Happy Sunday, and welcome back to Dry Powder.

This past week, a hasty defenestration at Lazard sent a powerful message about the ground rules of the new Orszag regime. In today’s issue, my reflections on how the tolerance for certain types of behavior has changed at my old firm over the years, plus notes on Elon’s startling public letter to Mark Zuckerberg.

In short order, Michel demoted seven partners and forced another seven to become limited partners. It sent a powerful message. “It was a Napoleonic first act, if you will,” one partner once told me for my 2007 book about Lazard, The Last Tycoons. “I am sure it was all calculated to instill fear and trembling in the troops.” Many said Michel took a page from Candide in which Voltaire explained how the British had executed one of their own admirals who lost an important battle pour encourager les autres (to encourage the others).

I was reminded of this reverie after the Journal broke the news, which quickly traveled around Wall Street, that the firm had hastily parted ways with a newly hired Managing Director, Reid Snellenbarger, following a July 4 party at his home attended by junior Lazard employees. I don’t know what happened, and Lazard isn’t saying, though down-and-dirty Wall Street blogs appear to be surfacing their own allegations. “Out of respect to our colleagues who may have been affected by this person’s behavior, we are not providing or confirming any further detail on the incident,” emailed Judi Mackey, Lazard’s head of communications. But his immediate defenestration, within hours, sent a powerful message that the new Orszag regime will not tolerate such behavior.

I’m not saying that outgoing C.E.O. Ken Jacobs would have tolerated whatever Snellenbarger allegedly did either—in fact, Jacobs is still Lazard’s C.E.O. until October, and so I’m sure the decision was made jointly by Jacobs and Orszag—but the firing of a newly hired managing director still sends a message that Orszag will be making sure that no one at Lazard embarrasses the firm or its reputation, even on the weekend, even when they are off-duty, even at a party at their own home.

Needless to say, this represents a sea change from the Lazard of old. Back when I was there, between 1989 and 1995, there were countless interactions that occurred between the men and women at the firm (and the men at the firm and women outside the firm) that would definitely no longer be considered even remotely acceptable today. (I captured some of them in Chapter 14 of my book on Lazard, entitled, “It’s a White Man’s World.”) So it’s safe to say that the Lazard of old, where bad behavior between the men and women was largely ignored and was considered how shall we say, very French, will not be allowed at the Lazard of today, or, frankly, at any other Wall Street firm. And let’s call that progress. Why it was considered acceptable, ever, at any time, is the real mystery. It’s about time that times have changed.

Lazard is now a public company, with a market value of $3.6 billion, up 12 percent in the six weeks since the firm announced that Orszag would be replacing Jacobs, after Jacobs held the job for nearly 14 years. Lazard has things nowadays it never used to have: shareholders who are not Michel and his family; an H.R. department; an Investor Relations department; a full-time press office; flashy offices just below the Rainbow Room in 30 Rockefeller Plaza; air conditioning; windows that don’t open. So even a 175-year-old organization can change, or at least change with the times, as required. It’s hardly a reason for celebration, or for hosannas. But, hey, it’s a start, if a modest one at that.

The bigger question for Orszag to solve will be how to return Lazard back to its glory days in the 1980s and 1990s when it consistently punched above its weight, consistently found itself in the middle of the biggest and most important deals, and when Michel used to refer to Lazard as the “haute banque d’affaires vis-à-vis the world,” which he once described as meaning: “To me it is a state of mind, not an activity. It is a firm which puts itself at a level parallel with the level at which decisions are made in enterprises. It means that you remain at the decision-making level, that you give advice at that level, that you think at that level and that you remain exclusively at that level.”

I have a few thoughts about how Orszag, Obama’s former director of the Office of Management and Budget, can return Lazard to being an haute banque d’affaires and to a semblance of its past glory. (Lazard isn’t even among the top 10 M&A advisors for the first half of 2023.) Orszag and I have lunch scheduled for October, shortly after he takes the reins of the firm from Jacobs. I’ll share them with him then. Stay tuned for my report on how that lunch goes.

This is a man who obviously knows no boundaries. He also fired something like 75 percent of the Twitter workforce, and then deprived many of them of their rightful severance payments, including by stiffing JAMS, the arbitration professionals hired to adjudicate these claims. Now, most recently, in the letter written by his Quinn Emmanuel lawyer, Alex Spiro, to Mark Zuckerberg, Musk claims that the employees he fired, and failed to pay severance too, walked across the street to Meta and then set up Threads using Twitter’s trade secrets and expertise. In the letter, which was widely disseminated last week, Spiro accused Zuck of hiring “dozens of former Twitter employees,” an assertion that Andy Stone, Meta’s communications chief, disputed. “No one on the Threads engineering team is a former Twitter employee —that’s just not a thing,” he wrote.

Spiro also asserted “that these employees owe ongoing obligations to Twitter” and “and that many of these employees have improperly retained Twitter documents and electronic devices.” I think there is only one person in the world who could make Zuckerberg appear sympathetic and we have found him in Elon Musk. Suing the company that may or may not have hired the employees he fired, many of whom he stiffed of their severance from Twitter? That takes an extraordinary level of hubris and a belief that the rules just do not apply to him.

As for his suit against Wachtell, one of America’s premier law firms, I understand why Elon thinks $90 million for a few months worth of legal advice given to a plaintiff where he was the defendant is offensive, but a contract is a contract. And in this case, there was a contract that the old Twitter entered into with Wachtell, which has long structured its fees based on success, more like an investment bank, than a typical law firm that bills by the hour. Services were rendered. There was success. Elon, as he well knows, was forced to close the deal for Twitter, which he had previously signed a contract to buy. When he bought the equity of Twitter, he also assumed the liability for all those contracts in the process, and that’s the end of that, even though the case that Elon’s attorney lay out in the complaint against Wachtell makes some fascinating claims about what went on in the last few hours before the Twitter sale closed.

I recently laid out the Machiavellian case for why Elon might be driving down the value of Twitter, in order to buy back its debt for pennies on the dollar from the Wall Street banks that will soon be forced by the Federal Reserve to sell it and move it off their balance sheets. It’s one of the few explanations I can think of why Elon continues to stiff Twitter’s creditors, any three of whom could join together to put the company into an involuntary bankruptcy if they are willing to stomach the headlines.

Of course, it would also make sense for Elon to try to unload this headache called Twitter. After all, he’s made a total hash of it. He’s got new competitors all around now, including the aforementioned Threads—where nearly 100 million people flocked this past week—and he has a new C.E.O. in place, Linda Yaccarino. Why not ask Morgan Stanley to put together a private selling memorandum, filled with all sorts of exciting projections about what Twitter could be and circulate it, via a non-disclosure agreement, to potential buyers? Nothing really to lose by testing the waters.

Who would buy it? I could easily imagine someone like Apollo coming in at the $6 billion price—an 86 percent discount to Elon’s initial purchase price—and perhaps marrying it with Yahoo, which Apollo bought for $5 billion from Verizon a few years ago, and then bringing the two companies public under some sort of social media holding company structure with all the pomp and circumstance a Wall Street underwritten IPO can muster. But, other than a distressed buyer, buying at a severe discount—perfecting Elon’s loss and that of his banks in the process—I don’t see that anyone else is going to step up and pay anything like a remotely full price for the company.

The other reason Elon might want to sell Twitter? If he continues to own the company, he will probably have to sell more Tesla stock to make the interest payments to the bank group. The next interest payment of around $300 million is due in September—unless he wants to strategically skip the payment and risk an involuntary bankruptcy filing or a restructuring that would turn the company over to his creditors. Why not just get rid of the whole damn thing and move on? Especially since, incredibly, his net worth has increased around $100 billion since he sunk $24 billion of his own money into buying Twitter. After all, at this moment, incredibly, he’s ahead.