Dear Reader,
What an incredible turn of events.
As a response to Elon Musk’s offer to acquire Twitter on April 14, Twitter’s board immediately adopted a poison pill defense to ensure the acquisition by Musk wouldn’t happen.
I can imagine the board members chortling over the poison pill vote saying, “It’ll be a cold day in hell before Musk takes us over…”
Of course, I’m just paraphrasing. I’m sure much fouler language was used. But the funniest part is that hell did just freeze over.
The board was “forced” to accept the offer from Musk at a buyout price of $54.20 a share, or roughly $44 billion.
I used the word “forced” for a reason. Twitter’s board made a critical mistake… They left themselves exposed and in a weak position.
They neglected their fiduciary responsibility as members of the board who are supposed to be acting in the best interest of shareholders. That’s where they failed.
The way the poison pill was designed would have resulted in a material decrease in the value of Twitter and its share price. The major shareholders of course knew that. The board, in one fell swoop, created enemies of those who they were supposed to be working on behalf of.
Twitter founder Jack Dorsey struggled with his dysfunctional board for years. He’s a brilliant entrepreneur, but even the best can be stifled by a bad board. And we just got a glimpse of how big the struggle was for him.
So with so much hate and distaste for Musk and his beliefs, why did the board capitulate?
The answer is that they had no choice.
The 12 days that followed after Musk’s original offer were most certainly a scramble. With an offer like that in the air, it meant that Twitter was “in play.”
The board had to canvas the investment banks and private equity markets to see if there were any other possible bidders out there at a higher price… Preferably one that was seen as being less principled than Musk.
Clearly, there were none.
Otherwise, the board wouldn’t have agreed to the “no shop” provision in the deal that prohibits Twitter from taking another offer. And the board’s foolish poison pill gave Musk even more influence over the large shareholders of Twitter.
The shareholder base was clearly able to force the hand of the board to accept the offer from Musk.
The criticism has been harsh from some. It’s typically along the lines of, “Rich people shouldn’t be allowed to control media companies.” Yet it’s perfectly OK to those critics that Jeff Bezos owns The Washington Post, and Mark Zuckerberg controls Meta (Facebook).
The other tired complaint is that Twitter will now be awash with misinformation and disinformation under Musk’s control.
The most ironic part about comments like that is that Google, Facebook, and Twitter all banned scientific research and/or world-renowned epidemiologists, virologists, and cardiologists from their platforms during the pandemic, considering them all to be in the class of “misinformation.”
It pains me to even write those words, they are so absurd.
What is it about Musk’s ideas that are so hated by this toxic minority?
“Twitter has become the de facto town square, and it’s really important that people have both the reality and perception that they are able to speak freely within the bounds of the law.”
Musk plans to remove the political bias from Twitter’s algorithms and make the source code available in order to prevent “behind the scenes manipulation, either algorithmically or manually.”
He pledged to defeat the “spambots” that have been used by bad actors and nation-states to negatively influence not only society, but also elections.
The plan is to authenticate all humans who use the platform.
He believes that freedom of speech is a fundamental right and that it is a necessity for a free and democratic society.
From my perspective, it’s hard to disagree with the above… In fact, this is precisely what needs to happen in order to unleash the value in Twitter.
To use Musk’s words, Twitter’s “behind the scenes manipulation” has fomented hate and division, and it has also resulted in a deeply undervalued company.
Musk can and will fix Twitter as a platform. And he managed to pick up Twitter at an incredible price.
Presuming that Musk takes Twitter public again at some time in the next two or three years, he is going to make a fortune – at least two or three times his investment.
Do I think Musk can fix Twitter? Absolutely. Just have a look at what he’s built to date:
Tesla (worth $1 trillion) – the world’s most successful clean energy company
SpaceX (valued at $100 billion) – the world’s most successful aerospace company
Boring Company (valued at $5.7 billion) – the world’s most innovative boring company
Neuralink (valued at $2.1 billion) – on the verge of a breakthrough for brain-computer interface technology
Any one of these accomplishments would be an outlier, but four of them? Plus, we know there will be more to come, presuming Musk doesn’t work himself to death.
But the incredible thing about his deal with Twitter is that if he is successful in affecting the changes that he intends, it may very well be the greatest contribution that he’ll make… That being the restoration of one of our most fundamental and cherished rights, freedom of speech.
We may have to declare it “Musk Week” in The Bleeding Edge. It’s incredible – and impressive – how much he is driving and how quickly he and his teams are innovating right now.
Another one of his revolutionary projects, The Boring Company, just raised an impressive $675 million in its Series C venture capital (VC) round. This values the company at $5.7 billion… This is the capital that the company needed to go out and expand its business.
As a reminder, Musk launched The Boring Company to build underground transportation systems. On the surface, this sounds like just a heavy machinery construction business, which normally wouldn’t be very interesting. But there’s more to the story…
True to form, Musk is using bleeding edge technology to revolutionize how tunnels are built.
To “dig,” The Boring Company deploys machines called Prufrocks. Here’s what they look like:
The Boring Company’s Prufrocks
Source: The Boring Company
These machines “porpoise” into the Earth to start tunneling at the specified depth. That means the machine “dives” into the ground – like a porpoise – and gets to digging.
And they lay tunnel support infrastructure as they go. This eliminates the typical start and stop, as well as additional equipment needed to erect the tunnel walls. One Prufrock can do the entire job.
What’s more, the Prufrocks are fully autonomous. They operate without any humans in the tunnels. It’s kind of like a self-driving Tesla, but one that bores tunnels underground.
The result is, The Boring Company can build advanced tunnel networks much faster and cheaper than what was ever possible before.
In fact, each Prufrock can bore about one mile per week. So if it has 10 Prufrocks running, The Boring Company can establish a 100-mile-long tunnel in just 10 weeks. That’s incredible.
For comparison, let’s look at the “Big Dig” in Boston. This was a major project to re-route Interstate 93 through a 1.5-mile-long tunnel.
Work for the Big Dig began in 1991. And get this – they didn’t complete the project until 2007. It took over 16 years to finish the small tunnel.
And the project ended up costing taxpayers nearly $8.1 billion. It is still the most expensive highway project in U.S. history.
Meanwhile, The Boring Company just completed a 1.7-mile loop under the Las Vegas Convention center for $47 million. That’s less than 1% of the cost. And it took weeks to get the job done.
This efficiency is why The Boring Company recently received approval from Nevada’s Clark County Commissioners to establish a 29-mile-long transportation system beneath Las Vegas. We talked about that last October.
And now that The Boring Company is cashed up, it’s in a prime position to go out and win more business. Musk clearly communicated this in a recent tweet:
Source: Twitter
I got a kick out of this one. And it makes a clear point: The Boring Company is open for business.
It now has the cash to build a ton of Prufrocks, which it can use to go out and win major projects around the world.
I have no doubt that this company will completely transform metropolitan transportation systems. It makes building the tunnels comparatively easy. And then Musk can easily install fully autonomous pods for rapidly moving consumers through the system.
Between the latest developments at SpaceX that I shared yesterday, the new raise for the Boring Company, and now the acquisition of Twitter, Musk is on fire right now.
Another electric vertical takeoff and landing (eVTOL) company just completed a major funding round.
Beta Technologies just raised a major $375 million in its Series B round. Fidelity’s venture capital arm led the round, and I wouldn’t be surprised to see Beta accessing the public markets, probably via a SPAC, within the next 24 months.
We just talked about another eVTOL company, Elroy Air, a few weeks ago. Elroy partnered with FedEx to test cargo deliveries.
Beta is similar, in that its focus is on cargo. And its aircraft can carry as much as 1,400 pounds. That includes up to five passengers, in addition to the pilot.
The aircraft can reach speeds up to 170 miles per hour. And it can fly as much as 250 miles on a single charge. Here it is:
Beta Technologies’ eVTOL
Source: Beta Technologies
Here we can see Beta’s eVTOL in flight. The primary focus is on cargo deliveries, but it could also work great for passenger transportation.
In fact, the helicopter charter service Blade ordered five of Beta’s aircraft to incorporate into its service. And Blade has an option to purchase up to 20 of Beta’s eVTOLs if the first five do well as part of its fleet.
But there’s another application for this technology we should keep in mind…
Logistics giant UPS is turning to Beta Technologies to help it keep up with FedEx. More specifically, FedEx’s intention is to use eVTOLs as a way to shuttle cargo, from larger distribution facilities to smaller centers, closer to where deliveries will be made.
UPS ordered 10 of Beta’s eVTOLs with the option to buy 140 more. And the reason is very simple…
As I shared at the Legacy Investment Summit three weeks ago, e-commerce orders are up about 50% in two years. That’s great news for e-commerce giants like Amazon, but it also represents a logistics problem.
How often have we waited weeks for a package when it used to take days? This has everything to do with the strain that our logistics networks are under. And the answer to solving this problem is the adoption of bleeding-edge technology like eVTOLs.
It’s easy to envision a fleet of these aircraft doing the same work of ferrying packages normally done by semi-trucks, and in a fraction of the time. After all, how much quicker would our packages arrive if they could be transported at 170 miles per hour with no traffic?
This is an exciting application for this technology that few realize. Fully autonomous eVTOLs, as a way to improve logistics and distribution – while at the same time relieving surface road traffic – will be transformative for the industry.
Let’s have a look at these glasses…
Snap’s Latest “Spectacles”
Source: Snap
These are the latest pair of augmented reality (AR) “Spectacles,” courtesy of social media giant Snap. Regular readers may remember that we featured Snap’s fourth-generation Spectacles in May of last year. That was the first version to enable some simple AR features.
Well, the story just got a whole lot more interesting…
Snap recently distributed the latest prototype of its Spectacles smart glasses to a few hundred people for testing and evaluation. On the surface, this doesn’t seem groundbreaking. But the timing isn’t an accident…
Snap is hosting its Partner Summit on April 28… That’s this Thursday. This is an annual event where Snap announces its new products and features to its developer and creator communities.
The fact that Snap is getting the latest Spectacles prototype out ahead of the Partner Summit is telling. The company clearly plans to reveal some new features at this week’s conference.
Could it be that they are much closer to a full-scale augmented reality launch than we thought? There’s good reason to think so.
Already, 200 million people now use Snap’s augmented reality filters in their social media interactions every day. That results in roughly six billion AR-related interactions daily.
And in Snap’s most recent earnings call, it highlighted that it has 332 million daily active users on its platform.
These numbers are almost shocking. I don’t think anyone realized that Snap’s AR features had caught on so much.
What I love about this is that Snap has basically trained its customers to use AR technology. And that gives the company a massive warm market into which it can launch a pair of full-scale augmented reality glasses.
Companies like Meta (Facebook), Alphabet (Google), or Apple don’t have that.
And I would also point out that – while not perfect yet – these Spectacles look almost like regular glasses. They’re a bit bulky and the field of view may be a bit limited, but it’s not hard to see that the next generation product will be really close to a pair of sunglasses.
Longer term, this is the technology that I believe will replace our smartphones. And some of the largest technology companies in the world already know this.
Snap may be the first company to release a consumer-friendly version of AR glasses, but it won’t be the last. Apple, Amazon, Meta, Samsung, Niantic, and others are all in the works with their own AR products.
We are looking at an absolute land grab for the next billion-plus unit consumer electronics craze.
And yes, Snap (SNAP) is a great company to own to gain exposure to the augmented reality trend. And it’s not the only one…
For any readers that would like my top recommendations for how to gain exposure to this trend, I’d encourage you to watch my full presentation on the topic right here.
Regards,
Jeff Brown
Editor, The Bleeding Edge
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The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
