Elon Buys Twitter, Vroom In The Texas Hot-Seat, A Real-World Metaverse Store

April 26, 2022
Just 24 months ago, today’s episode would seem like crazy-talk, but instead, it’s real talk as we dive into Elon Musk’s purchase of Twitter, Texas’ turning up the heat on used car retailer Vroom, and Meta is opening a real-world store to hoc the metaverse. And it’s only Tuesday, Troublemakers. 
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Vroom is getting sued by…Texas over alleged deceptive trade practices

  1. “According to a news release distributed on Wednesday, the lawsuit against Vroom, which also sells vehicles to Texas consumers under the name Texas Direct Auto, alleges that company has misrepresented and failed to disclose significant delays in transferring clear title and obtaining vehicle registrations, “burdening thousands of consumers.””
  2. Also states Vroom failed to disclose vehicle history, condition, and financing terms
  3. Received over 5000 complains from the BBB

Elon is buying Twitter for real

  1. 54.20 per share, a 38% premium
  2. Timeline of events: 
  3. Jan. 31: Musk starts building his stake 
  4. March 24: Musk starts critiquing Twitter, on Twitter
  5. “Worried about de facto bias in the Twitter algorithm having a major effect on public; Twitter algorithm should be open source,” Musk tweeted on March 24.
  6. “Free speech is essential to a functioning democracy. Do you believe Twitter rigorously adheres to this principle?” Musk asked his Twitter followers in a poll posted on March 25.
  7. “Is a new platform needed?” Musk asked in a tweet on March 26. “Am giving serious thought to this.”
  8. April 4: Musk’s stake becomes public, and he’s invited to join Twitter’s board
  9. April 5: Musk becomes an active investor -Musk refiled the disclosure of his stake to classify himself as an active investor, making the change only after indicating that he would accept a seat on the social media company’s board.
  10. April 9: Musk rejects the board seat
  11. April 10: Twitter makes the news public
  12. April 11: Speculation abounds: Musk files an amended disclosure with the SEC. He can now purchase as many shares as he wants.
  13. April 14: Musk makes his “best and final” offer to buy the whole company ​​$54.20 a share, a 54% premium
  14. April 15: Twitter adopts ‘poison pill’ to ward off Musk takeover
  15. April 16: ‘Twitter’s board owns almost no shares’
  16. April 19:  Musk retains Morgan Stanley to consider leveraged buyout
  17. April 21: Musk lines up $46.5 billion in funding as he talks about a ‘tender offer’
  18. April 24: The board holds discussions with Musk
  19. April 25: Musk will buy Twitter for his original offer of $54.20 per share
  20. Musk will take the company private. Musk said he will prioritize free speech on the site, open-source its algorithms, eliminate spam and add new features
  21. Deal will likely take 6 months to close
  22. It is unlikely that the leadership will stay in place
  23. Musk has taken shots by Jeff Bezos asking if China just gained a place in the town square
  24. Employee reactions are mixed with a present optimism

Meta is opening real-world stores to push the metaverse

  1. “Meta said Monday that it's opening its first retail store on May 9. The 1,550-square-foot space will be located on the social network's campus in Burlingame, California, where employees are focusing on the metaverse -- virtual worlds where people will be able to work, play and socialize.”
  2. “​The store will feature products such as Meta's first pair of smart glasses with Ray-Ban/ Facebook's line of video chat devices called Portal..
  3. “You'll also be able to try out the company's latest VR headset, the Quest 2, and people will be able to play games such as Beat Saber, Golf Plus, Real VR Fishing and Supernatural on the device. A wall-to-wall curved LED screen will display what you're seeing in virtual reality.”

Paul Daly  0:00  

Hello All right, you saw it. We're having an event on May 9. Get your tickets if you didn't see the promo because you're on the podcast, go to a soda.com Get your tickets from a knife. We have an insane show to talk about today. You wouldn't believe it a year ago.

Music  1:17  

I go to people really want to know who it is and who I need in

Paul Daly  1:21  

the show notes when they see this morning when we put it in. I wrote just 24 months ago, today's episode would seem like crazy talk this. It's real talk, right? Because as we're gonna talk about Elon Musk purchase of Twitter, Texas turning up the heat on room or like room where they come from a year ago. And then Mehta is opening a real world store to sell Metaverse equipment, and push people into the metaverse. It's like, first of all a year, 20 years ago, you'd be like the meta who? Room who? What, what are you Jim? What's all this gibberish?

Kyle Mountsier  1:56  

What are all these words that you have on a page? And then it's like, we know he builds cars and you know, solar panels. But track with me here. He bought a social media platform

Paul Daly  2:03  

he just executed a hostile takeover of Twitter brilliantly. It really is one of those things like you boil the frog, you don't realize that I mean, we didn't even mention blockchain and FTS IP lock downs. Mat 24 months ago, well, actually 24 months ago now we would know what to lock down. Unfortunately, we wouldn't know gently. Okay, but but all the other stuff. All the other stuff? For sure. I mean, it is it's easy to forget the staggering velocity that we've been moving on for the last 24 months, which means we've kind of normalized to it.

Kyle Mountsier  2:50  

Yeah, I think about this in in just the reality of a week for me right now. If, like associating that to just over two years ago, how the pace of a week the pace of news, the pace of, you know, the like the mentality on customer experience, all of that the pace at this point, then feels like drag pace, right. And I think everybody in business is dealing with that it was kind of like, there's just rhythm, and you just did you just kind of did things and everyone kind of showed up and then boom, things happen. And there's a pace right now, that sometimes almost feels like a frenzy to me. Does that make sense?

Paul Daly  3:33  

No, we've had it we've had to get used to operating well, in frenzy mode. Really, it's almost like Battlefield logistics, you know, like things are changing all the time. And you literally like when you go into battle, they say you never know exactly what's going to happen. Because you never know what the enemy is going to do. Like you can plan. But when you hit the battlefield, guaranteed, something's going to happen that you didn't plan for. Right? Because there's just too many possible scenarios. So I mean, I feel like we're getting very conditioned to do things we never thought were possible. And we talked about it all the time, the four minute mile, it was totally impossible. Actually, people were like, we pretty sure the human heart will explode. If you run a mile in four minutes. And then one person doesn't then now like it becomes the training, the training benchmark that many people do, and I think we're living in that world. I mean, na, na da conference, right? Let's and I think it's still like this. They may be trying to change it. But typically, if you're going to be a speaker at nada, right, you give your submission in like, sick. I don't know. It's like in the summer. Yeah, it's

Kyle Mountsier  4:34  

like three days from now, actually, for next year.

Paul Daly  4:37  

Is it really three? Probably, we missed it again. So, so it is it's like now and then they review it and then they approve it. And you need like final slide deck, everything you're going to be talking about in March of 2023 into them by like September, and that the funny thing is like that used to be just fine. Right? It used to be just fine. Yeah. And I think

Kyle Mountsier  4:58  

there's always It's been that kind of struggle, and but it used to be just fine. It was, I mean, if you think about the things that have happened in the last 24 months from a retail business experience perspective, and what we've had to adjust and shift on that, right, there are some normal sees, like we talked about yesterday, you know, the fact that people are pressing into vehicle buying centers and buying vehicles, I did a presentation at driving sales last year, that I could probably give today. And there'd be a whole subset of dealers that are just approaching this. So they're tackling, there's some blocking and tackling still to get rid of and to end to get in. And, you know, and now we've got, you know, if anyone's thinking Google, you know, with the GA for changes for analytics, we're going to be talking about that for the next 14 months until the old analytics. There's there are some of those like regular business things that but to really be dynamic with anything that you're talking about in the industry, it's a day to day type thing and and that's not just because of what's happening in automotive, but it's because of what's happening outside of automotive as well. And I think that's where, where, interestingly enough where we kind of lean lean in on this podcast every single day is hey, we're gonna look inside and outside of automotive because they all are impacts on how the business operates. Great

Paul Daly  6:20  

segway without being a segway. Great segue that being a segue so let's talk inside and outside automotive vroom is getting sued this news dropped last week but we never talked about it versus getting sued by Texas. You know, you're in trouble and Texas is suing over a legend deceptive trade practices. From the article, according to a news release distributed last Wednesday, the lawsuit against room which who sells vehicles to Texas Consumers also under the name Texas auto direct, you may already know this alleges that the company misrepresented and failed to disclose significant delays in transferring clear title. And obtaining vehicle registrations were back to the titling and registration, something that auto dealers are really good at, that everyone took for granted. How hard can it be? It's just a piece of paper. Also room failed to disclose VEHICLE HISTORY condition and financing terms. And they have received 5000 complaints to the Better Business Bureau. And if you just Google room lawsuit, actually, the news about this doesn't even show up because there are so many people on Reddit thread saying can I sue room? It's not a good place to be. Yeah,

Kyle Mountsier  7:24  

I mean, the typical thing for me that when when dealers start talking about room, they go to the reviews page. And it's like this question mark of so what you're really saying is putting out a 3.4 star aggregate review rating is a good thing for them. Because that's what they they literally have that on the website. You know, we've seen Carvanha struggle with the same type of thing. And I honestly, at some level, I am sympathetic because I do know from a dealership operation perspective, when you're dealing with anything across state lines, the the dynamics and the intricacies of it tax title registration are extreme. It honestly it's a problem that the states have. That is that's that's the bigger problem. Well,

Paul Daly  8:10  

it definitely needs to be normalized. I mean, I bought I bought over the pandemic, I bought a car from Wisconsin, and it was disgusting. Getting the title. Yep. it over to New York. I mean, granted was in the middle of the COVID that comp complicated it but it had to like go through a title processing place in Delaware. I was like what is going on with this? Obviously, this is a problem that like blockchain is going to solve it very easily, like proof of ownership when we get to that, but hey, but here's the thing when you have a piece of

Kyle Mountsier  8:37  

this for Vroom, and I gotta say this is what's really interesting is if you notice that the Texas direct brand, which five years ago was when kind of room purchase Texas Direct, which was an intentional thing to be able to do a lot of the Recon and house a lot of vehicles because Texas direct Texas. Direct auto was awesome. Yeah. So and Texas direct had an absolutely incredible reputation in the Texas market. From what I understand it. Yes. No, they did. Absolutely. I knew the brand. There was a lot there were a lot of people in the retail automotive industry actually looking to Texas right. Next there, they got it right after showroom experience, the online experience, they had all that right, which was what room was hoping to acquire. But the scale up of that is what has and the corporatism is corporatization which I don't know if that's a word. It's not there you go. Has has really, you know, took a took a negative impact on that really solid brand.

Paul Daly  9:39  

It's one of the problems that I think comes with either success, or in this case, just getting a lot of public money. Yeah, right. The margin for error just widened so much that I think it's really easy to go to sleep and lose focus on the fundamentals of the business. And you see it all the time with public companies because you know, benstock talks about this are playing with public money, like no one really feels it when they take the hit, the feeling of it is so collectively spread out that there's no real consequence. And let's be honest, like consequence is a great motivator. And when you remove that from the situation like, I think things just begin to slide like

Kyle Mountsier  10:15  

this, you know, I do think as I'm thinking through this, and just for those mid to large size auto groups that are that have dealer principals or general managers that are kind of tuned in to this type of news and pointing the finger, I think it's it, it's a time to kind of reflect, as brands centralize, as brands kind of roll up to a group level. And I'm thinking all the way from, you know, a Lithia, with driveway and Asbury, with click lane, Sonic group one are all are all doing similar things. There's also mid sized groups that are doing this regionally. And there is a massive danger to like losing the impact of the local brand when you roll up. And so for the groups that are doing that, I think it's the right move, being very attentive to this, like as you move to a corporatization and as you move to a centralized approach to your marketing and brand, realizing that that local dealer has a lot of has a lot of real world experience to be able to execute the things that still have to be done at the corporate level. And not just saying, oh, because we're corporate, we know how to do this, recognize that the local brand has has a lot to say about it.

Paul Daly  11:29  

It's almost like you got to remember the personalization of it in the midst of the corporatization of it because like when you go to house that was a mouthful

Kyle Mountsier  11:36  

that was I don't even know if I could

Paul Daly  11:38  

type definitely I definitely couldn't smell it like any any big corporation that you do business with that makes you feel amazing. It's because the person at the end of the chain the person on the front line did something to personalize it that's why like Nordstrom Ritz Carlton they get it so right because they tried they formalize and corporatize the the overall trajectory of it but when when that server is at the table it's ladies and gentlemen helping ladies and gentlemen, right serving ladies and gentlemen and you feel it so I don't know there's there's a lot there to unpack. Thanks for giving us something to talk about room. We appreciate it. We hope you We hope you get it right. We really do. All right. Speaking

Kyle Mountsier  12:16  

of big corporations

Paul Daly  12:19  

segue this is like an understatement. That segue button doesn't do this one. Any dang justice

Kyle Mountsier  12:28  

needs however, the whole like personalization, human touch thing is a little that's not the segue we're looking for. If if you know what I mean, no,

Paul Daly  12:35  

no, there's not everyone's talking about it today. I saw the news come through on like on like one of my apps Elon Musk's bid to buy Twitter is accepted. And I would just like he did it. He did it. How did this even happen? So the How did this even happen actually spurred a little bit of research. So I looked up a timeline and found a great little article, we linked it up in the show notes. Let's go through the quick timeline of events of how this actually transpired because you may have started hearing it somewhere along the process. And then it just executed in a flurry of Elon Musk now buying Twitter and like the whole thing. And so he bought it for $54.20 a share, which is a 38% premium over the stock. I don't know that any Twitter shareholder was expecting to get a 38% return on their investment in Twitter. Here's a quick timeline in January 31 of this year, so less than three months ago, Musk started buying Twitter stock on March 24. So now we're a whole month almost two months later, he starts openly critiquing Twitter on Twitter, right? He's saying I'm worried that there's a bias in the algorithm. It's affecting free speech, free speech is essential, and is a new platform needed. Right? And he says, I'm giving serious thought to this. On April 4, his stake in Twitter becomes public. He's saying, Oh, I know. It's all of a sudden he owns 9.2% of Twitter, and everybody knows it now. And Twitter says, Hey, come join the board the next day, he fails to become an active investor, right? It's a designation that allows him now to be openly saying like I'm active, I'm trying to influence the company and therefore, you know, could influence the stock price. A few days later. He was like, they were like, Hey, come be on the board. Like this guy's going to be trouble. We need to get him inside. He was like, Oh, I'll consider this is Kyle. This is when you were like if anyone ever had a question whether or not Elon Musk is a car guy,

Kyle Mountsier  14:24  

right? He took the deal away. It was incredible. He just grabbed the piece of paper off the desk, walked off and took the deal away is unbelievable.

Paul Daly  14:32  

Not so this is April 9 on April 20/10. Twitter made that news public and speculation abounds. The next day, he filed another thing with the SEC saying you could buy as much as he wants. And then on the 14th so let's let's do this. On the fifth. He became an active investor on 15th 14th. Almost 10 days later, he said, Here's my best and final offer. It was his only offer by the way. He said I have one offer for you. And it was 5420 just by the way, when it closed that, then Twitter said I don't think so the very next day, they said, no way. We're going to try to stop you from buying this at any our commitment is to the freedom of speech and all that all that stuff. And then the next day, it's revealed that how many shares Kyle the Twitter's board and how much? How much did they on the board, collectively, the whole board that's like no way less than 2%. We don't want your garbage offer. We don't have any money vested in this company, except for the fact that we get big paydays. And we have a lot of power in the board. They said that, and then kind of the temperature changed a little bit. And he was like, oh, yeah, watch this, I'm gonna offer it to every single shareholder to buy their individual shares, which he was allowed to do. And then he, he then he pulled out the big stick. And he said, By the way, I've got the money lined up. So that was a game changer, because at that point, he put the board in the position saying, like, Hey, if you don't consider this offer, seriously, it's obvious, you're not acting in the best interest of your shareholders, which is a legally binding fiduciary responsibility, which they'd be in for a lot of trouble. A couple days later, they held discussions with musk, and just yesterday, they're like, All right, we'll sell it, I want to do it. So starting to start to finish less than three months 10, we don't think there's much

Kyle Mountsier  16:13  

more to say, outside of the world's literally flipping. Elon knows it. And he's grabbing at the things that allow him to make a massive impact on it, both his personal brand and society, in a place where the opportunity is rich. And whatever side you land on this, whether you're happy or mad about it, or anything like that, for me, like where the rubber meets the road is that there are opportunities like this that exist everywhere. And depending on your brand, your company's brand or anything like that, keeping your head up and recognizing opportunities and working those opportunities intelligently will give you a leg up on whatever Impact Factor is happening around you.

Paul Daly  17:07  

Absolutely. I love that bringing that down to the ground because everyone has something like that somewhere that is in your sphere of control. We'll get to our last story in a second. This this buttons up his last and final offer was the offer that was accepted this deal will take six months to close. Like you said there are people big time on both sides of this a lot of speculation inside and outside the organization. And now you know, you know you've done it right when you have Jeff Bezos throwing throwing rocks but like you know, you have a lot of business in China. I wonder if China now has a an elevated voice in the town square Says the guy who owns a premier newspaper and obviously has no ties or issues or any integration with China because nothing that's sold on Amazon is made in China add on at all never got a Chinese made product from Amazon. Not once, not once. So what we'll see how this one plays out, we'll see how this plays out. And I guess that's really all we can do. Alright, let's talk about another big company that has also very close ties to automotive medical. I want you to talk about this as well. This is just hilarious.

Kyle Mountsier  18:14  

Look, I'm gonna I'm gonna lay this out every dealer everywhere it should be like look, see brick and mortar right, because Because Mehta in an obvious move, instead of putting a Metaverse place to order their Oculus, or any of their smart glasses from, they, in fact, go and are putting a 15 150 foot square foot space located in Burlingame, California, where employees are focusing on the metaverse virtual worlds where people will be able to work, play and socialize. The store will feature products that allow you to be in the metaverse, so they're putting a brick and mortar store to sell things to get you into the metaverse. They are irony is so unique here.

Paul Daly  19:09  

First, I thought they were going to roll these out all over the country, maybe they will. This is just the first they didn't announce any big plans. But you know, they're like, Hey, I think this is really a big acknowledgement of like, the big time like skepticism, like I don't think that that is going to be fun at all. Like I'm not gonna sit with an Oculus. And so I think that that's just an acknowledgement of like, you have to try it. You have genuine just have to try it. And I'll tell you the first time I put VR goggles on it was the it was the PlayStation ones. And it's a pretty awesome thing like you put them on and all of a sudden you start like looking around and you're like okay, this is definitely different. This This place has a water wall curved LED screen that displays what you're seeing in virtual reality. So you know, the 100 people that are standing around you and you have the goggles on can see in a big wraparound format like oh, this is what you're seeing that could be pretty cool. So I mean, like this is again another shift in move toward this integrated world of the metaverse and the real world and everything in between. And again, man first 24 months ago, I really think you'd listen to this episode and be like, is this an April 1 episode?

Kyle Mountsier  20:14  

Yeah, you know what's even more ridiculous? I think in 24 months, we're gonna look back at this and be like, that was all. That was all.

Paul Daly  20:24  

You know, that's true. Yeah. You know, that's true, but we have no idea what or when it's going to happen. But here's the deal. We have a full day that we can react to everything that we've just heard and make the next best move together. We're here for you. You're here for us. We're all here for the community. Let's get it done.

Transcribed by https://otter.ai