Musk Blasts Tech Bro Club At His Own Risk

How far are Elon Musk and his corporate adversary Twitter willing to go before mutually agreeing to call off their deal? The Tesla boss has enlisted a whistleblower complaint in a new effort to ditch his $44 billion deal with the social media firm. That complicates matters for Twitter, but Musk, by hitting former Silicon Valley allies with subpoenas, is putting more on the line.

On Monday, lawyers for Musk sent the social network a second deal termination letter to include allegations by Peiter “Mudge” Zatko, Twitter’s former chief security officer. He accuses his ex-employer of egregious deficiencies in its defense against hackers, among other issues. Now he is set to testify before Congress in September. Even if Musk’s deal doesn’t go through, Twitter has more questions to answer.

But Musk’s handling of the deal has dragged in many of his friends in the technology business. Twitter has sent subpoenas to Musk’s co-investors in the buyout, including Oracle founder Larry Ellison, who is on Tesla’s board, and venture capital firm Sequoia, an investor in Musk’s SpaceX.

He even subpoenaed his friend, Twitter co-founder Jack Dorsey, who had talked to his fellow entrepreneur about taking the social network private. Twitter’s banks, Goldman Sachs and JPMorgan, along with Musk’s financing firm Morgan Stanley, have also been served.

Musk may need them down the road. His main day job, managing Tesla, depends on his ability to follow through – and get funding. Tesla’s estimated price-to-earnings ratio over the next 12 months is 52, or eight times as much as other car companies including Ford Motor and General Motors, according to Refinitiv. That’s partly because of Tesla’s track record, but Musk also wants to expand Tesla sales to 20 million vehicles a year by 2030.

That’s about 10 times planned capacity at the end of this year and the biggest planned expansion of a capital-intensive automaker ever. The total cost might be $600 billion, including materials, according to a Reuters analysis.

Musk’s Silicon Valley friends may still throw in for one of his new ventures, or an old one. But if they are worried that they might later be served with a subpoena and a knock to their own reputation, they might think twice.


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