Alexander Saeedy
Appearances
The Journal.
How Elon Musk Pulled X Back From the Brink
It's as much of the company's performance as it is, one, the world's richest man owns this company, and two, he's now very close with the most powerful man in the United States, the president.
The Journal.
How Elon Musk Pulled X Back From the Brink
Advertisers started to signal that they weren't sure that they wanted to keep advertising on Twitter, soon to be X, because of the new ownership. The financial picture just really deteriorated, and that was true for about two years now.
The Journal.
How Elon Musk Pulled X Back From the Brink
Musk capitalized on a wave of investor enthusiasm for him and his companies. Because of his alliance with President Trump, you know, there's a lot of Trump trades happening around that time. And in a way, X kind of looked like another Trump trade. And I think that that's what people felt really positive about.
The Journal.
How Elon Musk Pulled X Back From the Brink
On the advertiser front, I mean, what you saw was advertisers who hadn't been on the platform in a while were willing to come back. I mean, most notably, Amazon announced that they would come back, which is a major shift after pulling advertising more than a year ago.
The Journal.
How Elon Musk Pulled X Back From the Brink
Apple also is ramping up ad spending on X. So without a doubt, you're seeing the momentum from advertisers move in a positive direction.
The Journal.
How Elon Musk Pulled X Back From the Brink
Not only does Musk now have, like, financial power and commercial power, he's got political power. You know, X also had a little bit of a stick, too, you know? They could say, hey, we are really close with the administration now. You gotta, like, respect us.
The Journal.
How Elon Musk Pulled X Back From the Brink
A lawyer from X called a lawyer at this advertising group Interpublic and said that your deal to Merge could face trouble given Musk's sort of powerful role there. So we need you to sort of, you know, play ball with us. Otherwise, we can make your life a little difficult.
The Journal.
How Elon Musk Pulled X Back From the Brink
Well, they did it, according to our reporting. And I don't think it was sort of like, if you don't advertise now, we're blocking the merger. But I think it was more of a sort of like, it's a nice ad agency you got there. It would be a shame if something happened to it.
The Journal.
How Elon Musk Pulled X Back From the Brink
The way bank loans like that often work is that the banks, while they sort of put the cash upfront, you know, to make sure the deal can happen, they often will sell and cut up those loans and give them to a broad investor base. You know, everything from mutual funds that can hold corporate debt, like a bond fund, to asset managers who focus on corporate debt.
The Journal.
How Elon Musk Pulled X Back From the Brink
It was the first time that the banks had decided we were going to test the whole market and see if there's interest in buying this debt.
The Journal.
How Elon Musk Pulled X Back From the Brink
All in, including a series of transactions that played out over, you know, about a month after that happened, the banks ended up selling $10 billion of debt all in when they were only planning to sell around three.
The Journal.
How Elon Musk Pulled X Back From the Brink
Musk really likes X. I'm sure there must be something about it.
The Journal.
How Elon Musk Pulled X Back From the Brink
Yeah, yeah, yeah. There must be some reason to it. He's such a nerd. Like, I'm sure there's some nerdy reason. I'd say this as a nerd myself.
The Journal.
How Elon Musk Pulled X Back From the Brink
XAI has trained itself off of X slash Twitter data, which is quite extensive. And there's a lot of data that automatically gets loaded up to it, financial market data, commentary, news. So one of the advantages I think XAI has is that it's not training itself off of a static set of existing data.
The Journal.
How Elon Musk Pulled X Back From the Brink
It actually has found a sort of live database that is truly in real time being updated with developments around the world.
The Journal.
How Elon Musk Pulled X Back From the Brink
It was a really tough deal for the banks. They were stuck holding debt that, you know, while they were getting paid interest on it, they don't want to, you know, have their money tied up in these loans. So it wasn't something they loved. But we're talking now because the story's changed. The story has changed.
The Journal.
How Elon Musk Pulled X Back From the Brink
People were starting to sort of work for two companies at the same time. Like you started to see there were people at X who had, you know, two hats at once. They were both XAI and X engineers, for example. So Elon was very purposefully, you know, moving resources inside of his empire towards the AI company. It was clearly a big priority for him.
The Journal.
How Elon Musk Pulled X Back From the Brink
I think what I can say with confidence is that X is a lot better off because of XAI. There is a huge advantage in having this web of companies that kind of rely on each other and can share resources. Like if one business is going through problems, then you can pull on some of your others to help it out.
The Journal.
How Elon Musk Pulled X Back From the Brink
Yeah, I mean, it was definitely a very unique transaction in a lot of ways. I mean, one thing that might give you a sense for the flavor of the kind of deal it was, was that you actually had, you know, for X and XAI, they had the same law firm and the same bank advising both companies on the deal. So normally that never happens because...
The Journal.
How Elon Musk Pulled X Back From the Brink
you want to ensure that each side is getting the best deal for themselves. So everyone acknowledged that's not typical. It's not usual.
The Journal.
How Elon Musk Pulled X Back From the Brink
One key thing to remember is when Elon bought Twitter, he very explicitly said, you know, my goal is to, one, rechristen it X, and then to turn this into the everything app. You do your payments through it. You do messaging through it. You communicate and read the news through it. And the question was like, okay, so you want to do that. How are you going to do that?
The Journal.
How Elon Musk Pulled X Back From the Brink
And now it's become clear that the way he at least first sees himself embarking on doing that is by merging these two companies together. And I think that there's no doubt about it that with X and XAI as one, like, it will move more in that direction. XAI can be the, like, computing power that makes all of the everything happen.
The Journal.
How Elon Musk Pulled X Back From the Brink
I think it shows that he can make a few good bets and have them pay off. He bet on the right horse in the election. He listened to the advice that was being given to him to use this open window in the beginning of 2025 to... sell things to investors. And that paved the way for these successes.
The Journal.
How Elon Musk Pulled X Back From the Brink
And obviously, I mean, XAI, you know, its interrelations with X have been true for the entirety of its existence. So that was clearly foresight, was seeing a way to bring these two companies together and just waiting for the right opportunity to do it. This has definitely been a good stretch of months for X and X AI, but who knows what the future holds. There's still a lot of risks out there.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
There are 12 real people sitting here listening and deciding whether or not you're going to really go to jail or not. And when he said it in front of the jury, you could feel it in the room that the stakes just got a lot higher. And I'm not trying to be dramatic. It really did feel that way.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
Who is making sure that everything at this complex financial institution is legit and above board and the data is real and we know everything that's going on? The events of the Frank acquisition suggest at least there are some checks missing in the work that some of its teams are doing at a very high level.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
I think everybody acknowledges it was a mistake to do it, but they can also say, hey, we were just lied to. We relied on this individual and the data she provided. You know, we can't always protect ourselves from lies. But I think they at least feel vindicated through the justice system.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
It was worth paying attention to because it offered a pretty unprecedented insight into how the sausage gets made at arguably the most powerful bank in the world. The big question was, well, how did this happen at the biggest bank in the country that's supposed to be an expert in deal-making?
The Journal.
The Fraud Trial That Became JPMorgan's Headache
That's a good question. She named it Frank, according to a TV interview that I saw. It means I'm forthright with you.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
The bank says that what they felt that they were buying was a list of customers, a highly vetted and high-quality list of customers.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
It came up on them slowly and then all at once.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
And Chase says, great, why don't we run a test marketing campaign with a portion of the total users, just see what the results are, and we'll iterate our marketing campaigns from there. And as the executives testified, only 28% of the emails sent in that campaign even delivered to an inbox. And the average for a Chase marketing campaign is 99%.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
So that means that the email addresses in the data file were not legit and likely did not have anything to do with the names of the people who were in the data file.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
Correct. She was put on administrative leave. The bank ran an internal investigation into the matter. And then they fired Charlie as a result and denied her the remainder of her $20 million retention bonus that she was given as part of the purchase agreement when the bank bought her startup.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
She told him, this is the whole synthetic data thing, we have this seed data set of 300,000 profiles. We want you to create a larger data file with 4 million profiles, but whose characteristics are identical to the seed file. So he just thought he was doing a, you know, consulting project outside of his normal tasks as a professor.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
He said, the names are fake. The names are made up. And he said, it would have been pretty obvious if you had done some basic due diligence.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
She tells him, I need you to create a synthetic database of containing four million profiles, essentially artificial data.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
The key argument for them was that this wasn't fraud. What we're seeing is actually buyer's remorse. J.P. Morgan, they actually just made a bad investment, and they're really mad about that.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
Charlie's two top attorneys are Jose Baez and Ronald Sullivan. They're kind of a team that have worked on a lot of cases together, most recently including the Harvey Weinstein trials. They were co-attorneys for Harvey as a defendant in those cases. So they know how to play things for a jury because it's the jury who's deciding everything here.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
Like before the judges even like passed the mic to him, he like jumps out of his seat and he's like, you wanted to date Ms. Chavis, didn't you? You sent her flowers. You sent her messages saying you have a terrifically fit body. He's like ranting and raving at this guy on the witness stand. You know, the judge is like, can you please move to the podium?
The Journal.
The Fraud Trial That Became JPMorgan's Headache
He like knocks over like a computer monitor on his way. He's like kind of out of breath. Like it was very embellished behavior.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
There was a younger person in their, I think, early 30s who was called to testify, who was essentially a bit of a mid-level employee. She was responsible for, like, taking notes during meetings and building PowerPoints. You know, she wasn't a decision maker, but she was helping the decision makers. And there was a Skype message that Charlie's defense attorneys pulled up.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
that this young woman had sent to her boss saying, you know, Charlie's startup, they barely make any revenue. So how can we even know that she's got these customers? And her boss sent back to her, well, it'll all come out in confirmatory due diligence. Don't worry about it.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
And now with hindsight, it's like, wow, she was actually asking the exact right question and nobody was really taking it that seriously.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
And she had underlined segments of that letter and sent it to the whole team working on the Frank deal. And in that annual letter, he actually had a section about due diligence. And he said in one part of it, you know, sometimes you don't need to do analysis. to know if a deal is a good deal. Sometimes you just know. You know, that's me paraphrasing what he said.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
Well, at first he says, is this even legal? And he then says he refused to do it. because he wasn't sure it was even legal, what was being asked of him. In reply, Charlie said to him, don't worry, I don't want to end up in an orange jumpsuit. It was when the jumpsuit comment happened that it was like, this is a real trial about real crimes.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
And Chavis' attorney said, isn't this proof that you guys were willing to rush your work to move ahead on this deal? And she said, it was a joke to my team. I didn't really mean it. But the point was made to the jury, which was that some people knew that things were moving really fast inside of J.P. Morgan. And nobody necessarily pumped the brakes enough to double-check all the work.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
Now, what this firm really seemed to do was to take the synthetic data file that Charlie had created, essentially go and count the number of rows and how many rows had information in it. So it didn't actually validate that the people were real, but they sort of took an Excel spreadsheet and said, okay, there seem to be 4 million people with first names and last names.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
So the defense just tried to paint a picture saying the bank either you know, didn't care about how many customers there really were, or, you know, they rushed their work to, you know, get this deal done and missed key details in the process.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
And then around 2.30, a note was sent to one of the clerks running the court that said the jury has reached a verdict.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
And then Charlie's defense attorney said, well, we want to poll the jury. Because sometimes, you know, these juries give a verdict and you poll every jury member to make sure that there's not someone who's like kind of on the fence about things or whatever. And they polled all 12 being like, on count one, did you find the verdict guilty? Yes. Yes.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
They went through everyone on every charge and everyone unanimously said, yes, we think they're guilty of everything.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
Silently. She was completely silent. And you could feel that she was stunned. You could feel that her family, who's been in court every day, were also stunned.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
Hi, so just got out of court. Charlie and her co-executive have been required to now wear ankle monitors. There was two hours back and forth where their attorneys both tried to say this wasn't necessary. In Charlie's case, they said, you know, her main source of income now is teaching Pilates. It's, you know, cumbersome to teach Pilates while you're wearing an ankle monitor.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
After a lot of back and forth, the judge said, we're going to request that you wear this ankle monitor. So here we go.
The Journal.
The Fraud Trial That Became JPMorgan's Headache
it was damaging for JP Morgan in the sense that it showed that some of the people in charge weren't asking the right questions about the investment that they were embarking to make. Now, this deal cost the bank $175 million. That, in the context of JP Morgan, a very large financial institution, is not a lot of money. But it goes to, I think, a bigger point