Chancellor Kathaleen McCormick wants to know what Kayvon Beykpour knows about the company’s decision to restate the number of users it had three days after agreeing to sell to Elon Musk.

It wasn’t until AFTER agreeing to buy the company, that Elon Musk learned that had concealed the fact that it had been overstating the number of users it had for three years from him. In fact, just three days after signing the Merger Agreement Twitter released its 10-Q and admitted that it had been overstating users by millions for twelve straight quarters. The billionaire was livid and demanded answers from the company’s vaunted head of product, Kayvon Beykpour, to understand how the company tracked users, bots, and spam accounts. The company informed Elon that Kayvon wasn’t immediately available because he was taking paternity leave. The CEO was unimpressed pointing out that he had nine children and had never taken a single day of paternity leave to which Vijaya Gadde gasped in horror and disdain.

SIDENOTE

At this time, Vijaya Gadde, head of legal at Twitter, had been vocal in her opposition to Musk’s acquisition. After the board approved the sale of the company to Elon Musk she held an all-hands meeting where she broke down and openly wept as she expressed fears that Elon would put the lives of women and minority groups on the platform in grave danger.1 Gadde, considered the company’s moral authority, is said to have privately advised Black and LGBTQAI+ employees to prepare for the worst should Elon take control of the company.

Upon reading the news of her various criticisms of him the billionaire criticized Gadde for HER various decisions relating to censoring America’s oldest newspaper after they reported that Hunter Biden’s laptop contained evidence he had sold his father’s influence to the Chinese, Russians, and Ukrainians. Just as early voting began for president, Gadde ordered her team to suspend The New York Post’s account, disable the link to the article sitewide, and begin suspending Twitter users who were circumventing her efforts to censor discussion about Joe Biden’s possible corruption.2

After Musk criticized Gadde, Kayvon (who had no idea he was about to be fired) came to her defense tweeting:

Kayvon’s claim that Gadde’s job was “thankless” resulted in quite a few Twitter comments.3 FWIW I would love a job half as thankless as Gadde’s.

Vijaya Gadde runs legal at Twitter. Despite working for a company with mounting losses and flat user growth she’s paid millions. Her fellow executives including Kayvon Beykpour believe her job is thankless. I would love a job just half as thankless.

Undeterred Elon then asked for access to Agrawal’s number three executive Bruce Falck the company’s head of revenue. In a call reminiscent of the Red October scene where the United States Secretary of Defense incredulously asks the Russian Ambassador, “Andrei, you’ve lost another submarine?” Twitter explains that Bruce had ALSO been fired. The two most senior executives at Twitter with the ability to give Elon the information he needed had been fired and the company was complaining that he was using 💩💩💩 emojis in his tweets. 4

THE ORDER

Predictably, with litigation in full swing Twitter and Elon Musk are still miles apart when it comes to agreeing on what information the billionaire is entitled to see. Elon’s argument from the start has been that Twitter simply isn’t giving him the information he needs to satisfy himself and his fellow investors/lenders that the company has a good understanding of the number of human users it actually has. Twitter has admittedly withheld the personnel and data Musk requires because they simply don’t trust him. It is now up to Delaware Court of Chancery Chancellor Kathleen McCormick to decide exactly what Elon is entitled to see before spending $44B.

This week Chancellor McCormick gave the bad news that it wasn’t going to be permitted to stonewall Musk any longer. If they want her to consider forcing the billionaire to buy the company they are going to have to give Musk a lot more access to its people and data. To that end, Musk’s lawyers have been given access to Twitter’s largest vendors including Concetrix Solutions and TaskUs USA . Elon is also asking for a LOT of data around mDAUs as it relates to the sale of advertising. These questions should be VERY concerning to Twitter’s management team—he's asking questions they most certainly don’t want the answers to—answers they’ll have to include in their SEC filings if they find them.

The BIG NEWS to come from Chancellor McCormick was that Twitter would have to produce Kayvon Beykpour and his files (emails, texts, documents, reports).

The Chancery Court Judge also ordered Twitter to produce 41 other witnesses or so-called custodians with relevant information pertaining to Twitter’s bot crisis. Musk’s team wanted Twitter to reveal the identities of 21 additional employees, contractors, and/or temp workers responsible for calculating the percentage of bots and spam accounts on the platform. The judge decided that 41 would be enough and refused to require Twitter to comply with Musk’s additional request—he’d have to settle for Beykpour and the 41 other witnesses.5 From her order:

“Having reviewed the defendants’ letter dated August 9, 2022, and the plaintiff’s letter dated August 11, 2022, it is hereby ordered that the plaintiff is required to collect, review, and produce documents from Kayvon Keykpour. The plaintiff is not required to collect, review, or produce documents from any other of the defendants’ proposed 22 additional custodians. The plaintiff need only collect, review, and produce documents from the 41 custodians to which plaintiff has agreed to date and Mr. Beykpour.”

Almost two weeks after Elon Musk agreed to buy Twitter the company fired its Number Two executive heading product AND Bruce Falck its Number Three executive heading revenue.

At the end of the day, Twitter realizes that it cannot force Musk to fund the deal if the financing of $13 billion in debt falls apart so they’ve focused much of their discovery on the lenders. To that end, they’ve sent out a flurry of subpoenas to Morgan Stanley , Brookfield Asset Management , Musk's various advisors, and even a handful of the billionaire's friends who happen to be billionaires as well.6

Twitter subpoenas information about Elon Musk's inner circle of Silicon Valley investor friends as it prepares to force him to go through with $44B takeover

THE ELEPHANT IN THE ROOM

The big question many people are asking, including most certainly Chancellor McCormick, is why Parag Agrawal decided not to discuss his decision to fire Kayvon Beykpour and Bruce Falk with Elon Musk. Only two weeks had passed since the Merger Agreement was signed and a decision to fire his top two executives - the head of product and the head of revenue was anything but “ordinary”. Surely Parag realized Musk would consider the firing decision to be a breach of the agreement’s ordinary course provision unless he sought Elon’s consent.

Bruce Falk & Kayvon Beykpour are bitter…

Parag must have believed that there was a chance that Elon might deny his request to fire the company’s No. 2 and No. 3 executives and for some reason, he simply couldn’t take that risk. For some hitherto unknown reason, Parag decided that firing Beykpour and Falk was so important that it was worth risking tanking the ENTIRE deal. That, my friends, is the elephant in the room.

During their initial negotiations, Elon made it clear he didn’t want the company to make any drastic changes to the executive team during the six-month diligence period. The agreement included a standard ‘ordinary course’ clause that required the company to get Musk’s approval before making significant changes but he wanted the Twitter team to be crystal clear he didn’t want them to make a bunch of big changes before close. He proposed making the ordinary course language more specific including language around hiring and firing. Twitter pushed back and the original language was agreed to.

Now Twitter is claiming that since Musk had asked for specific language that was rejected, the judge should augment the agreement’s ordinary course provisions with language that was not included. Had Twitter wanted to retain the ability to hire or fire anyone without Musk’s approval they could have simply included that language in the agreement—instead, the parties agreed to a standard clause. Ultimately the judge will decide what the agreement ‘means’ but again I can’t help but wonder why it was so important to fire Beykpour and Falk just two weeks after signing the deal knowing full well that it would put the entire deal at risk.

The bad news is that everyone involved stands to make a fortune if this deal closes—Agrawal, Beykpour, Gadde, and Falk all stand to make tens of millions of dollars each—there is literally a huge financial incentive to remain silent. Perhaps the biggest irony in this entire deal is that Twitter might turn out to be THE poison pill that nobody wants to take—most of all Elon Musk.