Apparently Elon Doesn’t Think He Needs To Pay Rent Because SF Is A ‘Shithole’; So Why Should We Pay For Twitter?

Legal Issues

from the burning-down-the-house dept

It’s no secret that Twitter isn’t paying many of its bills, including the rent for its headquarters. That was rumored last fall, but became much more clear when the landlords sued the company in January.

Now a new lawsuit, filed last week by six former employees, provides a lot more details on Elon’s view of, you know, paying for things he is contractually obligated to pay for. The employees, many of whom were high level, note that Musk and his circle of advisors (known by existing Twitter employees as “the goons”) made it clear to Twitter employees that they were to break all sorts of contracts:

Led by Musk and the cadres of sycophants who were internally referred to as the “transition team,” Twitter’s new leadership deliberately, specifically, and repeatedly announced their intentions to breach contracts, violate laws, and otherwise ignore their legal obligations.

The employees filing the lawsuit note that they were constantly ordered to violate their own legal obligations, often in the most obnoxious ways.

“Elon doesn’t pay rent,” one member of the transition team told Hawkins. Another member of the transition team put it more bluntly to Killian: “Elon told me he would only pay rent over his dead body.”

The crux of the lawsuit itself is that Musk hasn’t paid them the required severance he owes them per their contracts. But they used the opportunity to reveal a lot of what happened within Twitter. Enough that apparently the city of San Francisco has opened an investigation based on the claims in the complaint.

And while the complaint details various city building codes that Musk ordered employees to violate, the decision not to pay the rent is especially interesting. One of the plaintiffs, Tracy Hawkins, was Twitter’s VP of Real Estate and Workplace, and (as the complaint notes) if she had followed Elon’s orders, it would have destroyed her reputation in the real estate world.

The complaint paints quite a story:

On or about October 30, 2022, Hawkins attended a meeting with Steve Davis, Jared Burchall, and many of Twitter’s global leaders.

In that meeting, Davis announced several changes that boded ill for Hawkins’ team and her role at Twitter.

First, he announced that Twitter’s Sourcing and Procurement team should handle all lease negotiations from that point forward, despite lacking both personnel and experience sufficient to handle this task.

Next, he announced that the company would no longer be working with brokers to procure and negotiate leases.

This choice ran in conflict with every established standard and practice of commercial real estate management, and stood to further increase the burden on the in-house staff substantially.

The meeting gave no opportunities for feedback or discussion – it was merely a series of nonsensical pronouncements.

The only justification given for the changes was “Elon wants this.”

Very soon thereafter, Davis informed Hawkins that Twitter needed to find five hundred million dollars in annual savings.

To accomplish this, each Global Lead was given a massive spreadsheet that had to be filled out every single day, identifying possible savings opportunities.

Hawkins’ spreadsheet covered thirty locations and upwards of fifty leases.

The pressure to fill in the spreadsheet on time was immense. Expectations from above made it clear that compliance was prioritized above accuracy

Nonetheless, Hawkins and her team strove to deliver reliable, well-contextualized information.

For example, Twitter instructed Hawkins to identify leases for cancellation.

When she identified potential sites and leases that could be terminated for cost savings, Hawkins and her team took the time to document the risk factors involved in downsizing or terminating these leases, such as large termination fees.

However, when the time came to present their conclusions, this added context was not well received.

When informed of the risks of termination fees during a meeting on November 3, 2022, Steve Davis said “well, we just won’t pay those. We just won’t pay landlords.”

Davis also told Hawkins “We just won’t pay rent.”

Those are direct quotes of Davis per Hawkins’s best recollection; to the extent that they are not word-for-word accurate they are an extremely tight paraphrase.

Hawkins was shocked.

Twitter specifically directed Hawkins to breach its leases, whether by terminating without any good faith justification under the terms of the applicable lease, or by simply stealing from the landlords by intentionally remaining on the premises without any intention of paying amounts Twitter knew and believed were its legal obligation to pay.

Unwilling to be involved in (let alone responsible for) such thefts, Hawkins resigned the next day.

Later in the complaint it notes:

In effect, if she had done what Twitter was asking her to do, Hawkins would have become permanently unemployable in her field.

Perhaps even crazier is the story of Joseph Killian, Twitter’s Global Head of Construction and Design, who was given the role of taking over Hawkins’ responsibilities after she had quit. You have to read the following because it is absolutely incredible:

After Hawkins left Twitter, Killian, who was Twitter’s Global Head of Construction and Design, was immediately assigned Hawkins’s duties and given responsibility for managing Twitter’s portfolio of nearly fifty leases.

Killian worked directly with the Transition Team to effect the transition from Twitter 1.0 (pre-Musk) to Twitter 2.0 (post-Musk) and bring Twitter in line with Musk’s standard business practices.

Killian was directed in these activities by Steve Davis and Liz Jenkins, who worked for the Boring Company, and Pablo Mendoza, a venture capitalist who invested with Musk.

Killian was also directed in these activities by Nicole Hollander.

On information and belief, Hollander was not employed by any of Musk’s companies.

On information and belief, Hollander is Steve Davis’s girlfriend and the mother of his child.

On information and belief, Hollander was living at Twitter headquarters with Davis and their infant child, who was a month old.

Despite not being employed by any of Musk’s companies, Hollander nonetheless had full instructional authority over Killian and the rest of his team with regards to the transition.

Almost immediately, Musk’s “zero-cost basis” policy reared its head

Killian was informed by the Transition Team that he would have to justify his spend to Musk personally, and that if Musk was not convinced that the expenses were necessary, he would simply default on his contractual obligations and let the expenses go unpaid.

In early December, Davis sent a 3:00 a.m. email to 15 or 20 managers complaining about Twitter’s rent obligations, which totaled $130M annually.

In this email, Davis specifically compared Twitter’s rent obligations to SpaceX’s, noting that Twitter had 1/10th as many employees as SpaceX but paid five times as much rent annually.

Of course, Twitter had significantly more employees when it first incurred its rent obligations.

Killian quickly became concerned that Musk intended to stop paying rent on Twitter’s outstanding leases, breaching the contracts and placing the company at risk of being evicted.

Indeed, Musk’s attorney, Alex Spiro, loudly opined that it was unreasonable for Twitter’s landlords to expect Twitter to pay rent, since San Francisco was a “shithole.”

So, Alex Spiro is a big time lawyer. One of the biggest. But, I’m pretty sure that not paying your contractually obligated rent because the city is a “shithole” is not how anything fucking works.

Either way, I guess this means that Spiro and Musk approve of squatting in “shithole” cities? Power to the people! But also, I think this also means that Spiro doesn’t think anyone should pay Twitter anything because it, too, has become quite the shithole.

Either way, the complaint then details how Davis ordered Killian to stop paying rent. And, also to… install bathrooms all over Twitter HQ, telling him not to get permits (in violation of their lease) and to hire unlicensed plumbers to do the work. And when Killian emailed his concerns over this, Davis’ apparent girlfriend (who again, was not employed there, but living in Twitter HQ) told Killian to never put such concerns in writing:

Musk announced via the Transition Team that he was going to be installing “hotel rooms” at Twitter HQ.

Killian was initially told that the “hotel rooms,” soon renamed to “sleeping rooms” to avoid triggering the suspicions of the city inspectors, were just being installed to give exhausted and overworked employees a place to nap.

Though the changes had initially been simple, if unorthodox – removing a conference table and installing a bed – Davis instructed Killian to begin planning for and implementing the addition of features like en-suite bathrooms and other changes to the physical plant.

Concerned about how city inspectors would react to Twitter’s plans, Killian emailed the Transition Team to note that the changes they had made thus far were limited to ‘just furniture’ and therefore were code compliant, but that Twitter’s future planned changes would require permits and more complicated code compliance.

In response, Hollander visited him in person and emphatically instructed him to never put anything about the project in writing again.

Hollander appeared surprised and distressed that Killian did not inherently understand that this was not a project for which Musk and the Transition Team wanted a written record.

Hollander specifically conveyed that Davis in particular was upset that Killian had sent the email.

On Friday, Elon mocked the reports that came out of the lawsuit regarding the “wrong locks” on doors:

But… the details in the lawsuit are not just about “wrong locks on doors” but about the real risk that people would fucking die. Which puts Elon’s comment in a different light:

Killian was instructed to install space heaters in the “hotel rooms” in further violation of Twitter’s lease

Killian was also instructed to place locks on the “hotel room” doors – a request that betrayed the lie that these were intended to be temporary rest spaces for exhausted Tweeps.

California code requires locks that automatically disengage when the building’s fire suppression systems are triggered.

Killian was repeatedly told that compliant locks were too expensive and instructed to immediately install cheaper locks that were not compliant with life safety and egress codes.

Again, Killian protested that no licensed tradesperson would perform work that violated the building code.

Killian protested that installing these locks would put lives at risk – that in case of an earthquake or fire (the latter of which was made dramatically more likely by the noncompliant electrical work and the presence of the space heaters he had been instructed to install), these locks would remain locked, blocking first responders from being able to access the rooms and the Tweeps within.

Nobody cared.

On information and belief, the non-compliant locks were in fact eventually installed – but not by Killian.

Killian quit that day.

Yikes.

I mean, it’s pretty clear that Elon does not care one bit for the lives and wellbeing of those who work for him. But, this really takes it to another level.

And all this because Elon got suckered into massively overpaying for the company because he didn’t understand literally anything about social media, and then saddled the company with a huge, unnecessary debt, and his way to deal with that was to put people at risk?

Filed Under: elon musk, joseph killian, tracy hawkins, wolfram arnold
Companies: twitter, x corp.