy it for 25, I owe you $15,000. So he's not on the hook for a billion dollars. He's on the hook for the difference between the market cap of the company, the shares he already owns and what he agreed to pay for this company. All right, last question for each of us, I think. What does Elon do next and what does Twitter do next? Very briefly. He shitposts them. They continue to act professionally. They get back to work and their lawyers get going. And they both begin racking up a ton of legal fees. And this ends up being one of the most watched legal cases and their lawyers end up in Delaware Chancery Court. It's headed to court. And last one any buyers I think you correct I would agree with you on both those things Are there any buyers whatsoever It depends where the stock goes I mean, it's so complicated right there. There's so many moving parts that I don't think anyone wants to show up and go, hey, we're here, we're going to buy the company. And not only that, they'd be letting Elon off the hook. And I think a lot of people, here's the problem. It's not karma. I don't believe in karma. I think there's some really bad people that die happy. I think there's some really good people that have terrible lives. But in the business world, when you are constantly shitposting everyone from senators to the SEC to management of the company you have claimed you want to acquire to the board, you know, at some point you're going to eat a cold lunch. This is his cold lunch. And Brett Taylor's like, I can't think that they aren't really enjoying this. Also, I think SEC Chair Gensler has probably decided, you know, we might have weighed in here on his filing violations, but instead we're just going to let this play out. Yeah. Yep. No. I agree. I agree. And Tesla shareholders are going to wake up and go, well, what if he has to come up with $20 billion in damages? He would right now, if Twitter said, okay, let's just call it the breakup fee a billion dollars and call it a day, his lawyers would call him right now and say sign it and fax it back with a billion dollars as soon as possible. He's on the hook for a lot more than that. Right. Nope. So, you know, today, just so everybody knows, Tony Sirico, I would end on this, who played Pauly Walnuts on The Sopranos, I love him, died. and one of the things, I'm going to read one of my favorite quotes of his and I think this is where Jan is right now. Oof, Madonna, he looks terrible. Madonna, he looks terrible. Rest in peace, Paulie Walnuts, but this is not good. This is not good, but it's good for us. Have you heard anything? I have not talked to anyone. I texted with Preet just to make sure that I wasn't missing something legally, But have you spoken to anyone at any of these companies? I think people are worried that he is going to, he doesn't care, and it could really hurt Twitter. I think a lot of people at Twitter are very concerned that, or near Twitter, are very concerned that he is going to, he's scorched earth. And that could be a problem. Even if in the end he loses, he will he the fact that he's doing this to 7000 people for no good reason than boredom and ennui is weird and strange and and such so juvenile. I can't I honestly stop. Right. Right. But I think most people are relieved. The ones who like him are relieved. You know, the the ha ha bros are like, oh, now he's got them. That kind of thing. Twitter people are concerned about that he'll keep coming at them I think that is a real fear of theirs that he's not going to give up and so oh my god he would he wants out of Dodge and by the way speaking of quotes and people who died James Caan died this week yes I love him not only Sonny Corleone but in a hugely underrated movie a couple of them The Gambler and also Rollerball but his quote that I love also Elf but go ahead there you go they're going to the mattresses they're going to the mattresses okay we'll see how that works he said I won't mention names but in my career the most talented people invariably are the easiest and nicest to get along with yep like James Caan that's a nice thing to say James Caan class X there you go not so much for our friend Elon these days okay Scott that's a wrap on the Elon deal and the show with our emergency Elon episode for certainly he's good Sext a mom, the new head of special projects at the Boring Company. You love that. Pulling out. He can pull out. I'll say it again. I'm so proud of you going to profanity. You have been a bad influence on me. That's right. You've been a bad influence. That's right. If that's wrong, I don't want to be right, Kira. All right. We'll be back next week for more. We'll have a show on Tuesday. We'll have more thoughts, and we will know a lot more then. Scott, read us out. Today's show was produced by Taylor Griffin. I don't know where everyone else is, so thank you, Terry. I'm sure Ernie will engineer this episode. Thanks also to Drew Burrows and Miel Silverio, especially Drew. Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to our special episode of Pivot, blah, blah, blah. You've heard this shit before. Oh my God, this is going to be good. because to you, it's more than an invoice. It's your hard work becoming revenue. It's more than a wire. It's payroll for your team. It's more than a deposit. It's landing your fundraise. 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