Twitter is being evicted from its Boulder office over unpaid rent
techcrunch.com
techcrunch.com
https://www.denverpost.com/2023/05/22/twitter-boulder-colora...
I wonder if this office was still occupied.
https://www.fastcompany.com/90898558/twitter-lawsuit-new-det...
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THE TOILET
The lawsuit alleges that Boring Company CEO Steve Davis told plaintiff Joseph Killian, a 12-year Twitter veteran who oversaw office design, that Musk wanted to add a bathroom next to his office, so he didn't need to wake his security team (who escorted him everywhere in the building) when he needed to relieve himself in the middle of the night. Killian says he promised to jump right on that, but warned it would take time to get the permits approved.
Davis, the suit alleges, told him not to get the permits saying, "we don't have to follow those rules." When told no licensed plumber would do the job without a permit, Davis allegedly told Killian to hire an unlicensed plumber instead, which would have been a violation of the lease.
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He occasionally does a non-bastard episode, and the tone is very different.
And of course there is the Steven Seagal two-parter, which is not only one of the best episodes of Behind The Bastards - it's one of the best podcast episode sets ever.
Also, the guests can be pretty hit-or-miss. Some are great, some are pretty terrible.
Biggest problem is kinda like many other small businesses, you end up being on call 24/7 (okay, really more like 18/7 since nobody is cleaning at 3 am.) and unable to take vacation, or even reliable weekend trips out of town.
Staffing is also a continual problem. Even if you pay significantly above market, cleaning isn't a very in-demand job, so you have to deal with both regular turnover and employee performance issues.
https://officesnapshots.com/2022/12/05/twitter-offices-bould...
But if you’re on the hook for the full amount either way, why not just leave early and hand over the key? There’s less that could go wrong that you’d be responsible for, the space isn’t just sitting unused, and the owner has an opportunity to market it earlier.
Everyone walks away better for it. Plus you don’t have the negativity and expense of a lawsuit or an eviction or whatever else.
Ninja edit: am I missing something?
ya the lease agreement
Saved 10 month of obligations
I resided there for four years and consistently paid on time, but by the fifth year, I simply couldn't meet all the financial obligations. I sincerely wish the Justice system would show more leniency instead of demanding that I repay the entire lease upon eviction.
If you're lucky, you can negotiate an "out" clause, where, given sufficient notice, you can terminate the lease early, but commercial landlords are very hesitant to do it.
There's a reason Start-ups love month-to-month co-working spaces.
Reneging on a written contract doesn't seem to have the same social stigma in America.
I suspect if that we were in a pre-covid real estate market these evictions would have gone way faster. As it is, it's not like the landlord has potential customers waiting in the wings, so treating this as what it is (ie a price negotiation) seems like a value-optimizing strategy.
Wait, what? There's prestige in that?
Hating Musk doesn't change this.
When you have enough money, they do. There are two completely separate justice systems in this world.
If it takes more money than rent, why do it. If it takes less money than rent, then everyone could not pay rent then have access to the money to access the separate justice system.
If a large wealthy person stops paying for rent, the landlord might worry about a long and expensive legal and settle for a lot less than was owed.
The layperson is less likely to have the capital to prolong a legal battle and so is more likely to get stuck with the bill.
There are other economies of scale. If I stop paying for Google cloud my account quickly gets deactivated, but when Twitter stops paying they don't shut off service right away, they try to keep the client around and might offer discounts. If payment continues to be denied they may eventually shut off the service and settle for a portion of the cost of services extended during that time as above.
Wealthy people are given a ton of leeway until all the leeway immediately stops. You’ll see this throughout history. Elizabeth Holmes, etc.
A point made elsewhere, wealthy landlords have zero sympathy for those that cannot pay their bills. Their mightier than thou attitude that they didn’t get where they are in life by giving anything away for free or themselves getting any free lunches, so why should they cut anyone slack if they don’t pay their bills. However, they’ll be the first to not pay their bills if if the going gets tough because they have the knowledge of how the systems works.
Today you can see an equally clear cut example in e.g. Seattle’s attempt at re-criminalizing drug consumption. It is only public use which is being recriminalized, meaning this is basically just legislation against the homeless, The housed have a safe space where they can safely use and not be arrested.
Relating to OP, the two justice systems is simply how differently failure to meet financial obligation is prosecuted between the two classes. If a working person owed this much in rent, they would be forced into bankruptcy, or worse. Wage theft is allowed to fester unhindered without consequences. A working person who commits financial fraud and steals only a fraction of what their bosses have stolen from them, is usually met with a SWAT raid.
Donald Trump has entered the chat.
But it's really quite simple:
Twitter had a spending problem. The history of that is actually not all that relevant. The ugly handover did not help of course and that caused a dip in advertising that combined with macro economic circumstances is just causing a massive cash flow problem. Like it or not, that problem added up to negative a few billion per year. Apparently things have recovered somewhat since Elon Musk started 'fixing' things but it's still not a great situation.
The bottom line is that an expensive office in Boulder Colorado is probably pretty high on the list of things to immediately cut. No matter how you look at what happened in Twitter, paying lots of cash for office space you don't need is not a great thing.
Office leases normally run for several years. So, a simple way to force the issue is to freeze the payments. You'll get evicted and sued, naturally. But what does this really mean in a situation where you just downsized staff by two thirds and they were reluctant to come back to the office anyway after Covid? Just making the point that the value of that office for Twitter was probably very low.
Not nice to do business like that, of course. But it is what it is and being nice is not the main job right now. Fixing the cash flow issues is. Paying for a mostly empty office in Colorado just isn't a high priority.
I don't actually see this having an unhappy end for Twitter. There will be some kind of settlement at some point and that will be it. The real estate market is imploding everywhere. So, the building owners might cut their losses at some point depending on how deep their pockets are and how big their stamina for pursuing this in the courts is. I have actually no idea how the real estate market in Colorado is but I imagine that won't be the only empty office in the area. Or judging from recent other articles on HN, everywhere else. Real estate is not a great business to be in right now.
There's more than a bit of a bubble there. Get a big fancy office, put a lot of overpaid staff in it, ????, profit. That ship has sailed. Twitter fired two thirds of their people and they are still there and they need a lot less office space now. Was that ugly: yes. How could it not be. But it happened and the situation needs fixing.
These are not the only creditors of course and I'm sure most are counting their cards right now and are going to be a lot more open to settling sooner rather than later. Not a bad outcome for Twitter if that works.
I was an avid Twitter user, but stopped using it because I find Musk super annoying and unethical. This is part of that. Complete and total brand destruction. That's not "delivering shareholder value". There's been massive markdowns to Twitter's valuation since Musk took over.
That valuation was itself at the height of the COVID stock bubble.
I don't know who owns the real estate, but it's not a difficult win. The terms of the lease is clear, and Twitter has the money to pay.
Commercial Real Estate in many cities is in a death spiral
> "Elon doesn't pay rent"
Among the many absolutely bonkers things in there, Elon appears to believe he just doesn't need to pay for things.
Surely they'll be pursued for the rent (plus costs) & evicted along the way. The landlords aren't individual employees he can just shit on and assume they won't sue.
If there were a logic to it, I'd guess that it's more important he make the interest payments on the billions of dollars in loans he took out for the purchase than it is to not get sued for non-payment of a lease.
That's been clear to me for many years, but for me, the nail in that coffin was the whole "pedo guy" thing. It was a great demonstration of what a despicable person he is.
The punchline of all this is that his main argument was that bots devalued Twitter, and the bot problem has become so much worse in recent months, to the extent that it's become a meme to mess with the bots that sell t-shirts.
If Musk lost in court, was ordered to go through with the deal, and then sabotaged the financing to try to get out of the deal, potentially a court could have thrown him in jail and said, "You are lying about not being able to go through with the financing, we find you in contempt of court and you are staying in jail until you obtain financing and close the deal." It's not very plausible that the world's richest man can't find financing on the deal.
Potentially a court could have also instead said, "Since you sabotaged the financing, you are in breach of contract. Twitter is worth 22 billion dollars today. You offered 44 billion dollars to buy it. You are hereby ordered to pay Twitter 22 billion dollars to make them whole." Presumably the court could have forced him to sell assets to pay up.
I don't think anyone knows for sure what would have happened in court but it seems he had a very weak case.
On it being a questionable deal, it’s not a consumer contract. It is assumed that both sides know what they’re doing in commercial deals; there’s little protection for incompetent participants. It might be questionable, but the participants have largely signed away the right to question it.
He can’t cry if he made a bad business decision. Or well he can, but it has no legal bearing.
So maybe it is to burn it all down.
Most things settle and they settle for far less than the original amount. "It's just not worth it" the individual says. That's what Musk and others bank on.
upto about $250,000, you pay a nominal fee, both sides represent themselves, you get whatever's owed + they pay your fees if you win
you have to pay their nominal fee and your own if you lose
and if they don't pay what's owed at that point you can send in the bayliff or begin winding up the company
with something like an unpaid lease for an office it would be over and done more or less instantly
Basically no lawyers, only you and only up to a certain amount (varies by state, usually ~5-10k$).
As I understand it, US small claims court is _not_ like this; practical enforcement powers are usually fairly limited.
In general the attitude of big business or HNI is pay a lawyer, reduce the cost you actually pay to the vendor. Get a bulk pricing on lawyer hours (Retainer, tons of active issues anyway, etc)
It looks bad to us because we spend a lifetime being upfront and on it with obligations. We literally never want to be evicted but like any crime that has a fine, it is not really a crime. It is a price of doing business a certain way and the question is simply whether you can afford it.
> Led by Musk and the cadres of sycophants
> Musk proceeded in line with the principle on which he generally operates: that keeping his contractual promises is optional.
and that's just in the first couple of pages, many more.
He's the equity anchor for the last cycle's top-tick LBO. He's trying to get to unlevered cash-flow positivity so he can renegotiate the debt from a position of relative strength. (That or wait until a regulator fines Twitter out of existence so he can blame them.)
Either way, he's–perhaps rationally–hyperbolically discounting. Cash today is worth more than that cash tomorrow plus court fees and reputation.
(good reference Ameo)
I just really really hope his hubris drives him into the ground.
I suspect Elon cares a whole lot more about making the billion dollar interest payments he owes to the Saudi financiers of his buyout than the little rent payments to landlords of corporate offices.
If Twitter has an office that they don't use, in Musk's mind obviously they shouldn't pay rent for it. If the landlord tries to collect just ignore them. If they sue then tie them up in legal processes to make the costs unbearable. What are they going to do? Evict them? Great, that is the desired outcome.
Let’s say twitter is a dumpster fire circling the drain, if they recover, they’ll have to pay, if they fail, the landlord will have to fight for the debt in a bankrupt company.
I can't figure out why Musk of all people, especially since he clearly resents paying rent, cannot figure out that one of the key the benefits of WFH is that the company avoids rent and basically co-opts the offices of it's employees (while remote workers also cost less and are a far larger hiring pool).
Of course it may have to do with the same management bias leading Musk to post that "Perhaps we just need a modern day Sulla" [0], a late despot of Rome who in the very reference that Musk posted was noted for "...to despotism, slavery, cruelty, and inhumanity, and the absence of any principle of good government."[1]; IOW, Musk is just a junior wannabe dictator.
> the Chicago-based landlord that owns Twitter’s offices at 3401 Bluff St in Boulder, was provided a $968,000 letter of credit back in February of 2020, which it has been drawing on to pay the rent in lieu of ordinary payments (the details of this arrangement are somewhat obscure).
Does this mean that Twitter hasn't been paying for this office in over three years? That there's just a line of credit the landlord has been drawing on?
Effectively, it's a guarantee provided by a bank saying, "if Twitter doesn't pay, we will". Now it's up to the bank to get repaid by Twitter.
At some point Twitter stopped paying their rent and I’m sure there is a clause in the lease that allows the LL to draw down the letter of credit to pay the rent. Twitter also has an obligation the replenish the LOC.
I'm not a financial analyst so take with grain of salt, that's just how I'd heard it discussed in banking.
edit: and I guess the payee's receiving financial institution is also a signatory if those are different entities from the payee! Or at least can be, I'm running into Dunning Kruger so I'll tap out now.
Another question, shouldn't this cause Twitter's bond rating to fall ? That would mean they will see an interest rate raise, thus costing Musk more.
I'd lean towards "No, they won't actually be evicted."
All of the pieces are in place, and who wants a demonstrably unreliable tenant? End of July, call up the sheriff and shovel Twitter's stuff onto the streets. I don't own the building (or any building other than my own house), but I'd go looking for a tenant who pays their bills.
This landlord, however, may well be done with Twitter. "Pay what you owe, AND GTFO."
Edit: was until veeeery recently: https://www.denverpost.com/2023/01/05/kitchen-streetbar-clos...
That point?
https://www.bizjournals.com/denver/news/2023/06/13/boulder-t...
Unsure how I feel about TechCrunch just summarizing another source's article like this.
Do you just feel that way about Techcrunch or in general? Because that behaviour is blatant amongst news outlets, they report on each other's stories all. the. time.
At what point are they considered non-grata?
Edit: typo / etymology. Thank you.
Let's say they don't need it.
You can't just stop paying your lease.
Usually there's a provision to terminate a lease with a hefty fee attached, or you wait until it expires and don't renew it. Otherwise you still owe the money you agreed to in your contract (and likely other breach fee clauses as per lease).
If you don't need the office you can't just decide to stop paying but still occupy it.
/s just in case