Natural as it is to let your hair down in casual podcasts about business and life, these candid off-the-cuff remarks can come back to bite you, including in multi-million dollar lawsuits where judges weigh podcast statements more than sworn testimony. That is a cautionary headline for everyone, set forth on page 10 of a recent 119-page Delaware Chancery Court opinion being widely discussed for its application of the old Revlon duty in a take-private transaction.

The case involved Mindbody, the software company that Rick Stollmeyer founded in his garage in 2001, built with $100 million in venture funding, and took public in 2015. The public shareholders challenged the fairness of Mindbody’s 2019 sale to a private equity firm for $1.9 billion. Siding with the shareholders, the judge cited a podcast where Stollmeyer described personal financial circumstances that added weight to the shareholders’ claims of conflicting interests. Calling the podcast “more persuasive” than contrasting testimony during trial, the court quoted the following:

[F]or the entrepreneur or particularly for the CEO, [an IPO] is not a liquidity event. Your capital is locked inside the business, and you can sell tiny bits of it, called the 10b5-1 plan where you decide essentially a year in advance, a couple of quarters in advance, you come up with a plan that says sell off a little bit on these predefined dates. It doesn’t matter if the stock got hammered, it doesn’t matter if the stock’s high. So, it’s kind of like sucking through a very small straw. For me, I had been at it for a long time… We were public in 2015, so I’d been at it for 15 years. We would have public investors. I would have them challenge me that I was selling my own stock, and he was like, “Don’t you believe in your own company, Rick?” 98% of my net worth is in the stock of my company, which is extremely volatile. I’m in my 50s now, and I’ve got kids in college. What kind of question is that?

Podcasts are often designed to evoke a sense of privacy, even intimate conversation. But they are in fact permanent public records. The lesson from Delaware for corporate officers and directors is clear: on podcasts, assume you are speaking on the record for the world, not chatting with a friend.


Lawrence Cunningham
Special Counsel, New York
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