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Speaker 1: There's nothing better than bitcoin in your gold storage. It

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Speaker 1: has the best risk adjusted return. That should be the

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Speaker 1: foundation of anyone's portfolio. If you want to take some

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Speaker 1: additional risk, then you should explore the treasury companies and

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Speaker 1: attempt to outperform bitcoin. Capital is trapped under different mandates.

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Speaker 1: Those trap pools the capital have no way of getting

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Speaker 1: some of that upside. Michael Saylor accumulates bitcoin on his

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Speaker 1: balance sheet so that he can create securities that fulfill

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Speaker 1: the mandate of that trapped capital. He sells those securities

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Speaker 1: and he's bringing new capital, which ultimately lands in bitcoin

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Speaker 1: from those trap capital pools.

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Speaker 2: Do you think the good companies will be able to

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Speaker 2: outpace bitcoin over a long term? And when I say

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Speaker 2: long term, call it five years.

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Speaker 1: Yeah, I think that's right.

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Speaker 2: Hey, Brandon, thanks for joining me today. It's been a

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Speaker 2: while since we've got to sit down and do a recording.

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Speaker 2: I'm super excited to jump in here.

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Speaker 1: Likewise, what was the last time Mark? Was it live

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Speaker 1: in LA a couple of years ago? Is that the

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Speaker 1: last time we recorded together?

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Speaker 2: That is a good question. I should have gone and looked.

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Speaker 2: I did see one as I was going through from

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Speaker 2: like I think four years ago that we had a recording.

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Speaker 2: I think we were talking about I think the Fourth

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Speaker 2: Turning four years ago, but so much has changed since then,

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Speaker 2: and I would say the whole direction of the world

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Speaker 2: has changed since then. You know, the Fourth Turning was

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Speaker 2: a hot topic four years ago. I was talking about

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Speaker 2: the cycles and the decentralization, and I think it was

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Speaker 2: a super important message at that time. For right now, though,

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Speaker 2: I just see massive change, but so much hope and

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Speaker 2: prosperity on that side. I'm curious if your sort of

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Speaker 2: worldview has shifted since where we were four years ago.

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Speaker 1: Yeah, I think it definitely has. When we recorded last

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Speaker 1: let's call it twenty twenty one, we're in the thick

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Speaker 1: of the COVID tyranny stuff. I was genuinely disenchanted by

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Speaker 1: my fellow American at the time. I thought we stood

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Speaker 1: up for individual rights and sovereignty and we went just

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Speaker 1: do whatever we're told. And yet I flashed back to

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Speaker 1: that period. I remember I was living in Minneapolis at

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Speaker 1: the time. I remember my neighbor calling the cops on

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Speaker 1: my other neighbor because they had too many cars in

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Speaker 1: the driveway for some holiday or birthday or something, and

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Speaker 1: that really set me off, and it ultimately led to

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Speaker 1: me finding the fourth Turning and trying to make sense

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Speaker 1: of this whole thing. And now that we're sort of

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Speaker 1: through the fog of war, I would like to believe

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Speaker 1: society learned something from that, but I honestly don't think

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Speaker 1: the average person did. But what gives me optimism now

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Speaker 1: is that it feels like Bitcoin's time is really coming.

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Speaker 1: It's clearly being financialized, it's clearly being accepted by the

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Speaker 1: political party in the US, at least for now, and

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Speaker 1: I think that puts a lot of It gives bitcoin

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Speaker 1: a lot of runway, and it will give us a

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Speaker 1: chance to get out really far ahead of this thing.

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Speaker 1: So even if the political tides turn in the future,

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Speaker 1: I think Bitcoin is sufficiently too big, too entrench nothing

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Speaker 1: can stop this thing. And so while we have Paul

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Speaker 1: today telling us that the two percent inflation is no

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Speaker 1: longer a target, markets react positively, obviously, So we have

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Speaker 1: Fiat with nothing stops his train, and we have Bitcoin

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Speaker 1: getting adopted in larger and larger scales. So that's pretty

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Speaker 1: cool to see.

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Speaker 2: Yeah, I haven't got a chance to catch up on

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Speaker 2: what he said this morning, but I did just pop

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Speaker 2: on to Twitter for like a split second to check

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Speaker 2: a message, and I see a post from Lynn Alden

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Speaker 2: and she said if you missed if you missed her

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Speaker 2: own Palell speech. He basically said, nothing stopped his train.

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Speaker 2: I was like, Okay, that's all I need to know.

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Speaker 2: And I see the price of bitcoin and everything else

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Speaker 2: going back up quite a bit. So one thing I

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Speaker 2: think that's important to kind of catch up on is

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Speaker 2: the different facets that we've sort of seen bitcoin go

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Speaker 2: through as it's growing up, as it's advancing. You mentioned

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Speaker 2: the political headwinds have shifted now to maybe tailwinds. Sort

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Speaker 2: of Bitcoin has gotten to where it's at in spite

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Speaker 2: of all the headwinds that it's had from Operation Choke

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Speaker 2: Point to you know, Elizabeth Warren's anti crypto army, to

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Speaker 2: all of those things, and now that that headwind has

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Speaker 2: turned into a tailwind politically, which has then seemed to

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Speaker 2: bring a lot of the institutional money, the Wall Street

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Speaker 2: money maybe waiting for that sort of all clear is

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Speaker 2: from this regulatory front. That's how I see it. Anyway,

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Speaker 2: how are you framing up where we're at with the

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Speaker 2: bitcoin price now here breaking new all time highs, the

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Speaker 2: political wins where they are.

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Speaker 1: Yeah, I think that's right. I think the big watershed

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Speaker 1: moment was the ETF getting approved, and so Grayscale won

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Speaker 1: that case, which essentially made the way for the ETFs.

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Speaker 1: Those were obviously the most successful ETFs of all time.

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Speaker 1: They continue to be net accumulators. And we have the

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Speaker 1: Trump administration signaling gas pedal for the industry, and so

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Speaker 1: you pair those two things together and it's essentially as

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Speaker 1: d risk as you can possibly get. Maybe you sprinkle

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Speaker 1: a little Larry Fink being a bitcoin spokesman spokesman on

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Speaker 1: top of that, and yeah, clearly the conditions have changed.

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Speaker 1: We're seeing Wall Street respond, We're starting to see pension funds,

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Speaker 1: Harvard Universities, some other marquee names taking a bite out

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Speaker 1: of this thing. And so, yeah, it's very clear the

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Speaker 1: tides have shifted. And if we look at this the

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Speaker 1: price over this recent time period, bitcoin is not operating

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Speaker 1: like it normally does in a bowl market. With these

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Speaker 1: exponential moves thirty ish plus percent declines hopefully rebase and

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Speaker 1: run up again. We're seeing a very different market structure.

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Speaker 1: We're seeing little pops to reprice and then we're seeing

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Speaker 1: this really boring crab market period as old investors selling

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Speaker 1: out and new investors coming in, everyone gets bored, and

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Speaker 1: then we have another little pop and we chill out

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Speaker 1: after that. And so to me, it seems pretty clear

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Speaker 1: that something has changed. I don't know if if we're

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Speaker 1: ever going to have another eighty percent bear market again,

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Speaker 1: if we continue this slow climb stair stepping climb, I

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Speaker 1: don't think we will. However, if we do reach some

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Speaker 1: sort of a mania Piero, let's say, in the next year,

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Speaker 1: and bitcoin really goes parabolic, I think we will have

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Speaker 1: at least a fifty percent correction.

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Speaker 2: Yeah, it seems like if you look at a long

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Speaker 2: term chart of bitcoin, it's like the line in the

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Speaker 2: sand is sort of when the ETFs got launched, and

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Speaker 2: since the rise of the ETFs, it sort of seems

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Speaker 2: like a lot of that volatility has come out of

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Speaker 2: the market. So maybe it's that there's such a long

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Speaker 2: standing sustained bid for bitcoin that it just isn't allowed

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Speaker 2: to sort of get those twenty five or thirty percent drops,

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Speaker 2: as you said, because that bid is there.

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Speaker 1: Yeah, I think that's exactly right. I think there's a

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Speaker 1: sustained bid from larger players. They know they need a position.

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Speaker 1: They're accumulating. Any dips are getting bought up, and I

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Speaker 1: think we'll see that for some time. If you look

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Speaker 1: at the market cap of bitcoin compared to let's say

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Speaker 1: there's one thousand trillion dollars in total assets in bitcoin's

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Speaker 1: two point five or something like that, this is a

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Speaker 1: giant whale we're going after, and Bitcoin's still a minno relatively,

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Speaker 1: so I do expect those institutional flows to continue, and

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Speaker 1: we have a lot way to go there. Now. One

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Speaker 1: thing that's very unique that I'm noticing in my personal

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Speaker 1: life is that retail does not seem to be woken

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Speaker 1: up yet. They're not coming back in large numbers. I'm

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Speaker 1: getting a few messages from contacts, but it's pretty quiet

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Speaker 1: compared to twenty twenty one or twenty seventeen. Are you

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Speaker 1: seeing the same?

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Speaker 2: I would say, I would say I'm seeing about the same.

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Speaker 1: You're right.

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Speaker 2: I mean, typically when it starts breaking out, making new

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Speaker 2: all time highs, contacts you haven't heard from in years

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Speaker 2: start coming and sending your messages, asking you, you know,

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Speaker 2: how they can get in, if now's the time to buy,

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Speaker 2: should they wait? Those types of things, And I would

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Speaker 2: say those have been a little light right now. Maybe

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Speaker 2: it's because we've been hovering around this one hundred thousand

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Speaker 2: dollars mark for quite a while, so maybe you know,

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Speaker 2: we had one hundred and twenty, it's not that much higher.

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Speaker 2: It's the law of large numbers, right, It's like the

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Speaker 2: numbers have gotten so much larger that getting one hundred

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Speaker 2: hundred and twenty like what's the big deal kind of

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Speaker 2: a thing. So maybe that's it, but I would agree

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Speaker 2: with that. I'm curious what your take is. I mean,

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Speaker 2: between the ETFs, as you said, like this this sustained bid.

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Speaker 2: Now we have the rise of the bitcoin corporations, the

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Speaker 2: big win treasury companies acquiring you know, we've seen it

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Speaker 2: looks like five to ten times more demand than the

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Speaker 2: new incoming like mining supply. So I guess number one

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Speaker 2: the big question that everybody has is if there's all

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Speaker 2: this buying and it's outstripping supply by that much, why

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Speaker 2: hasn't the price moved more?

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Speaker 1: Yeah, that's the million dollar question. You see this all

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Speaker 1: over Twitter. You see all the analysts bringing this up.

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Speaker 1: And I think I would draw from James check who

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Speaker 1: writes a newsletter check on Chain. I think he's one

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Speaker 1: of the top on chain analysts and people have opinions

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Speaker 1: about this, but I think there's some value here to

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Speaker 1: be added in your analysis. And what James Check notices

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Speaker 1: is that we are seeing old, large whales that have

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Speaker 1: held their coins for a very long time finally taking

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Speaker 1: some meaningful profits. And you might say, why would you

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Speaker 1: do that? Bitcoins maybe the best time ever to buy

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Speaker 1: from a risk adjusted return, why would they do that?

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Speaker 1: But if you're sitting on one hundred million or a

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Speaker 1: billion dollars in unrealized gains, maybe you want to upgrade

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Speaker 1: your life a little bit. And I think that's pretty reasonable.

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Speaker 1: I also think it's healthy for these coins to change

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Speaker 1: hand and not move the price very much. If you

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Speaker 1: remember that giant cell that I.

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Speaker 2: Think Galaxy executed that Galaxy.

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Speaker 1: Yeah, Galaxy, excuse that eighty million or I forgot the

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Speaker 1: number of.

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Speaker 2: Eighty thousand bitcoin. I believe it was like nine billion dollars.

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Speaker 1: There you go, it's way off. Move the market maybe

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Speaker 1: three percent that day, came back up the next day.

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Speaker 1: That's extremely bullish, and so the bid is there. We're

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Speaker 1: recycling investors. This is all healthy, and this is how

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Speaker 1: we could see a world where we don't see another

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Speaker 1: eighty percent draw down. Instead, we're more correlated to M

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Speaker 1: two growth or general macro conditions.

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Speaker 2: Yeah, back in the day, when I first got into

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Speaker 2: bitcoin twenty five ten, twenty sixteen, then I thought, well,

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Speaker 2: it's not bitcoin, it's the blockchain. So then I'm into

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Speaker 2: the different crypto assets and I would trade these assets,

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Speaker 2: and I would sit on some of these exchanges, pullin

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Speaker 2: X I think, or bit tricks or whatever, and I'd

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Speaker 2: sit there try and trade these things, and i'd literally

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Speaker 2: watch the order books and I'd be taking the orders

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Speaker 2: that were the highest, so I could move my coins

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Speaker 2: without moving the market cap, without getting the slippage in

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Speaker 2: the price. And today they just dumped nine billion in

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Speaker 2: a single day, just like and it moves the market

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Speaker 2: by a couple of points. Like I literally would like

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Speaker 2: execute trade by trade by trade, you know, and just

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Speaker 2: a couple of years later you can literally have nine

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Speaker 2: billion or whatever it was in liquidity in a single day. Amazing,

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Speaker 2: that's wild.

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Speaker 1: I remember the twenty seventeen market, people were selling their

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Speaker 1: kyced binance account for like twenty thousand dollars right right,

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Speaker 1: just as a sign of the times. Now you can

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Speaker 1: get a you can go buy the ETF on any

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Speaker 1: brokerage you want. The on ramps are numerous, very easy

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Speaker 1: for large volume. Times have definitely changed.

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Speaker 3: Yeah.

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Speaker 2: Now, when you look at the demand outstripping the supply,

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Speaker 2: I mean, obviously there's always supply. I'm talking about the

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Speaker 2: new supply, the new mining supply. When you look at

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Speaker 2: the demand outstripping the supply by five or ten times,

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Speaker 2: how much do you think this four your having cycle

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Speaker 2: really matters. When the demand is already outstripping the new

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Speaker 2: supply by so much, what difference does it make if

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Speaker 2: it drops by another fifty percent?

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Speaker 1: Yeah, I think it's a good point. What people would say,

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Speaker 1: let's rewind a year or two ago, is bitcoin as

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Speaker 1: a having cycle every four years. We know that soon

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Speaker 1: after the having cycle we see a price run. And

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Speaker 1: the conclusion for most people during that period would be

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Speaker 1: because the inflation is cut in half, that just cycles

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Speaker 1: through the market and there's less supply being created. So

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Speaker 1: if you have steady demand and less supply, price goes up. However,

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Speaker 1: those were very different times. In the first four years

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Speaker 1: in bitcoin's life, fifty percent of the coins were issued.

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Speaker 1: This is a very large inflation rate. Next cycle, twenty

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Speaker 1: five percent of the total coins were issued, Right, that's

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Speaker 1: a lot of supply, and you meant you bring it

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Speaker 1: up to today. We're less than two percent new issuance

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Speaker 1: per year today and the next HAVING cycle will be

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Speaker 1: less than one percent. And if you look at that

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Speaker 1: total dollar amount like you mentioned, those are peanuts relative

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Speaker 1: to average trading volume or new new buyers. However you

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Speaker 1: want to look at that. And so just looking at

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Speaker 1: the mining supply d dynamics, I think it has almost

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Speaker 1: no impact going forward, and increasingly so each cycle. Now,

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Speaker 1: I think there's another bigger question here, which is was

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Speaker 1: there ever actually a cycle that was catalyzed by these

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Speaker 1: supply reductions? And if you look up an M two

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Speaker 1: money chart relative to Bitcoin's price, Bitcoin's extremely correlated to

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Speaker 1: M two meaning money printer goes burr. Where does the

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Speaker 1: new money go? Bitcoin gets an unfair or outsized percentage

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Speaker 1: of those new flows. And so I'm leaning to there

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Speaker 1: never was a HAVING cycle. However, it's hard to say.

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Speaker 1: I don't think we'll ever know.

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Speaker 2: Yeah, Well, you mentioned global liquidity, and it's something that

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Speaker 2: I spend an enormous amount of time watching and reporting on.

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Speaker 2: I talk about it on almost every one of my videos.

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Speaker 2: And I would probably agree to the point that I

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Speaker 2: think you're proposing. I don't know if that's your review,

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Speaker 2: but I would agree. I think the global equity cycle

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Speaker 2: is the dog wagging the tail. It's not the four

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Speaker 2: you're having cycle. I think Michael Howell is the goat.

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Speaker 2: I subscribe I paid a subscribe to. It was newsletter.

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Speaker 2: I read that Nick Body at the Bitcoin Layer they

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Speaker 2: do a really good global equity cycle charts. Ral Paul

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Speaker 2: of Our Real Vision does some really good ones. And

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Speaker 2: it was actually Ralph Paul that sort of brought me

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Speaker 2: onto this idea. So getting credit where it's due. You know,

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Speaker 2: we're in a debt based monetary system, so obviously the

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Speaker 2: debt always has to expand, and debt could be termed

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Speaker 2: from months to up to thirty years, and so all

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Speaker 2: around the world you have all these different rates of debt.

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Speaker 2: And there's this really interesting phenomenon where you take a metronome,

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Speaker 2: which is supposed to keep perfect time for music, and

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Speaker 2: if I put like one hundred metronomes on this table

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Speaker 2: and started them at all different times in a period of time,

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Speaker 2: they would all sync up because of the way the

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Speaker 2: table vibrates or whatever. And so you have all this

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Speaker 2: debt around the world at these different terms and rates.

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Speaker 2: But in two thousand and eight, when we had the

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Speaker 2: Great Financial Crash, the entire world dropped rates to zero

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Speaker 2: and everybody called the banker and refinanced basically, right, So

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Speaker 2: all the debts got synced up. And if you look

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Speaker 2: at the profile of the debt today, seventy five percent

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Speaker 2: of the debt is termed between three to five years,

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Speaker 2: which means four years now. That started in two thousand

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Speaker 2: and eight, twenty twelve, twenty sixteen, twenty twenty, twenty twenty four,

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Speaker 2: which just so happens to be the four year having cycle,

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Speaker 2: which just so happens to be the four year presidential

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Speaker 2: election cycle, which just so happens to be the four

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Speaker 2: year business cycle, all on the same cycle. And so

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Speaker 2: certainly we think about are they trying to stimulate the

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Speaker 2: economy going into a presidential cycle. I mean, I saw

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Speaker 2: some talk today about Jerome Powell and potentially trying to

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Speaker 2: get some easy for the midterms next year. So there's

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Speaker 2: certainly the four year election cycle, certainly the global liquidy cycle.

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Speaker 2: So I tend to kind of think that is the

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Speaker 2: dog that's wagging the tail and I remember, you know,

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Speaker 2: going into the last cycle.

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Speaker 3: No, this can't be the top.

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Speaker 2: Michael Sailor said, all my models are destroyed. Sixty nine

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Speaker 2: or wherever it was in the sixty thousand. It's not

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Speaker 2: high enough. It needs to be higher. It's got to go,

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Speaker 2: gotta go, gotta go. But right on point November twenty

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Speaker 2: twenty one, it made it high. But it was Jerome

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Speaker 2: Powell that went out on the news and said we're

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Speaker 2: going to start raising rates, and he said he gave

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Speaker 2: forward guidance, he said in January will raise rates, and

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Speaker 2: just like that, Bitcoin and then NASDAC and then S

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Speaker 2: and P five hundred drew down. So I think back

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Speaker 2: to the point that you're making. You look at the

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Speaker 2: M two. It was Jerome Powell coming out saying we're

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Speaker 2: going to because he had said we're not even thinking

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Speaker 2: about thinking about raising rates. He said, we're not going

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Speaker 2: to raise rates for four years. But then he came

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Speaker 2: out and said, okay, we're going to tighten, and then

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Speaker 2: Bitcoin's sold off. So then the question is is Jerome

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Speaker 2: Powell going to come out in November and tell us

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Speaker 2: they're going to tighten and start raising rates.

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Speaker 1: It's a good question I'm no fed hawk. I don't

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Speaker 1: keep an eye too much day to day. I just

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Speaker 1: pick up the scraps on Twitter. But his recent comments

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Speaker 1: today are him signaling that the two percent's gone, two

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Speaker 1: percent target's gone, and markets are screaming. So as far

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Speaker 1: as I can tell, we're going to be printing until

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Speaker 1: further notice. And if so, Bitcoin's going to do extremely well.

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Speaker 2: I mean, I just think about Trump seems to kind

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Speaker 2: of get his way. He's been banging on Fed chair

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Speaker 2: Powell to lower rates. He wants them down like three

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Speaker 2: and a half points. And if he doesn't get Powell

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Speaker 2: to drop him either way, Powell's gone next year and

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Speaker 2: he'll replace him with someone who will bring.

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Speaker 3: Them down three and a half points.

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Speaker 2: So it was a rhetorical question, you know, and rather

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Speaker 2: than Jerome Power raising rates, I mean, potentially he could

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Speaker 2: before he's gone, but by this time next year he'll

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Speaker 2: be gone. Most betting odds are that Trump will replace

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Speaker 2: him with a dove and those rates are going to

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Speaker 2: be down by several points, and so that changes the

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Speaker 2: global equity cycle, and it changes that for your having cycle.

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Speaker 1: I think I agree. If so, if we went with

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Speaker 1: the four your having cycle, the market should be pretty

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Speaker 1: exhausted by this time next year. But if we have

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Speaker 1: some right decreases starting this year maybe next year, there's

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Speaker 1: no way that the cycle will be over if we're

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Speaker 1: correlating to M two. So I'm on the train selling

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Speaker 1: now is crazy. Hold your bitcoin, folks.

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Speaker 3: Yeah.

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Speaker 2: Now, the other big phenomenon is not just do we

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Speaker 2: have these ETFs buying massive amounts of bitcoin, but we

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Speaker 2: also have the bitcoin treasury companies buying them. And so

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Speaker 2: these are companies like Michael Saylor started Strategy micro Strategy,

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Speaker 2: which is now Strategy, and they're basically leveraging public deechn

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Speaker 2: equity markets to buy bitcoin. And now there's a sustained bid,

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Speaker 2: not just a sustained bid, which there.

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Speaker 3: Is, but a race, if you will.

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Speaker 2: What's your take on that sort of situation that's been

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Speaker 2: setting up in the markets.

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Speaker 1: Yeah, absolutely, So I love this topic. First of all,

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Speaker 1: I've been in bitcoin full time for about eight years now,

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Speaker 1: and you know, you kind of go through these different

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Speaker 1: periods where you're excited about bitcoin and then you kind

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Speaker 1: of get bored, and then you go learn about mining

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Speaker 1: and that's fun, and then you go learn about something else.

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Speaker 1: And for me, treasury companies is the latest fascination and

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Speaker 1: most of my mental cycles outside of work and family

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Speaker 1: are going this way, and so I think it's I

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Speaker 1: think it genuinely is the most exciting story in corporate

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Speaker 1: finance and at least a decade, maybe generations. So it's

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Speaker 1: definitely something to pay attention to. But before we go

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Speaker 1: into analysis and different ways to slice this, I want

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Speaker 1: to be very clear, there's nothing better than bitcoin and

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Speaker 1: your cold storage. It has the best risk adjusted return.

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Speaker 1: That should be the foundation of anyone's portfolio. Now, if

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Speaker 1: you want to take some additional risk, and there is

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Speaker 1: significant additional risk, then you should explore the treasury companies

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Speaker 1: and attempt to outperform Bitcoin. Some of these absolutely will,

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Speaker 1: just like Michael Saylor has shown, not all of them will.

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Speaker 1: Maybe some of them will over different time periods. But

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Speaker 1: point being, Bitcoin and cold swords is the foundation. Take

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Speaker 1: additional risk on top of that as you see fit.

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Speaker 1: That's that. So what's going on here? Okay? Capital is

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Speaker 1: trapped under different mandates. You may be only able to

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Speaker 1: invest in fixed income, you may be only able to

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Speaker 1: invest in equities, all these different structures, right, and if

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Speaker 1: you look around the world, bitcoin is the best performing asset,

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Speaker 1: and those trap pools the capital have no way of

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Speaker 1: getting some of that upside. And so what does Michael

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Speaker 1: Saylor do. Michael Sailor accumulates bitcoin on his balance sheet

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Speaker 1: so that he can create securities that fulfill the mandate

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Speaker 1: of that trapped capital. He has a whole portfolio of

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Speaker 1: these things now, and he packages them up for different

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Speaker 1: types of investors. He sells those securities, and he's bringing

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Speaker 1: new capital, which ultimately lands in Bitcoin, from those trapped

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Speaker 1: capital pools. And we talked about this earlier. Bitcoin's two

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Speaker 1: and a half trillion. Fixed incomes in the hundreds of trillions,

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Speaker 1: and so there's a lot of capital chasing yield right now,

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Speaker 1: and there aren't many good options for fixed income guys,

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Speaker 1: and so enter these preferred equity products that Sailor's creating,

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Speaker 1: and it's just a far better product for the fixed

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Speaker 1: income guys. And what are they doing. They're buying it

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Speaker 1: in volume. And so I suspect that this trend is

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Speaker 1: going to continue for a long time, and I think

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Speaker 1: it's important to maybe differentiate in the types of these entities.

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Speaker 1: I think micro strategy. Now strategy is in a league

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Speaker 1: of its own. It's almost silly to compare it to

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Speaker 1: the others. But I think there's roughly three different types

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Speaker 1: of these companies that I think it's important that we differentiate.

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Speaker 1: So number one is the peer play treasury companies. This

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Speaker 1: is micro strategy. This is more or less Metaplanet, but

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Speaker 1: essentially the operating business is either nothing or marginal. The

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Speaker 1: whole game is accumulate bitcoin issue securities to accumulate more bitcoin.

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Speaker 1: Then you have the second category, which I call Bitcoin

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Speaker 1: forward operating companies. This might be a bitcoin minor like Mara,

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Speaker 1: This might be fold, This might be there's tons of these,

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Speaker 1: but they have core operations that are totally related to bitcoin.

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Speaker 1: They're exposed to bitcoin, and they also accumulate bitcoin for

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Speaker 1: their treasury, so it's kind of a hybrid. And the

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Speaker 1: third one is just an operating business that maybe has

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Speaker 1: nothing to do with bitcoin, but they generate free cash

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Speaker 1: flows and they put a percentage of their free cash

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Speaker 1: flows into bitcoin as one of their treasury assets. This

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Speaker 1: could be Tesla. This could be Figma, which we saw recently,

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Speaker 1: and the market treats these three categories very differently. Operating

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Speaker 1: business with a bitcoin treasury Figma Tesla essentially no premium

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Speaker 1: on those on that holdings. Now, the Bitcoin Forward operating companies,

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Speaker 1: they're not getting much premium either here right now, the folds,

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Speaker 1: the Maras, there's many others, but the peer play treasury.

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Speaker 2: Where would you put similar scientific in that.

434
00:22:18,560 --> 00:22:21,040
Speaker 1: It's a good question. They do have free cash flow

435
00:22:21,080 --> 00:22:25,760
Speaker 1: generating operations, not technically Bitcoin Forward, and they also do

436
00:22:25,880 --> 00:22:29,760
Speaker 1: some novel different finance games to try and accumulate. I

437
00:22:29,760 --> 00:22:32,760
Speaker 1: think they're kind of in category two, but it's not

438
00:22:32,960 --> 00:22:37,520
Speaker 1: technically Yeah, it's not technically a bitcoin operating business, right,

439
00:22:38,000 --> 00:22:40,280
Speaker 1: and so maybe I expand that category to just say,

440
00:22:40,320 --> 00:22:44,360
Speaker 1: a free cash flow generating operating business that also does

441
00:22:44,480 --> 00:22:45,560
Speaker 1: financial engineering.

442
00:22:45,920 --> 00:22:49,320
Speaker 2: Yeah, and it's a great breakdown. That's exactly the way

443
00:22:49,359 --> 00:22:51,720
Speaker 2: that I look at it in those three categories as well.

444
00:22:52,920 --> 00:22:55,200
Speaker 2: One of the things I told you before we started

445
00:22:55,240 --> 00:22:58,840
Speaker 2: recording was it two months ago or so a couple

446
00:22:58,840 --> 00:23:01,560
Speaker 2: months ago, I was in Prague a keynote at Bitcoin Prague.

447
00:23:01,560 --> 00:23:03,720
Speaker 2: Got there and I got to have a small intimate

448
00:23:03,760 --> 00:23:06,879
Speaker 2: dinner with Michael Saylor and Alexander from the Blockchain Group,

449
00:23:06,920 --> 00:23:12,320
Speaker 2: and Adam Back and Eves from Tobain and Eric White,

450
00:23:12,359 --> 00:23:14,800
Speaker 2: you know, a small little group, and he gave us

451
00:23:14,800 --> 00:23:17,920
Speaker 2: a you know, three hour masterclass on on what's going

452
00:23:17,960 --> 00:23:20,240
Speaker 2: on and bigwin treasuries and and I was telling you

453
00:23:20,280 --> 00:23:22,600
Speaker 2: how it sort of reframed my entire brain as to

454
00:23:22,640 --> 00:23:25,120
Speaker 2: what was going on. And what you just laid out

455
00:23:25,240 --> 00:23:26,920
Speaker 2: is one of those and I can give you more,

456
00:23:26,960 --> 00:23:29,879
Speaker 2: but one of those things. And and and he really

457
00:23:29,960 --> 00:23:32,640
Speaker 2: kind of gave me the difference of at least those

458
00:23:32,680 --> 00:23:36,800
Speaker 2: two tiers of the peer play versus a business that has.

459
00:23:36,640 --> 00:23:38,200
Speaker 3: A bitcoin treasury strategy.

460
00:23:39,440 --> 00:23:43,840
Speaker 2: And the big difference that I saw and that completely

461
00:23:43,920 --> 00:23:48,239
Speaker 2: changed my mind on this is and and is well

462
00:23:48,280 --> 00:23:51,159
Speaker 2: there's two there's two parts of it. So number one,

463
00:23:51,520 --> 00:23:56,000
Speaker 2: when when micro Strategy started, they started using convertible debt,

464
00:23:58,600 --> 00:24:01,119
Speaker 2: and there was all this noise in the market and

465
00:24:01,160 --> 00:24:03,359
Speaker 2: the ecosystem of they took on this debt and what

466
00:24:03,400 --> 00:24:05,720
Speaker 2: if they can't afford the debt and how they'll be

467
00:24:05,720 --> 00:24:07,280
Speaker 2: able to afford it, and what if it comes do

468
00:24:07,480 --> 00:24:09,960
Speaker 2: and all these things right, but don't worry because they

469
00:24:10,000 --> 00:24:12,960
Speaker 2: have an underlying business model that throws off free cash.

470
00:24:13,000 --> 00:24:14,840
Speaker 2: And as long as the debt doesn't exceed what the

471
00:24:14,880 --> 00:24:16,840
Speaker 2: business can do with free cash, they can, right.

472
00:24:16,840 --> 00:24:18,120
Speaker 3: So remember that whole narrative.

473
00:24:18,920 --> 00:24:21,520
Speaker 2: But what he sort of. He didn't say in as

474
00:24:21,600 --> 00:24:23,679
Speaker 2: many words, but what he basically told me is that

475
00:24:23,720 --> 00:24:28,840
Speaker 2: when he changed micro Strategy into Strategy, he also changed

476
00:24:28,880 --> 00:24:32,480
Speaker 2: the strategy. He headfaked the whole industry. Hey check this out.

477
00:24:32,520 --> 00:24:33,960
Speaker 3: Oh, but I'm gonna go do this over here.

478
00:24:34,480 --> 00:24:38,560
Speaker 2: So Strategy employees a completely different model. So Strategy doesn't

479
00:24:38,680 --> 00:24:43,639
Speaker 2: use convertible debt anymore. Now they use preferreds. And what

480
00:24:43,680 --> 00:24:47,480
Speaker 2: he told me, if I started over, if I could

481
00:24:47,480 --> 00:24:49,800
Speaker 2: start over again, I would never do the converts. I

482
00:24:49,800 --> 00:24:52,440
Speaker 2: would just do the preferreds. And so that's all he's

483
00:24:52,440 --> 00:24:54,119
Speaker 2: doing now. He's trying to get the converts. At their

484
00:24:54,200 --> 00:24:56,080
Speaker 2: last meeting, he talked about getting that off. But here's

485
00:24:56,280 --> 00:24:57,840
Speaker 2: here's what I want to add on to what you

486
00:24:57,960 --> 00:25:01,040
Speaker 2: just said with the pure play versus the stage two,

487
00:25:01,080 --> 00:25:03,119
Speaker 2: I think you called it like a similar. So what

488
00:25:03,200 --> 00:25:06,399
Speaker 2: he said was that the market wants to see me

489
00:25:06,800 --> 00:25:11,080
Speaker 2: as more volatile than Bitcoin. The market wants to know

490
00:25:11,480 --> 00:25:14,680
Speaker 2: that I move with Bitcoin in a more volatile fashion

491
00:25:14,800 --> 00:25:18,680
Speaker 2: so they know how to position around me. He said

492
00:25:18,720 --> 00:25:22,040
Speaker 2: that if he used an example, he said, if God

493
00:25:22,080 --> 00:25:24,000
Speaker 2: came and spoke to me tonight and told me the

494
00:25:24,040 --> 00:25:26,800
Speaker 2: market was going to crash tomorrow, and I woke up

495
00:25:26,800 --> 00:25:31,119
Speaker 2: and hedged my position so we didn't crash. That'd be great, right, No,

496
00:25:32,400 --> 00:25:35,479
Speaker 2: the market wants me to crash. If bitcoin crashes, the

497
00:25:35,520 --> 00:25:38,320
Speaker 2: market wants me to move up and down. They need

498
00:25:38,359 --> 00:25:41,240
Speaker 2: to know how to position around me. If I'm two

499
00:25:41,320 --> 00:25:44,320
Speaker 2: times as volatile, they knew how to position. But if

500
00:25:44,359 --> 00:25:47,440
Speaker 2: I changed volatility, they don't want that. They would rather

501
00:25:47,520 --> 00:25:50,320
Speaker 2: change their position size. And so what it did is

502
00:25:50,359 --> 00:25:53,080
Speaker 2: it made me reframe if I'm similar, not to throw

503
00:25:53,119 --> 00:25:56,439
Speaker 2: similar science scientific under the bus, but they have an

504
00:25:56,520 --> 00:26:00,399
Speaker 2: underlying business model in the medical world. Will they get

505
00:26:00,400 --> 00:26:02,239
Speaker 2: a new invention and a new patent and will that

506
00:26:02,280 --> 00:26:04,520
Speaker 2: bring up their revenue or will they get this DOJ

507
00:26:04,720 --> 00:26:06,880
Speaker 2: lawsuit and will it bring them down? We don't know.

508
00:26:07,480 --> 00:26:12,760
Speaker 2: But that unknown makes the stock move differently than with

509
00:26:12,840 --> 00:26:16,280
Speaker 2: the price of bitcoin. And so all of a sudden

510
00:26:16,520 --> 00:26:18,600
Speaker 2: I have to like, well, how do I evaluate a

511
00:26:18,680 --> 00:26:21,560
Speaker 2: business and how do I evaluate the bitcoin? And I'm

512
00:26:21,600 --> 00:26:24,000
Speaker 2: not sure. I don't typically invest into medical businesses, so

513
00:26:24,040 --> 00:26:26,359
Speaker 2: I'm not you know, versus like just looking as a

514
00:26:26,359 --> 00:26:29,240
Speaker 2: pure place. That was one big mental shift that I got.

515
00:26:29,960 --> 00:26:34,080
Speaker 1: That's absolutely fascinating. It also brings up the point that

516
00:26:34,119 --> 00:26:38,800
Speaker 1: sailor always hammers, which is volatility is vitality, right, he

517
00:26:39,000 --> 00:26:41,560
Speaker 1: wants the volatility. But I hadn't thought about what you

518
00:26:41,720 --> 00:26:46,359
Speaker 1: just mentioned, that how complex security analysis becomes if you

519
00:26:46,400 --> 00:26:49,960
Speaker 1: have to analyze a business and a bitcoin market and

520
00:26:50,119 --> 00:26:53,960
Speaker 1: their ability to raise capital in a creative way. That's

521
00:26:54,000 --> 00:26:57,440
Speaker 1: way too complex for most people. And it's also fascinating

522
00:26:57,480 --> 00:27:01,200
Speaker 1: to say when bitcoin's down ten percent and strategy should

523
00:27:01,200 --> 00:27:04,000
Speaker 1: be down twenty percent, and that actually rewards him in

524
00:27:04,040 --> 00:27:07,240
Speaker 1: the long term. Counterintuitive and fascinating.

525
00:27:07,760 --> 00:27:14,240
Speaker 2: Yeah, now you mentioned Checkmate earlier, James, I also agree

526
00:27:14,240 --> 00:27:16,400
Speaker 2: with you. He's brilliant. I love his is on chain analysis.

527
00:27:16,880 --> 00:27:20,920
Speaker 2: He's been pretty critical of these bigcoin treasury companies. He

528
00:27:21,000 --> 00:27:24,360
Speaker 2: seems he calls them Ponzi adjacent, not quite calling them

529
00:27:24,359 --> 00:27:26,720
Speaker 2: a Ponzi scheme or a Ponzi's game or whatever, but

530
00:27:26,760 --> 00:27:29,520
Speaker 2: I think that was him used the word Ponzi adjacent.

531
00:27:30,040 --> 00:27:30,960
Speaker 2: What's your take on that.

532
00:27:31,560 --> 00:27:36,040
Speaker 1: Yeah, I think his primary argument is that, first of all,

533
00:27:36,119 --> 00:27:39,199
Speaker 1: micros strategy is separate and unrelated. He thinks that's too

534
00:27:39,240 --> 00:27:41,679
Speaker 1: big to fail, doesn't have the same risk. But I

535
00:27:41,680 --> 00:27:46,600
Speaker 1: think his primary point is targeting the upstart treasury companies

536
00:27:46,680 --> 00:27:49,240
Speaker 1: that quickly get to market and try to follow in

537
00:27:49,280 --> 00:27:53,040
Speaker 1: the footsteps. And if I'm capturing his argument, well hopefully

538
00:27:53,040 --> 00:27:55,440
Speaker 1: i am. He believes that we're going to have too

539
00:27:55,480 --> 00:27:59,040
Speaker 1: many of these things relative to the demand, and if

540
00:27:59,080 --> 00:28:02,000
Speaker 1: you have a sitch situation like that, mnavs can press

541
00:28:02,119 --> 00:28:06,280
Speaker 1: so low that the smaller treasury companies essentially don't have

542
00:28:06,320 --> 00:28:10,399
Speaker 1: any moves left because without some sort of hype in

543
00:28:10,480 --> 00:28:13,480
Speaker 1: their stock price, it's very hard to raise capital in

544
00:28:13,520 --> 00:28:17,040
Speaker 1: a way that's a creative to shareholders. And I think

545
00:28:17,040 --> 00:28:19,600
Speaker 1: it's a fair argument. I think that there's some truth

546
00:28:19,640 --> 00:28:23,359
Speaker 1: to that. I think what I would say in response

547
00:28:23,440 --> 00:28:26,320
Speaker 1: is that timing is very challenging here. Right. If we

548
00:28:26,359 --> 00:28:29,919
Speaker 1: look at the timeline of these things for four years

549
00:28:29,960 --> 00:28:32,920
Speaker 1: twenty twenty to twenty twenty four, it was only Sailor.

550
00:28:33,600 --> 00:28:36,359
Speaker 1: Then we got Metaplanet, I think in twenty twenty four,

551
00:28:37,080 --> 00:28:40,160
Speaker 1: and people were not confident about Metaplanet coming out. They

552
00:28:40,160 --> 00:28:45,480
Speaker 1: were mocking Metaplanet. Obviously, Metaplanet absolutely crushed, and I think

553
00:28:45,600 --> 00:28:49,400
Speaker 1: once Metaplanet performed, well that's really when the game started.

554
00:28:49,840 --> 00:28:52,200
Speaker 1: Now we see a bunch of these things coming out

555
00:28:52,240 --> 00:28:55,440
Speaker 1: with different strategies, different jurisdictions. There's a lot of different

556
00:28:55,480 --> 00:28:58,440
Speaker 1: ways you can go to market, and most of those

557
00:28:58,960 --> 00:29:02,000
Speaker 1: are still small. They're obviously small compared to strategy, but

558
00:29:02,040 --> 00:29:05,160
Speaker 1: they're small compared to their potential. And many of the

559
00:29:05,240 --> 00:29:08,600
Speaker 1: larger ones haven't even acquired any Bitcoin yet, such as

560
00:29:08,640 --> 00:29:12,320
Speaker 1: twenty one or atom Back's new one bstr or whatever

561
00:29:12,360 --> 00:29:16,160
Speaker 1: that is. And so we're essentially at the very very

562
00:29:16,200 --> 00:29:18,840
Speaker 1: beginning of this thing. So while I think James Check

563
00:29:18,920 --> 00:29:21,719
Speaker 1: might be right in the long run, between here and

564
00:29:21,760 --> 00:29:25,520
Speaker 1: there could be years, and if you took his advice today,

565
00:29:25,760 --> 00:29:29,240
Speaker 1: maybe you'll miss out on some opportunities in the midterm.

566
00:29:30,160 --> 00:29:32,280
Speaker 2: What you brought up the I think is really interesting

567
00:29:32,360 --> 00:29:34,800
Speaker 2: talking about the m navs. That's the multiple to the

568
00:29:34,840 --> 00:29:38,200
Speaker 2: net asset valuation. So the company is trading at a multiple,

569
00:29:38,240 --> 00:29:40,800
Speaker 2: so it's trading at one times the net asset value

570
00:29:40,840 --> 00:29:44,640
Speaker 2: or two times the net asset value. But what I

571
00:29:44,680 --> 00:29:49,360
Speaker 2: see as this duration mismatch, where bitcoin is like a

572
00:29:49,400 --> 00:29:51,080
Speaker 2: long term asset. You've got to be looking at it,

573
00:29:51,640 --> 00:29:54,680
Speaker 2: you know, over years, not over not over weeks or months.

574
00:29:55,320 --> 00:29:59,120
Speaker 2: But yet the Bitcoin treasury companies, it's it's a it's

575
00:29:59,120 --> 00:30:01,239
Speaker 2: a big build. They got to build this engine, they

576
00:30:01,280 --> 00:30:03,880
Speaker 2: got to acquire the asset base. They got to spin

577
00:30:03,960 --> 00:30:06,080
Speaker 2: up the financial assets on top of that.

578
00:30:06,320 --> 00:30:07,280
Speaker 3: It's going to take time.

579
00:30:07,720 --> 00:30:11,360
Speaker 2: But the market in the security space is marketing them

580
00:30:11,360 --> 00:30:13,880
Speaker 2: to market on a daily basis and a weekly basis,

581
00:30:14,400 --> 00:30:18,360
Speaker 2: and so it's not allowing them the grace period of

582
00:30:18,440 --> 00:30:20,760
Speaker 2: allowing them to get this engine up and running. And

583
00:30:20,800 --> 00:30:23,040
Speaker 2: it's like, really interesting that everyone's so focused on the

584
00:30:23,080 --> 00:30:27,760
Speaker 2: net asset value, which I think is wrong in a

585
00:30:26,880 --> 00:30:29,600
Speaker 2: couple of ways. And I want your opinion on this,

586
00:30:29,680 --> 00:30:32,760
Speaker 2: but in my opinion, it's like number one, most growth

587
00:30:32,760 --> 00:30:35,640
Speaker 2: companies aren't being judged on their net asset value. They're

588
00:30:35,680 --> 00:30:41,360
Speaker 2: being judged on their forward potential future valuation. Number two.

589
00:30:41,520 --> 00:30:44,200
Speaker 2: The net asset value wall, it's certainly an important metric.

590
00:30:44,240 --> 00:30:47,160
Speaker 2: I don't think it's everything because, for example, if I

591
00:30:47,360 --> 00:30:51,120
Speaker 2: add one more bitcoin, my net asset value drops, or

592
00:30:51,120 --> 00:30:54,520
Speaker 2: my multiple drops because I added one more bitcoin, unless

593
00:30:54,600 --> 00:30:56,920
Speaker 2: the price of the stock also goes up with it.

594
00:30:57,200 --> 00:30:59,960
Speaker 2: But those don't happen on a one to one day

595
00:31:00,400 --> 00:31:04,480
Speaker 2: mirrored basis. So it's like I added more bitcoin, congratulations,

596
00:31:04,480 --> 00:31:07,680
Speaker 2: that instantly shows up right now today, My need asset

597
00:31:07,720 --> 00:31:10,280
Speaker 2: value drops now maybe in a couple weeks or a

598
00:31:10,280 --> 00:31:12,120
Speaker 2: couple of months when the market realizes that my stock

599
00:31:12,160 --> 00:31:15,200
Speaker 2: price goes up and now it's too late. What's your

600
00:31:15,200 --> 00:31:17,760
Speaker 2: take on using that MNAV as his indicator.

601
00:31:18,600 --> 00:31:20,680
Speaker 1: Yeah, it's a good one to bring up. So MNEV

602
00:31:20,720 --> 00:31:23,760
Speaker 1: became popular over the last three to six months or

603
00:31:23,800 --> 00:31:27,000
Speaker 1: something like that broadly across all these things. Yeah, and

604
00:31:27,120 --> 00:31:29,760
Speaker 1: the naive investor would just look at a simple metric,

605
00:31:29,880 --> 00:31:32,480
Speaker 1: what is MNAV. If it's low, then you should buy.

606
00:31:32,560 --> 00:31:35,920
Speaker 1: If it's high, you shouldn't buy. But that's extremely flawed

607
00:31:35,960 --> 00:31:38,440
Speaker 1: for the reasons you mentioned, and I'll share a few more.

608
00:31:38,880 --> 00:31:42,800
Speaker 1: So Metaplanet has done extremely well. Their MNAV was like

609
00:31:43,080 --> 00:31:46,080
Speaker 1: ten or maybe more at one point. And if you

610
00:31:46,120 --> 00:31:48,760
Speaker 1: go look at their price chart, buying Metaplanet at an

611
00:31:48,880 --> 00:31:52,240
Speaker 1: MNAV above five to seven ten, something in that range

612
00:31:52,360 --> 00:31:57,240
Speaker 1: in the early days would have performed extremely well. And

613
00:31:57,400 --> 00:32:00,080
Speaker 1: the primary reason there is because MNEV doesn't tell the

614
00:32:00,120 --> 00:32:03,200
Speaker 1: whole story. You need to look at their current size

615
00:32:03,320 --> 00:32:06,080
Speaker 1: and what is their ability to acquire more in the future.

616
00:32:06,120 --> 00:32:08,560
Speaker 1: You hinted at the forward potential. So how do we

617
00:32:08,640 --> 00:32:12,280
Speaker 1: price securities? Well, we normally price them to a price

618
00:32:12,360 --> 00:32:14,960
Speaker 1: to earning ratio. How long does it take to earn

619
00:32:15,080 --> 00:32:18,280
Speaker 1: enough to make back my investment. And in bitcoin we

620
00:32:18,440 --> 00:32:22,760
Speaker 1: kind of sort of use MNAV, but again that's forward looking.

621
00:32:22,840 --> 00:32:26,200
Speaker 1: So MNAV should be high for companies that you believe

622
00:32:26,240 --> 00:32:31,080
Speaker 1: will accumulate multiples theoretically of their current position, and so

623
00:32:31,200 --> 00:32:36,080
Speaker 1: the smaller ones MNAV should be high if they can perform. However,

624
00:32:36,160 --> 00:32:38,520
Speaker 1: you're looking at Sailor. Sailor should never have an m

625
00:32:38,600 --> 00:32:42,840
Speaker 1: NAB above five ever, again because the ability to accumulate

626
00:32:43,000 --> 00:32:45,600
Speaker 1: that much bitcoin going forward is going to be hard,

627
00:32:45,680 --> 00:32:48,640
Speaker 1: simply do the law of large numbers. And he bought

628
00:32:48,720 --> 00:32:50,720
Speaker 1: most of his bitcoin, well, he bought most of his

629
00:32:50,800 --> 00:32:54,640
Speaker 1: bitcoin recently, but that's sort of a distraction point I'll

630
00:32:54,640 --> 00:32:56,840
Speaker 1: skip for now. And so what I see here is

631
00:32:56,960 --> 00:33:00,720
Speaker 1: mnav's useful, but not in isolation. To have the rest

632
00:33:00,760 --> 00:33:04,480
Speaker 1: in context, and I think going tying back to our

633
00:33:04,520 --> 00:33:08,320
Speaker 1: point on the bare case from checkmate, is that I

634
00:33:08,320 --> 00:33:10,360
Speaker 1: think what you're really betting on here if you want

635
00:33:10,400 --> 00:33:13,600
Speaker 1: to go invest in these smaller microcaps, which have extreme

636
00:33:13,640 --> 00:33:17,800
Speaker 1: potential also some risk, is that who do you think

637
00:33:17,840 --> 00:33:20,680
Speaker 1: can actually get to the endgame. And let's just assume

638
00:33:20,720 --> 00:33:23,840
Speaker 1: the endgame at this point is the preferred equity, because

639
00:33:23,840 --> 00:33:25,960
Speaker 1: as far as we can tell that's the most accretive

640
00:33:26,040 --> 00:33:29,240
Speaker 1: way to raise capital. Maybe Sailor comes out with new

641
00:33:29,240 --> 00:33:32,120
Speaker 1: things in the future. I wouldn't bet against him, but

642
00:33:32,280 --> 00:33:35,719
Speaker 1: for now, that appears to be the mature phase. And

643
00:33:35,800 --> 00:33:38,280
Speaker 1: so really you have to accumulate a large enough bitcoin

644
00:33:38,320 --> 00:33:41,880
Speaker 1: that the preferred equity investors will take you seriously. Right,

645
00:33:41,880 --> 00:33:43,960
Speaker 1: If you have one hundred bitcoin, you can't issue a

646
00:33:43,960 --> 00:33:46,120
Speaker 1: preferred equity. If you have a thousand bitcoin, you can't

647
00:33:46,160 --> 00:33:49,400
Speaker 1: issue it. But at some stage higher you will be

648
00:33:49,480 --> 00:33:52,240
Speaker 1: able to issue those vehicles, and I think that's when

649
00:33:52,720 --> 00:33:56,080
Speaker 1: these treasury companies start to be de risked in a

650
00:33:56,120 --> 00:33:59,920
Speaker 1: meaningful way. Sailor has a whole portfolio of these things,

651
00:34:00,520 --> 00:34:02,920
Speaker 1: and you can think about it as different tools to

652
00:34:03,000 --> 00:34:07,320
Speaker 1: apply at different market conditions. If the market's screaming hot,

653
00:34:07,640 --> 00:34:10,719
Speaker 1: he can sell his shares into the market and raise cash.

654
00:34:11,120 --> 00:34:13,480
Speaker 1: If the market's a little bit more bearish, maybe he'll

655
00:34:13,560 --> 00:34:17,160
Speaker 1: use one of his preferred equity tools, and vice versa.

656
00:34:17,239 --> 00:34:19,880
Speaker 1: So essentially he's creating a whole toolbox to keep his

657
00:34:20,040 --> 00:34:24,200
Speaker 1: engine moving regardless of the market conditions. And so I

658
00:34:24,200 --> 00:34:27,120
Speaker 1: think that's when you're mature, that's when you're safe. And

659
00:34:27,200 --> 00:34:29,880
Speaker 1: so just to rewind a full circle, you'd be betting

660
00:34:29,920 --> 00:34:33,000
Speaker 1: on who can get to scale and execute that effectively.

661
00:34:34,320 --> 00:34:36,879
Speaker 2: So I'm curious, how do you look at all these

662
00:34:36,920 --> 00:34:40,279
Speaker 2: new entrants into the market. So I have a new

663
00:34:40,320 --> 00:34:43,480
Speaker 2: company that's entered the market, Satsuma in the UK, so

664
00:34:43,520 --> 00:34:46,560
Speaker 2: we have a new jurisdiction. The UK market one of

665
00:34:46,640 --> 00:34:50,880
Speaker 2: the largest oldest financial centers of the world on a

666
00:34:50,920 --> 00:34:54,520
Speaker 2: percentage basis. It has the highest fixed income to the

667
00:34:54,600 --> 00:34:58,760
Speaker 2: overall market on a percentage basis, similar characteristics to Japan.

668
00:34:59,560 --> 00:35:02,520
Speaker 2: You with Swan obviously you're involved with Sikwans and what

669
00:35:02,520 --> 00:35:05,520
Speaker 2: they're doing over there. Congratulations, you guys did a very

670
00:35:05,560 --> 00:35:07,160
Speaker 2: big raised three hundred and some million.

671
00:35:07,200 --> 00:35:07,760
Speaker 3: I think.

672
00:35:09,040 --> 00:35:10,640
Speaker 2: We did two hundred and some million. But now there's

673
00:35:10,680 --> 00:35:13,160
Speaker 2: all types of entrants all the way down who raised five.

674
00:35:13,040 --> 00:35:13,720
Speaker 3: Or ten million?

675
00:35:14,160 --> 00:35:16,799
Speaker 2: Right? I mean you have the h one hundred and

676
00:35:16,920 --> 00:35:20,120
Speaker 2: smarter Web they start with a couple bitcoin, right. How

677
00:35:20,120 --> 00:35:22,360
Speaker 2: do you look at all these new entrants and then

678
00:35:22,760 --> 00:35:24,960
Speaker 2: think about which ones could get to that level?

679
00:35:25,880 --> 00:35:29,040
Speaker 1: Yeah, it's a good question. It seems like there's kind

680
00:35:29,040 --> 00:35:32,360
Speaker 1: of two sides to this game, and the first side

681
00:35:32,440 --> 00:35:36,000
Speaker 1: is do you have experience in capital markets specifically public

682
00:35:36,040 --> 00:35:39,840
Speaker 1: capital markets and can you actually generate the cash needed

683
00:35:40,360 --> 00:35:44,640
Speaker 1: to keep the engine going, And so someone on the

684
00:35:44,680 --> 00:35:48,120
Speaker 1: team needs to have deep experience there. The second side,

685
00:35:48,160 --> 00:35:52,800
Speaker 1: which is I think where checkmate he calls it Ponzi adjacent,

686
00:35:53,040 --> 00:35:55,480
Speaker 1: is that there is a retail element here and you

687
00:35:55,560 --> 00:35:59,640
Speaker 1: have to be careful around securities law. But Michael Saylor

688
00:35:59,680 --> 00:36:03,520
Speaker 1: did really well by creating an army of retail investors

689
00:36:03,560 --> 00:36:06,520
Speaker 1: that would be buying his stock and resharing his information.

690
00:36:07,040 --> 00:36:09,760
Speaker 1: Part of that is to educate the market broadly, because

691
00:36:09,800 --> 00:36:12,760
Speaker 1: most people still don't know what's going on. But having

692
00:36:12,840 --> 00:36:16,440
Speaker 1: retail buy your stock increases your m NAB, which allows

693
00:36:16,480 --> 00:36:19,840
Speaker 1: you to issue more shares and makes your stock more volatile.

694
00:36:20,160 --> 00:36:22,400
Speaker 1: And so I think the two parts are a capital

695
00:36:22,440 --> 00:36:26,280
Speaker 1: market experience and also the ability to communicate with retail

696
00:36:26,280 --> 00:36:31,360
Speaker 1: investors to explain your vision, and that comes with some transparency,

697
00:36:31,400 --> 00:36:34,879
Speaker 1: that comes with a plan, that comes with hiring spokespeople

698
00:36:34,880 --> 00:36:36,759
Speaker 1: that are well trusted and that are in it for

699
00:36:36,800 --> 00:36:38,600
Speaker 1: the long game. So that's my two.

700
00:36:40,400 --> 00:36:43,360
Speaker 2: Another metric that people use along with the m NAB

701
00:36:43,400 --> 00:36:46,440
Speaker 2: is the bitcoin yield, and so that's the percentage of

702
00:36:46,600 --> 00:36:50,560
Speaker 2: how fast you're able to grow your bitcoin stack. And

703
00:36:50,680 --> 00:36:52,400
Speaker 2: kind of the point that you made about micro strategy.

704
00:36:52,480 --> 00:36:55,640
Speaker 2: They have so much bitcoin, it's very hard to grow

705
00:36:55,680 --> 00:36:58,680
Speaker 2: that even though they're even though you know sailors buying

706
00:36:58,719 --> 00:37:02,080
Speaker 2: more bitcoin in one perchase. Then number two Metaplanet has

707
00:37:02,080 --> 00:37:05,880
Speaker 2: bought you know, all year for example, as a percentage,

708
00:37:05,960 --> 00:37:09,719
Speaker 2: it's a small yield versus you take another company who

709
00:37:09,719 --> 00:37:13,080
Speaker 2: starts with one bitcoin and buys a second bitcoin. They

710
00:37:13,120 --> 00:37:19,640
Speaker 2: have one hundred percent yield. Now, recently I saw I

711
00:37:19,640 --> 00:37:21,719
Speaker 2: won't throw them. I won't, I won't throw them out there.

712
00:37:21,719 --> 00:37:25,279
Speaker 3: But someone came out of a new metric called p bid, which.

713
00:37:25,040 --> 00:37:29,080
Speaker 2: Basically measures what that yield is how fast they're acquiring

714
00:37:29,400 --> 00:37:33,080
Speaker 2: that that bitcoin. To me, that seems like the wrong

715
00:37:33,200 --> 00:37:36,640
Speaker 2: metric to use, at least isolated on its own, because

716
00:37:36,640 --> 00:37:38,759
Speaker 2: again I went from one to two, I went from

717
00:37:38,760 --> 00:37:41,120
Speaker 2: one to five. I have a five hundred percent yield.

718
00:37:41,200 --> 00:37:43,280
Speaker 2: I'm better than Michael Saylor because he only grew.

719
00:37:43,160 --> 00:37:46,960
Speaker 3: At fifteen percent. How do you think about that metric?

720
00:37:47,520 --> 00:37:49,680
Speaker 1: Yeah, it's a good point. I think you critiqued it

721
00:37:49,800 --> 00:37:52,799
Speaker 1: pretty well here in that none of these metrics tell

722
00:37:52,840 --> 00:37:55,880
Speaker 1: the whole story, and so as a savvy investor, you

723
00:37:55,920 --> 00:37:58,080
Speaker 1: need to take these things into account, and there's a

724
00:37:58,120 --> 00:38:01,120
Speaker 1: bunch of subjective stuff that's not to reduce down to

725
00:38:01,200 --> 00:38:04,560
Speaker 1: a simple number, even though humans love simple numbers. And

726
00:38:04,640 --> 00:38:07,400
Speaker 1: so I think yield is useful. I think it shows

727
00:38:07,480 --> 00:38:10,200
Speaker 1: the growth and I think it could predict or help

728
00:38:10,239 --> 00:38:14,280
Speaker 1: predict where the stock price could go. The other wildcard

729
00:38:14,320 --> 00:38:17,880
Speaker 1: here is that if a metric is flawed, however everyone

730
00:38:18,000 --> 00:38:21,800
Speaker 1: uses it in a way, it creates its own reality.

731
00:38:22,400 --> 00:38:24,960
Speaker 1: Right Like you look at the thacharts, everybody knows a

732
00:38:25,000 --> 00:38:28,360
Speaker 1: two hundred week moving average. Does that magically make the

733
00:38:28,400 --> 00:38:31,600
Speaker 1: price go up? Or does all the market participants think

734
00:38:31,640 --> 00:38:34,920
Speaker 1: it does, in which case it does, right, And so

735
00:38:34,960 --> 00:38:38,800
Speaker 1: there's some interesting dynamics there. One more point I forgot

736
00:38:38,800 --> 00:38:41,880
Speaker 1: to add on how do we evaluate these, especially the upstarts,

737
00:38:42,000 --> 00:38:44,839
Speaker 1: is their geography. You touched on the benefits of the UK.

738
00:38:46,000 --> 00:38:50,600
Speaker 1: Japan has some major benefits. Brazil has different tax treatment

739
00:38:50,680 --> 00:38:53,680
Speaker 1: whether you're owning an equity or bitcoin, and so I

740
00:38:53,680 --> 00:38:56,360
Speaker 1: think that's a very important element here. If you have

741
00:38:56,440 --> 00:38:59,920
Speaker 1: a structural advantage in that geography, that would lead to

742
00:39:00,040 --> 00:39:03,839
Speaker 1: an increased percentage of flows, that's obviously a good thing. Now,

743
00:39:03,880 --> 00:39:07,760
Speaker 1: the one caveat is how long do these geographies stay

744
00:39:07,920 --> 00:39:13,200
Speaker 1: roughly isolated. And for example, if metaplanets trading everywhere in

745
00:39:13,239 --> 00:39:17,319
Speaker 1: the world, does that change anything? Right? And then one

746
00:39:17,400 --> 00:39:20,960
Speaker 1: last point here, sorry I'm scattered, is the fact that

747
00:39:21,000 --> 00:39:25,040
Speaker 1: we're squabbling over the different metrics and new ones are

748
00:39:25,040 --> 00:39:28,040
Speaker 1: popping up every week. I think that says something important here,

749
00:39:28,480 --> 00:39:30,920
Speaker 1: which is that this is an entirely new way to

750
00:39:30,960 --> 00:39:34,080
Speaker 1: look at securities. It's a new type of company. And

751
00:39:35,080 --> 00:39:37,120
Speaker 1: we're early in this thing because we don't even have

752
00:39:37,200 --> 00:39:39,640
Speaker 1: agreed upon ways to evaluate these things.

753
00:39:39,880 --> 00:39:44,280
Speaker 2: And that is our opportunity, the thing that I wrestle

754
00:39:44,320 --> 00:39:46,919
Speaker 2: with and I haven't quite figured out, and we won't

755
00:39:46,920 --> 00:39:50,160
Speaker 2: figure out yet. But I think, as somebody who believes

756
00:39:50,200 --> 00:39:54,960
Speaker 2: in the long term vision of bitcoin, I believe what

757
00:39:55,120 --> 00:39:58,920
Speaker 2: happens in studying history and technology. What happens is we

758
00:39:59,040 --> 00:40:03,440
Speaker 2: try to take something new, like this electricity and what

759
00:40:03,600 --> 00:40:05,319
Speaker 2: is it? So we try to compare it to something

760
00:40:05,320 --> 00:40:07,200
Speaker 2: that we already know to grasp it. Well, it's sort

761
00:40:07,239 --> 00:40:09,480
Speaker 2: of like a digital candle. Well it was at the

762
00:40:09,520 --> 00:40:12,120
Speaker 2: time that was the killer app, but of course electricity

763
00:40:12,200 --> 00:40:14,200
Speaker 2: was more so what is this bitcoin? And I think

764
00:40:14,200 --> 00:40:18,359
Speaker 2: it's going to make us rethink what capital is, what

765
00:40:18,520 --> 00:40:22,200
Speaker 2: assets are. You know, with the gap change on the

766
00:40:22,200 --> 00:40:25,880
Speaker 2: FASB rule, we're starting to rethink what income is. And

767
00:40:25,920 --> 00:40:27,960
Speaker 2: so when you sort of break these things down into

768
00:40:28,080 --> 00:40:32,839
Speaker 2: first principles metrics or first principles thinking, I should say,

769
00:40:32,960 --> 00:40:35,759
Speaker 2: I think it's going to change the entire way we

770
00:40:35,800 --> 00:40:38,719
Speaker 2: look at these companies. So for example, you know, companies

771
00:40:38,960 --> 00:40:42,319
Speaker 2: typically give you a bond and they're going to have

772
00:40:42,360 --> 00:40:45,560
Speaker 2: some sort of credit rating based off of their ability

773
00:40:45,680 --> 00:40:48,799
Speaker 2: to create the income in the future to pay you.

774
00:40:48,880 --> 00:40:51,399
Speaker 2: They don't have the income, but maybe hopefully you think

775
00:40:51,440 --> 00:40:53,120
Speaker 2: I can get the income and I can pay you,

776
00:40:54,000 --> 00:40:57,040
Speaker 2: versus micro strategy has the assets right now today to

777
00:40:57,040 --> 00:41:00,920
Speaker 2: pay you. So like just even a little thing like that,

778
00:41:00,960 --> 00:41:04,319
Speaker 2: but the rating agencies don't consider that to be a

779
00:41:04,360 --> 00:41:07,600
Speaker 2: factor in giving them a credit rating. So I might

780
00:41:07,920 --> 00:41:10,200
Speaker 2: be able to make the money, maybe I can make

781
00:41:10,239 --> 00:41:12,319
Speaker 2: the money in the future to pay you, but you

782
00:41:12,440 --> 00:41:14,040
Speaker 2: have the money to pay, but you're not as safe

783
00:41:14,040 --> 00:41:16,279
Speaker 2: as I am. Right, So, I think all of these

784
00:41:16,320 --> 00:41:18,560
Speaker 2: ways that we look at companies and we look at risk,

785
00:41:18,600 --> 00:41:21,440
Speaker 2: and we understand income and we understand asks, all of

786
00:41:21,440 --> 00:41:24,520
Speaker 2: that changes, and it's really hard for us to understand that.

787
00:41:25,200 --> 00:41:27,080
Speaker 2: I think the outlier. Well, let me ask you a

788
00:41:27,160 --> 00:41:30,600
Speaker 2: question before I lay out the outlier. Do you think

789
00:41:30,719 --> 00:41:35,600
Speaker 2: the good companies? Yeah? Maybe it's a two part question.

790
00:41:35,680 --> 00:41:38,440
Speaker 2: Number one, do you think the good companies will be

791
00:41:38,520 --> 00:41:42,120
Speaker 2: able to outpace bitcoin over a long term? And when

792
00:41:42,120 --> 00:41:47,280
Speaker 2: I say long term, call it five years? And number two,

793
00:41:47,360 --> 00:41:50,840
Speaker 2: how many good of those types of good companies do

794
00:41:50,840 --> 00:41:52,800
Speaker 2: you think we could see in five or ten years?

795
00:41:54,000 --> 00:41:56,880
Speaker 1: Yeah? Good question. I do think the good ones will

796
00:41:56,920 --> 00:42:01,480
Speaker 1: outperform Bitcoin over a five year period. I hesitate to

797
00:42:01,520 --> 00:42:03,799
Speaker 1: go much further than that because it's really hard to

798
00:42:03,840 --> 00:42:08,840
Speaker 1: speculate on when this. It is an arbitrage right, Eventually

799
00:42:08,960 --> 00:42:12,480
Speaker 1: something in the market will change, And so is it

800
00:42:12,520 --> 00:42:15,000
Speaker 1: five years, is it twenty years, is it two years?

801
00:42:15,040 --> 00:42:17,240
Speaker 1: I don't know. I think five is pretty safe where

802
00:42:17,480 --> 00:42:20,280
Speaker 1: I feel comfortable placing bets in some of these companies

803
00:42:20,280 --> 00:42:23,360
Speaker 1: in over five years. Maybe some fail, but the others

804
00:42:23,400 --> 00:42:26,040
Speaker 1: do extremely well and do outperform Bitcoin, So I think

805
00:42:26,040 --> 00:42:29,520
Speaker 1: that's fair to say. Now the next question is how

806
00:42:29,560 --> 00:42:34,239
Speaker 1: many could we see? And that's really tricky. Right on

807
00:42:34,239 --> 00:42:36,279
Speaker 1: one side of the argument, people say it's a winner

808
00:42:36,320 --> 00:42:40,680
Speaker 1: take all market. Eventually strategy will be available and everyone's

809
00:42:40,719 --> 00:42:42,680
Speaker 1: brokerage all around the world and they'll only pick the

810
00:42:42,719 --> 00:42:47,560
Speaker 1: best one. I think that's absolutely wrong. On the other side,

811
00:42:47,600 --> 00:42:50,120
Speaker 1: you could say there's going to be thousands of these

812
00:42:50,160 --> 00:42:52,919
Speaker 1: things and they're all going to be winners. That's also

813
00:42:53,080 --> 00:42:56,600
Speaker 1: obviously wrong, And so I lean towards a winner take

814
00:42:56,719 --> 00:43:01,239
Speaker 1: most market, and I winner take most, with a caveat

815
00:43:01,280 --> 00:43:05,640
Speaker 1: that jurisdictions still will matter in the future because there

816
00:43:05,640 --> 00:43:08,239
Speaker 1: will be slight rule changes depending on where you are.

817
00:43:08,719 --> 00:43:13,040
Speaker 1: Individuals sometimes have national pride, and maybe the countries will

818
00:43:13,040 --> 00:43:16,280
Speaker 1: provide advantages for their citizens to invest locally or something

819
00:43:16,320 --> 00:43:19,000
Speaker 1: like that, and so I think geography matters. I think

820
00:43:19,040 --> 00:43:22,239
Speaker 1: it'll be a winner take most in most markets. Now,

821
00:43:22,239 --> 00:43:24,640
Speaker 1: I don't think like I don't want to even name

822
00:43:24,680 --> 00:43:29,560
Speaker 1: a country, country X that's small close to the US,

823
00:43:30,080 --> 00:43:33,359
Speaker 1: that isn't that different from the US. I don't think

824
00:43:33,400 --> 00:43:36,000
Speaker 1: that they need their own treasury companies. I don't think

825
00:43:36,040 --> 00:43:38,920
Speaker 1: there's a geo arbitrage there, and so I think the

826
00:43:39,080 --> 00:43:42,239
Speaker 1: US absorbs a lot of the flows. It's still number one,

827
00:43:42,560 --> 00:43:47,560
Speaker 1: but I would expect on the order of twenty to fifty.

828
00:43:47,760 --> 00:43:50,120
Speaker 1: That's kind of what feels right to me right now.

829
00:43:51,160 --> 00:43:51,319
Speaker 2: Now.

830
00:43:51,360 --> 00:43:54,120
Speaker 1: The other thing we don't know about is are we

831
00:43:54,200 --> 00:43:57,480
Speaker 1: in a world where the FIAT long debt cycle is

832
00:43:57,600 --> 00:44:01,719
Speaker 1: unwinding and there's pandemonium in markets because that sort of

833
00:44:01,760 --> 00:44:03,080
Speaker 1: blows everything out the window.

834
00:44:03,120 --> 00:44:06,239
Speaker 2: If people are reaching that I think I lean that way.

835
00:44:06,719 --> 00:44:10,320
Speaker 1: Yeah, if we're leaning that way, which I also do timing. Sorry,

836
00:44:10,440 --> 00:44:12,399
Speaker 1: if we lean that way, the number could be much

837
00:44:12,480 --> 00:44:17,319
Speaker 1: higher as people are just reaching for exits. It's kind

838
00:44:17,320 --> 00:44:19,280
Speaker 1: of a waffle answer, but I'm going to say twenty

839
00:44:19,280 --> 00:44:20,799
Speaker 1: to fifty feels about right.

840
00:44:23,120 --> 00:44:26,120
Speaker 2: My take on it is is the winner take most.

841
00:44:26,280 --> 00:44:28,360
Speaker 2: I mean, certainly we always have winners that take a

842
00:44:28,360 --> 00:44:30,400
Speaker 2: majority of market share. But the way I sort of

843
00:44:30,400 --> 00:44:33,880
Speaker 2: think about it is Strategy has already released four different

844
00:44:34,239 --> 00:44:37,160
Speaker 2: products that each reach a different type of a person

845
00:44:37,440 --> 00:44:43,800
Speaker 2: that's looking for a different risk and credit profile. Each

846
00:44:43,920 --> 00:44:50,520
Speaker 2: company could create another flavor, another version, another basket, another whatever,

847
00:44:50,600 --> 00:44:53,479
Speaker 2: another way to do this. In the United States, there's

848
00:44:53,600 --> 00:44:58,160
Speaker 2: thirty nine hundred ETFs thirty nine hundred that are each

849
00:44:58,480 --> 00:45:01,000
Speaker 2: doing something just a little bit different. It's a little

850
00:45:01,000 --> 00:45:04,120
Speaker 2: bit of a different basket than the other one. There's

851
00:45:04,400 --> 00:45:09,440
Speaker 2: I believe another five thousand types of bonds, from junk

852
00:45:09,520 --> 00:45:16,200
Speaker 2: bonds to HYO credit bonds, to institutional grade. Right, each

853
00:45:16,239 --> 00:45:18,319
Speaker 2: one of those bonds has a little bit of a

854
00:45:18,360 --> 00:45:22,560
Speaker 2: different profile. So we're talking ten thousand just in the

855
00:45:22,680 --> 00:45:27,200
Speaker 2: US alone, not including what's in another country. So why

856
00:45:27,239 --> 00:45:29,920
Speaker 2: can there only be ten or twelve or twenty or fifty.

857
00:45:30,480 --> 00:45:33,000
Speaker 2: We have ten thousand right now in the US, So

858
00:45:33,320 --> 00:45:34,719
Speaker 2: I take a little bit of a different view. I

859
00:45:34,800 --> 00:45:38,080
Speaker 2: think Number one, right now we can see there's over

860
00:45:38,120 --> 00:45:41,480
Speaker 2: ten thousand products in this type just in the US alone.

861
00:45:42,040 --> 00:45:44,640
Speaker 2: Number two, I think it also requires what does success

862
00:45:44,760 --> 00:45:49,080
Speaker 2: look like? So I know it's atsuma in our initial rays,

863
00:45:49,120 --> 00:45:52,399
Speaker 2: which we haven't even fully got up and going it

864
00:45:52,440 --> 00:45:55,120
Speaker 2: gives us enough bitcoin just from here if we were

865
00:45:55,160 --> 00:45:57,400
Speaker 2: to never and actually going back to the dinner with Sailor,

866
00:45:57,760 --> 00:46:00,279
Speaker 2: he was asked a very direct question. Don't think he

867
00:46:00,480 --> 00:46:02,439
Speaker 2: liked the question. He probably gets asked it all the time,

868
00:46:02,480 --> 00:46:04,239
Speaker 2: but he gave a good answer, so I'm gonna repeat it.

869
00:46:04,680 --> 00:46:07,760
Speaker 3: He was asked, what goes wrong?

870
00:46:08,719 --> 00:46:13,040
Speaker 2: What's the risk? What is the thing that you haven't

871
00:46:13,040 --> 00:46:16,839
Speaker 2: considered that could potentially go wrong? He said? He said,

872
00:46:16,880 --> 00:46:21,000
Speaker 2: the worst case scenario is we can never raise another

873
00:46:21,120 --> 00:46:27,200
Speaker 2: penny ever again. Okay, so let's say that. So with Withsatsuma,

874
00:46:27,440 --> 00:46:30,680
Speaker 2: let's just hypothetically say that we can never raise another

875
00:46:30,719 --> 00:46:34,720
Speaker 2: penny ever again for whatever reason. Let's just say that, Okay,

876
00:46:34,880 --> 00:46:38,160
Speaker 2: well we got a couple thousand bitcoin in five years

877
00:46:38,160 --> 00:46:40,480
Speaker 2: from now. That puts us to a three or four

878
00:46:40,560 --> 00:46:44,160
Speaker 2: billion dollar valuation. You know, how many companies ever make

879
00:46:44,160 --> 00:46:48,640
Speaker 2: it to a billion dollar valuation point zero zero two?

880
00:46:50,320 --> 00:46:54,000
Speaker 2: I would say that's the success. So, like, what is

881
00:46:54,040 --> 00:46:57,160
Speaker 2: the level of success, right? How many products can be bear?

882
00:46:57,239 --> 00:46:59,800
Speaker 2: So that's sort of my frame. Certainly there's going to

883
00:46:59,840 --> 00:47:02,320
Speaker 2: be a top dogs. Certainly, no one's going to surpass

884
00:47:02,520 --> 00:47:04,960
Speaker 2: the amount of bitcoin that micro or Strategy has, Like,

885
00:47:05,320 --> 00:47:09,359
Speaker 2: certainly they've won before the game even got started. They've won.

886
00:47:09,400 --> 00:47:12,120
Speaker 2: And so the winner take most, sure certainly, But I

887
00:47:12,120 --> 00:47:15,280
Speaker 2: think there could be hundreds or thousands of different types

888
00:47:15,280 --> 00:47:17,040
Speaker 2: of products out in the market. I think the market

889
00:47:17,080 --> 00:47:19,520
Speaker 2: can bear that. And I do think that we can see,

890
00:47:19,600 --> 00:47:21,919
Speaker 2: you know, a bunch of these companies have some level

891
00:47:21,920 --> 00:47:25,200
Speaker 2: of success if you call that becoming a unicorn as well.

892
00:47:25,280 --> 00:47:27,680
Speaker 2: But certainly I do agree with the winner take most.

893
00:47:27,719 --> 00:47:30,600
Speaker 2: That's how the world works, right, and so we'll certainly

894
00:47:30,640 --> 00:47:32,800
Speaker 2: see that. Certainly there will be the winners in each jurisdiction.

895
00:47:32,880 --> 00:47:36,240
Speaker 2: I agree with that, but a little bit of nuance there.

896
00:47:37,000 --> 00:47:40,040
Speaker 1: Yeah, I think that's interesting. And yeah, is it so

897
00:47:40,280 --> 00:47:43,359
Speaker 1: bad that you own part of a company that has

898
00:47:43,440 --> 00:47:46,400
Speaker 1: a lot of bitcoin? I agree, That's not the end

899
00:47:46,440 --> 00:47:49,040
Speaker 1: of the world. It's not the same type of risk

900
00:47:49,280 --> 00:47:52,600
Speaker 1: is taking a bed on an operating company that fails

901
00:47:52,640 --> 00:47:56,279
Speaker 1: their execution or market changes or they get swallowed up

902
00:47:56,320 --> 00:47:58,680
Speaker 1: by a competitor. Right, It's a very different type of risk.

903
00:48:00,040 --> 00:48:02,120
Speaker 1: I think. I think when I think about winners, I

904
00:48:02,160 --> 00:48:06,680
Speaker 1: think about they have the Fiat arbitrage or the financial

905
00:48:06,719 --> 00:48:10,560
Speaker 1: engineering tools to continue this thing for a while. Sure,

906
00:48:10,920 --> 00:48:13,600
Speaker 1: I guess that's how I define it. But yeah, the

907
00:48:13,600 --> 00:48:15,719
Speaker 1: worst case scenario, you have a pile of bitcoin, you

908
00:48:15,760 --> 00:48:18,680
Speaker 1: could do something with that. I think that's yeah.

909
00:48:18,760 --> 00:48:22,600
Speaker 2: Yeah, Unlike you know the risk of going into an ico,

910
00:48:22,840 --> 00:48:25,400
Speaker 2: for example, and then you found out it was just vaporware,

911
00:48:25,520 --> 00:48:30,440
Speaker 2: the protocol got abandoned, the anonymous founder, rugbold, the treasury

912
00:48:30,520 --> 00:48:32,439
Speaker 2: or whatever. Right, Like, there's a lot of risk there

913
00:48:33,080 --> 00:48:36,080
Speaker 2: traditional trad fy you know, I po to your point,

914
00:48:36,120 --> 00:48:38,279
Speaker 2: they could have operational risk. It could you know, the

915
00:48:38,320 --> 00:48:41,200
Speaker 2: patent could wear out, someone could duplicate whatever. So here

916
00:48:41,239 --> 00:48:43,640
Speaker 2: it's like, as long as they hold the bitcoin, it

917
00:48:43,760 --> 00:48:46,360
Speaker 2: kind of de risks that position. So I hate to

918
00:48:46,480 --> 00:48:48,640
Speaker 2: use this word, I have to kind of think about it.

919
00:48:48,680 --> 00:48:52,640
Speaker 2: But when I look at like investing into early stage

920
00:48:52,760 --> 00:48:57,080
Speaker 2: traditional companies and doing IPOs, or I look at crypto

921
00:48:57,120 --> 00:48:59,719
Speaker 2: doing icos, and then I look at these companies, I

922
00:48:59,760 --> 00:49:02,520
Speaker 2: would say they're the safer of those three because at

923
00:49:02,560 --> 00:49:04,520
Speaker 2: the end of the day, if the company holds the bitcoin,

924
00:49:05,760 --> 00:49:07,600
Speaker 2: it's gonna be worth something in the future.

925
00:49:08,920 --> 00:49:10,680
Speaker 3: Anyway, fun stuff, fun stuff.

926
00:49:11,120 --> 00:49:13,840
Speaker 1: I think that's true. With the only caveat that retail

927
00:49:13,920 --> 00:49:18,160
Speaker 1: investors can buy some of the microcaps time it poorly

928
00:49:18,400 --> 00:49:23,600
Speaker 1: misunderstand the market. Sure, and although the company itself is

929
00:49:23,640 --> 00:49:27,640
Speaker 1: secure with let's just say MNAV one, the investor might

930
00:49:27,680 --> 00:49:29,840
Speaker 1: have invested at a much higher m NAV and so

931
00:49:30,040 --> 00:49:32,680
Speaker 1: if they don't time it right, they could get wrecked.

932
00:49:32,680 --> 00:49:34,920
Speaker 1: And I do expect a bunch of retail to plow

933
00:49:34,960 --> 00:49:36,840
Speaker 1: in at the wrong time, just like we do in

934
00:49:36,920 --> 00:49:38,280
Speaker 1: every type of hype cycle.

935
00:49:38,680 --> 00:49:41,520
Speaker 2: And so let's play that out, thoughts. Let's play that out.

936
00:49:41,560 --> 00:49:44,759
Speaker 2: So let's say that let's say that I invest for

937
00:49:44,840 --> 00:49:46,520
Speaker 2: easy numbers because I'm not good at math on the

938
00:49:46,520 --> 00:49:49,200
Speaker 2: fly I invest at a company at two times at NAV,

939
00:49:50,160 --> 00:49:53,680
Speaker 2: so the NAV is worth a million dollars, and I

940
00:49:53,719 --> 00:49:56,520
Speaker 2: invested at two times, so the company is worth two

941
00:49:56,520 --> 00:50:00,600
Speaker 2: million dollars. When I invest the m NAV compresses to one,

942
00:50:01,520 --> 00:50:03,920
Speaker 2: so the million of assets they have. So I lost

943
00:50:03,960 --> 00:50:09,360
Speaker 2: fifty percent of my equity, right, or my equity valuation.

944
00:50:10,120 --> 00:50:13,120
Speaker 2: But let's say in five years from now that million

945
00:50:13,200 --> 00:50:17,040
Speaker 2: dollars becomes worth ten million dollars a bitcoin and it's

946
00:50:17,040 --> 00:50:21,719
Speaker 2: still traded at a one time z m NAV. I

947
00:50:21,760 --> 00:50:24,040
Speaker 2: went from owning a percentage of a company with a

948
00:50:24,040 --> 00:50:25,920
Speaker 2: million dollars of assets to now on a percentage of

949
00:50:25,920 --> 00:50:26,479
Speaker 2: company with ten.

950
00:50:26,400 --> 00:50:27,359
Speaker 3: Million in assets.

951
00:50:28,880 --> 00:50:29,399
Speaker 1: That's right.

952
00:50:30,640 --> 00:50:33,279
Speaker 2: So over time, even though even though in the short

953
00:50:33,400 --> 00:50:36,120
Speaker 2: term my equity took a hit because of the compression

954
00:50:36,160 --> 00:50:39,000
Speaker 2: of the NAVE, over time that equity comes back up.

955
00:50:40,160 --> 00:50:43,200
Speaker 1: That's right. I think in that case, your equity investment

956
00:50:43,239 --> 00:50:48,120
Speaker 1: would be returning positively. But you essentially bought at twice

957
00:50:48,480 --> 00:50:51,520
Speaker 1: the market price on day one, right, That'd be another

958
00:50:51,560 --> 00:50:54,239
Speaker 1: way to look at it. So you have less upside.

959
00:50:54,880 --> 00:50:58,360
Speaker 1: You harvested less upside because of that m NAV compression,

960
00:50:58,800 --> 00:51:01,360
Speaker 1: but you didn't lose more because at the end of

961
00:51:01,400 --> 00:51:03,759
Speaker 1: the day. Bitcoin is the engine here, and that does

962
00:51:03,880 --> 00:51:06,000
Speaker 1: de risk a lot of this stuff to your point,

963
00:51:06,280 --> 00:51:09,280
Speaker 1: assuming an investor would hold through that long period.

964
00:51:09,840 --> 00:51:13,719
Speaker 2: Right, But here's where I think this differentiation matters. You

965
00:51:13,800 --> 00:51:17,080
Speaker 2: and I are bitcoiners, So to me, Bitcoin is my

966
00:51:17,239 --> 00:51:19,799
Speaker 2: base assets. Bitcoin is my hurdle rate.

967
00:51:20,000 --> 00:51:20,680
Speaker 3: I look at.

968
00:51:20,520 --> 00:51:22,600
Speaker 2: Anything that I could potentially put money into, and if

969
00:51:22,600 --> 00:51:25,000
Speaker 2: it can't beat fifty percent a year, I'm not interested.

970
00:51:26,320 --> 00:51:29,320
Speaker 2: So for me, if it's not going to outperform Bitcoin,

971
00:51:29,680 --> 00:51:31,839
Speaker 2: I don't want to do it. So when I look

972
00:51:31,880 --> 00:51:33,960
Speaker 2: at that m NAV, if it's only doing a one

973
00:51:33,960 --> 00:51:36,120
Speaker 2: time z M NAB, it's not beating bitcoin, why would

974
00:51:36,120 --> 00:51:39,160
Speaker 2: I do it? So to what I just laid out,

975
00:51:39,200 --> 00:51:40,799
Speaker 2: I bought it at two times, I ended up at

976
00:51:40,800 --> 00:51:43,120
Speaker 2: a one times, and in fiat terms, I made a

977
00:51:43,120 --> 00:51:45,920
Speaker 2: lot of money in fiat terms, but in bitcoin terms,

978
00:51:46,000 --> 00:51:51,319
Speaker 2: I maybe never got back potentially. Right, That's the way

979
00:51:51,320 --> 00:51:52,919
Speaker 2: I'm looking at it. I think that's the way master

980
00:51:53,040 --> 00:51:54,960
Speaker 2: us as bitcoiners look at it. But the problem is

981
00:51:55,200 --> 00:51:58,719
Speaker 2: it's not the problem. The reality is the majority of

982
00:51:58,760 --> 00:52:02,000
Speaker 2: the world doesn't look at things like that. They're trying

983
00:52:02,040 --> 00:52:04,680
Speaker 2: to beat either CPI or the S and P five

984
00:52:04,760 --> 00:52:09,000
Speaker 2: hundred bitcoin is not their unit of account, and so

985
00:52:09,400 --> 00:52:10,920
Speaker 2: they don't look at it that way. So they go,

986
00:52:11,000 --> 00:52:13,359
Speaker 2: I put one hundred dollars in in five years, that's

987
00:52:13,400 --> 00:52:14,600
Speaker 2: worth a thousand dollars.

988
00:52:15,320 --> 00:52:16,399
Speaker 3: That's good.

989
00:52:16,880 --> 00:52:19,439
Speaker 2: And so I just try to kind of pull back

990
00:52:19,480 --> 00:52:21,640
Speaker 2: a little bit and think, because again, we have a

991
00:52:21,680 --> 00:52:24,400
Speaker 2: public company now we're trying to sell to retail. The

992
00:52:24,400 --> 00:52:28,360
Speaker 2: bitcoiners are just a small percentage and hardly any of

993
00:52:28,400 --> 00:52:31,160
Speaker 2: the buyers. These are really for trad fi investors. These

994
00:52:31,160 --> 00:52:33,759
Speaker 2: are for fiat maximilis, right. These are for people trying

995
00:52:33,760 --> 00:52:36,439
Speaker 2: to beat the SMPR or a CPI, and so from

996
00:52:36,520 --> 00:52:38,520
Speaker 2: that level, i'd say it's pretty safe for them. As

997
00:52:38,560 --> 00:52:41,920
Speaker 2: a bitcoiner, as you started out, and I'm gonna maybe

998
00:52:41,920 --> 00:52:43,640
Speaker 2: wrap this up by a green with what you said

999
00:52:43,640 --> 00:52:45,960
Speaker 2: and reiterating it one more time. These are not a

1000
00:52:46,000 --> 00:52:50,320
Speaker 2: replacement for owning bitcoin in cold storage. Buy your bitcoin,

1001
00:52:50,600 --> 00:52:52,919
Speaker 2: put it in cold storage if you want a little

1002
00:52:52,920 --> 00:52:56,279
Speaker 2: bit of extra risk. These are fun to play with. Ultimately,

1003
00:52:56,360 --> 00:52:59,280
Speaker 2: these are trad fi tools for people who can't buy

1004
00:52:59,440 --> 00:53:00,480
Speaker 2: cold storage bitcoin.

1005
00:53:01,080 --> 00:53:03,720
Speaker 1: Yeah, well said Mark. I think that's a really important point.

1006
00:53:03,719 --> 00:53:05,759
Speaker 1: And if you go out on Twitter sometimes you see

1007
00:53:05,800 --> 00:53:08,840
Speaker 1: people fighting over these things, and I think if everyone

1008
00:53:08,920 --> 00:53:11,880
Speaker 1: understood that point, which I've seen you tweet multiple times,

1009
00:53:12,080 --> 00:53:15,280
Speaker 1: I think the tension would come down between the paper

1010
00:53:15,280 --> 00:53:18,560
Speaker 1: Bitcoin summer and the haters or whatever we're calling these tribes.

1011
00:53:19,040 --> 00:53:21,160
Speaker 2: Yeah, because it's you know, you've been doing this for

1012
00:53:21,200 --> 00:53:23,000
Speaker 2: a long time and you help high net worth people

1013
00:53:23,000 --> 00:53:24,840
Speaker 2: come into bitcoin, and it's easy for us to go

1014
00:53:25,120 --> 00:53:28,480
Speaker 2: just just buy the bitcoin, and that is the right answer.

1015
00:53:28,560 --> 00:53:31,480
Speaker 2: But that doesn't take into account the reality that most

1016
00:53:31,560 --> 00:53:33,080
Speaker 2: people have money locked up.

1017
00:53:33,040 --> 00:53:35,680
Speaker 3: In pensions and four one gains and they can't do that.

1018
00:53:36,160 --> 00:53:38,759
Speaker 2: So it's like, thank you, but I can't write, and

1019
00:53:38,840 --> 00:53:42,200
Speaker 2: so this this is a solution for that. Let's go

1020
00:53:42,200 --> 00:53:44,759
Speaker 2: ahead and wrap it up here. Brandon, any last thoughts

1021
00:53:44,840 --> 00:53:46,719
Speaker 2: or anything you want to draw attention to where they

1022
00:53:46,719 --> 00:53:48,719
Speaker 2: can follow, or anything that you're working on.

1023
00:53:49,360 --> 00:53:51,399
Speaker 1: Yeah. Absolutely. I was going to say one more point

1024
00:53:51,440 --> 00:53:55,680
Speaker 1: on Sailor's elegance here, and it's drawing from the unit

1025
00:53:55,680 --> 00:54:00,400
Speaker 1: of account conversation we just had. So what is Sailor doing. Okay,

1026
00:54:00,480 --> 00:54:03,240
Speaker 1: he's putting bitcoin on the balance sheet, so his assets

1027
00:54:03,280 --> 00:54:06,840
Speaker 1: are in bitcoin, and he's paying out some fixed income

1028
00:54:07,400 --> 00:54:11,800
Speaker 1: through his preferred equities in dollars, so assets in bitcoin

1029
00:54:12,040 --> 00:54:15,839
Speaker 1: dollar liabilities. That's the game, and that's the engine for

1030
00:54:16,239 --> 00:54:18,960
Speaker 1: a lot of shareholder value. So that's just a beautiful

1031
00:54:18,960 --> 00:54:21,760
Speaker 1: thing to see. And if you're too late to switching

1032
00:54:21,800 --> 00:54:24,200
Speaker 1: your unit of account to bitcoin, well you pay the

1033
00:54:24,239 --> 00:54:27,040
Speaker 1: price for that. So yeah, there's a little cheeky ending

1034
00:54:27,080 --> 00:54:29,160
Speaker 1: for that. You can find me on Twitter at b

1035
00:54:29,400 --> 00:54:32,120
Speaker 1: quitm b in my last name. All my essays are

1036
00:54:32,320 --> 00:54:35,480
Speaker 1: brandonqu dot com. I've been at swan for five and

1037
00:54:35,480 --> 00:54:40,080
Speaker 1: a half years. We're a US focused bitcoin wealth platform.

1038
00:54:40,160 --> 00:54:42,120
Speaker 1: So if you want to buy some bitcoin and a

1039
00:54:42,160 --> 00:54:46,000
Speaker 1: personal account, a retirement account, an entity account, if you

1040
00:54:46,000 --> 00:54:48,440
Speaker 1: want to get a two of three collaborative multi sig,

1041
00:54:48,480 --> 00:54:50,000
Speaker 1: you want someone to hold your hand through any of

1042
00:54:50,040 --> 00:54:52,680
Speaker 1: this stuff, come to swan dot com and check us

1043
00:54:52,680 --> 00:54:53,120
Speaker 1: out there.

1044
00:54:53,920 --> 00:54:55,640
Speaker 2: Yeah cool, all right, Brandon, thanks so much.

1045
00:54:56,280 --> 00:55:00,600
Speaker 1: Thanks Mark at