All-In with Chamath, Jason, Sacks & Friedberg

Industry veterans, degenerate gamblers & besties Chamath Palihapitiya, Jason Calacanis, David Sacks & David Friedberg cover all things economic, tech, political, social & poker.

E76: Elon vs. Twitter

E76: Elon vs. Twitter

Sat, 16 Apr 2022 02:04

0:00 Jason's new skincare routine, Sacks' Good Friday portfolio update, Bestie intros

3:12 Breaking down Elon's offer to buy Twitter and take it private: poison pills, board responsibility and more

30:50 Core issues of Elon vs. Twitter, analyzing reactions, breaking down Twitter's revenue per employee

43:10 Free speech and Twitter, predictions for how this saga ends, business film recommendations

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Referenced in the show:,_Inc._v._MacAndrews_%26_Forbes_Holdings,_Inc.

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You got, like, moisturizer all over your face. Are you moisturizing? I am. I'm just, my skin is so dry. I just got over having food poisoning and I'm like, I dehydrate. OK, hold on. Let me get this off camera. Off. Look at this guy you got makeup on. It's not makeup. It's moisturizer. *** ****. This is bad. The reason you look like the ******* crypt keeper and I look spy and young and she felt because I do a little skin care routine. OK? Give me a ******* break. Look at me. Turn off his camera because he's embarrassed about whatever. He's not embarrassed. I just don't need you telling me. Sax is in a ******* good mood. Just a lot of up 15 cents. Why are you so ******* happy, dummy? Well, the markets are closed today. It's Good Friday. So I have my stock portfolio. Can't be down because the markets are closed. Thank Jesus. Praise Jesus. Yeah, it's a Good Friday. If the markets are closed, My Portfolio can't go down anymore. It's truly a Good Friday. Your portfolio will rise again and these be resurrected. Let your winners ride. Man David. We open sources to the fans and they discover. We. Nowadays he works in DNA, but in the 90s all he cared about was the MDMA, the Duke of DNA, the Titan of Tempe, the shepherd of the Soy Boys. He turns water into wine and dollars into Dimes. He's a foolio for Coolio. The Sultan of Science himself. David frieberg. Welcome. I have never done drugs. Just for the record, but go on. No, of course not. Of course none of your behavioral problems in high school had to do. Yeah, neither is Jason. No, absolutely not. Not this morning. He's the VC who loves Bray. He'll sell you the sleeves off your vestie. He's enthralled with green wall. He eats uppers for supper. The Rain Man himself, David Sacks. Alright. Thank you. You're welcome, dad. Alright. Coming around the bend. That time piece, what does it do? It reminds him of how much more money. He has then you the sweater is worth 6 times. Lora Piana is above his line. Your super villain with that 1985 sassicaia he beat chilling there it is. He loves space, just like junkies love crack. He's your dictator chamath Polly habitat. That works. I'm like becoming the M&M of intros. I mean, I'm, I'm rhyming ****. It's really solid, bro. I gotta say, I'm, I'm working shopping it. A shout out to Nick and one person on Twitter of 100 gave anything a moving into my spring sweater season. My spring sweater collection. Oh, wait, hold on a second. I just got a call. Oh yeah, confirm you. Nobody gives a ****. ******* Christ. The king of the inane. I don't think it's a name at this matters to exactly one person. No, no, the person selling you the threaders. That's not that. I I think if you took a poll on Twitter, there's a lot of people who silently hate it but love it, I think a lot more who hate it. Let's get to all the news. So much news going on. All the news. Where should we start, Jason? On on a Friday? I'm 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. We're on to the next thing. There's only one issue. Elon put in a bid to buy Twitter outright on Thursday and take the company private and a deal worth $43 billion. The most breaking news when we're taping this on Fridays at 11:00 AM when we typically tape this, is that the Board of Directors? You know, the professional Board of Directors has decided they would like to get personally sued, you know? I mean, this is the most insane thing. I woke up and read this and I was like, OK, they're creating a poison pen. I'm sorry, a poison pill. That's going to give Twitterers existing shareholders the ability to buy more shares if Elon hits 15% of the company at a discount. Chamath explained the concept of a poison pill. Just generally speaking, and then give us your. Because everybody knows what's going on, but like, here we are on this, whatever. I don't know if this is the 7th or 8th inning of this saga or it's the second, but where do you think we are in this saga? And then what happens on Monday and it's describe a poison pill. A poison pill is basically a defensive maneuver that a board of directors uses to prevent a hostile takeover. And basically the simple way it works is it allows the board to create enormous amounts of new shares and effectively. Dilute the potential hostile acquirer so that it becomes economically unfeasible for them to get enough shares to get controlled the way that they do that. Is that they basically give everybody except a person that crosses a certain ownership threshold. So let's use Twitter as an example. So the Twitter's poison pill basically says that if you get to 15%. You're essentially locked out from a right that then everybody else has that effectively allows them to buy another share of stock at I think it's a 50% discount. And So what it does is it creates an incentive to essentially almost double the fully diluted shares outstanding of the business. And what that does is it makes it almost impossible for the person with 15% to then go and acquire what's necessary to get to 50%. There are different kinds of poison pills. There's things that you can do with debt. There's things that you can do with equity. But that's the thing that that Twitter did. I think the if anybody's interested in it, Nick, maybe you can just bring it up, but you can Google on Wikipedia there's a phenomenal article called Revlon versus Mcandrew and Forbes and Mcandrew and Forbes was the holding company of this very prolific deal maker in the 70s, eighties and 90s named Ronald Perlman and. What happened was he was the CEO of a company called Pantry Pride, and Pantry Pride made an unsolicited hostile takeover bid for Revlon, which made makeup. And basically, you know, there was like 40 to 45 bucks a share. The board instituted all these poison pills. The price kept escalating. Then a private equity firm stepped in, also tried to compete for the asset. All along the way, there was enough shenanigans that essentially what what what Ronald Perelman did was sue Revlon, which went to Delaware court. And from it basically came the current framework of law that we use in this situation. And basically what it means is that board directors have these fiduciary obligations to their shareholders. And in some cases, these are very broad fiduciary obligations, meaning do the right thing. But in some really narrow circumstances, all of that collapses and their sole focus is to get the best price. And what a director and a board of directors 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. You know they're probably going to assume they're going to get fired from the board, they want to stay on for different reasons, etcetera, etcetera. And so right now, what Twitter and their advisors are trying to do is basically stay in 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 shareholders who own stock at 40, some odd dollars. A chance to basically get, you know, a a 20% payday by selling it to Elon for 54 bucks or 53, 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 this broad fiduciary obligations, you know one thing I'll tell you as a public company director. 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 OK. On that note of personal liability, you have directors insurance so doesn't think that Pierce doesn't, it doesn't cover. Have there been examples of this happening? Yeah DNO insurance is, is kind of like DN insurance is their director and officer. Insurance is, is a layer of protection that we all have as public company directors. We actually also have it as private companies. Yeah, yeah, but the the amount of coverage changes. But what I'll tell you is DNO coverage tends to be relatively nominal because the risk profile doesn't really, you know, include these kinds of tail events. And now what you're talking about is 10 to $15 billion 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, compensatory and punitive damages is a function of how much money was was made or lost. And so you're talking about a realm of of of risk. Now, for these directors, that's well beyond what DNA insurance will cover. So when if a lawsuit did happen to mouth, you have to find damages. So if the board found a better offer, great. But if this thing goes down on Monday, Elon sells the shares and it goes down to 30. Now you have the opposite effect. Go ahead, freeburg. So I'll say two things. One is, All in all these cases, by the way, the board is indemnified. For the company. So the individual board members, 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 fiduciary, except 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 the most value possible for the shareholders. It's very simple. When the stock price is at 30 and someone says, I'll give you 50 bucks to say, Oh well, obviously getting 50 bucks is in the best interest of the shareholders. Let's assume though that you're on that board and you know about some super secret plan that you believe in the next 30 days is going to get the stock price to 60. And your belief in that plan and your understanding of that plan gives you a good rationale for having a debate as a board that this deal doesn't make sense at 50. We should hold out until we finish our plan over the next 30 days, get the stock up to 60 and then we'll see if someone comes in and says, hey, I'll give you even more than, than 60. Could be something on the product road map, right? This is the complicated point. It's not just about the current share price. And there is a history in the 80s and 90s, early 90s when stocks would drop tremendously for market volatility. Reasons or very some bad news event or someone quits the board macro and all of a sudden the stock price drops and you have a hostile buyer that says, Oh my God, this company looks super cheap. I'm going to come in and buy it while it's 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 that's being offered. And the board says, you know what, we're going to get back to that share price because the market will pick up again. The things we're working on are going to grow us out of this hole. And so it's very hard for us to sit here as and I know that I want everyone here on this zoom to suspend your alliance to 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, strategic plans etcetera with the current CEO 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 70 bucks a share. So remember it was only a few months ago Twitter stock was trading at 70, the stock price dropped with market compression. Of all experience and the nelons come along and said, I'll offer you guys 54 bucks and the board's like, wait. A few months ago we were at 70. We have all these great things we're working on. And so I'm just trying to paint the other side for everyone that this is not just like a clear cut, obvious deal. It's their judgment at this point that they should get more for the stock given where they think the company's head and where the stock price will will eventually get to. Alright, go into you sacks, you heard from Friedberg to suspend disbelief that the greatest entrepreneur on the planet running two of the most important companies is not more qualified. To run Twitter than the current. Yeah, I'm not. I'm not gonna suspend my disbelief. Let me make the case for the clear cut. For the clear cut case here. It's sorry. Let me just say something. He could be better at running this company, but OK. He will be better, Jason. But the shareholders don't benefit from that because he buys the whole company for 50. They do hold. Hold on. Yeah, they're getting $54.00 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 $54.00 of cash, I don't care if Elon. Is a better job running Twitter down the road because I have no interest. Suddenly, one Fact Check on that, one Fact Check on that. He said he wants to bring along with many of the shareholders jail. That's a thing he said. That's not actually in the proposal, right? So as a board member, I have to look at the proposal on the table, which is I gotta take $54.00 a cash for my shares and give up all the upside sacks. Looks like he's going to explode. Fair enough. Look, here's the reason why fiduciary duties exist. Let's just explain where this concept comes from. There is fundamentally a principal agent problem. This is what it's known as. Between stockholders and the people running the company. So in other words, the owners of the company are the stockholders. OK, 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 stockholders, but to pocket personally as many benefits as they can. And the whole reason why fiduciary duty was invented is to prevent that agency problem. So if the board members. Or the CEO of the company are just looking out for themselves and trying to pocket personal benefits, excessive compensation, or turning down an offer to sell the company for a much higher price. That would be a breach of their facial duty because they're looking out for themselves. Pirog knows that if Elon buys this company, he is out of a job, his head is on the chopping block, he is fired right away. Elon has made that clear, he said in this letter on this SEC filing on Thursday. I have no confidence in the comp in the management of the company. If I'm unable to buy the whole thing and take it private, I will dump all my shares. That's all or nothing for him. So Pirog is interested in preserving his job. If Elon wins this battle, frog is going to have the shortest executive career since that Pope who got poisoned, OK? To borrow a line from Wall Street. So he is incentivized to fight this thing, whether it's in the interests of shareholders or not. Now, why is the incentives of the border? I think they're the same. These are guys who love the power they derive. From being on this board, we know Twitter has enormous cultural power. These guys, they enjoy all the benefits they get. They probably do get some compensation being on the board, but they enjoy being in this very exclusive club that wields enormous power over our culture, and they have no incentive to give that up. And by the way, how much of the company 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. Fox sells for 60 or 70. So and 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 it. You know look maybe there's a, there's a variety of, they're conflicted. It's got nothing to do with integrity, the fact of the matter. But you could say the same about any board sax that it's no because it's different. Listen, when we're on a board, OK, I'm on plenty of boards. We own a huge percentage of the company. So when somebody makes a takeover offer to buy one of our companies. We are thinking like stockholders. We're fundamentally aligned. You have all the skin in the game. Yeah, we have massive skin in the game. These people on the board, what skin in the game do they have? Most of them are these directors who are just appointed, and it is. It's like a club. These guys, it's all big back scratching club. These guys are all on the way. You think they're motivated by the influence of being a Twitter board member? Why being at the Nexus of power, do they? This is shaping up to be as the Nexus of power. And who controls the power? Own much of Twitter. None of them own much of Twitter. I do 100% agree with sex. I've always believed what I think Carl Icahn said or or whoever it was that the board should be represented by the biggest shareholders, the the, the, the folks who actually have skin in the game, the folks who actually care about the share price. You know having some nominal number of shares issued to you as a board member of a public company showing up, you know patting each other in the back. It's certainly generally speaking leads to non founder LED companies ultimately dying because there is no motivation and incentive and drive from anyone. Let me take the other side. Especially, I think you're mostly right. I would never join a public company board that I did not own 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 and 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 sort of 5050 split between the biggest shareholders and people who are very much experts in a handful of things. And I just want to be specific in a help book company board, you have to have a lot of focus these days on things like governance, audit. Because you have to attest to these financial statements, right? Cybersecurity becomes a huge one because you have to disclose these risks. And so I think that it really behooves boards to have a few experts who can chair those committees. 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 to have a large piece of the company, but they're going to do a really good job of managing those things that minimizes 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 huge equity value. When those things come together you have great outcomes. But I really agree with you, if you stack the board and you know we've we've had this issue public boards in America got perverted over the last sort of last few decades to being these little badges of status that people would collect and now you know we're starting to see a real pushback. What's called Overboarding, right, where these distinguished folks will pick up 567 boards. All of a sudden that's the fastest way to make 3/4, five, $6 million a year. How can you sit on five or six company public company boards? It's impossible. And add any value. Exactly. And you think, question, do you think those people get appointed to boards by standing up to the CEO? No, the opposite. Safe vote for the CEO. 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 own them for very long period of time. As you guys know they're they they remain significant owners they don't sell off the shares in the US traditionally as companies have gone public the shares, the founders, the original investors because we have 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 end up owning the bulk of the shares. How do you think those companies can be best represented on the board given that there isn't concentrated ownership in public companies? Generally mature public companies in the US like Twitter, the largest you know owner is vanguard with five million other investments and then Jack Dorsey, he only owns 2%. What do you guys think is the right thing to how do you create good alignment with board members that that could be better, you know, placed 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 a concentrated position because they have a plan for the company, you don't stand in the way and completely thwart that. Your job isn't to assess their plan because your job is to assess the dollars you're getting paid today for your shareholders, and then whatever they're gonna do with it, it's their thing. But are you getting a fair price? Is it? Elon is willing to put massive skin in the game in order to basically fix this company and get the best value? Agree. But that's not about the shareholder sex. Like, I agree with you. I think Elon should own and run Twitter. Alright, let's let's let's evaluate this poison pill for a second. OK, so Elon comes in, he starts buying up the stock. The premium he's proposing is something like a 50 something percent premium from when he started accumulating as four percent. 54% is like a 38% of 40% of the time count from the time from the time he basically made the offer. And by the way, the stock is going right back to that previous level if they turn down this proposal. OK. So he's made them a good offer, OK. Now, I think it would be acceptable for the board to say, OK, 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, then we're, you know, why wouldn't we take this? There's one thing that's left over that you didn't mention. The thing that's left over. You're right. They absolutely have a responsibility to shop it and find the best price. But what's left over is their judgment that the companies no, no get above that level they have they have the ability and the right to do that and the responsibility to do that as a board. 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 going to be worth a lot more than what we're being offered for cash today. They have some inside information. Gotcha. The problem with that argument is that this is what activist firms use all the time in reverse. The inverse of the argument is more powerful. You've been a director with purview into all these confidential plans that has 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 10 year of all these folks, you know, the last sea change that happened on the Twitter board was when Elliott pushed to add, I think, two or three directors. But in the absence of that, I think David is largely right. These are. That is games. And when status games ultimately play out over years, they either play out in the stock price 11 way or the other. And in this case, what's true is that this is a languishing stock that has largely been going sideways independent of anything that's been happening. And what about the fact that that less than 90 days ago it was trading at $70.00? Do you mean during the COVID bump? Yeah, everybody was betting stocks. I mean, look at the history. Friedberg, it was $69 guys. I'm just giving, you have to give some context. January 3rd, 2014, the stock was trading at $69. The fact that it got a a ridiculous bump like the entire market did during the Robin Hood stonks, you know, heyday during COVID means nothing. I think that was market beta, not their performance exactly. That's exactly, that's exactly what I was going to say this if you could actually point to some alpha, meaning there was a strategic misstep. Or something that happened that was fixable. A better example would be, let's just say that there was a let's just say that in that Twitter instead was not a technology company but a pharma company because this example would be easier to understand. The stock is at $69 and you get some interim results from your phase three trial. People misread it and the stock tanks. 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 Sachs just said is more true in this case. In this case what's irrefutable is that there's been a broad based drawdown in the markets. There is nothing that you can point to that says this is something inside of Twitter's control to get the stock back to $69, meaning 69 three months ago is actually 38 or $40. Today we're, we're, we're at an apples to apples even comparison. So from there the real question is this 20 or 30% 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 Elon's 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 won't be able to is not a single person who is capable of stepping up with $43 billion would ever get it through regulatory muster. Not going to happen in my opinion. And anybody with the 43 billion who could buy it will never take it on. Meaning could Comcast show up? Sure. Could Disney show up? They'll never even look at it. No, they're not the people for whom this asset is strategic. Apple, Facebook, Google can bite, dance amid, never. Amazon can never get it done. So Lena Khan. No, breno. I think that's probably right. Jamath. But there is a chance. So I just want to finish from who? So hold on. Just let me finish. And then, so I think basically it's like, Elon, thank you. We're going to create a go shop. We'll try to find the best offer. I don't think any offer comes in. But then I think what they can do freeberg is if there is this magical plan to shoot rainbows out their *** 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 air 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 shareholders to be able to see that, compare it to Elon's offer and decide for themselves who's the white knight if any. But I heard Comcast we know that big tech can't do it because Lena con and then we'll go on to the next topic and the next nuance here. Sax, do you have anybody? A financial player, anybody who is a dark horse in your mind, somebody you know, I think it could be Disney. Jack is on the board of Disney. There's a lot of relationships I got they tried to buy it. Bob Iger said he bailed 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, name 1 sacks. 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 it means big tech gets bigger. So I think that I think they will put Lena con on pause to allow Google to buy this company if that's what it comes down to. You're kidding me. You're conspiracy theory is that it's going to come once again. Will you take 100 to 1 odds against that? I'm saying if it comes down to it. Senator Biden's gonna whisper and Lena cozier, put your thumb on the scale and let Google buy this thing. I'm just saying the Dems can own it, the libs can. I'm still own Trump. If it was a choice, if it was a choice between what David saying is my enemy's enemy is my friend. And so instead of having Elon stated goal, I guess what David is 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 acquiesce to them, at least on the margins. But no question about it. Biden with Talina Khan to put her thumb on the scale, the lesser 2 evils. You believe that conspiracy their point of view? I do not personally, but I believe it's not. I'm just trying this. I feel like I'm on the radio, but go on. Yeah. Listen. Yeah. Where's my what is this? Where's my tin for me like and and by the way, I just want. I just just to go back. What is this all I just sent you guys I. Hold on one second. I just sent you guys the revenue chart for for Twitter. It may not be that impressive relative to enterprise. Software companies and others, but 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 honest dialogue about this, why this board may actually stand on their own 2 feet and win with shareholders by saying, you know what, look, our revenues been going up, we're continuing to grow revenue, we're 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 $54.00 a share over the next 12 to 18 months. As we start to deliver this year's numbers and we start to deliver these product features that we've all been sharing and talking about in the progress we've been seeing and that's the, that's honestly, I think the most likely kind of middle ground here is that this board has enough to stand on by looking at the fact that it doesn't matter the stocks gone 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 own, not a single person and yada yada. And I think that's going to be part of the case. Let me make two points. First, the problem with Freeberg's argument. Is that there's no limiting principle to this. Any board at anytime could always claim that they've seen the magical plan and therefore they can reject the bid. You're right by the way, that's the problem with it. And agreed 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, OK? This is a company that's languished for years. The culture, look this culture, a decade, this culture has been so inept that in response. To Elon's takeover offer, they gave all the employees a day of rest because that's a reoccurring monthly big they have. No they don't. They really were so stressed out. The employees were so stressed out, they told him to stay at home and take it easy. OK, this is, this is a we don't know the emotional labor it takes to deal with this. This team is weak, OK? And it's soft, OK? Said weak. And Elon would give the whole company an enema and fix this thing, and that is why they don't want him taking over. Listen, you are 100% right, but but that's right. That's not the question. But This is why. This is why you should not let this board and this CEO invoke some magical plan that they don't have, that they never came up with and they would never come up with because it's just a big excuse. So they're not out of a job. OK, but now let me go. Good. I never got a chance to make the second point. Let me respond to the tinfoil hat thing. So listen, what is this story really about? It's about free speech. It's what it's about for Elon. He said in this takeover and then at the speech that 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 of ideas. We're going to make it a free speech platform. We're going to open source the algorithm so people know when they're being cancelled. They know why they were taken down, is that? Algorithmic was that a human intervention? This is what it's about for you. It's also what it's about. Hold on. It's also what it's about. For all the elites, for everyone observing this, for everyone who's criticizing it. Listen. Look at the look at the reactions. We haven't talked at all about the hysterical reactions to all of this news that happened. I mean, there was a fantastic tweet here. Well, Business Insider said that Elon must attempt to buy Twitter represents a chilling new threat. Billionaire trolls taking over social media. This is one problem. Back in 2013, business insiders headline was billionaire Jeff Bezos. Washington Post by marks a fascinating cultural transition in America. So these guys are completely hypocritical. When it's a billionaire that they like, they praise it. When it's when it's a billionaire supporting free speech, they oppose it. That's what's going on. You had Jeff Jarvis with this insane professor Jeff Jarvis saying today on Twitter feels like the last evening in a Berlin nightclub at the twilight of Weimar Germany. I mean. Somehow these people think that the reinstitution, the restoration of free speech, is somehow like the the end of Weimar 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, IE censorship, not less so. In the warped mind of all of these elites and the media, the corporate media, they think that for democracy to survive, they need more. Censorship. It's the worst thing the Democrats ever did is give the Republican Party free speech. That was our issue. How we gave it to you guys is just insane. By the way, this is your bias in evaluating this deal. I want to point that out. You you talk about the board's bias, but you do have a bias on on. And that's not really the question at hand. The question at hand is $54.00 the fair price to pay for this company. And I know that it is also about free speech. There is another issue. Motivation. It's core. That's not. That's not that. Sorry, I agree it's not about the deal, but that is why Elon's buying the company. I agree, I agree, I agree. He's not doing just pointing out that we, we all criticize the board and we all criticize them for not taking the deal. We're motivated generally because we want to see the deal happen. We want to see Elon doing I wanna be, I wanna be very clear, a couple of things. First of all, the stock is basically the same price it was in December of 2013, right. OK. So what happened in the market during that time, it went absolutely up into the right in a violent manner, right. So if you had a strategy to not grow. And you deployed 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, whatever, whatever, whatever has happened has collectively not worked. And it is, it is systematic, meaning the underperformance is not 1/4, it's not in a month, but whatever has happened here collectively inside this business has not been working for nearly a decade. OK. So just getting all the emotion out, that's a fact, right? OK. And so at some point people will say, well, the devil. I don't know is better than the devil I do know because devil I do know is destroying money for me. At at a horrific rate, which if you look at how the S&P is compounded since 2013 versus now. I mean, my gosh, if you had done a spread trade of long V S&P and short Twitter, you would have made a fortune. How about long Tesla, short Twitter? Well, I'm just trying to give the just the general market, and I'm just trying to give you the general market math, right. Forget even any individual right? And look freeberg, it's not just ideological here. I think we all agree on the correct economic thing to have happened here, which is that the Twitter board should run a process. They should see if there's a better bid out there. If there is, you play for the bigger bid, make Elon come up on the price. OK? But if there's not a better bid, Elon's offer is the best deal on the table. I think you take it. That's what economically should happen, but it's not going to happen. And the reason it's not going to happen is not because of superior economics or a magical plan is going to. Because the the board members on this Country Club they call aboard, their interest is to stay on that board, Pro's interest to stay as CEO and all the elite observers in the media, all the people denouncing 2. I'm going to give you guys. Numbers to want censorship to remain in place. That is what's going on. Give me one second. I wanna ask one question. OK. For you have a lot of Bitcoin. Amount of Bitcoin some bitcoins bitcoins trading like 40,000. If I said I'm going to buy out all your Bitcoin for 45,000, would you take it? Well, that's a it's a different situation because you can't, you can't make an offer for that. And by the way, there's there's no answer. Nice theoretic. Here's the difference. There's no principal agent problem in that context. I know it's a fully decentralized current. You have a point of view on, on, on Bitcoin. I know. Forget about the structure. I'm. I'm coming to you and I'm saying, hey, sex. I wanna buy all your Bitcoin for 45,000. What's your answer? It's creating 40. That's not that's not a share. That's not a share. So then put it. Put it to a vote. Yeah, I'm trading. Then put it to a vote. Right. Let every single shareholder decide. Then put it to a vote and we'll see. Yeah. And by the way, freeberg, there's no limits on your ability to go on the open market and buy Bitcoin. So if you do wanna try and acquire 100% of Bitcoin, go on the open market and acquire it and all sorts of limits. Trying to build big positions. Exactly. So go do that. But there are huge limits. I just want there. Hold on. There are big limits on the ability of Elon to go on the open market and just keep buying up all of Twitter and now it's just poison pill. Now, this poison pill, they've stopped it. Do you agree with the poison pill? Freeburg say jakel? Hang on. I wanna explain why that is, because this is really important from 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 shareholders, particularly minority shareholders, people that own a small stake in the company. So if someone came along, let's say, a private equity firm owned 60% of a public company, the board can't just act in the 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 a board 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. Meetings with the board. This is what they're telling. I think they're saying your job is to look out for all shareholders. So Elon can go out and buy a bunch of shares, but if he doesn't have 30% of the shares, the board has to represent the interest for those 30%, right? That's how it works, I think. I think what the what what also works and what normally good boards will do. And I don't know whether Twitter will or will not do this, but I'm assuming these are, you know, they'll they'll do the right thing here because we do know most of them. They should probably get a fairness opinion. I'm sure Goldman 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 factor in the market beta 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 going to pass a lot of muster. And so the, the, 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. I think, yeah. And I think it's going to create an enormous amount of backlash where you know, there's probably a lot of shareholders that would probably want to get out. You have to understand like why are vanguard and all these guys owning Twitter? They have to own it through these ETFs that they've created and that's right, that's right. They don't necessarily have, they don't have one. They have a point of view on the company, right. I agree. And so, you know, they're out to just basically. So when you really boil it down, how many concerned, interested shareholders are there? Well, he's Elon is clearly the largest there, you know, and then after that, it's probably only 30 or 40% of the total outstanding equity. I bet Jack has a really. I bet Jack is the linchpin and what's gonna happen here. You know, his point of view on this transaction and whether or not Elon should be the steward 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 going to go. Jack owns 2%. Elon owns over 9%. Yeah, but my point, my point is I think Jack's gonna be a big opinion setter in that board discussion he's on there, and I think there are some padico, and they're friendly. Just to give you guys a number to react to here, 2021 revenue is 5 billion. They have 8000 employees back of the envelope, $625,000 per employee in revenue. Just looking at Google, which is the greatest business ever created perhaps in terms of efficiency as we've talked about they have 135,000 employees and revenue is 257 billion which puts them at two close to 2 billion, two million per employee. How many people sacks on an operational basis does this business actually need to run efficiently? 8000, Yeah, you could fire half those people or more. That'd be absolutely no impact to the business. In fact, they probably run better because right now they probably got too many meetings happening with too many people. We all know this. That company, so culturally has been broken for a long, comes to you and says you're my guy. You did Yammer. You're in charge when you run itself, when you take the scene, of course you would of course be senile. Guys, come on. No, wrong. You take the job for 10%. I wouldn't. You're a liar. Would you take the job for 10%? No, I'm done operating companies. I'm sick of it. What if. But if your funds got kind of like doing hold on real work. Wait, hold on, hold on. I think, I think, I think this is time. I think this is time where we where we can share that too old. I think it was six years ago, five years ago I did approach Twitter with a another large investor but it was more of a friendly activist thing and David was our nominated CEO to that place apart King News must credit all in. But now after that meeting which which was a little heated. Their VP of Engineering and CTO quit the next day. I remember. Yeah, it was really funny. Or what? Just at the concept of reporting it to sax. They quit. They rage. Quit. Made this point. You know, stories are like the NBA. I mean, you get to a certain age, you you're just, you know, you're too old. I mean, you're the coach. You you'd be filled. Jackson. Just flattering. It's flattering, but I'm done. I'm done operating. I'm so sick of all that. Wow me. Who do you think? Protesting too much? Go on. Zoom calls a couple of times a day. It's a great life. I mean, you want can't run it. You've got a lot going on. Who you think should be the actual. You know, the day-to-day CEO there. Well, I think Elon would figure, I think he would go in and figure it out. I mean he is obviously an extremely, but who would be competent would be on the ground. Well, he's got a lot of people he can probably plug in there. You know that my understanding of the way that things work at Tesla and his job. No SpaceX is he's got some terrific young talent who he appoints these sort of project manager or product manager positions and they and he's got like 20 of them reporting to him and they run the company doing a whole sequence of of. Projects in parallel, right? So he has like a bench, a deep like Elon is the new GE back. Remember when GE, when all the talent used to go there? Yeah, Elon's got so much incredible talent on his bench, he could parachute in some amazing operators there and clean up that place. Let me tell you, the incredible, the AI team on that self-driving team which I'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 self driving and dropped them into Twitter, I'm one they would solve the bot. Problem. The spam problem in 30 days with one, and if, God forbid, he sent three, they would solve it in the weekend. The fact that they can't solve spam and bots and other mashugana going on at that company is crazy. He would fix that, by the way. There would be less, sort of. There would be less problematic content on that site with Elon running it. Why there be less harassment? There'd be less harassment because you get rid of all the bots he had imposed authenticity. Who's doing the brigading? It's all these bot armies. The problem is they don't want the bots to go because the only sign of life in that business is spammers and, you know, all these fake accounts being created. So they're just scared to take that 20% hit. But the site would be cleaner without it. But, but look, Jason, I really think that part of the problem with our conversation today is that we're viewing this whole Elon versus Twitter thing purely in economic and to some degree operational terms, when really, I think this is also an ideological and cultural battle or struggle. All right, we'll go to that. Let's do it. And This is why it's really captured the imagination. Of the public there. Look, what is the if you're to sort of zoom out 30,000 foot view, the big struggle of our time politically and culturally is populist versus elitist. OK, that's the big battle that's happening. Elon is one of the rare billionaires who's sort of anti elitist. He pokes fun at their pieties all the time. This is why they call him a troll, OK? 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're greatly outnumbered. There's more populous than elitist. So if the more democratic 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 Axios headline encapsulates that to a tee. I gave you guys the link, Nick, you can show it. The world's richest man, someone who used to be compared to Marvel's Iron Man, is increasingly behaving like a movie supervillain, commanding seemingly unlimited resources with which to finance his mischief making. I mean what a like, are you really, are you serious? This is the same guy journalism? I mean this is the same guy that's that's doing more on climate change and has been doing it to, you know, 20 years ago when it wasn't popular and satellites. But I I said this before and space travel. And and I said this before, but I just want to say it 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 going to 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 have such a high cost for making mistakes that it just shuts so many people down and out. And if he does that, that's actually a really big deal. I think global, you know what? That Axios headline could set him out, could have said Elon Musk spends significant portion of his fortune. To restore trust in public square by open sourcing, but you can't open source. Hold on open sourcing the API and allowing transparent. Moderation. No, Jason, that's what he said in his Ted talk. Jason, they can't because they lose power if Elon wins and gets control of Twitter, right? Exactly. Look, the, the, the. But I'm saying that's the accurate journalist like Axios. They don't make a lot of money. What they have is some degree of status, but more importantly they have influenced. That's why they do those jobs. And the fact of the matter is and their influences and enhance when other people don't have the right to speak. And the reason why Elon is a super villain in their eyes is because he's going to give the people their right to free speech back. That is what this is really about, and they are adamantly opposed to that now. 10 years ago, 20 years ago, every member of the press would have defended the 1st amendment. They saw freedom of speech, freedom of the press, as synonymous and fundamental to our Republic. Today, they don't believe that anymore. History has been inverted. Glenn Greenwald actually had a great. Paragraph about this, if I could. Green wall? Yeah look I mean I'm a you are a fan of what he said is that somehow these these elites, they somehow inverted history. So now they believe that it is not censorship that is the favorite tool of fascist tyrants and authoritarians even though every fascist and death spot in history use. Censorship is a key means for maintaining power, but they instead believe that it is free speech, free discourse and free thought that are the instruments of oppression. So that is what it is about. But but the the irony is that these. Elites now believe in the use of authoritarian tactics to preserve their cultural power. That's that's the battle that I think they're conflating harassment on a platform or hearing opinions they don't like with with, you know, like actual censorship. There's going to be harassment, sadly, in the world, and you can build tools to mitigate that. I mean, one of the things I don't understand, you know, I don't know if, you know this feature they added last year or so where you could say only your followers can reply. You know all these people who 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. OK. Lots more to come on this topic. I want to just get fired. Prediction topic for us. Wow. Well, I mean it. It it it's it is the perfect topic for us because you have freedom of speech, you have markets, you have governance. I mean, it's just everything. Entrepreneurship. I just want to end with, you know, we're here at 30 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 who's running the company in 30 days? Sacks, your first. Here's what's going to happen. This goes back to my tinfoil theory. I think one of two things is going to happen. OK, first of all, Elon is going to be thwarted by these folks. He's not going to get control of this company. They're the vested interest in stopping him by the board, by the new CEO, and by the corporate media and and and the political elites is too great. They will find a way to stop him, OK? And one of two things is going to happen. Either the poison pill will win and Twitter stock will be down in the dumps. 30 days from now. It'll be the same price it was when you're 35. Around that price, it's gonna be back in the dumps into chammas point. All these board members are going to be sued, justifiably so, because they did not pursue the best deal of the company. Or there's one other possibility. That they will find a buyer for Twitter and that the the way they will defeat Elon will be to find another buyer. You know, the same or 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 I'm telling you, I think that if Google were the company to step up, the administration would ultimately support that deal rather than Elon getting the company. And I think they would leave the con to stand down. In that instance, let it go through. OK, Lena con, you have. Now we will find out and I'll tell you, in 30 days, we will find out how rigged this game is and how deep the corruption goes because they will do anything to stop Elon from acquiring this company, even if it means violating their fiduciary duty or violating antitrust law. OK, there, you got it. Alex Jones position. Let's go freeberg. I mean, I am not at all the majority case in 30 days. Rhetorical as sacks, I don't think that this is really a first part. Sacks. Yeah. Protect. I think that. I think that we have a board of rational actors. I really do. I think that they're going to do what they think is in the best interests of shareholders in terms of price per share. I think that's how they're going to operate. They're all super smart, super ethical, high integrity people on that board. Right now, what? I like to see Elon own and operate Twitter personally. Yes, I would. Why? Well, I think he's gonna be a better operator and he's going to make that product better. I think he's make the business better. I think it's going to be better. He's going to, he's going to have a much more rational view on moderation that I think has been lost over the last couple of years. And I think he'll innovate in ways that we haven't seen in that business in many years. So I I'd be excited for him to own that business as a user of Twitter. That's awesome. But I don't think that I think the board is going to actually going to try and find the best price. They're going to reject his offer. I don't think he's going to up the offer significantly to the point. To get it done, they're going to go out and run a long strategic process. Three months from now, we're still gonna be running that process. That process is not going to be done. No one's going to have a real answer. You're going to trail off and do something else and this whole thing will kind of fade into the school, be trading where in three months, 35 bucks a share, 37 bucks a share, what is the majority case here? 30 days, 90 days from now. I think the the 30 days is we're kind of kind of still be here. I don't think much is gonna get figured out in the next 30 days. Yeah, in the next 90 days, I don't think you're gonna see a better offer. I don't think anybody wants to buy this dumpster fire. Because you have to understand, this dumpster fire is twofold, right? On the one hand, you have a whole user usage bot spam harassment problem, and then you have an internal you know. Issue around culture and monetization and all of this other stuff. And so, you know, you have to be really prepared to step in and deal with both of these two issues in a really definitive way. I think that that I'm not sure that corporate boards and companies and CEOs have the stomach for all of that. So I don't think there's a better bidder. But I think within 90 days. They're gonna probably first try to reject it. I'm not sure that that's in the best fiduciary interest of shareholders. In fact, I don't think it is. And I think to reject it would be more. A sign of ego than a sign of logic. And then I think they are going to get sued and they're going to be embroiled in lawsuits for years. So no sale happens. The stock languishes again. Stalemate. Disaster. Well, I think by saying it, look, I mean, if you look at the stock, like a simple stock market analyst would say, whenever there's a merger announced, right, I'd like X price, right. Like look at Microsoft and Activision. That's a better example. You know, Microsoft announced that the stock was at like, you know, $5758 a share. Microsoft says we're going to buy Activision. I think it is for 95. Well, there's a share, right? And if you notice the stock hasn't gone to 95 now typically merger ARB, merger arbitrage. What happens is that the stock goes to one or two dollars of the acquisition price right away almost immediately or it goes to within 5 or $10 or five or 10% and then it bleeds towards the and then a price has the deal gets closer to certainty. So when there's a big gap, what the market is voting is that the deal is not going to happen. And so when you look at the gap, Microsoft, Activision, it kind of says it's going to take a long time and there's a risk that it doesn't happen. Similarly, if you look at this Twitter thing, why didn't it go to 53 bucks a share? It's because a lot of people think that the board's not going to do the right thing. They agreed. The fix is in. That's so conspiratorial. Exactly. Do you listen to Alex Jones? The fix is happening in plain sight. Freeburg Jamacha said it. Why is the price for $54.00? Listen when when a deal is going to go through, the price goes right up to like below that price, the price is well below. The reason the price isn't going up is there is no buyer who wants this asset. It's going to be years to clean it up. And no, Jason, Jason, I don't think there's you should hire who wants it, even if you thought that there was another buyer that was gonna come at a higher price the the the money. Good thing. To do is for people to basically buy that equity to basically bleed into the acquisition process. I got all that, yeah. And so the fact, the fact that that that it didn't move at all in my opinion is a concerted belief that the board is going to reject the offer got even if there was another offer. And and what they didn't want to do is buy the stock at 50, have the thing all of a sudden get announced. As you know we're not going to take it. Elon dumps his shares. All the people that bought the Socket 50 hoping it'll go to 54 would all of a sudden. Lose a lot of money because it's would instead be a 34. So the fact that the stock basically didn't move is essentially the market's way of voting. This is a head fake. We you should take the offer. The board's not going to and the stock is going to tank back to its other it's its original price. My prediction is the. Board tries to fight it, stock collapses, nobody thinks it's going to get done. Elon lowers his offer and he wins it by the end of the year. And gives them a lower offer you didn't like. Always with the optimal we're going 49. That's very Michael Corleone. Yeah. Now offers 49 and it goes down to dollars every quarter until you guys acquiesce the end. It's trading AT30I lower my offer, Jason, if you want to, if you want to just finish with this little code of the, the, the Revlon story. It was actually kind of cool forstmann little comes in to try to basically give like a white Knight bid and what Ronald Perlman did was basically say, I'm just going to, you know, top tick. Every bid he he was pretty baller. He's like, I'm gonna top **** every bit. So Forsman would be at 51 and then you know, Perlman would be at 5150. 5455 you know, and and so he was poked and he exhausted Forsman little and eventually they're just threw their hands up. They said we can't we can't do this anymore. I want to. I want to make a couple of movie recommendations real quick because I I tweeted a couple of things that get to the gate. There's Barbarians at the gate in Wall Street and you know I tweet these things and they get no like. So I think people just don't watch old movies came out. They came out in the 1980s. Wall Street Movie Club is one of the all time great movies probably the best movie of business has ever been made. Oliver saying Wall Street. Yes, Wall Street is pretty good. I really like margin call, but yeah, great. Barbarians at the gate was better but better book. Yeah, it was. It was a TV movie with James Garner. It was good. I you know, it's worth watching. The book is excellent. The book is next level. I gotta go eat lunch, everybody. Love you, bestie. Love you guys. Bye. Bye. Back at you. Hey, everybody, we decided to split this epic episode into two parts, 1/2 parts, so we can get you all the Elon Twitter discussion out as soon as possible for your Friday night viewing pleasure. Stay tuned for episodes 76.5 this Part 2 coming out in just a few hours. We're going to talk about the global food crisis, China's plan for food storage, geopolitics, including the French election, and we got a bunch of all in summit talk. Everything is heating up, so stick with us. Let your winners ride Rain Man David Sasso. We open sources to the fans and they've just gone crazy with it. Why? Best place? My dog's driveway. Oh man. We should all just get a room and just have one big huge **** because they're all kinds of useless. It's like this, like sexual tension that they just need to release stuff out there. Beat, beat. See what we need to get murky.