Pivot - Everyone’s Favorite Legal Battle, and So Much Inflation

Episode Date: July 15, 2022

Kara and Scott discuss inflation being at a 41 year high, and predict what's to come in the showdown at the Delaware Chancery Court between Twitter and Elon Musk. Also, the newest revelations from the January 6th hearings, Governor Newsom takes on gun manufacturers, and crypto lender Celsius files for bankruptcy. Send us your Listener Mail questions by calling us at 855-51-PIVOT, or via Yappa, at nymag.com/pivot. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Just go to Indeed.com slash podcast right now and say you heard about Indeed on this podcast. Indeed.com slash podcast. Terms and conditions apply. Need to hire? You need Indeed. Hi, everyone. This is Pivot from New York Magazine and the Vox Media Podcast Network. I'm Kara Swisher.

And I'm Scott Galloway. How you doing, Scott? How was your weekend? My weekend? What is it? It's Thursday. Yeah. I mean, you're-

Are you on the meth again? It's Thursday. I'm on the meth again. What are you talking about? That's right. I've been traveling. I was in Los Angeles. You went to San Francisco?

Is that right? And Los Angeles, yes. And how was it? Good. I love San Francisco. It was great. And Los Angeles was lovely. Was it?

Good. I love San Francisco. It was great. And Los Angeles was lovely. I'm doing a head-to-body health check. And I was meeting a very well-known doctor there to talk about that. All the various things they're going to poke and prod me with. It's very exciting. Yeah, are you doing one of those full-body kind of health things?

I used to go play golf or do stupid shit with my buddies. Now we go have different devices shoved in every orifice, and they tell us that we're, oh, you have the prostate of a 44-year-old, and we all brag about it over dinner. Oh, good. Well, I'm going to get the whole thing, because I had that stroke several years ago. So I decided I can't die anytime soon, largely because of you, but also my many children. And so it's interesting. I may do one of, I have several book contracts and I may do one of them on the efforts by tech to keep people alive, like longer,

which is, you know, more hell on earth, essentially. Anyway, it's interesting. It was interesting. There's all kinds of changes in the past 10 years of all kinds of monitoring, but the healthcare system, as you know, still sucks in a lot of ways. But this is an interesting,

it was an interesting first meeting. We'll see how it goes. I'll keep you updated on my health. I'm going to have an entire 360 of my heart. You know, I have that hole in my heart, as you know. And so, I'm going to have this 360 Siemens thing that is the latest and greatest, which will be interesting. And most people cannot avail themselves of this, but I'm going to write about it and obviously pay for it myself. But it's really going to be interesting, I think, to find out what's inside Kara Swisher's heart and brain. Well, yeah, I think we've all been trying to figure that out for a very long time. Anyway, we'll see. Anyway, today we'll talk about the latest inflation numbers and whether or not we're headed into recession. The jobs report was different than the inflation report, which was very high and the jobs was

very good, actually. We'll, of course, get the latest on Twitter versus Musk. Scott's been doing his homework on that. He's been reading some legal briefs. We'll take a listener question from a recent college grad about the economy. But first, crypto lender Celsius has filed for Chapter 11 bankruptcy last month that froze withdrawals from customers. One of the company's former money managers filed a lawsuit against Celsius for being a Ponzi scheme. This is becoming a trend in crypto. Just days ago,

crypto hedge fund Three Arrows also filed for bankruptcy, and now its liquidators say they can't find the founders. These are people that were all touted at all these conferences, which we did not do. But talk about what it means for the bigger crypto market. Would you say, again, this is part of the same thing, but the inevitable continuing fall? Well, you have just a massive amount. You have basically delevering. And Celsius is a company where they convince people, they said, okay, I can give you an 18% APR if you give us your crypto to then lend out. And they would lever up, borrow more money against that crypto. Warren Buffett said it best, that leverage is how smart people do dumb things. And when everything's going up, and they wouldn't give you 18% cash

back, they would give you Celsius coin, which was obviously very tenuous in terms of its own value. And then when people got panicked, they don't need to pull out all their money. They just need to pull out a fraction of their money because it's so levered that it creates your veritable run on the bank. And the thing about this, because it's not regulated, because these deposits are not insured, it's not... I'll say I'll go this far, it's likely that if you put a thousand bucks into Celsius, you're now in line with a bunch of creditors and you may have to wait years

to get pennies on the dollar back. Pennies on the dollar, yeah. So this is, this is, and there's just no doubt about it, all of these things coming out and there's probably more to come,

taint the entire sector. Yeah, it feels very Madoff-y, right? It feels very Madoff-y in the whole sense of it. And the second part is that, you know, people are trying to recover the more credible companies here. Like Sam Bankman-Fried thought about buying Celsius and then walked away because of the debt as he started to unpeel this particular rotten onion. to unpeel this particular rotten onion. It's kind of an interesting situation because there are credible companies in here,

but they're going to suffer along with it. Well, and this is one of the many kind of, I think, unfortunate zeitgeist or gestalt that comes out of the valley. And that is just for the last couple of years, it's been all these very super smart people who would speak in terms that we didn't understand, which meant that they were smart and they would bully anybody who dared ask questions about how can you give 18% interest on money. You start asking questions and it

immediately outed you as a boomer who didn't get it. And also their general view was regulation and the government were nothing but shackles on these innovative geniuses. Yeah, I heard it all. And now it ends up that regulation or a lack of regulation is going to cost a lot of retail investors tens or hundreds of millions of dollars. Yeah, and where'd the money go? And the people, the naysayers who say it's all a scam are having their moment. you know, are having their moment. I would argue there's just so much money and so much human capital has been trying to figure out

how to use the blockchain that it's, I think, naive to think there isn't going to be enduring innovation here. But when you look back, you know, whether the CEO of Celsius used to show up to conferences and say, banks are not your friend. It felt very Travis Kalanick, right?

Yeah, it did. And so, you know, he did that with taxi companies. He did that at one of my events, I remember. And, you know, they're the enemy. And they have to create that. We're better. We're different. They're screwing you.

And of course, guess who got screwed, which is interesting. Well, we'll see where it goes. But it's really, you know, some people think crypto's, Bitcoin, for example, which is the one you point to as being the most survivable, is going to go down to 10,000, not up to 30, as people had thought. But, you know, we'll have to wait and see. This has been a big black eye, much different than compared to the last time it declined, because there's all these bankruptcies, people losing money,

losing their shirts and stuff like that. And then the question is, who benefits? I think there's going to be a lot of, not regulation, but legal action here, all kinds of ways. I'd be shocked if amongst these, I mean, you have another fund, right? The Seraph Fund, where the founders disappeared and then reappeared. I mean, it's really, it all feels very, very ugly. And then when you talk about Celsius, you want to talk about who loses here. Celsius had, get this, Cara, 1.7 million customers.

So, the population of San Francisco is is what, 850,000 people? So imagine two San Francisco's and every person is now waking up going, oh, well, that's money I'll never see again. See again. And some of it's substantive. And they were hoping. There was all this parties. And we wrote about that in the very early days about parties and this and that, all kinds of stuff around Bitcoin. But it is tarnishing the larger market, which is really the problem. You know who it also hurts? I mean, there's always these knock-on effects.

You know who this kind of does kind of hurt? Is Miami. Because Miami's kind of- No, it's not perfect. Miami's linked to the- Miami was trying to be a tech hub or claiming it was a tech hub. Bitcoin was the way there. Crypto was the way there.

Exactly. And the reality is there's been more venture money invested in Philadelphia and DC than Miami. And my thesis all along, and I get pushed back on this because it sounds like I'm being critical of some of the colleges in Florida, every major tech hub involves one thing, and that is a world-class engineering university. And unfortunately, in Florida, we don't have that. And so it's hard to build sustainability. There are a lot of great entrepreneurs in Miami, but they're usually in the restaurant or the services or the hospitality business. And just because some VCs move there to recognize a gain at a lower tax rate does not make a tech hub. And so they said, okay, but what if we

become known for, and they had a great spokesperson in Mayor Suarez, who's thoughtful, likable, innovative, and they went kind of went all in on crypto, because that was the fastest way to scale And they had a great spokesperson in Mayor Suarez who's thoughtful, likable, innovative. And they kind of went all in on crypto because that was the fastest way to scale up. So they had their event down there. Yeah, that was the fastest way to kind of scale up their notion that they were a tech hub. And so all of a sudden, Miami and being kind of epicenter for crypto is not a good look right now. No, neither is a lot of the bills. And DeSantis, of course,

performing for the cheap seats in Iowa. Anyway, we'll see where it goes. When anytime anybody goes on and on and then has to trash where they came from, I've always thought that was incredibly lack of class and also seemed desperate on some level. Anyway, speaking of California, Governor Newsom continues to be super aggressive,

signed a bill this week that allows victims of gun violence to be able to sue gun manufacturers. We'll see what happens in the courts. But companies could face lawsuits if their products are, quote, abnormally dangerous or end up in the hands of people prohibited from owning firearms. Newsom is also expected to sign another bill which would allow residents to sue people or companies that distribute assault weapons. to sign another bill which would allow residents to sue people or companies that distribute assault weapons. You know, there's going to be legal challenges, but he's going for it like he did with gay marriage, which is he was the one who was super aggressive. It's kind of his old playbook. He lost several times and then he won, right, ultimately, or California did initially was a real pusher of the gay marriage bills. But gun makers already lost their first challenge with

similar law in New York. The legislation follows his ads where he was inviting people in Florida to move to California. And it's just more presidential campaigning, it feels like. But at the same time, it's interesting in its aggression and focus on certain things. He's sort of doubling down on a look for the Democratic Party. I think Ron DeSantis and Gavin Newsom have already are trying to say to the world, we're the Democratic and we're the Republican and the Democratic nominees for president 2024, and they're already running against each other. And just as, so I like this. And so I think of this as good policy, but to be objective, you objective, I often criticize Ron DeSantis for posing for white evangelical Christian voters with a straw in their hand in Iowa.

This is a little – I don't understand my understanding of gun laws, or I should say my lack of understanding, so I'll come to a quick thesis here, is that much of what he's proposing here will not hold up in court. Because gun rights are pretty strong, for better or for worse. I'm not saying I agree with that. So, I think a lot of what he's doing right now is signaling his viewpoint and trying to establish leadership around democratic issues. But the thing I found fascinating about this, I think both DeSantis and Newsom, to their kind of credit strategically, are slowly but surely communicating to the nation, and it kind of becomes a self-fulfilling prophecy that we are the nominees for our party, and we represent our party. So, I think Newsom, I think Newsom has been a huge winner the last 15 or 20 days. Right, yeah. He's got to, his vulnerabilities, DeSantis is around all these social issues where he's really over, he hasn't said a lot on abortion, actually.

It was a really interesting story either in the Times or the Post that he's being very quiet about it because he doesn't, he knows the center does not like this particular thing. And he's also trying to hold on to the evangelicals. Newsom, of course, is going the opposite way, signaling all kinds of things. And it'll be interesting. The negative on Newsom is homelessness in California, you know, and crime. And that's the two things.

So, you know, shitty social behaviors are DeSantis' weak part and crime and not the economy. The economy of California is doing great, actually. So we'll see where that goes. It's actually doing terrific. He's sending people money. I wish I was still a taxpayer there. Actually, I think DeSantis' weakness is that people don't know him.

They know his issues and people look at Florida and think they were smart around the pandemic, letting people get on with their lives. A lot of people on the far right like his positioning. His weakness is Achilles' heel, and there's very little he can do about this. He's not likable. And the party doesn't—people in the party don't—other people don't like him among the Republicans. Well, insiders and voters. You listen to the guy speak, and you just think, this guy's kind of a jerk. And every president, probably since Nixon in their own way, is likable or funny.

Yeah, Nixon. I think that was one of his downfalls. He wasn't likable, right? His first time out against Kennedy. It's hugely important. Anyways. It's hugely important. Anyways.

It's a little Kennedy versus Nixon because Newsom just is compelling as a figure. He is compelling as a figure. He suffers a little bit from what I'll call the Vice President Harris. After speaking to him for 10 minutes, you kind of feel a little deflated. He's not as bad as Vice President Harris, but after you listen to him speak, you wonder, okay, what moisturizer does he use? But you don't feel like inspired by a movement. I would agree, but I think what he did around gay marriage was something short of a miracle and courageous. The reason he doesn't get sort of the courageous thing is because he's so handsome, but we'll see where it goes. also lastly the latest on the january 6th hearings compelling

compelling from a branding perspective the committee is expected to hold its next and final hearing on july 21st in prime time so much has happened at tuesday's hearings a lot of focus on trump tweet that mobilized the crowd where he wrote big protests in dc on january 6th be there will be wild of course it followed this crazy meeting at the White House where crazy people got in and the other people tried to keep them out and like chase them out and had screaming matches. A former Twitter employee, by the way, speaking of tech, this is the first time tech was really mentioned, told the January 6th committee that he tried in vain to sound the alarm on Trump's tweets and explained why he thinks the company didn't take sufficient action. Let's play a clip.

Keep in mind, the speaker's voice was altered to protect his anonymity. I believe that Twitter relished in the knowledge that they were also the favorite and most used service of the former president and enjoyed having that sort of power within the social media ecosystem. Liz Cheney says Trump tried to contact also as yet unseen witness and warned again about witness tampering. Seems like he can't help himself. We'll talk more about Twitter later on the show, of course. But again, these hearings continue to be the best watching of the summer. Later on the show, of course. But again, these hearings continue to be the best watching of the summer.

They're doing a really good job by rolling things out and connecting the dots and making a narrative. It's better than White Lotus, for example. Yeah, I do think, though, at some point, I think the two of us probably find it more compelling than most of America. And I think they've done a great job so far. But I would argue they need to bring it to a close. And I think Merrick Garland has to decide whether he's going to issue an indictment. And it's time to decide. And what usually gets criminals, and I do think there's criminal activity here, is little stupid stuff,

like calling a witness and not recognizing that that's tampering with a witness, that that is very much a crime. Which is also happening in Georgia, that there's also a Georgia thing happening. And they have it on tape with him. I think the nation, the Department of Justice, the media have all heard both sides. It's time for the sheriff to decide if we're going to indict this guy or not. I think the majority of America is going to get fatigued by this at some point. And they've handled it well. It's been compelling. They should bring it to a close and then decide whether we're going to indict this individual.

Yeah, that's what they're doing. I think it has had some effect. I can tell you all my conservative friends and family are like, whoa. Yeah, agreed. Like a lot of them. And they were not. They were like, what's wrong with Trump? And recently it's like, man, what an idiot.

Like kind of, what a crazy person. We can't have him back there. And they're, of course, moving to other Republicans, but they're definitely, they've had it with Trump, I think, in a lot of ways. So, and you can see that in the polling. You can see that in the polling over and over again. We'll see. He certainly has a way of bouncing back, but he certainly looks like a criminal in this. And we'll see where it goes.

Definitely Mark Meadows looks like he's going to jail at some point. Okay, let's get to our first big story. Okay, let's get to our first big story. Inflation, which is at its highest peak in 41 years, which everybody is paying attention to. The consumer price index is up 9.1% since June of last year. The biggest pain points are food and energy costs, also used cars and things like that. Groceries are up 12% on the year. Energy prices are up 41% annually.

I mean, it is really, I just bought some plane tickets and I was, whoa, like it was really kind of a different price. And I think everybody's feeling it and talking about it. It's eased off since then from what I understand. But we'll see if the Fed will resort to a bigger rate increases. Last month, it raised interest rates by 0.75% and is expected to raise another 0.75% later this month. So investors think that could go as high as 1%. The rate increases don't necessarily seem to be working because we're at, Jobs' report was very strong,

wondering if we're at peak inflation or could go higher. Other countries certainly have. And lastly, President Biden called the inflation data, quote, unacceptably high and pointed to the fact that these were numbers like last month's data. They're trending down now. There's all kinds of stuff going on, but it's still topic A, and it may wane as things get better. But the average price of gas now is $4.63 compared to $4.78 a week ago and $5.01 a month ago. So what do you think, Scott? How's this narrative playing out? Well, so first you have to acknowledge that inflation,

it would be unfair to hold Biden accountable because inflation is a global issue. I don't care if it's Turkey, Russia, prices are up 15%. Europe has experienced the same inflation. But the U.S. is so global as a country, but go ahead. Well, and not like that. The U.S. doesn't really give a shit what's happening elsewhere. Americans are like, all I know is—and we've entered the point of, if you look at when governments are overthrown, they're overthrown for a variety of reasons. They see the leader is corrupt. They kick out the, you know, the shove around. Or they think that this person doesn't reflect their religious values.

Or they think that this person is persecuting or ends up persecuting the wrong people, and there's a revolution against that person. But probably number one or number two, in terms of when people start getting very angry, as we see in Sri Lanka, is inflation. Now, inflation on its own sounds pretty benign, but this is what's happening. And wages are either flat to down while everything else is accelerating. This is what's happening. And wages are either flat to down while everything else is accelerating. The very basic premise is your quality of life diminishes drastically.

So, and I realize this is going to be a story of privilege. Each summer, we rent a house in Colorado. And the people we rent the house from came back to us and said, do you want to reserve it for next year? And we said, yes, we'd like that. And they said, okay, here's the price. They're increasing the price 80%. And it's the same house. And Bancop hasn't increased our compensation 80%, which means my quality of life is going down. Now, imagine that on a more substantive, real level. That is a perfect story. Yes, I got that. Okay, we're going to take it down to a real level, people buying milk. countable. And it's become, I do think there's evidence that it is coming down. Energy prices

are coming down. There's layoffs. The consumer price confidence indicator is showing that consumers are buttoning up or getting more hesitant to spend money. They're ripping through their savings. And Jerome Powell's hero is Paul Volcker, who took a lot of shit by increasing interest rates. And what you're probably going to see here is an unprecedented hike in interest rates of 100 basis points. But, you know, economic activity, I have to tell you, all over California, everywhere. Everyone was out. People are spending. The airports were jammed.

You know, London's airport, good luck living there. It's crazy. They're gating tickets. They're not selling tickets anymore because there aren't enough people working. But nonetheless, adjusted for inflation, workers' hourly wages fell 1% during the month and are down 3.6% from a year ago, which is a significant

amount of money that you're paying more for the things you're buying. Let me ask you just to, what would be the thing Biden should do? Saying they're unacceptably high is the right thing. Saying it's all over the world, I don't think is the right thing. It doesn't really matter to Americans.

What do you imagine is the best messaging here for an administration? Because people, even if Biden doesn't have a lot of ability to do anything about it, he's blamed for it. It sucks to be a grown-up. We had a 13-year party. The last administration flooded the market, overdid it with stimulus, was irresponsible. And I'm the grown-up here. My legacy is to do what's right for future generations. And we're going to raise interest rates, and we're going to make difficult decisions. And that's what leadership is. And I apologize, folks. But looking back on

this, you're going to realize we made the hard decisions that the last administration wasn't willing to make, and we're going to get this under control. And then point to evidence that they are getting it under control. I think, Jerome Powell, they are raising interest rates. Do you realize a mortgage has gone from, a 30-year mortgage has gone from 3% to 6% in the last six months? I'm aware. I got a mortgage when it was 3%, and I'm very thrilled I did, I have to say. I feel like I missed that kind of thing. Yes, it's crazy.

I have friends looking for houses. And then do what he's doing. I mean, people don't notice it. We've kissed and made up with Venezuela. I mean, he's in Saudi Arabia saying, I'm going to ignore him. I'm just going to kind of look the other way on a lot of very— Fist bumping. He's not supposed to touch anyone because of the COVID.

Right. He's fist bumping. He's not supposed to touch anyone because of the COVID. Right. He's fist bumping. But he's basically trying to open up the supply and the spigot of oil such that energy costs come down. But there's no elegant way out of this. Yeah, yep, yep. And also there's still, the war in Ukraine is continuing to grind on.

New coronavirus variants. Lockdowns in China all play a role. Continuing every single, I did some work at my house in San Francisco, every single person, workman I talked to was like supply chain. They can't get things, whether it's toilet parts or various things.

And they said it's easing up, but it isn't eased up, which is interesting. So I agree with you. I think the adult way to go, it's not going to be politically palatable, unfortunately. Anyone who's going to say, I'm going to give you pretty candy later is going to win. Well, here's the scary part, is that he'll probably end up, as we get closer to the midterms or the election, having to pull a Newsom.

So Newsom, and I want to be an equal opportunity criticizer here. He had the Inflation Relief Act, and he's sending a check to any household in California that makes less than $500,000 because they have a surplus, mostly because of the stock market acceleration and capital gains. That is absolutely the wrong thing to do to get inflation under control. And what you're probably going to see is political pressure. If the economy starts going to a tailspin, you're probably going to see political pressure to start the printing presses again. So one of the problems with our government and one of the advantages a place like China has on us, or even I think European countries, we just don't think long-term because people don't want to... In America, we've been told, oh, wait, as long as the market's going up, you get rich, isn't it great? Oh, the market goes down? Well, we'll bail you out because this event is a once-in-a-lifetime event. No, it's not. The

market goes down a lot. And I think Americans as a whole have become, well, you know, Daddy, I want an Oompa Loompa. It's just, I don't think Americans, I think we've become somewhat- That is a reference to Willy Wonka, everybody. You like that, right? Yeah, I do. You like that. Anyways. Doompity-doo. There we go.

Oompa Loompa, doompity-doo. Veruca. Daddy, how much? Which one are you? How much Wonka, everybody. You like that, right? Yeah, I do. You like that. Anyways. Doompity-doo. There we go. Oompa-loompa-doompity-doo. Veruca. Daddy, how much Wonka? Which one of those kids are you? You're not Charlie. I'm definitely Charlie. I'm Charlie's dad. I'm Charlie's dad.

No, his grandfather. Remember how his grandfather? Yeah, yeah. That was a sweet character. Grandpa Jack. I love that. Grandpa Jack. I love that relationship.

Yeah, that was good. In all the movies. I don't like the newest one. I like the old one with Gene Wilder. With Johnny Depp? I don't like the Johnny Depp one. I find him creepy. Don't shit if Johnny Depp's bad when you're talking about Willy Wonka.

I love Gene Wilder. It was so charming in that role. Anyway. All right. So this is where we are. We're going to go on a quick break. When we come back, we'll talk about the latest with Twitter versus Elon by Judge Advocate General Scott Galloway. And we'll take a listener mail question about the job market. This is advertiser content from Zelle. When you picture an online scammer, what do you see?

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Thumbtack presents the ins and outs of caring for your home. Out. Indecision. Overthinking. Second-guessing every choice you make. In. Plans and guides that make it easy to get home projects done. Out. Beige on beige on beige. In. Knowing what to do, when to do it, and who to hire. Start caring for your home with confidence. Download Thumbtack today. Scott, we're back with our second big story. Everyone's favorite legal batter, Twitter versus Elon Musk. Now, you insisted we talk about this, even though I'm fine to talk about this. This is great. The two are headed to a showdown in Delaware, Chancery Court, after Twitter filed this lawsuit Tuesday arguing that Musk is contractually

obligated to buy the company. Let me quickly recap what the arguments are, and then I'd love your thoughts on this. Musk's lawyers are basically saying he doesn't have to go through with the deal because Twitter withheld information about the number of spam accounts on the platform. Twitter is saying that that's false, and Musk has re-tabbed it on the business and damaged the share price. They're also accusing him of violating an NDA by publicly insulting the company. And as evidence, they have apparently provided a screenshot when Musk tweeted a poop emoji at CEO Paragag. Oh my God. So let's, let's, I think they're being super aggressive to settle. Their legal counsel is asking for a four-day trial in September.

They initially agreed to complete the sale by October 24th. Let me hear your thing. Let me hear your thing. So I have spent the better part of the last few days on the phone with litigation attorneys and also an attorney who specializes in the Delaware Chancery Court. And there's just some myths being promulgated by his sycophants and stenographers. But essentially, the narrative here, there's just a lot of myths that are not going to come to fruition.

The first is this notion that the bots is a legitimate argument. He said the Twitter complaint summarizes it perfectly. His argument here is a lesson in hypocrisy. There are text messages to the chairman of the company saying, I'm going to help clean up the bot problem. And then he made a request for information. They gave him the firehose. He now has as much data on user activity as Twitter does, and he's been unable to figure out a way to present an argument that there's more than 5%. Even if he can, he has to show material adverse event, which he can't because

a lot of people would argue the bots or the continuing existence of the bots actually increases their revenues. And then there's this information request, which is so ridiculous and so overdone that they'll be able to punch holes in it as they do in the argument. But the myths that really are ridiculous is one, this is going to be a long, drawn-out battle. The Delaware Chancery Court is built for speed. They have a chancellor and six vice chancellors. Basically, that's their language, their names for judges. They don't have juries. They usually don't even allow opening arguments. They just go straight to the evidence, and then the judge makes a decision. And they've already asked them to

fast-track this. This likely will happen in early September. The chancellors are all former gangster corporate litigators. They are not intimidated. They are not on Twitter. They don't give a shit if he starts shit posting and posting memes about him. And look what's happened in the market. So if you look at the stock price when he started acquiring shares, it was 32 bucks a share. Since then, the peer groups, specifically Meta and Snap, are down 10 and 50% respectively. The natural level of Twitter stock should be around $22 or $23 a share. But it's not. It's around $35 or $36. And this is why, Kara, I believe the stock is 60% higher than it should be. Do people believe he wants to buy this thing? No. Do people believe the underlying business has gotten stronger? No. This is what you have when you are a shareholder

of Twitter that owns a share on Twitter. You have the rights to one nine hundred millionth of the company and its cash flows. But more than that, you now have the rights and the legal obligation of the richest man in the world to pay you fifty four dollars and twenty cents. And the market is saying, based on their analysis of this case, that he is going to have to pay every shareholder $54.20. Or something, some approximation. Now, let me ask you a question, because this was raised by two smart people, Matt Levine and also Bill Cohen, in their columns, is what if he doesn't behave? What if he gets ruled against and then refuses to comply? Well, this is what will happen. This guy could do this, right?

This guy does things like this. I just don't think that's true. One, if he can repeal once to the Delaware Supreme Court, that will take, they will hear the court, the Delaware Supreme Court, within two weeks. So the notion that's going to drag on for years just isn't true. I'm not talking about dragging on. It's true. Delaware Chancery does not have a jail cell, but they can compel people. They can compel authorities to put people in prison. In addition, they have a lot of tools at their disposal. They are where SpaceX, Boring Company, Neuralink are all incorporated. They could issue an order that he has to begin selling shares in any company that is incorporated in Delaware.

shares in any company that is incorporated in Delaware. They absolutely have the power to compel him. In addition, every regulator, every senator is going to go, if people start ignoring court decisions, then who's going to ever do anything a court tells them to do? So, this mythology— He should settle. He should settle. Well, this is likely what will happen. In short order, and by the way, something I did mention that's worth mentioning. The characters and the size of this case are novel, but the argument itself is plain vanilla. This is a contractual dispute of which there are multiple similar precedent-setting court cases. For example, recently, Kohlberg & Company, a private equity firm,

decided after signing an agreement to buy a cake decorations company for $550 million, the market changed and they're like, fuck, we paid too much. We'd rather not do the deal. What arguments did they make? They haven't provided the information we requested and we lost our financing.

And the chancellor goes- Which they forced loss. They did it on purpose. They made it go away. That's right. And the chancellor said, your information requests are not sincere. They're tripwires looking for a false excuse because you went out of the deal. Bullshit. I'm putting that aside. And you went back to your financial sources who made a commitment and demanded unreasonable terms in a scripted attempt to get them to back away, such that you could use another hollow excuse. Sorry, guys, I compel you to show up and close the deal. Their arguments make Elon's arguments look credible, and the Chancery Court ruled

against them. It's going to be a bad, bad summer for him in Delaware. If the board were to settle right now, they would be liable and open to shareholder lawsuits because shareholders could say, wait, you have given up my ironclad contract to get $54.20 from the wealthiest man in the world? You can't do that. So what could happen here is if stock goes below 27 bucks a share, this agreement with Musk is now worth more than the entire company. That's correct. It's like owning like the way when Yahoo owned Alibaba many years ago. That's exactly, or when MicroStrategy owns Bitcoin. That's exactly the right analogy. Yep. Interestingly, two things before we get, just so you know, Twitter gave Musk more than 49 trillion bytes worth of data in response to requests for information.

According to Twitter, its executives offered meetings with Musk to discuss spam accounts, but Musk failed to attend them. Twitter claims Musk willingly offered and agreed to terms that were seller-friendly. They're really putting it on. They have really good lawyers here. Now, let me just switch very quickly to another person he's warring with, which is Donald Trump, who he somewhat embraced. He certainly embraced the right. Last week, Trump called Elon a bullshit artist, as we discussed.

And on Monday, Elon tweeted that Elon, who should shut up, tweeted that Trump should, quote, hang up his hat and sail into the sunset. On Tuesday, Trump fired back at Elon on True Social, blasting his, quote, electric cars that don't drive long enough, driverless cars that crash, and rocket ships to nowhere, adding Elon should focus on getting out of his Twitter mess. Now, I saw a lot of Elon's fans and reasonable fans in California this week, and they don't recognize this Elon. They still adore him and think he's brilliant,

but they're sort of perplexed by this. And I have had this experience. When you meet him, he's by this and say when you, you know, and I have had this experience when you meet him, he's not this much of an asshole essentially. So it's kind of interesting that he's all picking a fight with Trump again. I don't think it matters but it certainly takes the sheen off that idea

that he was moving to the right because he certainly, you know, he said DeSantis was his favorite candidate but nonetheless, it's an interesting, not a good thing for him to have Trump yelling at him too. He's got still the existing poster child and number one kind of advocate and leader of the Republican Party shitposting him. He's pissed off the far left by saying that Democrats, the Democratic Party, I think he's

used the word, has become hateful. I mean, he's like, he's sort of pissing off everybody. And something, and this is anecdotal evidence, it's pulse marketing, but I do think there's some illumination or insight here. So whenever I would post, so I posted the screenshot of him blocking me and I made a bunch of snarky comments and I got 22,000 likes. And a lot of people weighed in and said, Scott, you're so small as they usually do and you're just jealous of them. But the ratio, and I track all this stuff, of positive, supportive comments was about 90 and 95% to 10 or 5 negative. Until this point, whenever I pointed out anything negative about Tesla or that it was overvalued or that no one else would get away with this shit,

it was flipped the other way and people coming after me. Well, people are bots, right? Well, no, but the sentiment, in addition, the sentiment has changed here. I think public sentiment on Musk has jumped the shark. Both Trump and Musk, actually, which is interesting. Yeah, I think that's right. Yeah, we'll see where it goes.

Anyway, we will see. Maybe we will have more to know, but I think Twitter is probably playing it quite correctly here to see what they can get out of him. I still think I'm going with the settlement because I think that you never know what this guy's going to do. That's the thing. And I think when you have like a feral cat, you back away slowly and get what you can out of it. But let's talk about that. Just say the chancery court, as I predict they will, will find in favor of Twitter and say he owes them $54.20 per share. Then the question is, then what? Because Twitter board and Musk are both going to go,

I don't want to own this. You don't want me to own it. And they're going to go, okay, the stock's trading at 30. It was 24, 24 2420. And as the case moves through the Python here and it becomes more obvious that he's going to have to illegally owe this, they're going to come to a settlement that will be a significant chunk of change. Yeah, probably giving back his shares too. Somehow selling back his shares in some fashion.

Or use that as a form of payment. Desist, yeah, desist. You know, never buy again. Go away. Something like that. Never darken our doorstep. Something like that. Although he doesn't...

Who knows if he has to... He'd litigate that too, I guess. Anyway, we'll see where it goes. It's very interesting. He's not on the winning side here. And as much as people try to posit, oh, we know he does too, that, oh, I've gotten them. It's a desperation move on his part to do those silly memes. Anyway, we'll see if he blocks me for that one. Okay, Scott, let's pivot to a listener question.

You've got, you've got, I can't believe I'm going to be a mailman. You've got mail. The question comes from Millie via email. I'll read it. Hi, Kara and Scott. I'm currently a college student at UC Berkeley, set to graduate in 2024, and many of my peers, myself included, are growing nervous about the current economic climate. I've heard stories of new graduates unable to find work in recessions of the early 2000s and 2008. I'm worried that the same thing will happen for college grads now. My question is, do you think finding work after graduate will be difficult in this recession

or are you worried for nothing? I love the podcast and appreciate all the work you do. Level of insight you provide about business and tech is unmatched. Thank you, Millie. Scott, should she be worried? No. College grads from the majority of colleges in the United States, if we do go into a recession and there's a chill, they should be worried. You know what? Here's the thing. Stoicism teaches you be worried about the shit you can control and not worried about the things you can't control, and you can't control this. In addition, as a graduate of Berkeley, which is the finest public school in the nation,

she should not be worried. What this means for her is that she'll likely have three job offers, not five. And that is Berkeley has, first off, my favorite statistic about Berkeley is the following. Berkeley each year graduates more kids from low-income households than the entire Ivy League combined. And guess what? Employers love it. They're like, okay, you know what Berkeley is? Berkeley is like kids from Stanford who are super impressive, but they're more diverse, and they're from lower-income homes.

We like that. It is staggering, the demand for Berkeley grads among corporate America. If it gets cut in half, she's only going to get two job offers. So, one, college grads, some of them should probably, they shouldn't even worry because they can't control it. And two, the last person in the world that should be worrying about gainful employment is going to be a graduate of the greatest public school in America and the tip of the spear of what's wonderful about America. And unfortunately, unfortunately, there's some nuance here. Our higher education system has

become an enforcer of the caste system, where there is a big difference between the weight class economically and the life you get to lead when you graduate from Berkeley versus when you graduate from another no-name college that still charges you as much or more. But coming out of Berkeley, oh, it is good to be you. We're not worried. It is good to be you. Yeah, what are they? What are they? The bears?

Bears, the bears, yes. The California bears. The California golden bears. Golden bears. The golden bear, you'll be fine. Much different than the UCLA Bruins. A different species of bear. I would agree with you.

I think it's interesting because there's also other jobs for people. Like, I suspect Louis will work in hospitality and stuff when he graduates at some point. And I think he'll have a million jobs. I think plumbers and electricians and all kinds of jobs. There's not enough building trades and things like that. We'll see where that goes. that goes. But definitely, you're going to have slight, you can't agonize when other people have real problems. Like, you will have a job. It's just a question of, there might be depressed wages for certain companies. Yeah, okay. So, a graduate, an undergraduate's going to make 84K instead of 90K right at 22. I was on the board of the business school, and you know what our biggest problem was in terms of recruiting? Recruiters stopped recruiting at Haas because the kids were getting too many offers and wouldn't accept their offers. They're like, we come here, we spend two days, we spend a lot of time and energy, and then no one takes our offer because they're all getting... At some point, and this

is happening at NYU, and this is great to be a business school grad or great to be a graduate of a great undergraduate school, the kids are getting five and seven offers. And we've had to tell them, stop interviewing when you get your seventh offer. You're not doing anyone any favors. They don't like you. I was talking to a kid who was applying, you know, Alex will be applying to colleges. And, you know, I think they limit the number they can apply now, but it still is like, why are you applying to that many? Which one do you want to go to? Like, they over-safety them. It becomes competition. How many offers do you have? Yeah, exactly. Well, I don't think he's like that, but I think it's more, I don't see this,

I guess it's a strategy, but I find it appalling, actually. Anyway, you'll be fine, Millie. You'll be perfectly fine. Good to be Millie. Good to be Millie. What a good name, by the way. I love that name. All right, if you've got a question of your own you'd like answered, you know, we should, speaking of which, this is a really good thing on Career Advice. We should do a career show, just like we did the dating show, which I think we got a lot of people married. We should do a parenting show. I would like that a lot.

Let's do a parenting show. I think you're a one. People always say, tell me about Karen. I say the thing I admire most about you is your parenting. Yeah. Let's do a parenting show. I think it'd be good. Just before this, I made my son a delightful lunch.

In fact, I felt good about that. It was delicious. I cooked last night. Louie was like, are you sure I shouldn't cook? And I did it, and he was pleased with my meal. I had my 11. It's funny. Similar for breakfast.

I had my son mix me as a cop on Coke. Same, same. Same, same. I cook for them. I got to say, the New York Times cooking app is amazing. I've been using it a lot. I'm not a very good. I'm an okay cook, but. I cook for them. I got to say the New York Times cooking app is amazing. I've been using it a lot. I'm not a very good, I'm an okay cook, but now I'm getting to be a better one. If you've got a question of your own you'd like answered, send it our way. Go to nymag.com slash pivot to submit a question for our show or call 855-51-PIVOT. All right, Scott,

one more quick break. We'll be back for wins and fails. As a Fizz member, you can look forward to free data, big savings on plans, and having your unused data roll over to the following month. Every month at Fizz, you always get more for your money. Terms and conditions for our different programs and policies apply. Details at phys.ca. Okay, Scott, let's have some wins and fails. Before that, I want to make a call out to Doug and Freya. I was having lunch in Los Angeles at Jagusta, one of my favorite places. And I have to say about four people came up to me and asked about you.

And these were the most enthusiastic. Yes. Again, it's really quite amazing. It was a couple, just like Brene Brown and Rosamond. Oh, you sent me a video. Yeah, I sent you a video. They were great. But here's to Doug and Freya. Thank you.

I hope you enjoyed your lunch. I certainly did. And thank you for saying something. We really, as I say, come up to us and talk to us. We love it. I had another young guy and another one. It was really lots on the plane. It was really nice. It was really lots on the plane. It was really nice.

It was really nice, and we love it. So, WINS, I'm going to have, one, the NASA photos from the James Webb Space Telescope. Wow. 100%. It feels like I was watching Thor the other day getting ready to go to Thor Love and Thunder, and they have those beautiful visuals of them flying through space. Nothing so beautiful. So, so amazing.

It gives you pause. It makes you, this was from billions of years ago too, right? These pictures are from a galaxy that doesn't exist anymore. But wow, I wish someday we can space explore, exploration, because I'd love to see this. Yeah, brought to you by those boneheads called government. Government, yeah. Beautiful.

It's incredible. I agree with you. By the way, speaking of Thor, I heard that Chris Hemsworth, out of respect for Natalie Portman's veganism, decided not to eat meat before they kiss, which means, and this is a serious question, if I eat pork, do I get to make out with Chris Hemsworth? It could happen. Interesting. Well, interesting. It was an exchange between Tessa Thompson and Natalie Portman in an interview, and Tessa Thompson didn't know that. And then they all talked about how much meat he eats. He eats bison in the morning. He eats a ton of meat. So even though you'd think it's a small thing, apparently this man likes to eat animal flesh quite a bit. That was very cute. Do you eat beef? I eat beef two or three times a day.

Is that wrong? I do not. I eat it once every couple weeks, and I do eat chicken more. I eat a lot of fish. And I like pork. I do like pork quite a bit, but I don't eat it that much. I like it. I like the taste of it. I don't like beef as much anymore. I don't know why.

I just don't have a problem with it. I just don't like it as much. It's what's for dinner, beef. I see that. Thank you. But I don't like the plant burgers either, so I don't know why. I just don't have the, I don't have a problem with it. I just don't like it as much. Anyway. It's what's for dinner, beef. I see that. Thank you. But I don't like the plant burgers either. So I don't know. But I do like salmon.

It's my favorite thing. Wild salmon. Anyway, that's my positive. I don't really have a- Vegans aren't animal lovers. They're plant haters, Kara. My fail is that Sydney Powell and the whole gang of them.

She just lost, I think, a lawyer in her, I hope she loses her dominion suit. that that craziness at the at the white house those people able to get in just like it's nerve-wracking that crazy people could get into the white house and avail themselves to an audience with the president and these people elect one i know that but man i i i you know i think george conway actually said it well is someone said that pence and these others should get a Medal of Honor for what they did. You don't get a Medal of Honor for not participating in a coup, but thank goodness they were there. You know, my God, my God, that would have failed on behalf of the White House security and everyone else to let these lunatics, headed by Rudy Giuliani, including Sidney Powell, Michael Flynn, and the guy from Overstock.com, which my favorite reference in the testimony of Pat Cipollone. He goes, there was this overstock guy. I'm like,

who are you? Like, I didn't know this guy. Yes, yes, he was there. I remember like, oh, he's our crazy e-commerce guy. Yes, exactly. So crazy was in the office. And I love Pat Cipollone, like, who the fuck are you? Get the fuck out of my way. And why are you here kind of stuff. And apparently he ate a lot of Swedish meatballs. That was my favorite thing. Apparently Trump serves Swedish meatballs. Anyway, that gang of idiots is really, you know, hucksters, idiots, and grifters. Gunning it to the White House was a real fail. All right, your win and fail? I love your win, the NASA photos. My fail, and this is along the lines of what you're talking about, I don't think Biden gets the credit he deserves for assembling a team of people that

are competent. And that is, greatness is in the agency of others. The team with the best players wins. And Peter Navarro, who was on Newsmax, is no legitimate broadcast cable network, not even Fox will let him on anymore. And he went on to say that he believes Vice President Pence is guilty of treason because he certified the election. This is someone who was supposed to be handling our economy. It just gives you a sense for just how incompetent and weird the team that the former president assembled. Well, he had some good people and they left, right? I don't think you'd say that about the, I know. It's like the Facebook board. Anyone with any integrity ultimately ends up leaving kind of too sweet. So I don't think Biden gets the credit he deserves for assembling a government that is credible. And these are the smaller decisions that people don't hear about

that impact veterans affairs, that impact local health departments, that impact the housing and urban development. You know, it's important the government be competent. Anyways, my fail is just the incredible incompetence that continues to be unraveled here from the Trump administration. My win is I can't help it. I've been very critical of the Twitter board of directors. I thought it was ridiculous

that they entertained a part-time CEO or someone who was really the full-time CEO of another company. I think from start to finish on this Musk BS, despite all the pressure, his sycophants laundering his BS and saying, oh, it's going to be hard for you and discovery will be bad for Twitter. Yeah, it's going to be bad for someone. It's not going to be bad for Twitter. discovery will be bad for Twitter. Yeah, it's going to be bad for someone. It's not going to be bad for Twitter. They immediately assembled a special committee of the board. They didn't let Ego get involved. They knew that, and this is legal analysis, that this guy is so erratic. So the agreement is reviewed by litigation attorneys is more seller-friendly. In other words, tighter, more sealed than 93% of purchase agreements. They've handled this perfectly. They haven't gotten personal. They have been restrained. And they are going to get their shareholders $54.20 a share. I think the legal document reads like it's the most compelling complaint I have ever read. And to summarize, they say that

his actions are a lesson in hypocrisy. Well, that makes Elon the unhappy owner of the company. Yeah, but even, here's the thing. They're not going to make him buy the company. They're going to make him pay. Right. But they've got a pretty big hammer here because they can say to him, okay, fine, show up for 5420.

And even if he's forced to do that, and supposedly, by the way, one of the people he was considering to run Twitter was the father of his twins who was his subordinate. Yeah, but Discovery's gonna be back for Twitter. The mother, not the father. The mother, I'm sorry. Although not that there's anything wrong with that. I don't see gender, Kara. I understand.

I know you wanna have Elon's baby. I'm aware of this, but you can't. You know, I think it could happen. You know what I'd like? I'd like, I think he's- A uterus? I think he's very drawn to me. So I have a proposal for Mr. Musk.

Let's meet in Delaware as I would enjoy seeing you get fucked. Oh, and? And let's meet at 4.20 in the morning, bitch. I'm going to have to block you now. Oh my goodness gracious. Let's leave that in. Let's don't take that out later. Don't.

They always take out my good stuff. They always take out my selfie stuff. Nobody takes that out, including yourself. Don't have another thought after we get off. That was a really good joke. I would like to watch him get pretty seriously plowed in Delaware. Okay. That would turn me on.

I will touch myself watching those pants record here. Okay, then that's the show. Too much? Let me put it this way. I'm sorry. Let me take it down to a dad joke. Scott, I back you up. Let me take it down to a dad joke.

All right. His decision to buy this firm and sign this agreement is similar to my decision when I went and decided to have the clam chowder at the September Lexus to Remember event. It felt good at the time. It felt good at the time, but it ended up being a terrible decision.

By the way, inflation has gotten so bad, Cara, that I now go to car dealerships and take test drives to run errands. For more of these money-saving tips, follow me on Twitter. All right, Elon, get back to rockets and bring us beautiful pictures. I walked it back.

I walked back. Elon, get back to rockets. I don't think you have rockets to nowhere. Get back to rockets and cars. I have rockets for Elon, that little bitch. He really wants me. Do you get the sense he wants me? No, I don't get the sense.

I get the sense that if I asked him to code, he wouldn't come because of me. I think he's drawn to me. Okay, all right, okay. I think he's not talking to me. His sexual attention could be cut with a knife. I think he's not talking to you due to you, but that's okay.

I lose friends because of you sometimes. It's worth it. I gain them. I gain them. I don't care. I think he's not talking to you due to you, but that's okay. I lose friends because of you sometimes. It's worth it. I gain them. I gain them. I don't care. I don't care. Strangers in restaurants go on video saying they like me. I know they do. I showed my kids that yesterday. They love us both.

They love us both. I showed my kids that video yesterday that you sent, and they have the same reaction any time. They look at me and they're like, why do they like you? Yeah, I know. I'm like, because of the podcast. And they're like, the podcast you listen to on the weekends and make us listen to it? I'm like,

yeah. And they're like, and why do they like that? My kids are totally befuddled that we have any success at all. Not mine. Mine gets the appeal. Everyone in my family gets the appeal. Yeah, not my kids. It's the appeal. They love us, Scott. That's what they talk about, our beautiful relationship. It's not the chemistry that me and Elon have. I think it is. I think it's well beyond it. Anyway, that's the the chemistry that me and Elon have. I know. I think it is. I think it's well beyond it. Anyway, that's the show

on that note. We'll be back on Tuesday with more Pivot. Scott, read us out and try not to say fuck Elon.

Today she was produced by Lara Nim and Evan Engel and Taylor Griffin. Ernie Endredot engineered this episode. Thanks also to Drew Brose and Neil Saverio.

Make sure you subscribe to the show wherever you listen to podcasts. Thanks for listening to Pivot from New York Magazine and Vox Media. We'll be back next week for another breakdown of all things tech and business. An eight ball of cocaine, a cattle prod up my ass, and the Delaware Chancery Court. These were a few of my favorite things, Carol.