Flipping the Bird: Elon vs Twitter | Chief Twit | 3

0:11For most of the year, Sun Valley is a quiet mountain town in Idaho with a population of about 1 ,800 ,000 people. A picturesque slice of earth nestled in the Sawtooth National Forest. But every summer for one week in early July, the moguls aren't just on the ski slopes. Sun Valley is an annual conference run by a boutique investment bank called Allen & Co. Reporter Ed Ludlow has covered the event before for Bloomberg. The way I'd describe it is like, it's kind of like Davos, but more secret. Once a year, whether the locals want it or not, the leaders of industry arrive by private jet to live out their fantasies of being Ernest Hemingway and leave with a new fishing story and the occasional multi-billion dollar deal.

1:03It's like billionaires mountain retreat. And it's a who's who of company executives, wealthy elite, the world's richest people, influential bankers, interesting people, startup founders. With the exception of Mark Zuckerberg's Friday night karaoke party, a Sun Valley favorite turned COVID casualty, the event in 2022 was very much back to pre-pandemic form. There are just a constant stream of Allen & Co hired escorts who just ferry the world's most influential and richest between the main lodge where they have breakfasts and lunches and meet in the hallways and other sporting activities like people go and play golf.

1:51On the guest list this year were three of Twitter's most senior people. Twitter board chair Brett Taylor. CEO Parag Agrawal, and CFO Ned Siegel. Parag arrived the day before the conference began, by private jet, of course. Like everyone else at Sun Valley, Parag checked in and got his name tag. Even Rupert Murdoch wears a name tag. As Parag settled in, everyone was already buzzing about the headliner. In July of 2022, at Sun Valley, Elon Musk is the main event. Elon Musk, now just a few months away from becoming Twitter's new owner, was set to deliver the marquee address. But as the conference got underway, Elon wasn't there.

2:40He missed the first day of the conference, and the second. His absence meant that all the questions about the recently announced Twitter deal were thrown at the Twitter execs. We saw Parag Agrawal walking around, Ned Siegel walking around as well. And we called out to both of them to ask about what was going on with Twitter and if there was a risk that the deal would fall through. And neither of them, walking alone, answered any questions.

3:12On Thursday evening, the Elon finally landed. Security ushered him in through a back door. It was as low profile an entrance as he could make. But it didn't take long for him to make a huge ruckus. On Friday, as Sun Valley's VIPs were likely debating what to do about a looming recession, phone alerts started buzzing all around the resort. There was a new SEC filing regarding the Twitter sale. The regulatory filing states that Elon Musk is terminating his agreement by Twitter. He literally, while he's at Sun Valley, somebody on his behalf, one assumes, has filed a regulatory filing stating that he wants to end the agreement by Twitter.

3:57Elon wanted out of the deal. And in it, he alleges that the company has misrepresented user data. And he also says that Twitter has breached its contractual obligations to provide more information to him. Things were suddenly very tense in Sun Valley. Conference watchers were on high alert for any potential awkward run-in between Elon and Parag or Brett. When Elon took the stage the next day, the room was packed. He's interviewed by Sam Altman, the CEO of OpenAI, and he gets questions from Sam and from the audience about Twitter and he declines to talk about the status of the deal. But Elon was quite willing to drag Twitter.

4:51The pervasiveness of bots, the treatment of former President Donald Trump. He talks about how Twitter's user data is shared. At one point, he asked the audience if they believed Twitter's claim that 95 % of users were authentic. Heads immediately turned to see how the Twitter execs in the audience might respond. The scene may have been humiliating, Elon publicly dragging them. But Brett Taylor, Parag Agrawal, and Ned Segal sat there, in the audience, completely poker-faced. They had a plan. In fact, it appears they didn't speak to Elon at all. They were done with PR spats and public games. They had an airtight purchase agreement with Elon.

5:39Nothing he was saying on stage changed that basic fact. It was time to hold Elon Musk accountable for the deal he had signed. And once all the CEOs and billionaires had left their summer camp in Sun Valley, the Twitter board got to work. By suing Elon Musk.

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8:12From Wondery, I'm David Brown, the host of Business Wars, and this is Flipping the Bird, Elon vs. Twitter. This is Episode 3, Chief Twit.

8:32and I'll only disappoint you. Don't be all exceptional. I promise to exploit you.

8:50A week after Twitter sued Elon for breach of contract, their lawyers met in court for the first time. Well, they met in court virtually. It was, I'm sure, like the most hotly listened to pre-trial hearing the Delaware Chancery Court has ever had. New York Times reporter Lauren Hirsch was among the throng of reporters and Wall Street types who called in to listen to the hearing. There were so many of them that they jammed the court phone system. These kinds of hearings rarely draw this much attention. But Elon versus Twitter promised high drama. There has been so much noise and so many tweets. But at the end of the day, this is a trial that will largely simply rest on legal arguments.

9:36So you had both sides get up there and make their initial case. This hearing would determine the start date of the trial. And the date itself had major implications for both sides. Elon wanted to buy time. His legal team insisted it needed at least six months to prepare its case. They pushed for a February 2023 court date. So it seemed his strategy was to delay trial as much as he can and make kind of document search as sweeping as he wanted. And if you delay trial for long enough, then you might actually eventually give Musk the right to walk away if the company deteriorates so much that he can say, well, this isn't the company I agreed to buy.

10:21Now I can walk away. So Twitter's main objective from day one was to get to trial as quick as they could and keep it focused on the legal arguments that they really thought were on its side. Twitter's lawyers accused Elon of trying to sabotage the deal, arguing that every time he stoked uncertainty, he hurt the value of the company. Twitter stock had been on a bumpy ride since Elon made his offer, with each derogatory tweet and threat to the deal sending the stock on yet another dip. They entered into evidence one exchange that had made headlines. In mid-May, CEO Parag Agrawal tweeted a long thread that explained how Twitter analyzes the number of spam accounts, claiming it was less than 5 % of all accounts, and that Elon couldn't possibly determine the number of spam accounts on Twitter without having access to internal company data, which he didn't.

11:18Parag's thread was detailed and technical, showing his computer engineering roots. Elon responded with a poop emoji. Now, Twitter was demanding Elon close the deal on the originally agreed-upon date for the originally agreed-upon price. The judge agreed with Twitter that every passing day risked harming the company. She set the trial start date for October 17th. You look to the judge for clues as to how she is responding to your arguments, and that gives him an indication of whose side she's basically on. And she basically kept giving Twitter wins in court. Over the next two months, Elon kept trying to stall.

12:06He filed motion after motion, demanding more and more data from Twitter, subpoenaing his good buddy, Jack Dorsey, and even trying to use information from a questionable Twitter whistleblower to derail the deal. He asked for another delay of trial, but the judge said no. It was early September, and the approaching October trial must have started to feel like looking down the barrel of a gun. especially when Musk's lawyers were forced to reveal one particularly interesting bit of discovery exhibit h that filing with all of the text was like the juiciest uh most fun legal filing i think i have ever read it was 33 pages of text messages about the twitter deal between elon and his rich and powerful friends and associates.

13:00Remember billionaire Larry Ellison casually offering up a billion dollars and angel investor Jason Calacanis offering up his proverbial sword? It was all there, and then some. It's this insight into how deals are done, how people talk to each other in the valley, how so much of what deal-making that you think is about money and financials. Well, it is about money, but it's also about ego, and relationships. The dynamic was less sound investment principles and due diligence, and more like a teen movie. Yes, it was total high school vibes. Like the big man on campus was throwing a cool party on Friday night, and everyone was trying to figure out how to get the invite.

13:46Like some people are offering him beer. Some people are trying to like show off that they have the cool deed. The press had a field day with these text messages. And Tesla's stock, which was the main source of Elon's wealth, plummeted 5 % that day. It fell the next day, too. Public humiliation for Elon was one thing. Attacking Tesla stock and deteriorating legal situation was a different story altogether. Three days after Elon's private text messages were made public, the judge demanded Elon turn over even more documents. Maybe the public perception that Elon would lose this trial finally got to him.

14:30The next day, Elon changed course again. According to Bloomberg sources, he's U-turned now. He wants to propose to buy Twitter at that original offer price and has informed Twitter of his intention to do so. He would do what the board was asking. buy Twitter at the original offer price of$54.20 per share. The judge allowed him a few extra days to close the deal, giving Elon until October 28th. It had been one of the strangest on-again, off-again, on-again courtships in modern business history. For so long, the question had been whether or not Elon would actually buy Twitter. Now came the question, once it was his, What would he do with it?

15:18Elon had always been an erratic CEO at his other companies, but employees, the media, and investors had often overlooked his unusual or even abusive behavior, largely because of the incredible size of his vision. Tesla, the clear market cumbent in the world of electric vehicles, that continues to grow and set records for production and is working on advancing autonomous driving. And many would say and argue that it's a clear leader and the rest of the industry is struggling to catch up. Ed Ludlow has reported on Elon's companies for years. SpaceX dominates commercial launch of payload to orbit.

16:02It's like two-thirds of everything that goes into space. And that's pretty incredible to say when you take into account all of the public and private sector, not just here in the US, but in Europe, China. Elon started a project called Hyperloop, dedicated to hurtling humans in milliseconds through tubes from city to city. Did he have a grand vision like that for an Elon-run Twitter? One that could inspire his employees, users, and investors? Elon had already made plenty of bold statements about what he'd do with Twitter once it was his. Overhaul content moderation? make Twitter's code open source for anyone to see, verify every user, and get rid of bots.

16:46But those goals, and the way he'd behaved throughout the deal, had eroded most of the trust he might have had with Twitter employees. They weren't waiting for a visionary to come and save them. They were bracing for an invader. Because what was most worrying of all to Twitter's employees was Elon's plan for layoffs. While Twitter was likely to face layoffs even without Elon, he had told his investors he might lay off as much as 75 % of the 7 ,500-person workforce as a way to get the long-suffering finances of the company closer to profitability. But could Twitter even function with those kinds of cuts?

17:33On October 26th, employees at Twitter's HQ in San Francisco were surprised when their new boss arrived largely unannounced for the first time, carrying a large white porcelain sink. When he walked in with that sink, it was, I mean, that was the signal that there was no going back. We were in for it, whether we liked it or not. Elon was all smiles and let out a few chuckles as he lumbered across the lobby, sink in hand. The entire performance was caught on video, which Elon was quick to post. Entering Twitter HQ. Let that sink in. He also updated his Twitter bio to Chief Twit. That let that sink in moment really was pretty, uh, it was a terrible joke, but it was pretty apt nevertheless.

18:25The deal was not officially done, but it was clearly the beginning of the Elon Musk era. Musk visited the SF office. A lot of people didn't either know he was going to be there or weren't expecting him to be there. Software engineer and manager Sasha Solomon was working remotely from Portland, Oregon that day. But several members of her team were at HQ. And they were curious. And so they were like, we're going to try to find Elon Musk and talk to him. I was like, put in a good word for GraphQL. GraphQL. That was what Sasha's team worked on. It was a computing language the company used to send data between different parts of the site.

19:03They had no idea if Elon knew what it was, let alone if he would value it. Elon was there to learn, finally, how Twitter actually worked. He went from meeting to meeting with engineers and project leads to take a peek under the hood of the thing he was about to pay$44 billion for. But he wasn't alone. He also brought along his two-year-old son, X. and his biographer, Walter Isaacson. Tweeps who'd spent the better part of the last six months riding the rollercoaster of will he or won't he and what the hell will it mean for us if he does were a bit awestruck to see him in person, wandering around their halls, grabbing a coffee at Twitter's own coffee shop called The Perch, a hyper-modern cafe with black ceilings, surrealist murals, and inspirational quotes splashed on the walls.

19:55And he was, like, getting a coffee, and they like walked right up to him. That's where Sasha's team found Elon. They got like pictures with him. They like shook his hand. They told him about what we worked on. And then they like, you know, slacked us later. And we're like, we talked to Elon Musk. We shook his hand. They said that they like talked to him about GraphQL. And they're like, I think he thought it was cool. And I was like, great. Okay, maybe our team won't be cut. More and more employees met Elon and shared their impressions of him. Some said he wasn't a jerk. Some said he almost seemed cool.

20:27I thought things were kind of going well. And I was like, oh my God, maybe this will work. Like, maybe if he can run the company, things are going to be okay. And like the next day, everything just went to hell.

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23:30The day Elon's purchase of Twitter officially closed was the day of Twitter's annual Halloween party at HQ, aptly called Trick or Tweet. Employees were encouraged to bring their kids and make it a family affair The kids came in pretty common kid costumes You had them dressed up as different cartoon characters You had some kids dressed as witches or ghosts or skeletons Software engineer Jim Redman saw the festivities when he stepped away from his desk for a snack The two-story cafeteria had been decked out with carved pumpkins and fake spider webs Kids were digging into bowls of candy There were people dressed as pilots and flight attendants, zombies, vampires or things.

24:13So everything was very festive, very Halloween-y. But the fleet of Teslas parked outside was the flashing neon message that something else was going on. People realized, like, the deal was going to close, and it was probably going to close in the next 24 hours. And that would mean a ton of people were going to lose their jobs. Zoe Schiffer is a reporter for the fledgling tech blog site called Platformer, which became a leading source of breaking news in the Elon Twitter saga. Sources inside Twitter were sending Zoe photos of the Halloween party. There's a performer who's dressed like a scarecrow, and at first employees are saying, I think that's Elon Musk, and then, you know, quickly realize that, no, it's just like a scarecrow performer.

24:58The mood in the building was palpably different than the day before. There was a growing paranoia in the air that had nothing to do with Halloween. It has this kind of last day of camp vibe where everyone's like, we're not sure if we're going to see each other again, or like what this company is going to even be like. Jim had just grabbed a snack and walked past the Halloween scene to rejoin his team in what they referred to as the cave, a dark room with no windows. This was where they focused on maintaining the integrity of the site. Then, he noticed something on Slack. We started to hear rumors that the deal had closed.

25:40At this point, our sources were other employees. We didn't have any external confirmation. But the sources were plausible, and we were getting it from lots of different places. So it seemed pretty reasonable to assume that this had happened. Soon, one of Zoe's sources messaged her. The rumors were true. So she'd been at the party with her kids, trying to put on a brave face. And eventually she gives up and she's like, you know what? I'm going home. This is nuts. And on her way out the door, she passes the head of product. And he's looking super somber, just like not good news has not come his way in a minute.

26:17And as she passes him, he just kind of shakes his head and says, it's done. The deal's done. And she knows that Elon Musk now owns the company. Twitter was Elon's, and he was wasting no time getting to work on his agenda. Employees heard that CEO Parag Agrawal was out, head of legal policy Vijay Gatti, out, chief finance officer Ned Siegel, out. General Counsel Sean Edgid was escorted out of the building by security guards moments after he finished the paperwork on the deal. The key players of the C-suite were all gone, and they weren't just let go. Parag, Vijay, and Ned were fired for cause, meaning the millions of dollars they were owed as golden parachutes that had been baked into the deal, Ilan was trying to avoid paying them.

27:10Basically a huge middle finger to the people who had just sued him. A few employees from the party huddled in the bathrooms, sobbing. Anxiety hit epic levels, and a sort of mourning started to settle in for the Twitter they'd all known and loved.