Emergency Bonus Episode: Now Elon's Really Ready to Buy Twitter at $54.20

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Hi, everyone.

This is Pivot from New York Magazine and the Vox Media Podcast Network.

I'm Kara Swisher, and this is an emergency episode, Scott.

Elon has reportedly offered to proceed with a Twitter.

Elon Musk, I'm just using his first name like share, has reportedly offered to proceed with the Twitter deal at his original price of $54.20.

Our Elon trial palooza may be off, but this is a really interesting move.

So I had tweeted, as Scott had said, that I thought he was going to pay one way or the other.

So I guess he made the calculation he might as well own it, presumably.

But go ahead, Scott.

So let's look at the parties here.

There's Elon Musk, and Elon does not want to own it.

But here's the thing.

His lawyers, who are really smart people and have an obligation to their client, have told him, you're going to lose.

And in addition, not only was it going to lose, but this guy does not want to go under oath.

What happens when they ask questions about, it seems like a lot of text messages aren't in here.

For example, there's almost no text messages around the actual mechanics of the deal.

So questions like, okay,

have you had any contact with Donald Trump?

You just put out a tweet last week that feels very supportive of the Russian viewpoint.

Have you had any contact with any affiliates of Putin?

I mean, the questions would just get so uncomfortable so fast for him.

Yeah, already the texts were already problematic.

Well, yeah, but the texts were like, okay, Gail King trying to get an interview.

Yeah, but what I'm saying is from a proof point of view, the texts were problematic because he knew the bot problem.

It was proof that he knew of the bot problem.

So he was going to lose.

He was going to lose.

Okay, so he's going to lose.

And not only that, him under oath was just going to look awful.

They were going to, so much good stuff for the media and so much bad stuff for Elon Musk was going to come out.

He does not want to put his, he does not want to go under oath.

In addition, in addition, you have Twitter, whose board

is supposed to represent shareholders.

I just thought their largest shareholders are Vanguard and BlackRock.

They own about, I think, about nine and seven or 5%.

And here's the thing.

there's been some conjecture that maybe this is a strategy to move up the stock price.

That's the delta between

the $54.20 that he is supposed to, he is hermetically sealed around an agreement to acquire it for.

And what the stock trades at tomorrow might go up to 50 bucks tomorrow when they release a protection.

That he would just come to some sort of negotiated settlement for those four bucks.

But here's the thing: the Twitter board can't negotiate a settlement now that's correct because

if you're larry fink at blackrock let me ask you this do you want this board which has not draped themselves in glory keep in mind this is a board that tolerated a part-time ceo for seven years and has sent the company sideways if you're larry fink at blackrock Do you want Twitter's board to get $5, $10, $15 billion and the stock crashes?

Or do you want $54.20 and call it a day and move on?

That is correct.

So the Twitter board, they have no choice.

They can't settle.

I mean, their only issue here is they can't settle.

They have to, it's what you said you'd pay for it, and now you need to pay for it too.

That's right.

Settlement was happening no matter how.

This is a really interesting way to settle, which is you buy what you said you were going to buy.

We, none of us thought it was going to go to trial, obviously, because he would lose.

And as you were noting, all kinds of things would come out in that trial.

But one of the things the board has to be wary of is whether he's going to do it.

Whereas the money from it's got to move fast.

This thing has to move super, super fast for it to happen.

I think.

I think that's one thing.

And the second you're saying is they, at this point, the owners who are, as you said, Vanguard and just want the money that they were promised and

they literally can do nothing else but accept it.

They have no other choice.

And nor should they, because Twitter shareholders are getting a payday now or a great payday.

What would you rather have?

Say he was liable for 20 billion, a settlement for 20 billion, and Twitter's board agreed to it.

The shareholders would sweep the board out and say, no, you can't do this because here's the thing.

The stock should be at 15 to 20 bucks.

And you're going to give the first ballot Hall of Fame Poor Governance Board $15 to $20 billion with a new unproven CEO.

They're like, no, thanks.

No, thanks.

Give me my 54 bucks.

I'm done.

And he does not want to go under oath.

So guess what?

He's going to pretend.

Even the media is getting this wrong.

The media is like, Elon proposes to move forward with deal.

It's like, no, he signed an agreement.

That's correct.

And the chancery court,

Twitter called this bluff.

And the chancery court, the threat, and the algebra of deterrence is wonderful here.

This has a lot of good things.

And that is there's rule of law.

And when you're about to go down and you're guilty,

you live up to the enforcement.

You decide, oh, the chancellor is going to find, is going to force me to close.

But along the way of forcing me to close, they're going to discover a bunch of things that really reflect poorly on me.

So this thing, I think, I believe, is closing.

He's closing it fast.

It has to be fast and he's got to have the money in place.

That'll be interesting to see it because I think they should be wary of this guy.

Like if he's going to do it again and try to get out of the case or slow it down in some way, they would never could have accepted, as we've noted, a discounted offer.

They absolutely couldn't.

The next thing is two things.

Whether it finishes, which I think it has to, correct?

There's just no way at this point that he could pull another prank is what he's been doing, essentially.

Unless they come to an an agreement and Twitter's board,

they can't settle for 53 bucks at this point.

They can't.

Because the people who elect the board and

the dynamic on a board is the following.

Everybody has their say around every issue until it becomes an important issue.

And then there's one or two board members who generally hold the nexus of power, the fulcrum of power.

And usually it's the person who's the largest shareholder.

And also the chairman.

Do they want to deal with this shit?

Do they want to figure out how to put $10 billion to work with a new CEO?

Or do they want to say we lived up to our fiduciary responsibility and we got all our shareholders $54?

Yeah.

And enjoy the house.

It's leaking a little bit.

There's mold in the basement.

And best of luck to you.

Here's the keys.

Come on in.

The water's fine.

You know, everyone's always talking about if I only had Twitter in my hands, I could do better.

It's a very difficult problem.

It's underfunded.

It's under-resourced, especially compared to the others.

And even the ones who are resourced are having problems.

So it's, but it does have this thing that people like it.

He's, it's going to be very good for him.

I've always said for his other businesses, for global, if he goes to any dictator, we'll see him now.

Of course, they would before, but he has a certain amount of power.

So I think he was like, Look, I'm going to have to pay.

So I might as well own it.

But owning it is going to be like, what a house you just bought.

Tell us about this house we bought, this deal that he just got.

All right.

So let's just talk first off about some knock-on effects that no one's gotten to yet in the media, as far as I can tell.

The first is Morgan Stanley and his bankers secured $13 billion in loan commitments in a much lower interest rate environment.

And I don't know if that means they're about to take a quarter of a billion or half a billion dollar loss because they committed to funding this thing at 13 billion at interest rates that are now dramatically different.

And then Tesla shares are going to go down.

What benefit do Tesla shareholders have from now Elon Musk trying to figure out this cluster fuck?

And then also, you know what, other stocks are about to take a big hit?

True social.

The only thing they had left was the notion that Trump, Michael, on their platform, the only thing I can figure out that Elon Musk means with all this word salad and bullshit rhetoric about free speech is to put Trump back on the platform.

Oh, he said it.

No, he didn't.

He even, he didn't.

He said it directly.

He said it directly, and he's going to do it.

The old management, who has gone its way out, presumably, and a lot of employees too, was not going to bring Trump back on because why get the headache?

Just like they've already paid the price.

Elon will absolutely put him back on 100%.

What happened?

That's my point.

True Social.

I mean, it's shocking to imagine that the incredible management acumen of Devin Nunes isn't going to come through.

Well, Devin Nunes, as usual, Trump brings his loyalists in.

They're loyal to him.

And then he somehow fucks them.

And that's what's happening here.

It doesn't hurt Trump.

I think True Social and Virgin Galactic will enter into this race to the bottom to zero that's going to be really fun to watch.

Yeah.

Yeah.

But True Social gets hit really hard.

Tesla gets hit.

But the shareholders, the biggest shareholders of Twitter are like, I don't settlement.

Don't talk to me about it.

Don't talk to me about anything.

Show me my $54.20.

And Musk is trying to save some face by pretending this was his idea.

You know what this is?

There's a real silver lining here.

This is rule of law.

This is immunities kicking in and saying, we don't care.

A lot like Trump in the legal system.

He can get out of it from a public point of view, but a legal system is a little different.

He signed an agreement.

Without agreements and contracts, no houses closed, no adoption papers go through.

This is important that we signal that the United States values liberty, it values generosity, it values work, and it values rule of law.

And when you commit to buying something, you sign a contract, you have to live up to your end of the contract when the other party has lived up to theirs.

This is, in my view, a really big victory and says a lot of really wonderful things about our judicial system.

Yeah, he had to.

He was so exposed here.

He had to do this.

And you're right.

He would have been exposed in ways that he may not wanted to.

Now, underneath the drama, obviously, this will probably happen before the midterms.

He'll probably be the owner next week if this all goes through.

He will let Trump back on.

That will be a big deal.

Either a big deal because hearing Trump again could be tiresome to people, although he's been, you know, they've been quote tweeting him on the crazy stuff he says on True Social.

So we'll see the real impact.

But what do you see happening to Twitter as a consumer?

And then also employees.

It looks, I'm sure employees are headed to the doors.

I suspect Vigigati will leave.

Obviously, Parg will be leaving.

Everyone will be leaving that company.

And maybe Jack Dorsey makes it a return, him and his beard or something.

They don't want Dorsey back.

Dorsey.

Well, he might.

I don't know.

He's the thing that wouldn't leave.

But look, I mean, think about this thing, Kiara.

About 15 billion of this, I think.

So Tesla's stock has gone up.

He's got the bandwidth and the firepower to fill that equity hole, or at least most of it.

One of those things things those techs show is that a lot of people think so much of Elon and want to be so close to him.

There's more equity capital available than I had originally thought.

But even just that $13 billion in debt, that's going to go out at an interest cost of $2 to $3 billion a year.

He not only has to show up with $45 billion, unless it's a pick where you pay shares in kind, which I don't think they can do on that big a deal.

He's going to have,

he not only, it's like buying a boat.

Once you buy a boat, you're only starting the outflow of cash he's going to have to spend two to five billion dollars a year to maintain this vessel yes he is yeah and yep and also but what i will say about quote-unquote elon owning it i don't think it's as big a deal as everyone thinks The guy's a busy guy.

I think you're right.

I think he'll probably surprise everybody and appoint a competent CEO.

Yeah, I suspect.

There's a non-zero probability that after actually listening to some people, he delays putting Trump back on the platform.

We'll see.

He might, he might, he might.

He might.

It's not the end of the world.

Let me just say one of the things, and I know people have their feelings about Delon Musk, but as you saw through the test, he can text, he can be quite reasonable and very smart.

And so he's really taken some big risks.

This is an enormous one.

He's kicked up all kinds of dust, caused attention to himself.

There are ways to improve Twitter.

And let's finish talking about that.

Like, okay, so if he came to you and said, insufferable numbskull, I find that you've been right more than wrong.

What would you, you have been at Twitter at different times.

Give me, and I'll do it too, I don't know, two or three things you would do immediately with the product.

Three things.

Subscription, subscription, and subscription.

Oh, well, okay.

Based on number of users.

There is so much surplus value that everyone from Kara Swisher to Kim Kardashian gets on Twitter.

Okay.

Elon Musk

pays zero in Tesla pays almost zero in advertising.

And General Motors spends $2 billion.

And what's the difference?

The Delta?

Twitter.

No one cares what Mary Barra has to say on Twitter.

She doesn't have 90 million followers.

I doubt she has, you know, 90,000.

And there are so many corporations.

Every corporation, every influencer, anyone, any politician, anyone with over 10,000 followers should pay a small fee.

And the markets will go crazy for it because it'll be more predictable than a sub-scale ad-driven platform that's never been able to make money.

I also believe, and he won't do this and this gets everyone's hair on fire.

I think some sort of blue check or light blue check that says, I am not a bot

would be key to cleaning up the platform.

And if he goes subscription, he doesn't need to continue this roost that they have more people on the platform than they actually have.

That's correct.

That's correct.

Yeah.

Okay.

So mine are one,

you know, stop talking.

Like do, start doing, start making something because it could be, it could be a great business victory.

Everyone will go, everyone thought he couldn't do it.

And then he did.

He needs to go quiet.

The same thing I said about Charles Samurai, remember, just go quiet.

I know it's hard for you.

Stop with the right-wing.

I know, but he's got to stop.

All right, go quiet on the advice on Russia.

Go quiet on the right-wing stuff.

Just

go, like, how can we fix this?

Let me hear from everybody.

I'm just saying.

Yeah, let me hear from everybody and stop with the like ridiculous politicizing of everything.

It's just, it doesn't help him.

You know, I'm being cynical here.

It doesn't help you.

It doesn't get you where you want to go.

It doesn't make people want to.

So let me let me me just understand.

You don't think it's in his best interest to use Twitter to aid and abet an enemy?

You don't think he should channel and parrot Vladimir Putin's talking points?

You don't think he should do that?

I would agree with you.

I think he thinks what he said.

So nonetheless, look, I think he should stop.

Just stop.

Just talk about only the business, only the business, only the business.

When he does that, when he talks about SpaceX and everything else, it's just fine.

That's one.

Two, I think he's got to not be such a hair-trigger jackass to the employees, right?

There's a lot of really committed people at Twitter.

I think a lot of them will leave, but I think on some level, calling everyone an asshole doesn't really get you very far.

I think he's got to really control himself in that regard because this is a lot of money.

Even for the richest guy in the world, it's a lot of money.

And so if he really cares about

looking like a hero here in the end, and I'm talking years from now, he's got to really dial it back.

And then the last thing, and I agree with you on subscription, The last thing is to

make edit choices.

He's going to have to stop with just saying free speech, free speech.

He's got to make it a great place for people to be.

He's got to clean up this fucking city.

And that might mean some stuff people don't like.

He doesn't mind controversy.

He doesn't mind attracting scorn, everything else.

So that's a good thing.

It's, you know, Disney could never own this, but he really has to put a line in the sand of like not being caught in a daily dirge of unsafety, right?

Or racism or whatever happens to explode on the planet.

And take a little bit of a look at why TikTok is popular away from the Chinese government, away from everything else.

It's a pleasure to use.

And so I think that's one of the things that's important to think about.

That is my three things.

All right.

Final thoughts.

And I'm going to read some very funny tweets.

What do you think?

Final thoughts.

What's next in the immediate and the long term?

Well, when I moved to London, I paid cash for a house here.

And 30 days later, it was worth 20% less because the pound dropped.

I'm 20% down.

Elon shows up day one.

He's 50 to 70% down.

This thing is worth 20 bucks, not 54.

And you're right.

That will enforce some good behavior because even the wealthiest man in the world can't afford to lose $45 billion.

Right.

So I, if, again, he has not asked for my advice, I would personally keep Parague in place for a while and I would show up to the employees and elevate some and say,

you just can't

burn the village to save it

and act with a little bit more grace, be a little bit more generous.

And if in the next year he finds a great CEO or he already has someone in mind, fine, but he should just acquit himself with a,

you can't have everyone leave.

And not only that, they might just want to because they got 54 bucks or their options vest immediately.

They probably have all what's called a double trigger.

Change of ownership.

Yeah.

That's right.

A change of ownership clause.

And also

just

be, I would tone down his tweets because what might happen is, I mean, if he went under oath, I'd want to ask him, have you anywhere discussed the opportunities for Twitter to support Tesla stock with bots?

You haven't discussed that?

Those weren't part of the text that accidentally got lost?

Yeah.

So look, there's, this is going to be, there's, and not only that, the stories are just starting here.

What happens to Morgan Stanley's debt?

What's happened to, what happens to True Social?

What happens to Tesla?

What happens to

your point?

Employees, there's all sorts of knock-on effects here

that we haven't, that are still going to unfold.

Yeah.

We want the good Elon to show up.

There is a good Elon.

There is a good Elon.

I know you don't think so, but I think we want the smart one to show up.

Look,

I said at the very beginning, if he can leverage a fraction of that genius, and like you said, you have a lot, you know him better than I do.

And you have always said there's a side to him that doesn't get enough oxygen or air time where he's reasonable and thoughtful.

And I 100% believe you.

My view so far is that outside of his core interests, he brings volatility, not value.

And he has treated this thing and these people involved like a fucking kongball.

And you should see the way my great dame treats her kongball.

It is really not,

it's entertaining, but it's not nice.

Yes, yes, he doesn't have to do that.

I firmly believe he doesn't have to do this and be the bad boy.

Anyway, I'm going to finish by reading some good tweets on the topic.

Casey Newton, incredible to think how much human effort was wasted over the past few months as Elon flailed.

I read multiple profiles of the Chancery Court judge.

Well, no longer, maybe.

Gary Black, must feel great to avoid a day of deep prep and two days of ridiculous questions by Wachdell Lipton.

Elon Musk, life's too short and also too dangerous, Gary, for him.

Charlie Wurzel, we should call it Musk's Law or something dumb.

The story isn't over if there's more attention to be gained for prolonging it.

Well, let's hope he doesn't.

From Katie Natopoulos, Elon saw the Try Guys statement video and was inspired to go ahead and stick to his commitment.

Lastly, Ben Collins.

Yesterday, Elon Musk claims people disagreeing with him on Twitter about his plan to potentially cede Crimea to Russia is a bot attack with no evidence.

Today, Elon Musk buys Twitter at full purchase price.

Well, there you have it, Scott Galloway.

Yeah, this is stranger than fiction, but let me ask you this.

I don't know, I won't call you a friend, but you're a colleague of his.

If you were one of the friends that looks like a real ass after those text messages came out this week, wouldn't you be texting him, boss, you couldn't have decided this about five days ago?

They won't do that.

Well, because they're all sick of it.

I mean, I would just be,

it strikes me he has absolutely no regard for other people's reputation or time.

Yeah,

I think that he is facilitated by those people.

I think you got a real insight into that.

I actually looked up an email and I wrote him an email like, what are you doing?

Why are you doing it this way?

And so, and I wasn't trying to be his mom, but I was like,

this is going to lead to bad places.

So, I just think these people, listen, they get paid by him.

They somehow benefit from them.

And he needs to surround himself right now, at least in this case, if he wants to make this into a real business with really good people.

Now, the question is, will those good people work for him?

He has had a lot of really good people work for him.

So,

you know, he's got to, he's got to bring the excellence he brings to SpaceX and Tesla.

And there's lots of problems in Tesla, we know, but it's still an excellent product.

He's got to bring those same qualities to do this.

And if not, it's a lot of money for

a prank.

It just is a lot of money.

And you know what the hard part is about that?

Our society has decided there's certain individuals that have no limits limits to their genius, and I have found that is absolutely not true.

This is nothing but a distraction for him.

He does not understand media.

Well, maybe you could say he understands it better than most people.

He understands Twitter.

This is going to be bad, in my opinion, for all three companies, SpaceX, Tesla, and Twitter.

Wait, wait, Scott.

Breaking news, as always, when it comes to Elon.

In the time it took to record this, Twitter seems to have accepted Elon's offer, and it's hurtling towards the deal.

By the weekend, Elon Musk might own Twitter, barring any unforeseen legal circumstances.

And when it comes to Elon, there's a lot of unforeseen.

So we'll see.

When the ink is dry, that's when we'll say it's done.

But so far, right again.

I'm going to lose my blue check.

I can feel it.

Okay, Scott, that's it for this bonus episode.

People want to hear it.

We got to get it up.

We recognize this is a quickly moving story.

We'll be here to dissect all the updates on Friday, as usual.

Please read us out, Scott.

Today's emergency episode was produced by the same cast and characters that always produced our episode.

Thanks for tuning in.

We'll be back later this week on Friday for a breakdown of all things tech and business, i.e., more and more Twitter and more and more Elon.

Kara, thanks for doing this.

Lara, thanks for doing it.

Taylor, Evan, thank you for pulling this all together so quickly.

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