Speaker 1: Hey, guys, welcome, Welcome to the Tesla shareholder meeting. And
Speaker 1: I just want to start up by saying, hot, damn,
Speaker 1: I love you guys. Yeah, we have the most awesome
Speaker 1: shareholder base. I mean, it's just incredible. Any public company,
Speaker 1: it's incredible.
Speaker 2: Wow.
Speaker 3: Well, Elon Musk is now the richest person on the planet.
Speaker 2: More than half the satellites in space are owned and
Speaker 2: controlled by one man.
Speaker 4: Starting his own artificial intelligence company.
Speaker 5: Well, he's a legitimate, super genius, legitimate, he says.
Speaker 6: He's always voted for Democrats, but this year it will
Speaker 6: be different.
Speaker 3: He'll vote Republican.
Speaker 7: There is a reason the US government is so reliant
Speaker 7: on him.
Speaker 8: Alon Musk is a scam artist and he's done nothing.
Speaker 9: Anything he does is fascinating to people.
Speaker 2: Welcome to Elon Am Bloomberg's weekly podcast about Elon Musk.
Speaker 2: It's Tuesday, June eighteenth. I'm your host, David Popadopoulos. This week,
Speaker 2: we've got money on our minds, specifically Elon's victory. His
Speaker 2: pay package of some fifty billion dollars was approved by
Speaker 2: Tesla's shareholders last week. We'll dig into what that does
Speaker 2: and doesn't mean for his fortunes and for the company,
Speaker 2: plus imagine if X became the new Venmo. Friend of
Speaker 2: the show, Kurt Wagner has a scoop on Elon's plans
Speaker 2: to morph x into a payments platform and some early
Speaker 2: steps the company has taken. And we'll also dig into
Speaker 2: another ex development, the disappearance of users liked posts on
Speaker 2: the platform and what's behind it. To talk about all
Speaker 2: things Tesla, we have our expert muscologists, Max Chapkin, BusinessWeek
Speaker 2: senior reporter, he Loo Max, Hot, damn.
Speaker 8: I love you guys.
Speaker 2: You know you beat me to that. So I was
Speaker 2: gonna say that here at the end I should clearly
Speaker 2: I shouldn't be at the beginning you said, hot damn.
Speaker 2: You love us all, and we all love you back.
Speaker 2: Dana Hull, our Elon Musk correspondent, Hello, Dana.
Speaker 10: Awesome to be here.
Speaker 2: And we have Jeff Feely, who covers Delaware courts for
Speaker 2: us here at Bloomberg. Hello Jeff Mooring. Later on the
Speaker 2: show to talk Ax, we'll have Kurt on and we're
Speaker 2: gonna have a special guest, Max Reid, who writes the
Speaker 2: Read Max newsletter and his covered tech for many years. Okay, Dana,
Speaker 2: So the shareholder vote or votes. There were actually multiple votes,
Speaker 2: but the biggest one on Elon's pay package took place
Speaker 2: last week. He won. What was the margin of the vote.
Speaker 2: Was it similar to his victory way back when when
Speaker 2: this thing was approved in eighteen? Big or smaller? What
Speaker 2: did it look like?
Speaker 10: It was roughly the same. Seventy two of voting shareholders
Speaker 10: vote to reratify Musk's twenty eighteen pay package. And what
Speaker 10: was super interesting was that going into the shareholder meeting
Speaker 10: like the day before, I thought the vote was very close.
Speaker 10: I mean, Tesla had been running this very aggressive campaign
Speaker 10: to engage retail shareholders. All of these people like Tesla,
Speaker 10: Boomer Mama and others were like urging everyone to vote.
Speaker 10: There was this huge, huge get out the vote effort.
Speaker 10: Optimists was urging people to vote, and the sense was
Speaker 10: that they didn't have the institutional shareholders. But then on Wednesday,
Speaker 10: Elon Musk, who has a penchant for front running, basically
Speaker 10: ran the big revealed He posted on Twitter that the
Speaker 10: vote that he was winning by a wide margin. And
Speaker 10: we came to learn after the fact that Vanguard, the
Speaker 10: largest shareholder in the company after Elon himself voted yes.
Speaker 10: For the pay package, and that was a bit of
Speaker 10: a surprise because they were a no in twenty eighteen.
Speaker 2: So Max, I guess I wonder if at some level
Speaker 2: it shows that his get out the vote campaign was affected.
Speaker 4: Yeah, Danna says, And this is for a company that is,
Speaker 4: you know, sort of famously against spending money on marketing
Speaker 4: and pr and on on these kinds of things. They
Speaker 4: went all out on this, on this effort, So in
Speaker 4: other words, spending it seemed more energy and even maybe
Speaker 4: more thought and time and so on into marketing. Elon Musk,
Speaker 4: as a guy worth really.
Speaker 2: Wanted that money. I guess that included, of course, the
Speaker 2: slightly strong arm tactics of calling up Tesla employees who
Speaker 2: owned the stock and urging them to vote. You know,
Speaker 2: he was pretty pumped up about winning this vote. You
Speaker 2: guys heard at the outset his greeting the assembly meeting there.
Speaker 2: We have another clip of him here talking about where
Speaker 2: he sees the company and it's valuation going.
Speaker 9: I think, just based on vehicle autonomy, we can we
Speaker 9: can ten x one ten x the value of the company.
Speaker 9: I believe that's what will happen, and it's just what
Speaker 9: what do you know? It's it's four twenty pm. Just
Speaker 9: noticed that.
Speaker 2: I assume those pauses there are for the bong hits.
Speaker 4: I feel like I get it in contact high, you know,
Speaker 4: listening to.
Speaker 2: Him a little bit as well.
Speaker 4: Uh, you know, we talk a lot about on this
Speaker 4: podcast about how, you know, there's sort of what Elon
Speaker 4: says and then how he says it. And he's saying
Speaker 4: pretty much the same things he's been saying for a
Speaker 4: long time, although the mood was you know, even loopier,
Speaker 4: even more sort of ebuliant.
Speaker 8: Did I say that right than usual?
Speaker 4: And and you know, full on loopy and and you know,
Speaker 4: investors historically have kind of responded to that if if
Speaker 4: Elon must seems like he's in a good mood, even
Speaker 4: if he's making weed jokes and awkwardly pausing and using
Speaker 4: a weird voice to say hot, damn, I love you guys,
Speaker 4: investors are sort of okay with it.
Speaker 2: Yeah, Dan. At that point, the stock actually did pop
Speaker 2: both that day and the next day, So even though
Speaker 2: it was sort of expected, I guess it was a
Speaker 2: bit of a reassurance for those.
Speaker 10: Tesla has always struggled with key man risk, and the
Speaker 10: key man risk in this case, was that if the
Speaker 10: package didn't pass, that Elon was gonna get pissed off
Speaker 10: and quit and walk away and take his like AI
Speaker 10: and robotics toys elsewhere. So it was like reassuring to
Speaker 10: investors to sort of see him in this happy, expansive,
Speaker 10: dopamine fueled kind of mood, you know, talking about not
Speaker 10: just like the next chapter of Tesla's history, but he
Speaker 10: claimed that they are writing a new book. And then
Speaker 10: he threw out like all kinds of crazy numbers about
Speaker 10: how the valuation is just gonna skyrocket. I mean, they're
Speaker 10: gonna ten x, they're gonna see two hundred to three
Speaker 10: hundred percent year over year growth, and the energy storage
Speaker 10: they've got, the cyber trucks, they're going to optimize optimists.
Speaker 10: And then he thinks that it's possible for Tesla to
Speaker 10: achieve evaluation ten times that of the most valuable company today,
Speaker 10: which would be a valuation of thirty three trillion. So,
Speaker 10: you know, we talk about Elon's moods. He was expansive Elon,
Speaker 10: And you know, these shareholder meetings are like religious revival events.
Speaker 10: I mean, people are so grateful to have a ticket
Speaker 10: to be able to say that they were in the
Speaker 10: room with this guy. But this doesn't mean that it's over. Like, yes,
Speaker 10: the shareholders voted to reratify the package, but the judge
Speaker 10: in Delaware still has to sort of sign off on that,
Speaker 10: and that is far from certain.
Speaker 2: Yeah, so Jeff, give us the next legal steps here.
Speaker 3: Okay, So these guys have tried to do basically a
Speaker 3: redo over the original package to fix the flaws that
Speaker 3: Judge McCormick pointed out in January. Nobody's tried to ever
Speaker 3: try to do this before. The section of the law
Speaker 3: they're using, lots of people say was set up for
Speaker 3: technical fixes, not substantive changes like this. So Judge Katie
Speaker 3: that's her local nickname, is not required to take notice
Speaker 3: at all of the shareholder vote. She has to find
Speaker 3: a lot to issue a final ruling in the case,
Speaker 3: and that includes deciding how much the winning shareholders lawyers
Speaker 3: get in legal fees. There's a hearing July eighth to
Speaker 3: hear arguments on the legal fees. And I guess on
Speaker 3: Tesla's argument that they can, you know, now, they should
Speaker 3: be able to just reinstate its package because they've fixed
Speaker 3: all the you know, they've plugged all the holes the
Speaker 3: general belief in the bar around here is that this
Speaker 3: is not going to affect her ruling. She's ruled on
Speaker 3: the package, she's found the flaws. They really didn't address
Speaker 3: the flaws. They made some weak attempts at trying to
Speaker 3: remove the conflicts, but having one person serve as the
Speaker 3: special committee is not what you would call best practices
Speaker 3: in good governance world.
Speaker 2: Okay, And that's the thing, But Jeff, one of her concerns,
Speaker 2: if I'm remembering correctly, was that they kind of smooth
Speaker 2: played this one over on the shareholders and who weren't
Speaker 2: quite aware of what they were actually voting for when
Speaker 2: they voted for his pay package. And certainly, I would
Speaker 2: think no one can make that argument now. I think
Speaker 2: everyone was eminently aware of what they were voting for.
Speaker 3: Yes, although they basically they being TESLA, were not very
Speaker 3: transparent about the idea that this didn't have any binding
Speaker 3: effect on the judge. Okay, They led folks to believe
Speaker 3: that if you vote yes, that Elon's going to get
Speaker 3: his dough, and that ain't.
Speaker 2: So okay, right true, So they voted yes, he doesn't
Speaker 2: get his dough. Yet they're waiting for the judge now,
Speaker 2: to respond. Now, Dan, what happens if the judge says
Speaker 2: no yet again, is there any pay package in effect
Speaker 2: that all for him ers are essentially going unpaid in
Speaker 2: the horror of it, you know, a guy with whatever
Speaker 2: one hundred and fifty billion dollars or so going unpaid?
Speaker 2: But what is the current pay package in place?
Speaker 10: So there's a couple avenues. I mean, Tesla will undoubtedly
Speaker 10: appeal if the judge says no, screw you. I'm not
Speaker 10: taking this like redo vote into account. My opinion from
Speaker 10: January still stands.
Speaker 2: She's definitely saying screw you if she votes now.
Speaker 10: Yeah, Tesla can appeal to the Delaware Supreme Court. They so,
Speaker 10: you know, keep your eye out for a filing on
Speaker 10: that after they have this hearing in July. But now
Speaker 10: Tesla has moved its legal incorporation to Texas. I mean,
Speaker 10: that's the other significant vote that happened at the shareholder meeting.
Speaker 2: They are now.
Speaker 10: Domiciled in Texas. It's where their headquarters has been for
Speaker 10: a couple of years now. But now they have another
Speaker 10: avenue because they could I mean, Jeff correct me if
Speaker 10: I'm wrong here, but they could do yet another revote
Speaker 10: in Texas and then only Texas law would apply. So
Speaker 10: that's sort of the endgame here. I mean, they're doing
Speaker 10: an end run around the Delaware court system.
Speaker 4: This is going to go on and on though, because
Speaker 4: you have, first of all, I'm pretty sure that Texas
Speaker 4: has to respect Judge McCormick's ruling, or it should respect.
Speaker 8: Judge McCormick's ruling, so they have to do a new
Speaker 8: pay package.
Speaker 4: Meanwhile, you've got all of these lawsuits that were filed,
Speaker 4: you know, just under the wire, to all these shareholders
Speaker 4: who want to have cases in Delaware court. So this
Speaker 4: Delaware is going to have something to say about Elon
Speaker 4: Musk for some time.
Speaker 2: Yeah.
Speaker 3: Well, first of all, let's remember if Texas's business courts
Speaker 3: aren't even set up yet, they will not be set
Speaker 3: up until September.
Speaker 2: What does that mean Texas has no business courts at all?
Speaker 4: Right?
Speaker 3: No, No, they have no court equivalent to Delaware's chancery court,
Speaker 3: which is the primary premier venue for corporate litigation in
Speaker 3: the country. They are trying to set up a competing
Speaker 3: court to the Delaware court, and their legislature enabled it
Speaker 3: in the last session, but they have not been able
Speaker 3: to hire judges, they don't have stuff codified. It's a
Speaker 3: we're a fair distance away from anybody being able to
Speaker 3: navigate a lawsuit in those particular courts. So that's number one.
Speaker 3: Number two, we live in a rule of law the
Speaker 3: last time I checked here in country, and being a
Speaker 3: disappointed litigant and being unhappy about a court system is
Speaker 3: one thing, But you know, switching your state of incorporation
Speaker 3: because a judge ruled against you on one thing is
Speaker 3: so Elon, it's almost hilarious, Danna.
Speaker 2: Before we move on, though, let me ask you this
Speaker 2: last question. Out of this shareholder vote or the shareholder meeting,
Speaker 2: were there any other votes of import that our listeners
Speaker 2: should know about.
Speaker 10: Yeah, So two directors were up for re election, James
Speaker 10: Murdoch and Kimball Musk. They've both been on the board
Speaker 10: for a while. Kimball is obviously Elon's younger brother. Both
Speaker 10: of them them were re elected to the board with
Speaker 10: like pretty flying colors, So no surprises there. And I
Speaker 10: think it was just like a chance for Elon to
Speaker 10: take this big victory lap and for the retail shareholders
Speaker 10: who really came all out and got engaged in an
Speaker 10: active in.
Speaker 8: A way that you.
Speaker 10: I mean, frankly, retail shold shareholders typically do not vote
Speaker 10: in proxy fights. I mean, every once in a while
Speaker 10: you might have like a big proxy battle where there's
Speaker 10: like an activist shareholder trying to take over a stake
Speaker 10: in the company, But in general, like people own shares
Speaker 10: via their like mutual funds or in their retirement counts,
Speaker 10: and they're not like active participant in I guess what
Speaker 10: you could call shareholder democracy. But this was a real
Speaker 10: I mean, this was a real sense that they were.
Speaker 8: And so going.
Speaker 10: Forward, I'm curious to see how active these shareholders will
Speaker 10: be and if they will there will ever come a
Speaker 10: time where they're actually like opposed to what the company
Speaker 10: is saying.
Speaker 2: Hey, Jeff Feely, before we let you go, sir, any
Speaker 2: final words of wisdom.
Speaker 3: Well, I would not go to Vegas and put money
Speaker 3: down on Judge Katie allowing them to do a.
Speaker 2: Right Well, I do gamble a fair amounts, hold on,
Speaker 2: do not go to Vegas and bet again.
Speaker 3: I mean, you know, I'd put some money on the Eagles,
Speaker 3: but not.
Speaker 2: Don't you know I could talk about the Mets on
Speaker 2: this show and mock Max about the Mets. We don't
Speaker 2: talk about the Philadelphia Eagles on the show. Jeff Feely,
Speaker 2: thank you very much for joining us.
Speaker 5: All right, guys, see you take.
Speaker 2: Care, Dana. Thank you for joining us.
Speaker 10: Always the pleasure.
Speaker 2: All right Now, Max, Chafkin and I are joined by
Speaker 2: Kurt Wagner, who covers tech for us here at Bloomberg. Hello, Kurt, hey, Hey,
Speaker 2: and Max read the author of the Read Max Substack newsletter.
Speaker 6: Welcome Max, Thanks for having me.
Speaker 2: Okay, so for the purposes of this, so we don't
Speaker 2: get confused here, we're gonna go with Max, Reid and Chafkin.
Speaker 2: Does that work? By the way, Max is a fantastic name.
Speaker 2: I mean, if we if our if we had another child,
Speaker 2: there was a boy we were gonna name h Max,
Speaker 2: just Maximilian Papadopolis. The kid would have achieved incredible things.
Speaker 2: Kurt Wagner, let's start with you and your and your
Speaker 2: scoop this morning that you head out with your colleague
Speaker 2: Aisha Counts, Elon and co. There X are advancing on
Speaker 2: their plan for their Venmo like payments feature. We've known
Speaker 2: about this for a while, but you've encountered a bunch
Speaker 2: of new information. Tell us what you learned.
Speaker 7: Yeah, we submitted public records requests in all fifty states
Speaker 7: because what X is doing right now is they're trying
Speaker 7: to get payments licenses in these states, and so we
Speaker 7: just you know, sent the regulatory agencies are r foyas
Speaker 7: and in eleven cases actually we got documents back and
Speaker 7: it gave us a nice glimpse into what it is
Speaker 7: they're doing. So we've got some business plans, financial statements
Speaker 7: or charts, things like that that we're helpful not just
Speaker 7: to paint a picture of what they're doing on payments,
Speaker 7: but also just give us a bit of a sneak
Speaker 7: peek into X more broadly, because it is a private
Speaker 7: company now and we don't really get those updates like
Speaker 7: we used to when Twitter was public. But the short
Speaker 7: version is they are trying to build a payments like
Speaker 7: feature where you would, you know, log into a dashboard
Speaker 7: on x dot com or the app, you could pay people,
Speaker 7: you could pay businesses, you could store money. The fees
Speaker 7: would be very minimal, so it would it wouldn't be
Speaker 7: you know, passed on the business aspects of this wouldn't
Speaker 7: be passed on to consumers, and you know, as you mentioned, David,
Speaker 7: like this this plays into this everything app idea that
Speaker 7: Elon has talked about. You can't be in everything app
Speaker 7: if you can't use it for finances and money, and
Speaker 7: so they are very much in the process of trying
Speaker 7: to make this a reality. And even though Elon's sort
Speaker 7: of hinted at it and talked about it, I think
Speaker 7: these documents confirmed a lot of the progress and ambitions that.
Speaker 2: They have now Max read the Everything app and in
Speaker 2: particular leaning into the financial parts of it, something that
Speaker 2: Elon has really kind of obsessed about for a long
Speaker 2: long time, you know, way back to his prior to
Speaker 2: his acquisition of Twitter.
Speaker 6: Right, yeah, I mean twenty five years after he sold
Speaker 6: his first company, Zip to Go Zip two in the nineties,
Speaker 6: he wanted to launch an online bank, which he purchased
Speaker 6: the RX dot com for his URL in particular, maybe
Speaker 6: even more than the business plan has been a real
Speaker 6: white whale for him. But I mean, this is a
Speaker 6: sort of famous story. He launched X around the same
Speaker 6: time that Peter Teal and company launched what was going
Speaker 6: to become PayPal Confinity. They were in this really cutthroat
Speaker 6: competition and eventually merged and Teal famously pushed Musk out
Speaker 6: PayPal became, you know, the leader at the time of
Speaker 6: payment apps, and Musk, I mean, depending depending on how
Speaker 6: you look at at Musk has perhaps been stewing for
Speaker 6: decades hoping to get peg into the world of online payments.
Speaker 6: He bought back the x dot com URL from PayPal
Speaker 6: twenty seventeen, I think, and you know, this was one
Speaker 6: of the first things he was talking about when he
Speaker 6: was buying X. I think even before he bought X,
Speaker 6: he was talking up we Chat, the Chinese chat app.
Speaker 5: A app that's as good as we Chat in China,
Speaker 5: and like in China you like live on we Chat. Basically,
Speaker 5: it's like yeah, everyone, everyone's like, like, you live on
Speaker 5: we Chat, you do payments, you do everything. It's like, yep,
Speaker 5: it's great. Basically we chats kick ass, and we don't
Speaker 5: have anything like we Chat outside of Taina. So I
Speaker 5: was like, my idea would be, like, how about if
Speaker 5: we just copy we Chat.
Speaker 4: Hey, Honestly, the assent is more interesting in that clip
Speaker 4: than the substance.
Speaker 2: You know.
Speaker 4: One thing that Max left out of that story is
Speaker 4: that and I learned this when I was reporting my
Speaker 4: book about TIL. Some people think that the final straw
Speaker 4: for Elon Musk getting pushed out was an attempt to
Speaker 4: rename Among the things he did and PayPal was kind
Speaker 4: of a mess back then before before he got pushed out,
Speaker 4: was to try to rename PayPal, which at that point
Speaker 4: had a brand and a decent following and so on.
Speaker 4: He tried to rename it X so so kind of
Speaker 4: exactly the same move we saw with Twitter when he
Speaker 4: did the renaming there.
Speaker 8: He just loves, just loves that letter.
Speaker 2: So, Kurt, best case scenario for Elon and the X crew,
Speaker 2: when is this feature being rolled out? What's their timeline? Like,
Speaker 2: I know that Elon's always wildly optimistic on his timelines,
Speaker 2: but what are they talking about?
Speaker 7: Yeah, I mean they wanted it or want it by
Speaker 7: the end of this year. They had said in some
Speaker 7: of the emails we read that they were hoping to
Speaker 7: do someonce they had the majority of state. You know,
Speaker 7: they had payments licenses in the majority of states. They
Speaker 7: now have twenty eight, so technically they do have more
Speaker 7: than half. My guess is they would want more than
Speaker 7: you know, much closer to fifty so that people are
Speaker 7: able to actually send money.
Speaker 2: But could they do They absolutely need all fifty to
Speaker 2: start or could you start with forty two.
Speaker 7: You could start with forty two, but then you know
Speaker 7: there are people in eight states who can't participate, and
Speaker 7: it kind of.
Speaker 2: What they are going to be losing out on. Jesus.
Speaker 7: Well, yeah, but you know, imagine you have a friend
Speaker 7: there you want to send money to and you can't.
Speaker 7: It sort of limits the the you know, user experience,
Speaker 7: and I I think that's really the key, right, Like
Speaker 7: building this getting the approval is sort of the easy
Speaker 7: part in my opinion. I actually think the hard part
Speaker 7: here is going to be convincing people to use X
Speaker 7: in a way that they have never used it before.
Speaker 2: Right.
Speaker 7: Not only are there a bunch of existing competitors like
Speaker 7: Venmo out there that have market share, but it's a
Speaker 7: user behavior issue, Like how many people are going to
Speaker 7: suddenly say, yes, this app that I've used to you know,
Speaker 7: dunk on politicians or get my news for the past
Speaker 7: twenty years is suddenly going to be my bank. Like
Speaker 7: that's just not a logical jump for most people. And
Speaker 7: I think that's going to be the bigger hurdle than
Speaker 7: actually building the product.
Speaker 2: Quick shraphole here, which of the I want to ask
Speaker 2: the two max is and Kurt, if you indeed, would
Speaker 2: you know, try this out, assuming, by the way, I'm
Speaker 2: going to throw in one hundred dollars for X. I'm
Speaker 2: going to give you all three hundred dollars because I'm
Speaker 2: sure they're going to do something like that. They're going
Speaker 2: to slip you a C note or something. They slip
Speaker 2: you a cnoe and say, hey, we want you to
Speaker 2: use it. Stop using venmo use X Max.
Speaker 4: Jeff, Well, I'm going to look at what the interest
Speaker 4: rates are, you know, really very closely studied offering.
Speaker 8: No, I'm not going to use the app that I
Speaker 8: doom scroll to do banking.
Speaker 2: No next season, No, Max read.
Speaker 6: Take the one hundred dollars and I'd make the minimum
Speaker 6: number of payments to get the hundred dollars out, and
Speaker 6: then I would never use it again.
Speaker 2: It's a good answer, Kurt.
Speaker 7: Yeah, I do the same. I mean, I'm not even
Speaker 7: comfortable really using Twitter DMS right now for privacy reasons,
Speaker 7: So I'm not going to be using Twitter for my banking.
Speaker 4: Reading Kurt story and reminded it was like reading I
Speaker 4: feel like there's a really good illustration of how easy
Speaker 4: it is when you're very wealthy to like spend money
Speaker 4: on dumb things. Because clearly Elon Musk told a bunch
Speaker 4: of people, and I think there's some reporting to this
Speaker 4: effect as well. Like said, you know, essentially ordered his
Speaker 4: team to secure these permits. They're doing so at probably
Speaker 4: absurd expense.
Speaker 2: Why is that? Why is why is securing permits incredibly expensive?
Speaker 4: You have a bunch of you know, high priced lawyers,
Speaker 4: and you know it has taken years, and like, at
Speaker 4: the end of the day, even if they get all
Speaker 4: these permits, like Kurt says, you know, this is not
Speaker 4: going to be a big business.
Speaker 2: Right. Let's even pretend, Kurt that it is a big
Speaker 2: business for the sake of argument. Let's say this thing
Speaker 2: takes off and holy smokes, everyone stops using Zel, stops
Speaker 2: using Venmo. They are xing exing money across the globe
Speaker 2: as they see it. Does it generate a lot of
Speaker 2: revenue for them? As they've laid out their model and
Speaker 2: the documents you've looked at.
Speaker 7: They haven't put revenue projections into the documents we've seen.
Speaker 7: They have said that the fees are not really the
Speaker 7: main purpose here. Again, they wouldn't they wouldn't do fees
Speaker 7: for consumers. They would do a fee for a business.
Speaker 7: So if I buy something from you, David, you as
Speaker 7: the retailer might have to you know, pay one, two,
Speaker 7: three percent or whatever to X because the sale came
Speaker 7: through their platform. For them. What they've said is the
Speaker 7: bigger businesses this idea that people will find X more valuable.
Speaker 7: Therefore they will spend more time on X, and that
Speaker 7: will make X a better advertising business, which is what
Speaker 7: they already do.
Speaker 4: So the idea is that you buy your Cheech and
Speaker 4: Chung gummies with this with this payment platform, right, and
Speaker 4: that will cause Cheech and Chong to pay more money
Speaker 4: to X to advertise.
Speaker 7: Well, let's go back to our hundred dollars example here.
Speaker 7: You know, Max, you have your hundred bucks sitting in
Speaker 7: your X account, and chich and Chong suddenly says, well,
Speaker 7: you're a more valuable target for them because you could
Speaker 7: make a purchase with one click right there in the feed, right,
Speaker 7: you can make an impulse buy, Oh this looks cool,
Speaker 7: and I already have the money sitting my account. Boom,
Speaker 7: buy right there right. It just eliminates these steps that
Speaker 7: get to a sale, and their hope is that that
Speaker 7: will make X a more valuable advertising business.
Speaker 2: Okay, Now, Kurt in doing the digging for this story,
Speaker 2: I believe you guys, you also uncovered some financials in
Speaker 2: the filings, right, a bit of a better look inside
Speaker 2: how the company is doing and what did you learn there?
Speaker 7: No shock to focus on this pod because we've talked
Speaker 7: about this, but the business was not doing well last year.
Speaker 7: The numbers we got were from Q one and Q
Speaker 7: two of twenty three, so about a year ago, basically
Speaker 7: the first you know, full six months of Elon in charge,
Speaker 7: and X's revenue was about forty percent lower than the
Speaker 7: year prior when he took over. They lost almost five
Speaker 7: hundred million dollars in the first quarter alone, And I
Speaker 7: think for me, not only did it confirm a lot
Speaker 7: of things that we've been hearing and trying to report
Speaker 7: right sort of around the company, but I think that
Speaker 7: it just sort of explains why this everything app idea
Speaker 7: is so important to Elon, because the current business plan
Speaker 7: that they have is just not working. It's not big enough.
Speaker 7: And so if you are sitting there saying, hey, you know,
Speaker 7: we have a business that's half the size of what
Speaker 7: I acquired, you got to fill that in somehow. And
Speaker 7: so I think That's why this everything app and these
Speaker 7: payments are such a priority for them is because they're
Speaker 7: sitting there going we need to figure out how to
Speaker 7: make money from this thing.
Speaker 2: But I guess Max read My question for you would be,
Speaker 2: this is in some little startup company now, I mean
Speaker 2: X formerly Twitter's been around for a while. You are
Speaker 2: now losing a half a billion dollars a quarter. At
Speaker 2: what point do you just say, all right, we're just
Speaker 2: throwing good money after bad here. This ain't working.
Speaker 6: Are you asking me or are you asking hypothetical Elon Musk,
Speaker 6: because I'm not sure Elon Musk ever quite hits that point.
Speaker 6: I mean, for me, I would have said that nineteen
Speaker 6: months ago, but I also wouldn't have bought x Twitter
Speaker 6: or whatever. I mean, this is the funny thing about
Speaker 6: the everything app. And you could even hear it in
Speaker 6: that clip, which I believe was from before even bought Twitter.
Speaker 6: The idea. I don't know if you're thinking we need
Speaker 6: to make this company really big if you just say
Speaker 6: the words everything app, that's the biggest thing there is.
Speaker 6: Everything is everything. But it's not precisely a business plan,
Speaker 6: is it?
Speaker 9: You know?
Speaker 6: We Chat is what it is because of a pretty
Speaker 6: specific situation about Chinese finance and banks and payments, and
Speaker 6: it evolved into that after a bunch of decisions made
Speaker 6: over the course of a couple decades. And it's really
Speaker 6: not the kind of thing that you can just walk
Speaker 6: in and say, if we if we crobe our payments
Speaker 6: into the uh you know, as we say the the appword,
Speaker 6: Cheach and Shong are selling me gummies and where camgirls
Speaker 6: have all kinds of things in their bios. It doesn't
Speaker 6: strike me as as a natural fit. And I don't
Speaker 6: think it's the kind of thing that's suddenly can to
Speaker 6: leverage you into a Facebook sized company.
Speaker 4: We know that this everything app thing is is, like
Speaker 4: Max is saying, like an uphill battle because every other
Speaker 4: tech company has in the US has tried it. Facebook
Speaker 4: has tried it. You know, they all this is not
Speaker 4: like this is not like this is like the most
Speaker 4: obvious thing you could possibly think if you owned a
Speaker 4: social media But it's not some kind of this was
Speaker 4: real great epiphany, right, And they've all tried it and
Speaker 4: they've all basically failed for the reasons I'm Max saying,
Speaker 4: like the Internet is, it's a thing.
Speaker 8: It's like a living thing. That's evolved.
Speaker 4: You can't just sort of like snap your fingers and
Speaker 4: swallow you know, a whole section of the of the
Speaker 4: Internet where people have sort of locked in relationships with companies.
Speaker 4: But you know, one thing I've noticed as we've had
Speaker 4: this conversation, I mean, this thing with the everything app.
Speaker 4: Just take it seriously for a second. It's kind of
Speaker 4: similar to optimists, right, It's just like Elon Musk picking
Speaker 4: the biggest possible thing. So like, what if I owned
Speaker 4: the means of production for everything in the entire world?
Speaker 4: Like he's basically said that, what if I own the
Speaker 4: entire Internet? That would be great? And you know he's
Speaker 4: this is where he's honestly very good. I mean, as
Speaker 4: outlandish as those ideas are, and as outlandish it is
Speaker 4: for Elon to sit up at the Tesla annual meeting
Speaker 4: when Tesla is you know, worth five hundred billion dollars
Speaker 4: and is like, you know, way over valued relative to
Speaker 4: every other car company, to say, oh, we're going to
Speaker 4: be worth you know, thirty trillion, and people kind of
Speaker 4: take that no seriously.
Speaker 2: But on that going back to that shareholder meeting, because
Speaker 2: actually that that's where my mind was going a little bit, Kurt.
Speaker 2: I know you were listening in early and you heard
Speaker 2: the clips, the raucous clips of the crowd egging him
Speaker 2: on and cheering him. You can't tell me that you
Speaker 2: can't take some of those enthusiastic Tesla shareholders and Tesla
Speaker 2: owners and get them on this everything app Come on,
Speaker 2: you can.
Speaker 7: There were what three hundred people in that room? Sure users, right,
Speaker 7: I feel.
Speaker 2: Like there were at least you know, five hundred, come on,
Speaker 2: at least five.
Speaker 7: I mean, this is this is sort of the the
Speaker 7: subscription product that X launched on, you know, right after right, Like,
Speaker 7: you look at who kind of is subscribed to that,
Speaker 7: and I think for the most part it's people who
Speaker 7: believe in Elon and people who are Elon fans, and
Speaker 7: that is a small business for them. That is not
Speaker 7: a big enough business for this to work. So there's
Speaker 7: always going to be people no matter what he does.
Speaker 7: He sold he sold flamethrowers for God's sake, right, and
Speaker 7: like people bought those. So like, no matter what he does,
Speaker 7: there will be an audience for it. But I think
Speaker 7: the question is is it at scale? And I don't think,
Speaker 7: you know, I think this will be tough to get
Speaker 7: to scale.
Speaker 2: I got your currently everything app is going to be
Speaker 2: as important to X as the flamethrower was to test on.
Speaker 2: So some iteration of zero point zero zero zero zero
Speaker 2: one percent of revenue max read and other ex news
Speaker 2: the company has begun to hide to a certain degree
Speaker 2: your likes on posts. Tell us a little bit more
Speaker 2: about it and how we should interpret this.
Speaker 6: Yeah, so last week some people poking around on Twitter
Speaker 6: realized that they were piloting a program where likes would
Speaker 6: be hidden. So classically, there are three actions you can
Speaker 6: do with a tweet. You can retweet or quote tweet it,
Speaker 6: you can reply to it, or you can like it,
Speaker 6: which has an ambiguous meaning. Let's say, but it's saved
Speaker 6: in a big list that is public or was until
Speaker 6: recently publicly accessible on your profile. So if you're out
Speaker 6: there liking Cheech and Chong tweets, then anybody who goes
Speaker 6: to your profile can see all the Cheech and Chong
Speaker 6: tweets you liked. And similarly, I could click on a
Speaker 6: Cheech and Chong tweet and see everybody who liked that tweet.
Speaker 6: And when it was discovered that they were sort of
Speaker 6: figuring out how to hide these or they were playing
Speaker 6: around with hiding them. Twitter's head of engineering tweeted that
Speaker 6: they were doing this because they felt like people were
Speaker 6: afraid of liking I believe the phrase he used was
Speaker 6: edgy content, that trolls would attack people who liked edgy content,
Speaker 6: that it would be used to damage them in some way.
Speaker 2: You're not buying it, I take it.
Speaker 6: I mean, I think that's actually I buy that. That
Speaker 6: is the literal reason that many of the people who
Speaker 6: work at Twitter right now want to do this. It's
Speaker 6: hard for me not to associate a particular kind of
Speaker 6: political valance to that statement, by which I mean, I
Speaker 6: think there are people, maybe who work at Twitter, but
Speaker 6: a lot of people who use Twitter who are under
Speaker 6: the impression that there's all these kind of right wing
Speaker 6: statements that are getting made that people would like if
Speaker 6: they knew it would be hidden, but they can't like
Speaker 6: them because that edgy content is going to get them
Speaker 6: attacked by trolls. Practically speaking, I think maybe what they're
Speaker 6: talking about is a kind of dynamic where prominent people politicians,
Speaker 6: hedge fund managers, celebrities are under you know, are engaged
Speaker 6: in a kind of constant back and forth. Let's say
Speaker 6: with the non prominent, non famous people on Twitter, and
Speaker 6: if you like something in err and cy I mean,
Speaker 6: I'm thinking, for example, of when Ted Cruise's account, Oh yes,
Speaker 6: accidentally liked a still from a porno. This was back
Speaker 6: in twenty eighteen or whatever.
Speaker 8: It was all time greatest moment in Twitter history.
Speaker 2: I think yeah.
Speaker 6: I mean, look from a pure traffic perspective, it's obviously
Speaker 6: hugely profitable to Twitter to allow likes to be open,
Speaker 6: because stuff like that is just going to generate all
Speaker 6: kinds of attention to traffic. But if part of what
Speaker 6: you want to do is protect your most prominent users,
Speaker 6: you might want to reduce the you know what you
Speaker 6: would call their attack surface like you don't you want
Speaker 6: to reduce the number of ways that people can as
Speaker 6: Kurt was saying before, dunk on politicians, dunk on on
Speaker 6: prominent people. And to me, that's the sort of the
Speaker 6: kind of consistent thread through a lot of the product
Speaker 6: changes that Elon has brought through x Chafkin.
Speaker 2: Beyond the great Ted Cruise example, do any other big
Speaker 2: ones come to mind over the years of celebs mean
Speaker 2: or Kurt?
Speaker 4: I mean, you know, Max is saying, first of all,
Speaker 4: Max he wrote about this in his newsletter, which was
Speaker 4: great and really well argued.
Speaker 8: I think he's totally right.
Speaker 4: It's mostly about politics and this perception of essentially right
Speaker 4: wing content. But I will say I think a lot
Speaker 4: of this comes up with porn, and it's a lot
Speaker 4: of people, you know, liking content that's edgy in a
Speaker 4: in a sort of sexual way, because often I think
Speaker 4: because they don't quite realize that the likes are are public,
Speaker 4: Like like there's like in certain cases I think a.
Speaker 2: Genuine oh wait a minute, you mean they are, But
Speaker 2: you know.
Speaker 4: I also think, you know, just to play devil's advocate
Speaker 4: the light, Like I went back and looked at my
Speaker 4: likes from.
Speaker 2: The last Do you like your likes now? No?
Speaker 8: I hate them?
Speaker 4: And it made and it just made me think, like
Speaker 4: mostly the way I was using this was kind of
Speaker 4: just to express what amounts to like a pro I
Speaker 4: have it, thank you or something for somebody. It's like
Speaker 4: really embarrassing. All my likes are like self praise. It's
Speaker 4: like they're really lame.
Speaker 2: And it just made me feel.
Speaker 4: It really like going back, it just made me feel
Speaker 4: really bad about myself, Like I probably only out of
Speaker 4: for every twenty likes only one what one out of twenty.
Speaker 8: Was like a good joke, which I think is the
Speaker 8: way you're supposed to use it.
Speaker 2: You know, Kurt Max is feeling a little bad about himself.
Speaker 2: Can do you have anything encouraging or positive to say him?
Speaker 2: Can you like him right now? In fashion? Yeah?
Speaker 7: I like Max. I wouldn't obviously display that publicly on
Speaker 7: my Twitter. I'll say it here to you guys.
Speaker 2: Yeah, I want to ask Max read though another question
Speaker 2: on this, the you know, question of whether a legitimate
Speaker 2: argument can be made for it or not. I know,
Speaker 2: you know, you feel at some level that this is
Speaker 2: also just potentially cover for people liking outright racist sort
Speaker 2: of tweets and or x'es and that sort of thing.
Speaker 2: But is it possible that something like, hey, I want
Speaker 2: to be supportive of the kind of anti woke types,
Speaker 2: who are you know again some sort of corporate diversity initiative?
Speaker 2: But god, I can't quite get myself to do that publicly.
Speaker 2: Is that not potentially a thing? Yeah? Totally?
Speaker 6: And I think, you know, we probably don't have to
Speaker 6: go all the way into racism or hard right whatever
Speaker 6: to sort of acknowledge that there's like Twitter is a
Speaker 6: complicated social space, and there's all kinds of trouble you
Speaker 6: can get into, varying degrees of real life trouble versus
Speaker 6: just sort of having your Twitter experience be ruined. And
Speaker 6: I can recognize the value the user experience value to
Speaker 6: sort of feeling a little bit more free to lend
Speaker 6: your support to tweets, though you know, it's the kind
Speaker 6: of thing when you say that out loud, it feels
Speaker 6: a little bit ridiculous that this is like a user priority.
Speaker 6: Is that you want to make sure they're able to
Speaker 6: click the heart button as many times as possible, you know,
Speaker 6: under anti woke posts. But I think the other sort
Speaker 6: of the other, the thing that this cuts again just
Speaker 6: to defend public likes, is I think that, you know,
Speaker 6: Twitter is not a particularly transparent social network. Social networks
Speaker 6: in general are not particularly open or transparent. But I
Speaker 6: think that kind of transparency is really valuable, even to
Speaker 6: the limited extent that it exists in this specific case,
Speaker 6: not just for say journalists like me, who are you know,
Speaker 6: naturally just looking for ways to take down prominent politicians
Speaker 6: for liking you know, big butts posts or whatever it
Speaker 6: is that they're liking. But in a sort of broader sense,
Speaker 6: to have a sense of who on Twitter is looking
Speaker 6: at what and how they're looking at it.
Speaker 4: Well, yeah, what was cool about the likes is there's
Speaker 4: a cost to liking something, which is that you have
Speaker 4: to you know, there's a cost of retweeting, which is
Speaker 4: that you know you're gonna I'm gonna blast my followers
Speaker 4: with this, like that would be the maximal way to
Speaker 4: show approval or whatever, and alike, although it's not, you're
Speaker 4: not you're not spamming your feed, it's still there. And
Speaker 4: and now in a situation where you can just you know,
Speaker 4: like willy nilly, and you're never gonna have to defend
Speaker 4: your your likes and like, you know, you're just gonna
Speaker 4: you're gonna get liking.
Speaker 8: I feel like it's, you know.
Speaker 2: Just one more kind of inflation that we have to
Speaker 2: deal with now. Max reading Kurt, you heard that Max
Speaker 2: Chafkin is essentially embarrassed by almost all the likes he's
Speaker 2: ever put up there over the past.
Speaker 4: I only went back to like two early twenty one.
Speaker 4: Maybe you're like pre twenty one, Maybe might.
Speaker 8: Scrolled further back.
Speaker 4: There were cool likes back there, but I don't know,
Speaker 4: just not enough funny jokes and just too much, you know, professional, Thanks.
Speaker 2: For the support give us. For each of you the
Speaker 2: most embarrassing, like in hindsight, that you've encountered.
Speaker 6: Max read You know, I have to I don't want
Speaker 6: to ruin the game, but I have to say I
Speaker 6: don't think anybody should be embarrassed by their likes. I'm
Speaker 6: here to preach a gospel of non shame and unembarrassedness
Speaker 6: about what you're doing online. I think if you're liking
Speaker 6: stuff that people that people praising you, if your mom
Speaker 6: is on Twitter sharing your articles, you should be liking that. Frankly,
Speaker 6: it's it speaks poorly of you that you're not liking
Speaker 6: those things.
Speaker 2: You know, it's poorly of you.
Speaker 6: Max, you better be You better be liking those So
Speaker 6: that's that's all.
Speaker 2: This is good. This is good. So Max Chafkin is
Speaker 2: embarrassed by everything he's ever liked. Max Reid is embarrassed
Speaker 2: by nothing that he's ever like, or at least nothing
Speaker 2: that he'll admit to you here in front of all
Speaker 2: of us, Kurt Wagner, what is your answer, sir?
Speaker 7: You know I didn't go back as far as Max did.
Speaker 7: That's dedication to go all the way to twenty twenty
Speaker 7: one or whatever it is. I noticed two themes. The
Speaker 7: first is, unfortunately, just like our friend Max Chafkin, I
Speaker 7: really basically you even look my direction and boom, I'm
Speaker 7: liking that thing. Like if you comment about my book,
Speaker 7: even if it's not a nice comment, boom, you get.
Speaker 2: A like definitely thanks doing a lot of that.
Speaker 7: Yeah. And then and then I also have a ton
Speaker 7: of likes from around the time when Elon took over Twitter,
Speaker 7: because I was using the like at that point sort
Speaker 7: of as like a bookmark, right, like, oh, I want
Speaker 7: to come back to this tweet. So I got a
Speaker 7: ton of Elon tweets. I got the sleeping bag tweet
Speaker 7: from that executive who slept in the office. You know. Yeah,
Speaker 7: it was good, No, it was good. I mean, I'm
Speaker 7: not I'm actually with Max Reid here, like I'm not.
Speaker 7: I wasn't embarrassed by my likes necessarily. I just noticed
Speaker 7: that they fell into a couple buckets. It was like,
Speaker 7: I want to remember this for later for work, or
Speaker 7: you looked my way and boom, thanks for the attention,
Speaker 7: Like you get a life. So those were those were
Speaker 7: the buckets.
Speaker 2: That's a bit much getting so are going forward? Are
Speaker 2: you gonna stop doing that? No, not at all.
Speaker 7: Now you can't see now, you can't even see.
Speaker 2: It probably doesn't matter, but you just like everything exactly. Okay, No, No,
Speaker 2: very good, Max read thank you very much for joining us.
Speaker 2: Thanks for having me, Kurt as always, Thank you as always.
Speaker 7: I had a great time.
Speaker 2: Thank you, Max Chafkin did. This episode was produced by
Speaker 2: Stacey Wong. Naomi Shaven and Rayhan Harmancier are senior editors.
Speaker 2: The idea for this very show also came from Rayhon
Speaker 2: Wait Maples handles engineering, and we get special editing assistants
Speaker 2: from Jeff Grocott, Antonio Muffarech and Arafat Jalasho Perry. Our
Speaker 2: supervising producer is Magnus Hendrickson. The Elon Inc. Theme is
Speaker 2: written and performed by Taka Yasuzawa and Alex Sudijura. Brendan
Speaker 2: Francis Newnham is our executive producer, and Sage Bauman is
Speaker 2: the head of Bloomberg Podcast. A big thank you to
Speaker 2: our supporter Joel Weber. I'm David Papadopoulos. If you have
Speaker 2: a minute, rate and review our show. It'll help other
Speaker 2: listeners find us, see you next week.