E76: Elon vs. Twitter

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 Follow the besties: https://twitter.com/chamath https://linktr.ee/calacanis https://twitter.com/DavidSacks https://twitter.com/friedberg Follow the pod: https://twitter.com/theallinpod https://linktr.ee/allinpodcast Intro Music Credit: https://rb.gy/tppkzl https://twitter.com/yung_spielburg Intro Video Credit: https://twitter.com/TheZachEffect Referenced in the show: https://twitter.com/elonmusk/status/1514564966564651008 https://www.prnewswire.com/news-releases/twitter-adopts-limited-duration-shareholder-rights-plan-enabling-all-shareholders-to-realize-full-value-of-company-301526627.html https://en.wikipedia.org/wiki/Revlon,_Inc._v._MacAndrews_%26_Forbes_Holdings,_Inc. https://www.sec.gov/Archives/edgar/data/0001418091/000110465922045641/tm2212748d1_sc13da.htm https://www.google.com/finance/quote/TWTR:NYSE https://twitter.com/DefiantLs/status/1514738236207337477 https://twitter.com/jeffjarvis/status/1514578609754812419 https://twitter.com/maxboot/status/1514570168730636290 https://www.google.com/finance/quote/SPY:NYSEARCA https://www.google.com/finance/quote/TSLA:NASDAQ https://twitter.com/DefiantLs/status/1514738236207337477 https://twitter.com/auronmacintyre/status/1514653963408318474 https://www.google.com/finance/quote/ATVI:NASDAQ

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00David Sacks?

  You got like moisturizer all over your face. Are you moisturizing?

• 0:03Jason Calacanis?

  I am. My skin is so dry. I just got over having food poisoning and I'm like, I dehydrated. Hold on, let me get this off camera off.

• 0:10David Sacks?

  Look at this guy. You got makeup on?

• 0:12Jason Calacanis?

  It's not makeup. It's moisturizer dipshit.

• 0:14David Sacks?

  This is bad.

• 0:15Jason Calacanis?

  Reason you look like the fucking Crypt Keeper and I look schvai and young and schwelt. Cause I do a little skincare routine. Okay. Give me a fucking break.

• 0:22David Sacks?

  Look at him. He turned off his camera because he's embarrassed about whatever he's doing.

• 0:25Jason Calacanis?

  I'm not embarrassed. I just don't need you telling me that.

• 0:29Jason Calacanis?

  Sax isn't in a fucking good mood. What? Just a lot of up 15 cents? Why are you so fucking happy dummy?

• 0:34David Sacks?

  Well, the markets are closed today. It's Good Friday. So my stock portfolio can't be down because the markets are closed.

• 0:39Jason Calacanis?

  Thank Jesus. Praise Jesus.

• 0:41David Sacks?

  Yeah, it's a Good Friday. If the markets are closed, my portfolio can't go down anymore.

• 0:45Jason Calacanis?

  It's truly a Good Friday. Your portfolio will rise again.

• 0:48David Sacks?

  It needs to be resurrected.

• 1:07Jason Calacanis?

  Nowadays, he works in DNA, but in the nineties, 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 Friedberg. Welcome.

• 1:24David Sacks?

  I have never done drugs, just for the record, but go on.

• 1:27Jason Calacanis?

  No, of course not. Of course, none of your behavioral problems in high school had to do.

• 1:31David Sacks?

  Yeah, neither has Jason.

• 1:33Jason Calacanis?

  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 Sax.

• 1:46David Sacks?

  All right. Thank you.

• 1:46Jason Calacanis?

  You're welcome, Dan. All right. Coming around the bend. That timepiece, what does it do? It reminds him of how much more money he has than you. Sweater is worth six times. Flora Piana is above his line. Your supervillain with that 1985 Sasakaya, he be chilling.

• 2:02David Sacks?

  There it is.

• 2:03Jason Calacanis?

  He loves Sacks just like junkies love crack.

• 2:07Jason Calacanis?

  He's your dictator, Chamath Palihapiti.

• 2:10Chamath Palihapitiya?

  That works.

• 2:11Jason Calacanis?

  I'm like becoming the Eminem of intros. I mean, I'm, I'm rhyming shit.

• 2:15Chamath Palihapitiya?

  It's really solid, bro. I gotta say.

• 2:17Jason Calacanis?

  I'm work, I'm workshopping it. A shout out to Nick and one person on Twitter of a hundred gave anything.

• 2:23Chamath Palihapitiya?

  I'm moving into my spring sweater season.

• 2:25Jason Calacanis?

  Hmm.

• 2:26Chamath Palihapitiya?

  My spring sweater collection.

• 2:27Jason Calacanis?

  Oh, wait, hold on a second. I just got a call. Oh yeah. Confirm me. Nobody gives a fuck.

• 2:34Jason Calacanis?

  Fucking Christ. He's the king of the inane.

• 2:39Chamath Palihapitiya?

  I don't think it's inane at all.

• 2:40Jason Calacanis?

  This matters to exactly one person.

• 2:42Chamath Palihapitiya?

  No.

• 2:43Jason Calacanis?

  The person selling you the sweaters.

• 2:44Chamath Palihapitiya?

  No, 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.

• 2:50Jason Calacanis?

  I think a lot more who hate it. Uh, let's get to all the news. So much news going on.

• 2:57Chamath Palihapitiya?

  All the news. Where should we start, Jason, on a Friday afternoon?

• 3:00Jason Calacanis?

  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.

• 3:11David Sacks?

  There's only one issue.

• 3:13Jason Calacanis?

  Elon put in a bid to buy Twitter outright on Thursday and take the company private in a deal worth $43 billion. Uh, the most breaking news when we're taping this on Fridays at 11 a.m. when we typically tape this, uh, is that the board of directors, you know, the professional board of directors.

• 3:33Chamath Palihapitiya?

  Has decided they would like to get personally sued.

• 3:35Jason Calacanis?

  I mean, this is the most insane thing. I woke up and read this and I was like, okay, they're creating a poison pin, I'm sorry, a poison pill that's going to give Twitter's existing shareholders the ability to buy more shares if Elon hits 15% of the company at a discount. Chamath, explain 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 in this, whatever, I don't know if this is the seventh or eighth inning of this saga, or it's the second, uh, but where do you think we are in this saga? And then what happens on Monday? And describe a poison pill.

• 4:11Chamath Palihapitiya?

  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 control. 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

• 4:55Chamath Palihapitiya?

  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%. Yeah. 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 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 McCandrie and Forbes.

• 5:40Chamath Palihapitiya?

  And McCandrie and Forbes was the holding company of this very prolific dealmaker in the 70s, 80s, 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 Ronald Perlman did was sue Revlon, which went to Delaware court.

• 6:25Chamath Palihapitiya?

  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.

• 6:37Chamath Palihapitiya?

  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, et cetera, et cetera. 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.

• 7:17Chamath Palihapitiya?

  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 forty-some-odd dollars, a chance to basically get, you know, 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

• 8:02Chamath Palihapitiya?

  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 complicated.

• 8:11Jason Calacanis?

  Okay, on that note of personal liability, you have director's insurance, so how can that pierce through?

• 8:17Chamath Palihapitiya?

  Doesn't cover it, doesn't cover it.

• 8:18Jason Calacanis?

  Have there been examples of this happening?

• 8:20Chamath Palihapitiya?

  Yeah, DNO insurance is kind of like, DNO insurance is their director and officer insurance is a layer of protection that we all have as public company directors. We actually also have it as private company directors.

• 8:32Jason Calacanis?

  Private company, sure, yeah.

• 8:33Chamath Palihapitiya?

  Yeah. But 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 dollars of equity value that's going to either get created for existing shareholders or get taken away. And typically, what courts will do is that they will look at the amount of money and they will start to think about... You know, 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 DNO insurance will cover.

• 9:13Jason Calacanis?

  So if a lawsuit did happen in Schumacher, you have to find damages. So if the board found a better offer, great. But if this thing goes down on Monday, Elon sells his shares and it goes down to 30, now you have the opposite effect. Go ahead, Freebird.

• 9:27David Friedberg?

  So I'll say two things. One is, in all these cases, by the way, the board is indemnified by the company. So the individual board members, I don't know if there's ever been a point in history when an individual board member's 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 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.

• 10:11David Friedberg?

  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.

• 10:38Jason Calacanis?

  Could be something on the product roadmap, right?

• 10:39David Friedberg?

  This is the complicated point. It's not just about the current share price. And there was a history in the 80s and 90s, early 90s, when stocks would drop tremendously for market volatility reasons or various, 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

• 11:22David Friedberg?

  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, et cetera, 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 we've all experienced. And then Elon's 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, 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,

• 12:05David Friedberg?

  given where they think the company's headed and where the stock price will, will eventually get to.

• 12:08Jason Calacanis?

  All right, going to you, Sax, 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 CEO.

• 12:21David Sacks?

  Yeah, I'm not, I'm not going to suspend my disbelief.

• 12:23Jason Calacanis?

  Go ahead, Sax.

• 12:24David Sacks?

  Let me make the case for the clear cut, for the clear cut case here.

• 12:27David Friedberg?

  It's just, sorry, let me just say something. He could be better at running this company.

• 12:30Jason Calacanis?

  Could he?

• 12:31David Friedberg?

  Okay, he will be better, Jason, but the shareholders don't benefit from that. Cause he buys the whole company for 50.

• 12:36Jason Calacanis?

  Of course they do.

• 12:37David Sacks?

  Well, hold on. Yeah.

• 12:38David Friedberg?

  They're getting $54 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 of cash, I don't care if Elon does a better job running Twitter down the road, because I have no interest.

• 12:52Jason Calacanis?

  Suddenly, one fact check on that, one fact check on that. He said he wants to bring along as many of the shareholders as possible.

• 12:57David Friedberg?

  J Cal, 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 of cash for my shares and give up all the upside.

• 13:08Chamath Palihapitiya?

  Sax looks like he's gonna explode.

• 13:09David Sacks?

  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. Okay, they appoint agents, managers, to run the company for them. But those managers can be conflicted. They have an incentive, not just to get the highest share price for the 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,

• 13:51David Sacks?

  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 fiduciary duty because they're looking out for themselves. Parag 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 management of the company. If I'm unable to buy the whole thing and take it private, I will dump all my shares. It's all or nothing for him. So Parag is interested in preserving his job. If Elon wins this battle, Parag is gonna have the shortest executive career since that pope who got poisoned, okay, to

• 14:35David Sacks?

  borrow a line from Wall Street. So he is incentivized to fight this thing, whether it's in the interest of shareholders or not. Now.

• 14:43Chamath Palihapitiya?

  What do you think the incentives of the board are?

• 14:45David Sacks?

  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.

• 15:13David Friedberg?

  If you look at the wealth of the people on Twitter's board, and we know all the people on Twitter's board, they're well Is significantly greater than whether Twitter stock sells for sixty or seventy. 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, you know, look, maybe there's a

• 15:34David Sacks?

  They're conflicted. They're conflicted. It's got nothing to do with integrity. The fact of the matter is

• 15:38David Friedberg?

  But you could say the same about any board, Sax, that it's

• 15:41David Sacks?

  No, because it's different. Listen, when we're on a board, okay, because 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.

• 15:55Jason Calacanis?

  You have massive skin in the game.

• 15:57David Sacks?

  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 a bunch of different boards.

• 16:09Jason Calacanis?

  You think they're motivated by the influence of being a Twitter board member, at being at the nexus of power?

• 16:14David Sacks?

  Why do they serve on these boards?

• 16:16Jason Calacanis?

  And that is what this is shaping up to be, is a nexus of power and who controls the power.

• 16:18David Sacks?

  None of them own much of Twitter. None of them own much of Twitter.

• 16:21David Friedberg?

  I do a hundred percent agree with Sax. I've always believed, what I think Carl Icahn said, or whoever it was, that the board should be represented by the biggest shareholders, 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 on the back, it certainly, generally speaking, leads to non-founder led companies ultimately dying. Because there is no motivation and incentive and drive from anyone.

• 16:51Chamath Palihapitiya?

  Let me take the other side partially. I think you're mostly right. I would never join a public company board that I did not own a significant piece of.

• 17:01David Friedberg?

  Right.

• 17:01Chamath Palihapitiya?

  And I have never.

• 17:03David Friedberg?

  Right.

• 17:03Chamath Palihapitiya?

  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 50/50 split between the biggest shareholders

• 17:48Chamath Palihapitiya?

  and people who are very much experts in a handful of things. And I just want to be specific. In a public 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 own a large piece of the company, but they're going to do a really good job of managing those things. That minimizes risk

• 18:30Chamath Palihapitiya?

  for the business so that then the rest of the board, which are the large shareholders, can really use their influence and strategic understanding of the business to build a huge equity value. When those things come together, you have great outcomes. But I really agree with you. If you stack the board, and you know, 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 on what's called overboarding, right? Where these distinguished folks will pick up five, six, seven boards. All of a sudden, that's the fastest way to make three, four, five, six million dollars a year.

• 19:12Chamath Palihapitiya?

  How can you sit on five or six company, public company boards? It's impossible and add any value.

• 19:16David Sacks?

  Exactly. And do you think, do you think those people get appointed to boards by standing up to the CEO?

• 19:21Chamath Palihapitiya?

  No, the opposite.

• 19:22David Sacks?

  They're there to be a safe vote for the CEO.

• 19:25David Friedberg?

  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 base disperses? So, you know, in Europe and Asia, many companies go public, families own them for a very long period of time, as you guys know. 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?

• 20:07David Friedberg?

  Given that there isn't concentrated ownership in public companies, generally mature public companies in the US like Twitter. The largest owner is Vanguard with 5 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 could be placed and better suited here?

• 20:26David Sacks?

  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.

• 20:35David Friedberg?

  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 going to do with it, it's their thing, but are you getting a fair price is it?

• 20:44David Sacks?

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

• 20:51David Friedberg?

  We all agree, but that's not about the shareholder sex. Like, I agree with you. I think Elon should own and run Twitter.

• 20:56David Sacks?

  Well, let's evaluate this poison pill for a second. Okay, 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.

• 21:09Chamath Palihapitiya?

  54%.

• 21:10David Sacks?

  54% is like a 38%.

• 21:11David Friedberg?

  But a 40% discount.

• 21:13David Sacks?

  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. Okay. So he's made them a good offer. Okay, now, I think it'd be acceptable for the board to say, okay, this offer is attractive, but we need to shop this. We're going to run a process and we're going to see who else is out there. And if there's nobody better, then we're, you know, why wouldn't we take this?

• 21:37David Friedberg?

  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 company's stock price will get above that level. They have the, they have the ability and the right to do that and the responsibility to do that as a board. This happens all the time.

• 21:55Chamath Palihapitiya?

  The problem is...

• 21:56David Friedberg?

  And the board can look at the deal and they can say, you know what? We believe that this business in the future is going to be worth a lot more than what we're being offered for cash today.

• 22:04Chamath Palihapitiya?

  Right, so they have some inside information. Catch him off. The problem with that argument is that this is what activist firms use all the time in reverse.

• 22:15Chamath Palihapitiya?

  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 tenure 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 status games. And when status games ultimately play out over years, they either play out in the stock price one, one way or the other. And in this case, what's true is that this is a languishing stock

• 22:58Chamath Palihapitiya?

  that has largely been going sideways, independent of anything that's been happening.

• 23:03David Friedberg?

  And what about the fact, Chamath, that, that less than 90 days ago, it was trading at $70 a share?

• 23:07Jason Calacanis?

  You mean during the COVID bump? When everybody was betting stocks? I mean, let's look at the history of Friedberg. It was $69.

• 23:14David Friedberg?

  Guys, just remember, I'm not arguing.

• 23:17Jason Calacanis?

  You have to give some context. January 3rd, 2014, the stock was trading at $69. The fact that it got a ridiculous bump like the entire market did during the Robin Hood stonks, you know, heyday during COVID means nothing.

• 23:33David Sacks?

  Right. That was market beta, not their performance.

• 23:36Jason Calacanis?

  Exactly.

• 23:37Chamath Palihapitiya?

  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 Twitter instead was not a technology company, but a pharma company. 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 Sax just said is more true in this case.

• 24:20Chamath Palihapitiya?

  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 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.

• 25:02Chamath Palihapitiya?

  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 interested. The people for whom this asset is strategic, Apple, Facebook, Google, ByteDance, Amazon could never get it done. Nina Khan, no brno.

• 25:34David Sacks?

  I think that's probably right, Chamath, but there is a chance that they do get a higher bid.

• 25:38Chamath Palihapitiya?

  I just want to finish. From who? So, hold on, just let me finish. Okay, I'm going to finish, Chamath, yeah. And then Sax, who? 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, Friedberg, is if there is this magical plan to shoot rainbows out their ass, 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 and 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 anybody? I heard Comcast. We know that big tech can't do it because of Nina Khan, and then we'll go on to the

• 26:23Chamath Palihapitiya?

  next topic, the next nuance here. Sax, do you have anybody?

• 26:28Jason Calacanis?

  A financial player, anybody who is a dark horse in your mind, somebody, you know?

• 26:33David Friedberg?

  I think it could be Disney. Jack is on the board of Disney. There's a lot of relationships. Sorry, go ahead.

• 26:38Jason Calacanis?

  They tried to buy it. Bob Iger said he bailed on it.

• 26:40David Sacks?

  Listen, I think there's a lot of companies that could be interested in Twitter, and I think you create the period to shop it, to see. And by the way, listen,

• 26:48Jason Calacanis?

  Name one, Sax.

• 26:49David 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.

• 27:05Jason Calacanis?

  Wait a second.

• 27:05David Sacks?

  So I think that I think they'll put Lena Khan on pause to allow Google to buy this company if that's what it comes down to.

• 27:12Jason Calacanis?

  You're kidding me. Your conspiracy theory is that Biden's gonna come at a halt on a second.

• 27:16David Friedberg?

  Will you take 100 to 1 odds against that?

• 27:18David Sacks?

  I'm saying if it comes down to it.

• 27:20Jason Calacanis?

  Well, no way on the planet earth. Biden's gonna whisper in Lena Khan's ear, put your thumb on the scale and let Google buy this thing.

• 27:27David Sacks?

  I'm just saying.

• 27:28Jason Calacanis?

  The Dems can own it, the libs can still own Trump.

• 27:31David Sacks?

  If it was a choice, if it was a choice between.

• 27:33Chamath Palihapitiya?

  What David's saying is my enemy's enemy is my friend. And so instead of having Elon's stated goal, I guess what David is saying is instead of having Elon's 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.

• 27:55David Sacks?

  No question about it.

• 27:56Jason Calacanis?

  Biden would tell Lena Khan to put her thumb on the scale? Chumon, you believe that?

• 27:59David Sacks?

  It's the lesser of two evils.

• 28:01Jason Calacanis?

  You believe that conspiracy theory?

• 28:02David Sacks?

  From their point of view.

• 28:03Chamath Palihapitiya?

  I do not personally, but I'm just trying to explain.

• 28:05David Friedberg?

  This, I feel like I'm on the AM radio, but go on, yeah.

• 28:10David Sacks?

  Listen.

• 28:10Chamath Palihapitiya?

  Yeah, where's my tin?

• 28:11David Sacks?

  What is this all about?

• 28:12Chamath Palihapitiya?

  Where's my tin foil hat?

• 28:13David Friedberg?

  Like, and by the way, I just want, I just, just to go back.

• 28:16David Sacks?

  What is this all about?

• 28:16David Friedberg?

  I just sent you guys, hold on one second, I just sent you guys the revenue chart for Twitter. It may not be that impressive relative to enterprise software companies and others, but I, and I want to be really clear, I am not arguing against this deal. I'm trying to give you guys the perspectives that we all have a really kind of honest dialogue about this. Why this board may actually stand on their own two feet. And win with shareholders by saying, you know what? Look, our revenue's 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 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 and the progress we've been seeing.

• 29:00David Friedberg?

  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 stock's 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.

• 29:21David Sacks?

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

• 29:33David Friedberg?

  You're right, by the way.

• 29:34David Sacks?

  That's the problem with it.

• 29:35David Friedberg?

  Okay, agreed.

• 29:36David Sacks?

  And particularly in this case, we have to look at the track record of this management team, which barely exists, but also this culture at Twitter, okay? 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...

• 29:59David Friedberg?

  Oh no, that's a reoccurring monthly thing. They have a day of rest.

• 30:02Jason Calacanis?

  No, they don't. Do they really?

• 30:03David Sacks?

  The employees were so stressed out. The employees were so stressed out, they told them to stay at home and take it easy, okay? This is, this is a weak...

• 30:11David Friedberg?

  You don't know the emotional labor it takes to deal with this.

• 30:15David Sacks?

  This team is weak, okay? And it's soft, okay?

• 30:20David Friedberg?

  The word plays in weak.

• 30:21David Sacks?

  And Elon would give the whole company an enema and fix this thing. And that is why they don't want him taking over.

• 30:27David Friedberg?

  Yeah, but you are 100% right, but that's not the question at hand.

• 30:31David Sacks?

  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, okay? But now, let me go, wait, wait, 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 for 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 canceled, they know why they were taken down. Is that algorithmic?

• 31:15David Sacks?

  Was that a human intervention? This is what it's about for Elon. 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, uh, 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 Musk's attempt to buy Twitter represents a chilling new threat. Billionaire trolls taking over social media. This is one problem. Back in 2013, Business Insider's headline was billionaire Jeff Bezos washed in 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.

• 32:01David Sacks?

  When it's a billionaire supporting free speech, they oppose it. That's what's going on. You had Jeff Jarvis with this insane-

• 32:07Jason Calacanis?

  Professor Jeff Jarvis?

• 32:08David Sacks?

  Yes. 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 re-institution, the restoration of free speech is somehow like the, uh, 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, i.e. 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.

• 32:47Jason Calacanis?

  This is 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, David.

• 32:54David Friedberg?

  By the way, this is your bias in evaluating this deal. I want to point that out. You, you talked about the board- But you do have a bias on, and that's not really the question at hand. The question at hand is $54 the fair price to pay for this company.

• 33:07Jason Calacanis?

  I know, but it is also about free speech. There is another issue here at its core.

• 33:11David Friedberg?

  That's not, that's not that, sorry.

• 33:12Jason Calacanis?

  I agree. It's not about the deal, but that is why Elon's buying the company.

• 33:16David Friedberg?

  I agree. I agree. I agree.

• 33:17Jason Calacanis?

  He's not doing it for profit.

• 33:18David Friedberg?

  I'm just pointing out that 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 do it.

• 33:27Chamath Palihapitiya?

  I want to be, I want to be very clear. Couple of things. First of all, the stock is basically the same price it was in December of 2013.

• 33:35David Friedberg?

  Right, right.

• 33:37Jason Calacanis?

  So what happened in the market during that time?

• 33:40Chamath Palihapitiya?

  It went absolutely up and to the right in a violent manner.

• 33:43David Friedberg?

  Right.

• 33:44Jason Calacanis?

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

• 33:50Chamath Palihapitiya?

  So I'm just saying, that's just an objective fact that we have to keep in mind.

• 33:53David Friedberg?

  Yeah, that's true.

• 33:54Chamath Palihapitiya?

  Whatever has happened has collectively not worked. And it is, it is systematic, meaning the underperformance is not a quarter. It's not in a month. But whatever has happened here collectively inside this business has not been working for nearly a decade. Okay. So just getting all the emotion out, that's a fact.

• 34:13David Friedberg?

  Right.

• 34:13Chamath Palihapitiya?

  Okay. 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 a horrific rate. Which if you look at how the S and P is compounded since 2013 versus now, I mean, my gosh, if you had done a spread trade of long the S and P and short Twitter, you would have made a fortune.

• 34:34Jason Calacanis?

  How about long Tesla, short Twitter?

• 34:36Chamath Palihapitiya?

  Well, I'm just trying to give the general market. No, I'm just trying to give you the general market math, right? Forget any individual stock.

• 34:42David Sacks?

  Right. And look, Friedberg, 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. Okay. 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. It's going to be caused the the board members on this country club, they call a board, their interest is to stay on that board, Parag's interest to stay as CEO, and all the elite observers in the media, all the people denouncing Twitter.

• 35:22David Friedberg?

  I'm gonna give you guys some numbers.

• 35:23David Sacks?

  Want censorship to remain in place. That is what's going on.

• 35:26David Friedberg?

  Give me one second. I want to ask one question. Sax, you have a lot of Bitcoin?

• 35:30David Sacks?

  A little bit, some.

• 35:32David Friedberg?

  Bitcoin's trading like forty thousand. If I said I'm gonna buy out all your Bitcoin for forty five thousand, would you take it?

• 35:40David Sacks?

  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 no Here's the difference. There's no principal agent problem in that context.

• 35:51David Friedberg?

  I know.

• 35:52David Sacks?

  It's a fully decentralized currency.

• 35:54David Friedberg?

  You have a point of view on Bitcoin. No, forget about the structure. I'm coming to you and I'm saying, hey, Sax, I want to buy all your Bitcoin for forty five thousand. What's your answer? It's trading at forty.

• 36:02David Sacks?

  That's not that's not a share. That's not a share of stock.

• 36:05Chamath Palihapitiya?

  So then put it to a vote.

• 36:06David Friedberg?

  Yeah, I'm trading.

• 36:07Chamath Palihapitiya?

  Then put it to a vote.

• 36:08David Friedberg?

  Right.

• 36:09Chamath Palihapitiya?

  Let every single shareholder decide, then put it to a vote and we'll see.

• 36:12David Sacks?

  Yeah. And by the way, Friedberg, there's no limits on your ability to go on the open market and buy Bitcoin. So if you do want to try and acquire a hundred percent of Bitcoin, go on the open market and acquire it.

• 36:23David Friedberg?

  There are people trying to build big positions.

• 36:25David Sacks?

  Yeah, exactly. So go do that. But there are huge limits.

• 36:28David Friedberg?

  I just want

• 36:29David Sacks?

  There are, 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 with this poison pill, now this poison pill, they've stopped it.

• 36:38David Friedberg?

  Do you agree with the poison pill, Friedberg? See, J Cal, hang on. I want to 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 sixty percent 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 there 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.

• 37:17Chamath Palihapitiya?

  Okay.

• 37:18David Friedberg?

  Meetings with the board. This is what they're telling you.

• 37:19Chamath Palihapitiya?

  I think basically.

• 37:20David Friedberg?

  And 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%.

• 37:29Chamath Palihapitiya?

  Right.

• 37:29David Friedberg?

  That's how it works.

• 37:30Chamath Palihapitiya?

  I think, I think what, but, but 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, um, cause we do know most of them. Um, 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.

• 38:13Chamath Palihapitiya?

  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 think.

• 38:22David Friedberg?

  Yeah.

• 38:22Chamath Palihapitiya?

  And I think it's going to create an enormous amount of backlash where, you know, there's a 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.

• 38:38David Friedberg?

  That's right. That's right.

• 38:39Chamath Palihapitiya?

  They don't necessarily have a view on Twitter.

• 38:41David Friedberg?

  They don't have a point of view on the company. Right. I agree.

• 38:43Chamath Palihapitiya?

  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.

• 39:00David Friedberg?

  I bet Jack has a really, I bet Jack is the linchpin in what's going to 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.

• 39:14David Sacks?

  Jack owns 2%, Elon owns over 9%.

• 39:16David Friedberg?

  Yeah, but my point, my, my point is I think Jack's going to be a, a big opinion setter in that board discussion.

• 39:20Chamath Palihapitiya?

  And they're, and I think they're simpatico and they're friendly, so.

• 39:24Jason Calacanis?

  Just to give you guys a number to react to here, 2021 revenue is 5 billion. They have 8,000 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, 2 million per employee. How many people, Sacks, on an operational basis, does this business actually need to run efficiently? 8,000?

• 39:56David Sacks?

  Yeah, you could fire half those people or more, there'd be absolutely no impact to the business. In fact, they'd probably run better because right now, they probably got too many meetings happening with too many people. We all know this. That company culturally has been broken for a long time.

• 40:08Jason Calacanis?

  Elon comes to you and says, "You're my guy. You did Yammer. You're in charge."

• 40:12David Friedberg?

  Would you run it, Sacks? Would you take this?

• 40:13David Sacks?

  No, no.

• 40:14Jason Calacanis?

  Of course he would.

• 40:14David Sacks?

  No, I'm a VC now, guys. Come on.

• 40:16Jason Calacanis?

  Nope, wrong. You'd take the job for 10%.

• 40:18David Sacks?

  No, I wouldn't.

• 40:19Jason Calacanis?

  You're a liar.

• 40:20David Friedberg?

  Would you take the job for 10%?

• 40:21David Sacks?

  No. I'm done operating companies. I'm sick of it.

• 40:24Jason Calacanis?

  What if, what if your funds got?

• 40:26David Sacks?

  I don't like doing real work.

• 40:28Chamath Palihapitiya?

  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.

• 40:34David Sacks?

  I'm too old.

• 40:35Chamath Palihapitiya?

  I think it was six years ago, five years ago, I did approach Twitter with another large investor, but it was more of a friendly activist thing, and David was our nominated CEO to rip that place apart.

• 40:48Jason Calacanis?

  Breaking news, Musk put it all in.

• 40:50Chamath Palihapitiya?

  But now, after that meeting, which, which was a little heated, their VP of Engineering and CTO quit the next day, I remember.

• 40:57Jason Calacanis?

  Yeah. What, just at the concept of reporting it to Sacks, they quit? They rage quit at the possibility.

• 41:04David Sacks?

  You know, startups are like the NBA. I mean, you get to a certain age, you're just, you know, you're too old. I mean.

• 41:10Jason Calacanis?

  You're the coach. You'd be Phil Jackson.

• 41:12David Sacks?

  I'm done, guys. It's flattering, but I'm done. I'm done operating. I'm so sick of all that.

• 41:16Jason Calacanis?

  Wow.

• 41:17David Friedberg?

  Sacks, who do you think?

• 41:18Jason Calacanis?

  You're going too much?

• 41:19David Sacks?

  I go on Zoom calls a couple of times a day. It's a great life.

• 41:22David Friedberg?

  Sacks, Elon can't run it. He's got a lot going on. Who do you think should be the actual CEO, the day-to-day CEO there?

• 41:26David Sacks?

  Well, I think Elon would figure, I think he would go in and figure it out. I mean, he is obviously an extremely

• 41:32Jason Calacanis?

  But who would be the guy who would be on the ground?

• 41:34David Sacks?

  Well, he's got a lot of people he can probably plug in. You know, that my understanding of the way that things work at Tesla and SpaceX is he's got some terrific young talent who he appoints to 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.

• 41:56Jason Calacanis?

  Right.

• 41:57David Sacks?

  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? Elon's got so much incredible talent on his bench. He could parachute in some amazing operators there and clean up that place. It'd be incredible.

• 42:11Jason Calacanis?

  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, 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 meshuggah going on at that company is crazy.

• 42:40David Sacks?

  Right. 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?

• 42:49Jason Calacanis?

  Yes, there'd be less harassment.

• 42:50David Sacks?

  There'd be less harassment because he'd get rid of all the bots. He'd impose an authenticity requirement.

• 42:54Jason Calacanis?

  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.

• 43:06David Sacks?

  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.

• 43:23Jason Calacanis?

  All right, we'll go to that. Let's do it.

• 43:25David Sacks?

  And this is why it's really captured the imagination of the public. There, look, what is the, if you were to sort of zoom out 30,000 foot view, the big struggle of our time politically and culturally is populist versus elitist, okay? That's the big battle that's happening. Elon is one of the rare billionaires who is sort of anti-elitist. He pokes fun at their pieties all the time. This is why they call him a troll, okay? He wants to restore free speech. Somehow, the elites are now on the side of censorship. Like Max Boot said, they believe that in order to protect democracy, they need more censorship. What they really mean is to protect their control over democracy. They need censorship. Why? Because they're greatly outnumbered. There's more populists than elitists.

• 44:09David Sacks?

  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.

• 44:23Chamath Palihapitiya?

  To your point, the Axios headline encapsulates that to a T. 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? That's journalism? I mean, this is the same guy that's, that's doing more on climate change and has been doing it two, you know, 20 years ago when it wasn't popular, and satellites. But I, I said this before. And space travel. And space travel. And, and I said this before, but I just want to say it again.

• 45:04Chamath Palihapitiya?

  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.

• 45:49Chamath Palihapitiya?

  And if he does that, that's actually a really big deal, I think, globally.

• 45:53Jason Calacanis?

  You know what that Axios headline could have said, Chamath? It could have said Elon Musk spends significant portion of his fortune to restore trust in public square by open sourcing.

• 46:03Chamath Palihapitiya?

  No, but you can't.

• 46:04Jason Calacanis?

  Open sourcing, hold on, open sourcing the API and allowing transparent moderation.

• 46:11Chamath Palihapitiya?

  No, Jason.

• 46:12Jason Calacanis?

  Because that's what he said in his TED Talk.

• 46:13Chamath Palihapitiya?

  Jason, they can't because they lose power if Elon wins and gets control of Twitter.

• 46:18David Sacks?

  Right, exactly. Look, the corporate journalists like Axios, they don't make a lot of money. What they have is some degree of status, but more importantly, they have influence. That's why they do those jobs. And the fact of the matter, and their influence is enhanced when other people don't have the right to speak. And the reason why Elon is a supervillain 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 First 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.

• 47:03David Sacks?

  If I could just, I know Jason made fun of the fact that.

• 47:05Jason Calacanis?

  Yeah, we got him, Glenn Greenwald.

• 47:06David Sacks?

  Look, I mean, I'm a Glenn Greenwald fan. I'll admit it. But what he said is that somehow these elites, they've somehow inverted history. So now they believe that it is not censorship that is the favored tool of fascist tyrants and authoritarians, even though every fascist and despot in history used censorship as 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 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's taking place right now.

• 47:44Jason Calacanis?

  I think they're conflating harassment on a platform or hearing opinions they don't like with, you know, like actual. Censorship, there's gonna 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 can say only your followers can reply. You know, all these people are complaining about harassment. I never see any of them say, my followers can reply. If they did, they would never have anybody reply who they didn't want to reply. The problem would be solved. Okay. Lots more to come on this topic. I want to just get

• 48:19David Friedberg?

  That was a long topic for us. Wow.

• 48:20Jason Calacanis?

  Well, I mean, 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, 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? Sax, you're first.

• 48:48David Sacks?

  Here's what's gonna happen. This goes back to my tinfoil theory. I think one of two things is gonna happen. Okay, first of all, Elon is gonna be thwarted by these folks. He's not gonna 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 the political elites is too great. They will find a way to stop him. Okay, and one of two things is gonna happen. Either the poison pill will win, and Twitter's stock will be down in the dumps 30 days from now. It'll be the same price it was when Elon started. Around that price, it's gonna be back in the dumps. And to Chamath' point, all these board members are gonna be sued, justifiably so, because they did not pursue

• 49:30David Sacks?

  the best deal of the company. Or, there's one other possibility, that they will find a buyer for Twitter, and that the way they will defeat Elon will be to find another buyer at, 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'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 tell Lina Khan to stand down in that instance and let it go through.

• 50:12Jason Calacanis?

  Okay, Lina Khan, you have

• 50:13David Sacks?

  And we will find out, and I'm telling 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.

• 50:28Jason Calacanis?

  Okay, there you got it, Alex Jones' position. Let's go, Friedberg.

• 50:32David Friedberg?

  I mean, I am not

• 50:34Jason Calacanis?

  What is the majority case in 30 days?

• 50:36David Friedberg?

  I'm not at all as conspiratorial as Sacks. I don't think that this is about

• 50:40Jason Calacanis?

  I agree with your first part, Sacks, yeah.

• 50:41David Friedberg?

  Protect, I think that, I think that we have a board of rational actors, I really do. I think that they're gonna do what they think is in the best interests of shareholders in terms of price per share. I think that's how they're gonna operate. They're all super smart, super ethical, high integrity people on that board. Now, would I like to see Elon own and operate Twitter? Personally, yes, I would.

• 50:59Jason Calacanis?

  Why?

• 51:00David Friedberg?

  Well, I think he's gonna be a better operator, and he's gonna make that product better. I think he's gonna make the business better. I think it's gonna be

• 51:06Jason Calacanis?

  Better product.

• 51:06David Friedberg?

  He's gonna, he's gonna 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's gonna act rationally. They're gonna try and find the best price. They're gonna reject his offer. I don't think he's gonna up the offer significantly to the point to get it, to get it done. They're gonna go out and run a long strategic process. Three months from now, we're still gonna be running that process. That process is not gonna be done. No one's gonna have a real answer. Elon's gonna trail off and do something else. And this whole thing will kind of fade into the sunset.

• 51:39Jason Calacanis?

  And stock will be trading where in three months?

• 51:40David Friedberg?

  Thirty-five bucks a share, thirty-seven bucks a share.

• 51:44Jason Calacanis?

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

• 51:49Chamath Palihapitiya?

  I think the, the thirty days is we're kinda, kind of still be here. I don't think much is gonna get figured out in the next thirty days.

• 51:56Jason Calacanis?

  Yeah.

• 51:57Chamath Palihapitiya?

  In the next ninety 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, bots, 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 ninety days, they're gonna probably first try to reject it.

• 52:42Chamath Palihapitiya?

  I'm not sure that that's in the best fiduciary interests 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.

• 52:59Jason Calacanis?

  So no sale happens, the stock languishes again, stalemate, disaster.

• 53:04Chamath Palihapitiya?

  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, at 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, fifty seven, fifty eight dollars a share. Microsoft says, we're going to buy Activision, I think it was for ninety five dollars a share, right? And if you notice, the stock hasn't gone to ninety five. 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 five or ten dollars or five or 10%, and then it bleeds towards the M and A price as the deal gets closer to certainty. So when there's a big gap, what the market is voting is that the deal's not going to happen.

• 53:50Chamath Palihapitiya?

  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 fifty three bucks a share? It's because a lot of people think that the board's not going to do the right thing.

• 54:05David Sacks?

  Agreed, the fix is in.

• 54:08Jason Calacanis?

  So conspiratorial, Sax, you obviously, do you listen to Alex Jones?

• 54:12David Sacks?

  The fix is happening in plain sight, Friedberg, Chamath just said it. Why is the price below fifty four dollars? Listen, when a deal is going to go through, the price goes right up to like below that price. The price is well below fifty four.

• 54:24Jason Calacanis?

  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.

• 54:29Chamath Palihapitiya?

  No, no, no, Jason, Jason.

• 54:30Jason Calacanis?

  I don't think there's a buyer who wants it.

• 54:32Chamath Palihapitiya?

  Even if you thought that there was another buyer that was going to come at a higher price, the money good thing to do is for people to basically buy that equity to basically bleed into the acquisition price.

• 54:44Jason Calacanis?

  No, I get all that, yeah, yeah.

• 54:45Chamath Palihapitiya?

  And so the fact that it didn't move at all, in my opinion, is a concerted belief that the board is going to reject the offer.

• 54:54Jason Calacanis?

  Got it, even if there was another offer.

• 54:56Chamath Palihapitiya?

  And what they didn't want to do is buy the stock at fifty. Have the thing all of a sudden get announced as you know, we're not going to take it. Elon dumps his shares. All the people that bought the stock at 50 hoping it'll go to 54 would all of a sudden lose a lot of money because the stock would instead be at 34. So the fact that the stock basically didn't move is essentially the market's way of voting. This is a head fake. You should take the offer. The board's not going to, and the stock's going to tank back to its original price.

• 55:26Jason Calacanis?

  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 him a lower offer. You didn't like

• 55:38David Friedberg?

  Always with the optimism.

• 55:39Jason Calacanis?

  Now we're going 49.

• 55:40David Sacks?

  That's very Michael Corleone.

• 55:42Jason Calacanis?

  Now the offer is 49 and it goes down $2 every quarter until you guys acquiesce. The end. It's trading at 30. I lower my offer.

• 55:52Chamath Palihapitiya?

  Jason, if you want to, if you want to just finish with this little quote of 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 was pretty baller. He's like, I'm going to top tick every bid. So Forstmann would be at 51. And then, you know, Perlman would be at 5150. They would go to 54, 55, you know, and so he was always and he exhausted Forstmann Little and eventually they're just threw their hands up. They said, we can't, we can't do this anymore.

• 56:26David Sacks?

  Yeah, I want to, I want to make a couple of movie recommendations real quick because I tweeted a couple of things.

• 56:30Jason Calacanis?

  Barbarians at the Gate?

• 56:31David Sacks?

  There's Barbarians at the Gate in Wall Street and you know, I tweet these things and they get no likes. I think people just don't watch old movies. These movies came out, they came out in the 1980s. Wall Street is one of the all time great movies.

• 56:42Jason Calacanis?

  All time greats.

• 56:43David Sacks?

  Probably the best movie a business has ever been made. Oliver Stone directed it.

• 56:46Jason Calacanis?

  Wall Street is, yes.

• 56:47David Sacks?

  Wall Street is.

• 56:48David Friedberg?

  Margin Call was pretty good. I really like Margin Call, but yeah, I agree.

• 56:51David Sacks?

  Barbarians at the Gate was

• 56:53Jason Calacanis?

  Better book, better book than

• 56:54David Sacks?

  Yeah, it was a TV movie with James Garner. It was good. I, you know, it's worth watching too.

• 56:58Jason Calacanis?

  The book is excellent. The book is excellent. It's next level.

• 57:01Chamath Palihapitiya?

  I gotta go eat lunch.

• 57:02Jason Calacanis?

  Everybody, love you besties.

• 57:03Chamath Palihapitiya?

  Love you guys.

• 57:03Jason Calacanis?

  Bye bye.

• 57:04David Sacks?

  Back at you.

• 57:07Jason Calacanis?

  Hey everybody, we decided to split this epic episode into two parts. One, two 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 episode 76.5, this part two, 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's heating up, so stick with us.

• 57:38Speaker 04

  We'll let your winners ride. Rain Man David Sacks.

• 57:45Speaker 04

  And instead, we open source it to the fans and they've just gone crazy with it. Love you, Wes. I'm the queen of Kewa.

• 57:58Speaker 04

  Besties are gone. That is my dog taking a piss in your driveway.

• 58:05Chamath Palihapitiya?

  Oh, man.

• 58:08Chamath Palihapitiya?

  We should all just get a room and just have one big huge orgy because they're all just, it's like this sexual tension that they just need to release somehow.

• 58:16Speaker 04

  Wet your, the, feet. Wet your, feet. We need to get merch.