Tech Brew Ride Home - Thu. 04/14 – Elon Hostile Takeover Of Twitter (Funding Secured?)

Episode Date: April 14, 2022

Well, he went and did it. Elon Musk told Twitter’s board he wants to buy the whole company. The bids for a Jack Dorsey NFT are anemic. A warning from the US government about industrial cyber-attacks. Meta’s entire metaverse product roadmap. And say hello to the new hottest social network among the kids. Sponsors: CodeCademy.com promocode ride LiveOuter.com/techmeme Links: Elon Musk Makes $43 Billion Unsolicited Bid to Take Twitter Private (Bloomberg) US agencies warn of custom-made hacking tools targeting energy sector systems (The Record) ‘Jack Dorsey’s First Tweet’ NFT Went on Sale for $48M. It Ended With a Top Bid of Just $280 (CoinDesk) MARK ZUCKERBERG’S AUGMENTED REALITY (The Verge) Gen Z’s new favorite app (Axios) Learn more about your ad choices. Visit megaphone.fm/adchoices

On April 4th, 2023, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco. Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, the Killing of Bob Lee, beginning April 16. Welcome to the Tech meme right home for Thursday, April 14th, 2022. I'm Brian McCullough today. Well, he went and did it. Elon Musk told Twitter's board he wants to buy the whole company. The bids for a Jack Dorsey, NFT are anemic. A warning from the U.S. government about industrial cyber attacks. Meta's entire Metaverse product roadmap leaked and say hello to the hottest new social network among the kids. Here's what you miss today in the world of tech. Morning, friends, Elon Musk delivered to Twitter's board of directors a non-binding proposal to acquire all of Twitter's outstanding stock for $54, 20 cents a share in cash, and a deal worth a total of $43 billion.

Yes, he took $50 a share, added $420 to it. As someone on Twitter said, I wonder how hard it was for him to decide between $420 or $69. Anywho, quoting Bloom. The world's richest person will offer $54.20 per share in cash, representing a 54% premium over the January 28th closing price and a valuation of about $43 billion. The social media company's shares soared 18% in pre-market trading, though I should note that when the markets opened, they were only up maybe 5%. Musk 50 announced the offer in a filing with the U.S. Securities and Exchange Commission on Thursday after turning down a potential board seat at the company. The billionaire who also controls Tesla first disclosed a stake of about 9% on April 4th. Tesla shares fell about 1.5% in pre-market trading on the news. Twitter said that its board would review the proposal and any response would be in the best

interest of, quote, all Twitter shareholders, end quote. Let's pause now and quote from Elon's letter to the board, quote. I invested in Twitter as I believe in its potential to be the platform for free speech around the globe, and I believe free speech is a societal imperative for a functioning democracy. However, since making my investment, I now realize the company will neither thrive nor serve this societal imperative in its current form. Twitter needs to be transformed as a private company. As a result, I am offering to buy 100% of Twitter for $54.20 per share in cash, a 54% premium over the day before I began investing in Twitter, and a 38% premium over the day before my investment was publicly announced. My offer is my

best and final offer, and if it is not accepted, I would need to reconsider my position as a shareholder. Twitter has extraordinary potential. I will unlock it, end quote. Then if you actually read the filing, there's this weird addendum at the bottom that says this, among other things, quote, I am not playing the back-and-forth game. I have moved straight to the end. It's a high price, and your shareholders will love it. If the deal doesn't work, given that I don't have confidence in management, nor do I believe I can drive the necessary change in the public market, I would need to reconsider my position as a shareholder. This is not a threat. It's simply not a good investment without the changes that need to be made, and those changes won't happen without taking the company

private, end quote. Back to Bloomberg, quote, the $54.20 per share offer is, quote, too low for shareholders or the board to accept, said Vital knowledge is Adam Chrysafully in a report, adding that the company's shares hit $70 a share less than a year ago. Although Musk is the world's richest person, how he will find $53 billion in cash has yet to be revealed, quote, this becomes a hostile takeover offer which is going to cost a serious amount of cash, said Neil Kampling, head of TMT Research at Mirabod Equity Research. He will have to sell a decent piece of Tesla stock to fund it or a massive loan against it, end quote. There will be a host of questions around financing, regulatory, bouncing,

Musk's time, Tesla, SpaceX in the coming days, said Dan Ives analyst at Webb Bush. But ultimately, based on this filing, it is a now or never bid for Twitter to accept, end quote. Yeah, that's the thing. Never forget that billionaires like Musk, sure, they're billionaires. Sure, they've sold some of the stock that makes them billionaires to be somewhat liquid, to, you know, do things like buy yachts and stuff like that. But most of Elon's wealth is still in the form of Tesla and other stock. He'd have to sell a large portion of that to raise this amount of cash. Although there are hints that private equity firms might be circling to help him do that, if that's what he wants to do, I was talking to Ranjan Roy about this on Twitter this morning. And you know, Ron John is from Wall Street.

He's on CNBC all the time, so he knows more about this than I do. And he said to me, quote, would love to see any big reputable firm put their name on this, and already laughing that Morgan Stanley got listed as the advisor, end quote. Here are some other Wall Street types, Ben Carlson on Twitter, quote, here's where I am right now. 12% chance he actually buys Twitter. 48% chance he's low-balling as an excuse to get out of his position. 40% chance things just get weirder from here, end quote.

Matt Levine, whose newsletter, today will once again be a must-rere read for basically everyone, quote, at the risk of taking this too seriously, I will say it's kind of weird for the richest man in the world to say, this is the public square, and I will take it private, end quote. And then my favorite hedge fund manager, at least in terms of I trust his opinions on things, Eric Jackson tweeted, quote, Dan Ives says no one would want to come close to Elon's $54.20 per share offer. 52 week high for Twitter is $73.34. So back when Salesforce was considering buying Twitter in 2016, it traded at around $23 a share, end quote. Longtime listeners will know my longstanding biggest nightmare fear. It has something to do with this.

U.S. government agencies are warning of new custom tools created by several APT actors that they say are capable of compromising IT equipment used in critical infrastructure, quoting the record. In an alert released on Wednesday, the Department of Energy, the Cybersecurity and Infrastructure Security Agency, the National Security Agency, and the Federal Bureau of Investigation, warned critical infrastructure operators of potential attacks targeting multiple industrial control systems, or ICS, and supervisory control and data acquisition, or SCADA devices. The alert said the tools used in the attacks were designed specifically for Schneider Electric Programmable Logic controllers, PLCs, also Omron, Sysmac, NEX, PLCs, and Open Platform Communications Unified Architecture servers. Eric Beyers, chief technology officer of ICS cybersecurity software firm Adelis Technology, told the record that Schneider Electric Modicon PLCs and OPC Unified Architecture servers are incredibly common and are used widely within many major industrial facilities across the U.S. The tools enable them to scan for compromise and control affected devices

once they have established initial access to the operational technology or OT network. Additionally, the actors can compromise Windows-based engineering workstations, which may be present in information technology or OT environments, using an exploit that compromises an AS-Rock motherboard driver with known vulnerabilities. The alert explained, by compromising and maintaining full system access to ICS, SCADA devices, APT actors could elevate privileges, move laterally within an OT environment, and disrupt, critical devices or functions, end quote. The agencies urged energy sector organizations and other

critical infrastructure facilities to implement the detection and mitigation recommendations provided in the alert, end quote. I on the NFT market, the auction for an NFT of Jack Dorsey's first ever tweet, which sold for $2.9 million last year, ended with a maximum bid of only two-eath, so worth around $6,200, quote in Coin Desk. Iranian-born crypto entrepreneur Sina Astavi purchased the NFT for $2.9 million in March of 2021. Last Thursday, he announced on Twitter that he wished to sell the NFT and pledged 50% of its proceeds, which he thought would exceed $25 million to charity. The auction closed Wednesday with just seven total offers ranging from 0.09-eth or $277 at current prices

to $0.001.19.Eth, almost $6. The deadline I set was over, but if I get a good offer, I might accept it. I might never sell it, Astavi told CoinDesk via a WhatsApp message on Wednesday. Astavi has two days to accept the bid or it will expire. Astavi, whose crypto ventures Bridge Oracle and CryptoLand collapsed following his arrest in Iran last year, is in the middle of relaunching his Bridge Oracle tokens, or BRG, which were originally on the Tron blockchain to the Binance smart chain. BRG investors are waiting for Estabi to exchange their old tokens for the new ones. Astavi, who announced the token swap on the same day, he pulled up Dorsey's tweet NFT for sale again,

told CoinDesk that the swap is being run manually and the process may take up to two months to complete, end quote. Late yesterday, Alex Heath over at The Verge had a big scoop that basically outlined what sources tell him are meta's product roadmap for the metaverse, at least for the next decade. This would include Nazar AR glasses, at least version 1, which would not be tied to a phone, and a cheaper pair codenamed Hypernova, both due to be unveiled in 2024, then Nazar V2 glasses expected in 2026 and V3 in 28. This is a huge piece worth reading in its entirety, but here are some relevant bits. quote, animating the push for AR glasses and Facebook's rebrand to meta is a desire by Zuckerberg

to cast the company he founded as innovative once again, people familiar with his thinking say. If the AR glasses and the other futuristic hardware meta is building eventually catch on, they could cast the company, and by extension Zuckerberg, in a new light. Quote, Zuck's ego is intertwined with the glasses, a former employee who worked on the project tells me, he wants it to be an iPhone moment, end quote. Meta's CEO also sees the AR glasses dubbed Project Nazar as a way to get out from under the thumb of Apple and Google, which together dictate the terms that apps like Facebook have to abide by on mobile phones. The first version of Nazar is designed to work independently from a mobile phone

with the assistance of a wireless phone-shaped device that offloads parts of the computing required for the glasses to operate. A marquee feature will be the ability to communicate and interact with holograms of other people through the glasses, which Zuckerberg believes will, over time, provide people with a more immersive, compelling experience than the video calling that exists today. Despite already spending billions on developing its AR glasses, meta internally has tepid sales expectations in the low tens of thousands for the first version, which will be aimed at early adopters and developers. A price point hasn't been decided, but the device will certainly be pricier than the company's $299 Quest VR headset, given that the AR glasses bill of materials is multiple thousands of dollars. The cost will test

Zuckerberg's willingness to subsidize the price of the hardware and encourage adoption, a competitive strategy intended in part to undercut the margins enjoyed by other players like Apple. In addition to Nazar, a separate previously unreported pair of cheaper smart glasses, codenamed Hypernova, are also planned for 2024. Nizar is designed to operate independently of a smartphone, but Hypernova will pair with a nearby phone to show incoming messages and other notifications through a smaller heads-up display, similar to the North smart glasses Google acquired two years ago. Together with Nazar, Hypernova, and future versions of the Rayban camera-equipped glasses it recently introduced, meta hopes to be selling tens of millions of smart glasses

towards the end of this decade. Its VP of AR, Alex Himmel told employees, the stakes couldn't be higher for meta. Its division-making Metaverse hardware and related software has swelled to roughly 18,000 people, costing the company $10 billion last year, a lump. own. To build the glasses and future VR hardware, Meta has aggressively poached from Microsoft, Apple, Google, and others, driving up the price of talent across the industry. Since Nazar was brought out of research in 2018 with the internal codename Orion, Zuckerberg has shown a special interest in the project. Quote, it's like the eye of Sauron, one former team member says, referring to the all-seeing eye in the Lord of the Rings. Zuckerberg himself recently admitted in a podcast that

employees sometimes use this phrase to explain his intense involvement in a project. Zuckerberg has insisted that the first version of Nazar offer a full AR experience with 3D graphics, a large field of view, and a socially acceptable design. The team originally hoped for it to boast a 70-degree field of view, far wider than what's currently on the market, but that goal likely won't be met. The current design of the glasses slightly resembles Superman's black frames when he's disguised as Clark Kent. They weigh 100 grams, which is about four times more. than a typical pair of normal glasses. Nizar won't be a mainstream device, at least not at first. Its current battery life is only four hours, and the glasses are intended to be used mostly indoors.

Even though it will take a while before the glasses sell in high volume, Zuckerberg has spared no expense. The displays are powered by costly custom wave guides and micro-LEDD projectors. The first version will have eye tracking and a front-facing camera along with stereo audio in the frame. Employees are working with semiconductor fabs in Asia to build custom chips for the planned roadmap through the latter half of this decade. Perhaps the most futuristic aspect of the first versions of both Nazar and Hypernova is a risk device meta plans to bundle with the glasses for controlling them, hypothetically with the wearer's mind, something that will likely be the company's next big privacy hurdle. The wristband uses differential electromyography, or EMG,

to measure electrical pulses in the arms neurons, essentially creating the effect of a phantom limb the wearer can use to interact with the glasses. The result is that someone can essentially think to type or control a virtual interface, which meta believes will aid in interacting with the smart glasses that won't have a touchscreen, mouse, or keyboard. The tech is based on the company's roughly $1 billion acquisition of a startup called Control Labs in 2019. Everyone I've talked to who has tried a prototype of the band Meta is working on says it's one of the most impressive tech demos they've ever experienced. If it works at scale, the company thinks it could have the next mouse and keyboard. A focus has been getting the EMG to work through the display and other tech

built into the wristband. If Control Labs works, none of this other stuff needs to matter. According to one former senior meta employee, in the nearer term, meta is planning to debut its first ever smart watch as soon as this year. While the first and second versions of any watch won't have control labs tech built in, the plan is for the third generation to include it, and tie up with the debut of Nazar and Hypernova in 2024, end quote. Finally today, one of the things that I always try to do for you on this show is keep an eye out for whatever is potentially the next big thing so that you can know about it before anybody else. And to that end, let me tell you about French social app Be Real,

which encourages users to post just one selfie per day, and which has exploded in popularity with Gen Z users. Topia says, monthly active users for the app are up 315% just in 2022, quoting Axios. With so many apps fighting to get even a small sliver of Gen Z's attention, Be Real has pulled ahead by getting users not to overthink what they post. In a push towards authenticity, the app snaps photos from the phone's front and back cameras simultaneously, showing where you are and what you're doing at the same time. Because users have to send posts within two minutes of getting a randomly time notification, they don't have time to make fancy adjustments.

Also, the app doesn't include any photo editing tools. A user who misses the two-minute window can upload a picture later, but followers will be notified that they didn't post in real time. Users also can't view their friends' pictures until they've uploaded their own, forcing them to participate daily instead of lurking. Monthly active users on BeReal have grown 315% since the beginning of the year, per data from Apptopia. While the app launched in December, 2019, a majority of its lifetime downloads are 65% have taken place this year. The app has relied mostly on word of mouth marketing on college campuses. The app created in France is gaining steam globally per data from data AI, formerly app Annie. BeReal ranked fourth in downloads in the U.S.,

the UK and France for Q1, 2022 after Instagram, Snapchat, and Pinterest. While Gen Z is most likely to use the app, a large chunk of Beoreal's user base is also millennial. per data AI, end quote. If you are listening to this immediately after I posted it, remember that a couple hours from now, look for our Twitter space. Again, we're going to do a deep dive into what employees should know about joining hot startups, lest they flame out like Fast did, but also what you could expect if you join a major tech company, because there can be disillusionment there too.

And then I'm sure we're absolutely going to segue at some point into the whole Elon Twitter stuff. See you there, 2 p.m. Eastern, 6 p.m. GMT, 11 a.m. Pacific.