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Speaker 1: There are no losers here except the twentieth century antiquated

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Speaker 1: oligopoly that is selling inferior credit instruments. But that's technology.

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Speaker 1: The human race has got to move forward. The skeptics

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Speaker 1: and the cynics, they choose to be strategically ignorant.

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Speaker 2: Twenty seven years ago you didn't have trading apps on

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Speaker 2: your phone, and now it's even more accessible, but yet

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Speaker 2: the market is still held back.

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Speaker 1: The investment cycle is one thousand times faster than technology,

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Speaker 1: real estate, anything else you've ever seen before in your life.

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Speaker 1: We're literally selling fifty million an hour or one hundred

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Speaker 1: million an hour and buying one hundred million dollars a

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Speaker 1: bitcoin the same hour.

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Speaker 2: Is there an appetite for over collateralized debt that pays

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Speaker 2: ten percent?

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Speaker 1: Just go walk down the street and ask one hundred people,

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Speaker 1: would you like a stable investment that yielded ten percent

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Speaker 1: tax deferred? If you think the bitcoin is okay, I

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Speaker 1: can jack your retirement income from thirty thousand to one

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Speaker 1: hundred and twenty thousand. So what we're really talking about

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Speaker 1: is creating an annuity or a pension, And so what's

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Speaker 1: the offers like? Happily ever after, it's social security. That's

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Speaker 1: the product for how many people a.

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Speaker 2: Billion we need to go build the world that we want.

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Speaker 1: The real interesting question for all of us in the

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Speaker 1: industry is.

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Speaker 2: Michael. First of all, thank you for taking the time

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Speaker 2: to sit down with me here in DC.

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Speaker 1: Yeah, happy to be here.

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Speaker 2: I've gotten to spend a little bit time with you,

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Speaker 2: but I've never sat down one on one, so I've

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Speaker 2: been excited for this. There's one question I've always wanted

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Speaker 2: to ask you because I love history, and I know

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Speaker 2: you majored in science of history of science, but you

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Speaker 2: also have the MIT engineering degrees in astronautics, system dynamics,

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Speaker 2: and history of science. It seems like this unique blend

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Speaker 2: and I'm just curious how that the history so you

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Speaker 2: sort of get the history as well as like aeronautics,

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Speaker 2: helps you maybe understand bitcoin better and maybe sort of

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Speaker 2: see where the future of bitcoin goes.

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Speaker 1: Yeah, I think when you read I've read a lot

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Speaker 1: of history of late in its original form, you see

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Speaker 1: historians observing things. They're making observations that are noting its suboptimal,

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Speaker 1: like observing ten thousand tragedies.

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Speaker 2: Right.

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Speaker 1: Then occasionally you'll see philosophers who are complaining about it.

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Speaker 1: So philosophers synthesize and they complain about about what they

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Speaker 1: don't like, or they lament that it isn't better the

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Speaker 1: Austrian economies. The philosophers. The engineers build machines that work airplanes, ships, railroads, right,

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Speaker 1: et cetera, electric motors. The scientists they divine the relationships.

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Speaker 1: The math that you know explains the universe, and the

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Speaker 1: physicists you know, and the mathematicians take that you know

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Speaker 1: to the extreme right. I had a background on all

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Speaker 1: those things. I think it was useful to have studied physics.

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Speaker 1: It's useful to have studied math. It's useful to have

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Speaker 1: studied all of the sciences and the engineering disciplines, which

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Speaker 1: get deep in thermodynamics and mechanics. And I think it's

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Speaker 1: also useful to have studied history and philosophy and the

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Speaker 1: history of science. It's particularly interesting subject because it goes

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Speaker 1: back and looks at the histories, but it's extrudes it

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Speaker 1: through or filters through a scientific lens, like the classic

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Speaker 1: non scientific historian says this happened, and this happened, and

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Speaker 1: that was sulb optimal, right, and the history of science

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Speaker 1: historians says that happened because of this. That happened because

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Speaker 1: of this, Yeah, guns, germs and steel. Right that the

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Speaker 1: Europeans didn't just show up to the New World and

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Speaker 1: then they conquered it. They showed up to the New World,

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Speaker 1: brought a German every but he died. They didn't have

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Speaker 1: to conquer it. I think ninety ninety five percent of

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Speaker 1: the natives died, you know, And that's that's actually, you know,

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Speaker 1: a biological explanation for what happened. If you don't understand

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Speaker 1: you know, the science of immunology, or you don't understand germs,

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Speaker 1: you couldn't explain it. And then you know, if you

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Speaker 1: think about the impact of steel, what's to take to

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Speaker 1: create steel and explosives and gunpowder? You know. And so

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Speaker 1: the history of science is all about how technology dynamics

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Speaker 1: channeled the course of human history. And I think the

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Speaker 1: reason it's important to bitcoin is is you can't really

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Speaker 1: understand bitcoin if you're not an engineer. If you don't

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Speaker 1: understand engineering systems, engineering control systems, servo mechanisms, the system stability,

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Speaker 1: you've got to understand all those concepts. Intuitive if you

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Speaker 1: don't understand thermodynamics. You know, the people that are pure

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Speaker 1: computer scientists who are weak on physics and engineering and systems.

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Speaker 1: Oftentimes they create Reube Goldbherd devices in code that a

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Speaker 1: hardcore engineer wouldn't build, right, And so you can't just

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Speaker 1: be a coder. And of course if you're a pure

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Speaker 1: engineer and you reduce the world, or I built a

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Speaker 1: ship or I built I built a gun, but you

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Speaker 1: don't consider the implication of the ships and the guns

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Speaker 1: on the course of economic and political history, right, then

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Speaker 1: you don't really understand bitcoin either, because you have to

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Speaker 1: understand the history of money and the history of economics

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Speaker 1: and mercantel networks and yeah, yeah, the idea, the idea

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Speaker 1: credit networks are local, like a German prints can have

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Speaker 1: a credit network, a British prints can have a credit network.

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Speaker 1: But gold or silver networks tend to be transnational. Right

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Speaker 1: that the French, the Germans, the Brits, the Persians and

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Speaker 1: the Chinese could all agree to trade on a silver

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Speaker 1: network or a gold network, but not on a Chinese

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Speaker 1: paper money network. And so when you start to understand

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Speaker 1: the impact of technology has metallic money on economic networks,

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Speaker 1: and then the impact of a ship with guns on it,

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Speaker 1: you know, on that economic network, or the impact of

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Speaker 1: not having immunity to all the germs the Europeans brought,

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Speaker 1: or the impact of not having steel and being stuck

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Speaker 1: in the Stone Age. All of those things have an

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Speaker 1: impact on the way the world evolved, and I think

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Speaker 1: bitcoin is it's crossing every one of those fields right now, right.

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Speaker 2: Yeah, So being able to synthesize that information and understand

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Speaker 2: the cause and effect, and then looking at the changes today,

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Speaker 2: as you said, sort of a multinational asset, strong, a steel, fast, etc.

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Speaker 2: Then you can start to it seems like you can

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Speaker 2: start to see maybe the future that that creates better

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Speaker 2: than most people.

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Speaker 1: Well, I just I think if you've got a broad

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Speaker 1: synthetic educational background, if you've studied a bunch of different subjects,

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Speaker 1: had a lot of experience, you appreciate bitcoin more. If

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Speaker 1: you have a very narrow background, if you understand economics

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Speaker 1: or i you've studied economics but never studied engineering, you'd

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Speaker 1: be missing half the equation. And if you're an engineer

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Speaker 1: that doesn't understand economics and never been in business, or

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Speaker 1: never traded internationally or never traveled yet, or didn't know

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Speaker 1: anything about history, yeah, you would also understand only a

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Speaker 1: part of the equation. So I just think you need

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Speaker 1: to know a lot of different subjects in order to

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Speaker 1: fully appreciate the impact and the significance of the invention

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Speaker 1: of bitcoin.

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Speaker 2: Yeah, which is then in your professional career building technology companies,

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Speaker 2: and so you kind of predicted a lot of those

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Speaker 2: technology companies that have grown some of your books that

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Speaker 2: you wrote in the past. But then also navigating those

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Speaker 2: tech companies through the capital markets then sort of gives

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Speaker 2: you a new perspective to see the deficiencies in the

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Speaker 2: current capital markets that we have today and then help

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Speaker 2: you kind of think about fixing those with jumping into

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Speaker 2: sort of like this refinery model, trying to see solve

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Speaker 2: some of the deficiencies in those capital markets the way

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Speaker 2: companies are crue capital.

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Speaker 1: Yeah, I think what can be said of the capital

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Speaker 1: markets is ninety nine point nine percent of the companies

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Speaker 1: were locked out of them, right, So the first question

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Speaker 1: you got to ask is how come this forty million

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Speaker 1: businesses in the United States, But there's only like four

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Speaker 1: thousand publicly.

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Speaker 2: Traded companies, right, so don't have access to the capitol.

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Speaker 1: Okay, So it doesn't sound like a like if I

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Speaker 1: said only four thousand companies have telephone and internet access

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Speaker 1: and the other forty million businesses don't.

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Speaker 2: What would you say, Yeah, that'd be a problem.

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Speaker 1: Yeah, you know what if I said four thousand companies

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Speaker 1: have bank accounts and the other forty million don't. Right,

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Speaker 1: So you just start with the observation that the capital

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Speaker 1: markets can't be all that effective if ninety nine point

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Speaker 1: nine percent of the companies can't access them. And you know,

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Speaker 1: beyond that, the other observation is if you look at

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Speaker 1: the companies that are in the public market, if you

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Speaker 1: look at the thousands of publicly traded companies, it's like

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Speaker 1: twenty that control all the attention. And so you know,

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Speaker 1: most public companies are zombie companies. They're uninteresting, no one

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Speaker 1: cares about them, They carry a huge burden of regulatory compliance,

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Speaker 1: and they don't get the attention they deserve. So one

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Speaker 1: could characterize the capital markets as being unwieldy, ineffective, right,

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Speaker 1: And it's you know, and what is that they're twentieth

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Speaker 1: century instruments that never really evolved in the twenty first century.

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Speaker 1: You got to ask the question, why does it take

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Speaker 1: three years to raise money if you have a small business,

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Speaker 1: Why can't you do it in three days?

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Speaker 2: Right?

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Speaker 1: Why is it? Uh? You know, why does Why is

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Speaker 1: it impossible to take custody of your own stock shares?

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Speaker 1: Why is it impossible to trade shares on Saturday afternoon?

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Speaker 1: Why is it impossible to transfer things globally? You know?

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Speaker 1: Why is it? Why is it that you can actually

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Speaker 1: take a million dollars of cash and get paid interest

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Speaker 1: on it, but you can't take a million dollars worth

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Speaker 1: of stock shares and get paid for that? Yeah? Why?

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Speaker 2: Why?

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Speaker 1: You know? So there are all these things that just

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Speaker 1: are very inefficient that we just take for granted, but

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Speaker 1: they don't work very well.

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Speaker 2: Right. A lot of that is technology being inefficient, and

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Speaker 2: here we're at this in DC, at this bitcoin policy event,

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Speaker 2: and a lot of that might also be regulatory, right,

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Speaker 2: So a lot of that regulations maybe prevent some of that.

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Speaker 1: Yeah, generally, often oftentimes whenever you have a highly regulated industry,

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Speaker 1: progression stops. Right the banking If you look at the

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Speaker 1: credit markets, they seem to be stuck and stuck in

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Speaker 1: a mode that was probably probably modern thirty years ago,

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Speaker 1: Like they're thirty forty years old and they haven't advanced.

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Speaker 1: If you look at the equity markets, it's the same way.

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Speaker 1: For example, now, my company came public in nineteen ninety eight,

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Speaker 1: we traded on NASDAK from nine thirty in the morning

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Speaker 1: till four in the afternoon. The year is twenty twenty five.

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Speaker 1: We trade on NASDAK from nine to thirty in the

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Speaker 1: morning till four in the afternoon. Right, what's the difference

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Speaker 1: between the way my stock trades today and the way

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Speaker 1: it traded twenty seven years ago?

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Speaker 2: Yeah?

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Speaker 1: Nothing? Nothing?

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Speaker 2: Yeah?

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Speaker 1: Right? Could you imagine any other industry where there was

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Speaker 1: no material change for twenty seven years.

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Speaker 2: Every day we see headlines about inflation and dead and

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Speaker 2: diminishing control over our own money. That's why I always

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Speaker 2: come back to bitcoin, because it's built for generations, it's

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Speaker 2: built for legacy. But protecting your bitcoin legacy the right

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Speaker 2: way is not always simple. It demands discipline, focus, and

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Speaker 2: the right partner. Now, that's why I personally use unchained Signature.

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Speaker 2: It's a premium private client service for serious bitcoin holders

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Speaker 2: who want expert guidance, resilient custody, and an enduring partnership.

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Speaker 2: Now Signature, you're paired with your own dedicated account manager,

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Speaker 2: someone who understands your goals helps you every step of

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Speaker 2: the way. You're going to get white glove onboarding, same

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Speaker 2: day emergency support, personalized education or reduce trading fees, and

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Speaker 2: priority access to exclusive events and features. Unchained Collaborative custody

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Speaker 2: model is designed to provide the same security as the

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Speaker 2: world's biggest bitcoin custodians, but for those who prefer to

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Speaker 2: hold their own keys. Now. I've been using and recommending

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Speaker 2: Unchained for years. I even got my parents to set

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Speaker 2: up with them. So if you want to get set up,

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Speaker 2: check out Unchained signature at unchained dot com, slash mark

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Speaker 2: get ten percent off your first year. Because your bitcoin

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Speaker 2: isn't just for life, it's for generations. And one of

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Speaker 2: the differences, I mean, twenty seven years ago you didn't

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Speaker 2: have trading apps on your phone and now it's even

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Speaker 2: more accessible. But yet the market is still held back,

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Speaker 2: even though retail could access it easier.

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Speaker 1: Yeah, because you know, the traditional finance industry is highly

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Speaker 1: regulated and it has settled into a comfort zone, and

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Speaker 1: you know the forces of progression are in the crypto industry.

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Speaker 1: Most of the forces of the traditional finance industry are

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Speaker 1: forces of regression like that that the knee jerk reaction

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Speaker 1: is why shouldn't we do this? Why is this a

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Speaker 1: bad idea? If you listen to all the guenslor speeches

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Speaker 1: for the last four years, it's always why this is

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Speaker 1: a bad idea, right right, Like why can't why can't

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Speaker 1: I issue a token, you know, for my small business

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Speaker 1: over the weekend? Well, we got to protect the investors, right, Okay,

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Speaker 1: So that's why we're going to disenfranchise forty million companies

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Speaker 1: for being able to raise money, because the people that

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Speaker 1: might want to invest in them might not be qualified

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Speaker 1: to make that investment. So it's kind of like, well,

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Speaker 1: why don't we give cars to people below the age

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Speaker 1: of sixty? Got to protect the pedestrians or protect the work.

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Speaker 2: You know.

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Speaker 1: It's like if you if you took that rule and

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Speaker 1: you applied it to phones, or cars, or websites or

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Speaker 1: flying in an airplane, we would have no automobive industry.

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Speaker 1: We'd have no aircraft industry, we'd have no telephones, we

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Speaker 1: have nothing, because we wouldn't do anything until we're sure

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Speaker 1: that no one would be harmed by the doing of

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Speaker 1: the thing. We wouldn't even have fire, you know, we

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Speaker 1: w'udn't want someone to get burned. We wouldn't have electricity.

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Speaker 1: People might get shocked, right, got to protect you know,

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Speaker 1: got to protect the people that might get hurt by

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Speaker 1: the new idea. So that's pretty much should be the existing

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Speaker 1: status quo in traditional finance, and it has been for

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Speaker 1: thirty years.

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Speaker 2: Yeah, and with the advancements of technology, I'll get I

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Speaker 2: want to get more into the politics side. And you

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Speaker 2: talked earlier on your keynote about maybe the last twelve

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Speaker 2: months of this big political wins that shifted, but kind

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Speaker 2: of sticking with some of the ways that technology is changing.

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Speaker 2: On your keynote, you said you spent I think about

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Speaker 2: thirty years trying to come up with a billion dollar idea,

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Speaker 2: which you did and then couldn't come up with the

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Speaker 2: next one and now half a dozen billion dollar billion

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Speaker 2: dollar ideas in the last year or two. And that's

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Speaker 2: sort of in New York at the unconference, you talked

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Speaker 2: about this refinery model and standard oil sort of taking

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Speaker 2: this raw asset like bitcoin and creating products off of it.

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Speaker 2: And so you're creating now products off of it. That's

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Speaker 2: the model to do is what would be the kerosene

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Speaker 2: of this industry.

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Speaker 1: Kerosene represents most highly refined crude oil. It's like it's

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Speaker 1: pure liquid energy. Right if JEF you put it in rockets, like,

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Speaker 1: you can't refine oil more than kerosene. So it's an

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Speaker 1: important metaphor. It's the cleanest, highest grade distilled liquid energy,

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Speaker 1: like pure grain alcohol. Right, that's what you're talking about

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Speaker 1: there from a bunch of potatoes, stock of potatoes and

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Speaker 1: outcomes pure grain alcohol. The equivalent of kerosene in the

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Speaker 1: bitcoin industry is a treasury preferred credit instrument like stretch.

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Speaker 1: So on one side you have digital capital bitcoin and

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Speaker 1: bitcoin is a long duration, volatile, high energy, high performance

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Speaker 1: source of capital. Long duration. Think of it in terms

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Speaker 1: of like two hundred and forty months, like twenty years.

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Speaker 1: You should if you want to get the optimal performance,

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Speaker 1: you can hold it for twenty years. It's a ten

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Speaker 1: to twenty year type in man high volatility. Right now,

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Speaker 1: it's about forty five ball implied ball. It's been fifty,

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Speaker 1: it's been sixty, it's been seventy ball and high performance,

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Speaker 1: you know, appreciating fifty percent a year. So that's the

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Speaker 1: raw commodity. What happens if I if I strip away

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Speaker 1: the volatility, strip away the risk, strip away or compress

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Speaker 1: the duration, translate it to a given currency, and extract

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Speaker 1: the yield. That's what a treasury credit instrument or treasury

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Speaker 1: preferred is. So that's what stretches. The idea is you

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Speaker 1: build something that's got one month, like I'm going to

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Speaker 1: give you ten percent dividend yield for one month. Like

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Speaker 1: the duration is one, the yield is ten percent, the

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Speaker 1: currency base is US dollars. The spread. It's like, if

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Speaker 1: the risk free rate is four hundred basis points and

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Speaker 1: that's a six six hundred basis point credit spread, I've

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Speaker 1: extracted a six hundred basis point spread for the next

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Speaker 1: month in US dollars. Maybe I five x overcollateralize it.

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Speaker 1: Maybe I ten x if I, you know, raw bitcoin

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Speaker 1: is like one to one. It's like if I have

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Speaker 1: a dollar bitcoin. I have a dollar a bitcoin and

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Speaker 1: bitcoin trades down fifty percent, I've lost half my money.

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Speaker 1: But if I ten x overcollateralize something I have ten

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Speaker 1: dollars a bitcoin, I have one dollar of stretch. A

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Speaker 1: bitcoin trades down fifty percent, I still get a dollar

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Speaker 1: stretch a bitcoin trades down ninety percent, I still have

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Speaker 1: a dollar of stretch. The statistical odds of bitcoin trading

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Speaker 1: down ninety percent or like points something. Right, It's a

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Speaker 1: small percentage. So by over collateralizing, you strip away the

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Speaker 1: risk by structuring it to adjust. If you put a

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Speaker 1: set of adjustments or representations below below one hundred, you

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Speaker 1: start to strip away the ball Telly on the downside.

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Speaker 1: If like with Stretch, what we did is we put

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Speaker 1: in a call option at one oh one, and then

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Speaker 1: we told the market we're going to sell it actively

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Speaker 1: at one hundred or better. And then we also told

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Speaker 1: the market we're not going to sell it below ninety nine,

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Speaker 1: and if it's below ninety nine, we're going to raise

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Speaker 1: the dividend. Okay, So you're kind of collaring this instrument.

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Speaker 1: And then the last point is we created a preferred

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Speaker 1: instrument where we pay it monthly in cash and then

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Speaker 1: we adjust the dividend every month. So it turns out

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Speaker 1: if you scan in the history of preferred stock or

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Speaker 1: the history of the credit markets, no company has ever

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Speaker 1: issued a perred preferred stock where the management has discretion

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Speaker 1: to adjust the dividend every single month. Like there are

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Speaker 1: some preferred. That are floaters where they set the credit

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Speaker 1: spread at three hundred and fifty bases points over SOFA,

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Speaker 1: and they will float with SOFA with the risk free rate.

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Speaker 1: And there are a lot that are fixed where you

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Speaker 1: sit it at seven percent, and the principle will trade

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Speaker 1: up and down if sofur falls or arises. But the

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Speaker 1: idea that the credit spread is completely variable is a

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Speaker 1: new idea. But by the way, not a new idea

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Speaker 1: in a world of credit, because who does this, well,

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Speaker 1: Nation States do it.

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Speaker 2: The Fed.

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Speaker 1: Literally, that's what a central bank does, right, That's what

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Speaker 1: every central bank does. They set the interest rate on

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Speaker 1: their currency. Ye what we did was just copied you know,

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Speaker 1: traditional bankers, and we set the interest rate on our currency,

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Speaker 1: which is stretch. So that is the kerosene of of

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Speaker 1: the bitcoin you know, Treasury company, or of the digital

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Speaker 1: assets industry. Because it's the it represents the greatest degree

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Speaker 1: of financial engineering, just like kerosene represents the greatest degree

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Speaker 1: of petroleum engineering. Right, I've done the most refining. I've

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Speaker 1: distilled the highest quality product. You could imagine, for example,

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Speaker 1: you could you could extract the same product and yen.

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Speaker 1: So I want to create a yen instrument that's ten

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Speaker 1: thousand yen that pays you know, a monthly yen cash

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Speaker 1: yield or a cash dividend. I changed that every month,

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Speaker 1: and now I've created the equivalent of kerosene for the

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Speaker 1: Japanese market. And of course, what does everybody want? Everybody

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Speaker 1: kind of just wants. I've got some money I need

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Speaker 1: to park for the next ninety days. If I put

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Speaker 1: it in the bank, If I put it in the

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Speaker 1: bank in Japan, I got fifty basis points or less.

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Speaker 1: I put it in the bank in Switzerland, I get

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Speaker 1: minus fifty basis points. If I put in the bank

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Speaker 1: in Europe, I get two hundred basis points or less.

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Speaker 1: If I put it in the bank in the US,

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Speaker 1: I got four hundred basis points or less. And so

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Speaker 1: what I'd like to do is put it in some

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Speaker 1: kind of structure where I'm going to get my money

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Speaker 1: back in nine months or six months or whatever. The

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Speaker 1: principal is not going to move around, but I'm going

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Speaker 1: to get ten percent. Everybody wants a bank account of

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Speaker 1: base ten percent out of four percent, two percent or

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Speaker 1: zero percent. And and so I think I think the

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Speaker 1: most interesting product that you can create, the most interesting

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Speaker 1: digital credit product is a treasury preferred credit instrument for

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Speaker 1: corporate treasurers or for retirees. Right, just you know, and

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Speaker 1: how big is that, Marcus, Like thirty trillion dollars in

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Speaker 1: the US. Yeah, of just short term treasury money. So

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Speaker 1: thirty trillion in the US that's getting paid, so fur.

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Speaker 2: Yeah.

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Speaker 1: And the opportunity with digital credit is you create a company,

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Speaker 1: you hold bitcoin, that's digital capital. You start to issue

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Speaker 1: credit instruments on top of the capital, and you can

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Speaker 1: decide how much risk do you want to strip away?

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Speaker 1: Is it a BTC rating of two, which is two

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Speaker 1: times over collateralized, or is it ten? Right, Two is

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Speaker 1: less risk stripped away. Ten is more risk strip strip away.

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Speaker 1: The amount of risk you want strip away, the amount

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Speaker 1: of volatility. The smaller the instrument compared to the overall

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Speaker 1: collateral pool, the less the volatility. And then there are

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Speaker 1: a lot of terms and conditions that you can put

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Speaker 1: in the instrument that would constrain the volatility. So you

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Speaker 1: decide how much volatility and risks you want to strip away,

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Speaker 1: decide how much yield do you want to give it.

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Speaker 1: You decide whether you want it to be in pounds

400
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Speaker 1: or Canadian or euros or yen or whatever you know,

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Speaker 1: and then you distill out, you extrude the yield and

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Speaker 1: the pure you know, boost over the risk free rate,

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Speaker 1: and you offer that to the marketplace.

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Speaker 2: Yeah, I saw you ask it both in New York

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Speaker 2: conference then today at the keynotes. Just let me see

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Speaker 2: a raise of hands, like how many people have a

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Speaker 2: bankcount that like ten percent? And of course everybody wants that,

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Speaker 2: so we can see the demand for that is.

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Speaker 1: Nobody in the world's getting paid five.

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Speaker 2: Right.

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Speaker 1: We created a product STRD stride. It's the junior long

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Speaker 1: duration credit instrument right now. It pays about twelve point

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Speaker 1: six percent twelve point six percent and so the average

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Speaker 1: part by twelve point six percent as a return of capital.

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Speaker 1: So it's tax deferred and if you put your money

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Speaker 1: in the bank, you're going to get four percent pre tax,

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Speaker 1: three percent after tax. Right, So it pays anywhere from

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Speaker 1: three to four times as much cash flow. Yeah, so

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Speaker 1: that those are really interesting products that we're creating in

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Speaker 1: the market.

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Speaker 2: I mean, just in the US, we have seven trillion

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Speaker 2: in money market accounts just trying to earn a third

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Speaker 2: of that yield that you're paying out there. And so

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Speaker 2: then you have four different products, and so not everybody

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Speaker 2: wants cares. Some people might want other products. Yeah, you've

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Speaker 2: got strike, stripe, stride, and now stretch, and so each

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Speaker 2: one of those sits in a different location that gives

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Speaker 2: them a little bit of a different variation of the kerosene.

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Speaker 1: Yeah, pure kerosene like the I would think, I would say,

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Speaker 1: the other ones are kind of like gasoline or diesel,

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Speaker 1: or plastic or you know there naphthos. There's a lot

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Speaker 1: of other petrochemicals. You know, the entire petroleum ministry is

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Speaker 1: fascinating because out of a barrel of oil doesn't just

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Speaker 1: come gasoline, diesel and jet fuel. Also, you get acrylics,

435
00:25:36,520 --> 00:25:40,960
Speaker 1: you get fibers, you get polyester, you get lycra, you know,

436
00:25:41,080 --> 00:25:43,920
Speaker 1: you get PBC. You get the stuff that we make

437
00:25:43,960 --> 00:25:45,840
Speaker 1: doors with it, we make walls with it, we make

438
00:25:45,840 --> 00:25:48,640
Speaker 1: pipes with it, We wear it, we look through it,

439
00:25:50,240 --> 00:25:54,240
Speaker 1: we burn it. Think about how profound it is. Like

440
00:25:54,400 --> 00:25:56,520
Speaker 1: just around this room, if you glanced at the room,

441
00:25:56,560 --> 00:26:02,119
Speaker 1: you probably find there's probably one hundred or hundreds of

442
00:26:02,200 --> 00:26:04,600
Speaker 1: petrochemical products in this room.

443
00:26:04,840 --> 00:26:06,160
Speaker 2: Yeah, that have been created.

444
00:26:06,800 --> 00:26:11,960
Speaker 1: So the possibilities are endless. But if you come back

445
00:26:11,960 --> 00:26:15,080
Speaker 1: to just what we've done. Right, we're just one company

446
00:26:15,119 --> 00:26:20,119
Speaker 1: and we're just we're showing what's possible. Strike was the

447
00:26:20,160 --> 00:26:24,840
Speaker 1: first and it is a convertible preferred. So Strike shows

448
00:26:24,840 --> 00:26:32,800
Speaker 1: how you can you can extract any amount of yield, delta, duration, risk,

449
00:26:33,000 --> 00:26:36,439
Speaker 1: or volatility. So we Strike. We basically gave it about

450
00:26:36,440 --> 00:26:39,080
Speaker 1: thirty five delta, that is like thirty five percent of

451
00:26:39,160 --> 00:26:42,399
Speaker 1: the upside of the equity. So you get you know,

452
00:26:42,440 --> 00:26:44,760
Speaker 1: you get an equity component, then you get like a

453
00:26:45,000 --> 00:26:47,879
Speaker 1: right now, it's like eight and a half percent yielding,

454
00:26:48,080 --> 00:26:52,080
Speaker 1: like it pays eight percent at part. So we gave

455
00:26:52,119 --> 00:26:54,080
Speaker 1: it a divid end at eight percent. We gave it

456
00:26:54,119 --> 00:26:59,080
Speaker 1: an equity component for some upside, and then we made

457
00:26:59,080 --> 00:27:03,840
Speaker 1: it cumulative and so gave it some seniority privileges. And

458
00:27:04,200 --> 00:27:07,440
Speaker 1: that's for people that kind of just they don't want

459
00:27:07,480 --> 00:27:09,439
Speaker 1: to buy bitcoin and be on the roller coaster. They

460
00:27:09,480 --> 00:27:11,919
Speaker 1: want to get I call it a bitcoin fellowship. It's like,

461
00:27:12,720 --> 00:27:15,600
Speaker 1: you know, it's like you buy it, you're waiting for

462
00:27:15,640 --> 00:27:18,320
Speaker 1: the upside and you're getting paid to you know, a

463
00:27:18,720 --> 00:27:22,399
Speaker 1: living stipend right while you're waiting, you know, for the

464
00:27:22,600 --> 00:27:25,880
Speaker 1: principle to appreciate. So that's one instrument.

465
00:27:25,560 --> 00:27:28,080
Speaker 2: Because it will convert into mstr A thousands.

466
00:27:27,720 --> 00:27:31,000
Speaker 1: Because it's got a conversion right. Right, So if you believe,

467
00:27:31,160 --> 00:27:34,400
Speaker 1: if you want to hold something for thirty years, well

468
00:27:34,440 --> 00:27:37,719
Speaker 1: you're going to get thirty years worth of dividends. And

469
00:27:37,800 --> 00:27:41,280
Speaker 1: at the end of thirty years, you're you're holding, say

470
00:27:42,000 --> 00:27:44,760
Speaker 1: for one hundred dollars stock, you're holding if you have

471
00:27:44,800 --> 00:27:47,200
Speaker 1: about one of these, you've got a forty dollars worth

472
00:27:47,200 --> 00:27:51,359
Speaker 1: of of equity when you buy one hundred dollars instruments.

473
00:27:51,359 --> 00:27:55,440
Speaker 1: So that's for people that want some upside with downside

474
00:27:55,480 --> 00:28:02,159
Speaker 1: protection with guaranteed cash flow, right, which a lot of

475
00:28:02,200 --> 00:28:05,639
Speaker 1: investors want, right, I mean a lot of investors they

476
00:28:05,840 --> 00:28:09,239
Speaker 1: if they wanted max upside, max volatility, you would buy

477
00:28:09,240 --> 00:28:14,159
Speaker 1: the bitcoin, right. But can I go thirty years without

478
00:28:14,200 --> 00:28:17,800
Speaker 1: any cash flow? Can I go ten years without cash flow?

479
00:28:17,800 --> 00:28:19,359
Speaker 2: And can I stomach the volatility?

480
00:28:20,000 --> 00:28:21,600
Speaker 1: Yeah? And there are a lot of people that just

481
00:28:21,680 --> 00:28:25,400
Speaker 1: don't want the volatility right for any number of reasons.

482
00:28:26,200 --> 00:28:29,280
Speaker 1: So that Strike, it turns out that Strike is the

483
00:28:29,280 --> 00:28:33,000
Speaker 1: most volatile of the four preferred instruments because it's got

484
00:28:33,000 --> 00:28:36,280
Speaker 1: that equity component in it, and it's got longer duration,

485
00:28:37,040 --> 00:28:39,600
Speaker 1: and so that means it's got more volatile to interest

486
00:28:39,680 --> 00:28:42,280
Speaker 1: rate forward curve and has got more volatility to bitcoin

487
00:28:42,320 --> 00:28:46,880
Speaker 1: price and more volatile to MSTR price. The second thing

488
00:28:46,920 --> 00:28:50,840
Speaker 1: we did with Strife STRF, and that was long duration

489
00:28:51,120 --> 00:28:54,600
Speaker 1: senior credit. So it pays ten percent dividend in par

490
00:28:54,960 --> 00:29:01,600
Speaker 1: forever and that means that it doesn't adjust. It's like

491
00:29:01,800 --> 00:29:04,440
Speaker 1: it's like a you know, it's not a bond because

492
00:29:04,440 --> 00:29:07,000
Speaker 1: it's a dividend. It's better than a bond because in

493
00:29:07,120 --> 00:29:09,680
Speaker 1: that if you want cash flow, because the dividends get

494
00:29:09,680 --> 00:29:12,640
Speaker 1: better tax treatment, and it becomes if it becomes a

495
00:29:12,640 --> 00:29:14,600
Speaker 1: return of capital, which is what it is right now,

496
00:29:14,600 --> 00:29:20,400
Speaker 1: it's completely tax deferred. So that's that's for someone who's

497
00:29:20,440 --> 00:29:23,680
Speaker 1: a long term credit investor, and it happens to be

498
00:29:23,800 --> 00:29:26,880
Speaker 1: senior in the capital structure, so it so it gets

499
00:29:26,920 --> 00:29:30,840
Speaker 1: paid off before everything else, and it has penalty provisions

500
00:29:30,880 --> 00:29:35,360
Speaker 1: if we ever skip a dividend, right and so extremely

501
00:29:35,520 --> 00:29:38,960
Speaker 1: risk adverse institutional investors that want the credit but they

502
00:29:38,960 --> 00:29:41,800
Speaker 1: want to be ahead of everybody else in the stack,

503
00:29:42,600 --> 00:29:45,920
Speaker 1: they would buy that. Well, that's trading above par right now,

504
00:29:46,080 --> 00:29:50,640
Speaker 1: so it pays like nine percent effective yield, okay, because

505
00:29:50,640 --> 00:29:57,000
Speaker 1: it's senior. We followed that with the identical instrument. We

506
00:29:57,080 --> 00:30:00,000
Speaker 1: basically weeded ten percent at par, but instead of cumulative,

507
00:30:00,080 --> 00:30:02,560
Speaker 1: we made it noncumulative, and we may instead of senior,

508
00:30:02,680 --> 00:30:04,800
Speaker 1: made it junior, and instead of the penalty provisions, we

509
00:30:04,800 --> 00:30:05,240
Speaker 1: took them.

510
00:30:05,120 --> 00:30:07,520
Speaker 2: Out so get a little more yield.

511
00:30:08,000 --> 00:30:12,400
Speaker 1: And so what it does is it makes it theoretically riskier,

512
00:30:12,800 --> 00:30:15,880
Speaker 1: you know to the person studying the contract, but it

513
00:30:15,920 --> 00:30:19,400
Speaker 1: means the trades lower, so that trades like in the eighties,

514
00:30:19,680 --> 00:30:22,200
Speaker 1: so that that yields twelve and a half or twelve

515
00:30:22,280 --> 00:30:26,000
Speaker 1: point six percent. So the issue is why would somebody

516
00:30:26,080 --> 00:30:28,920
Speaker 1: want to buy the one without all the investor protections

517
00:30:29,560 --> 00:30:32,280
Speaker 1: in the security And the answer is because you get

518
00:30:32,280 --> 00:30:35,920
Speaker 1: paid three hundred and sixty bases points. So do you

519
00:30:35,960 --> 00:30:39,440
Speaker 1: want do you want twelve points five or twelve point

520
00:30:39,480 --> 00:30:42,000
Speaker 1: six percent for the junior instrument or do you want

521
00:30:42,080 --> 00:30:46,960
Speaker 1: nine percent to be senior? Well, if bitcoin, you know,

522
00:30:47,080 --> 00:30:50,800
Speaker 1: go sideways or up, and if the company doesn't fail,

523
00:30:51,120 --> 00:30:54,160
Speaker 1: then it's going to cost you three point six percent

524
00:30:54,240 --> 00:30:56,080
Speaker 1: a year for the rest of your life to not

525
00:30:56,120 --> 00:31:00,320
Speaker 1: trust us, right you see, So now you've actually got

526
00:31:00,360 --> 00:31:03,720
Speaker 1: there an actual credit spread. If you're wondering what is

527
00:31:03,760 --> 00:31:09,240
Speaker 1: the equity premium between being senior and then having having

528
00:31:09,240 --> 00:31:11,840
Speaker 1: none of the representations where you've actually got the market

529
00:31:11,840 --> 00:31:14,320
Speaker 1: tell it's like three point six or three point seven

530
00:31:14,360 --> 00:31:17,520
Speaker 1: percent or something. It varies every single day. If you

531
00:31:17,520 --> 00:31:19,560
Speaker 1: don't trust bitcoin, if you think bitcoin's gone to zero,

532
00:31:19,600 --> 00:31:22,120
Speaker 1: you wouldn't want to buy any of this, right, And

533
00:31:22,200 --> 00:31:24,120
Speaker 1: so then it comes down to how much do you

534
00:31:24,160 --> 00:31:30,160
Speaker 1: trust the company? And if you know, people buy dividend

535
00:31:30,160 --> 00:31:33,880
Speaker 1: bearing equities all the time, like every single equity, if

536
00:31:33,880 --> 00:31:36,800
Speaker 1: you buy Verizon equity, if you buy a telephone AT

537
00:31:36,920 --> 00:31:40,040
Speaker 1: and T equity, they pay dividends, but they're not required to.

538
00:31:40,080 --> 00:31:42,840
Speaker 1: They could suspend them without prejudice and without penalty at

539
00:31:42,840 --> 00:31:47,760
Speaker 1: any time. So could Apple. Do you trust the company? Correct?

540
00:31:47,880 --> 00:31:50,080
Speaker 2: You know that if they suspended, their stock's going to

541
00:31:50,120 --> 00:31:52,600
Speaker 2: take a hit, But otherwise you're completely trusted in your view.

542
00:31:52,520 --> 00:31:54,800
Speaker 1: Is like, well, they probably won't because the stock will

543
00:31:54,840 --> 00:31:58,040
Speaker 1: take a hit. And so the issue is with Stride,

544
00:31:58,480 --> 00:32:00,480
Speaker 1: will we pay the dividend? Well, of course we will,

545
00:32:00,520 --> 00:32:03,280
Speaker 1: but what happens if we don't. Well, if we don't,

546
00:32:03,440 --> 00:32:06,520
Speaker 1: Stride will trade way down. But then we won't. But

547
00:32:06,640 --> 00:32:09,320
Speaker 1: and then you're like, well, why would the company care.

548
00:32:09,880 --> 00:32:14,200
Speaker 1: We want to sell it, right, Like, if we actually

549
00:32:14,240 --> 00:32:18,120
Speaker 1: default on that obligation, then the instrument isn't the capital

550
00:32:18,240 --> 00:32:24,760
Speaker 1: raising vehicle for us. And the big idea is, unlike

551
00:32:24,880 --> 00:32:28,720
Speaker 1: most companies that issue credit apologetically in order to deal

552
00:32:28,880 --> 00:32:36,440
Speaker 1: with the crisis, we issued credit strategically, enthusiastically, with the

553
00:32:36,440 --> 00:32:40,080
Speaker 1: intent that the credit is the product. See when Boeing

554
00:32:40,120 --> 00:32:43,400
Speaker 1: issues preferred stock, the product is the airplane. They sold

555
00:32:43,440 --> 00:32:45,200
Speaker 1: the preferred stock because they ran out of money to

556
00:32:45,200 --> 00:32:50,080
Speaker 1: build airplanes. We issue the preferred The product is the

557
00:32:50,160 --> 00:32:53,960
Speaker 1: preferred We didn't never run out of money. We issued that.

558
00:32:54,080 --> 00:32:56,160
Speaker 1: You know, why did you sell a billion dollars of

559
00:32:56,200 --> 00:33:00,360
Speaker 1: Stride so I could sell ten billion dollars more of Stride?

560
00:33:01,080 --> 00:33:03,920
Speaker 1: Why did you sell a billion dollars of Strife so

561
00:33:04,000 --> 00:33:07,840
Speaker 1: I could sell ten billion dollars more of Right, So

562
00:33:09,120 --> 00:33:12,280
Speaker 1: we have a very different business model in that regard.

563
00:33:13,400 --> 00:33:16,680
Speaker 1: We created the Stride so we could create the credit

564
00:33:16,760 --> 00:33:19,800
Speaker 1: spread because we literally wanted to have an investment grade

565
00:33:20,000 --> 00:33:22,800
Speaker 1: type instrument, a senior one, and we wanted to have

566
00:33:22,840 --> 00:33:26,320
Speaker 1: a junior one because there's one class of investors that

567
00:33:26,400 --> 00:33:29,640
Speaker 1: want the junk credit, like they want twelve percent yield, right,

568
00:33:30,480 --> 00:33:32,480
Speaker 1: it's like, it's very simple, do you trust the company?

569
00:33:32,560 --> 00:33:34,560
Speaker 1: Do you want twelve and a half percent? You know,

570
00:33:34,640 --> 00:33:37,240
Speaker 1: do you have trust the company and you prefer to

571
00:33:37,280 --> 00:33:40,920
Speaker 1: take the nine percent? Well, iron it. There's markets for both,

572
00:33:40,920 --> 00:33:43,040
Speaker 1: and they are not the same investor. Yeah, there are

573
00:33:43,160 --> 00:33:45,600
Speaker 1: days when everybody wants to buy Strife and they don't

574
00:33:45,600 --> 00:33:47,320
Speaker 1: want Stride, and there are other days when they want

575
00:33:47,320 --> 00:33:50,840
Speaker 1: to buy Stride, and so so that was part of

576
00:33:50,840 --> 00:33:53,600
Speaker 1: building out the risk curve. And then the last thing

577
00:33:53,720 --> 00:33:58,360
Speaker 1: we did stretch was a very different idea. Instead of

578
00:33:58,400 --> 00:34:01,880
Speaker 1: paying an eight or ten percent perpetual dividend forever, we

579
00:34:01,960 --> 00:34:08,359
Speaker 1: just said, hey, let's actually reduce this to one month duration, right,

580
00:34:08,440 --> 00:34:10,880
Speaker 1: and so we're only promising to pay this dividend for

581
00:34:10,920 --> 00:34:13,239
Speaker 1: a month. The other one is a promise for one

582
00:34:13,280 --> 00:34:17,840
Speaker 1: hundred years. And so theoretically the mcaulay duration, the theoretical

583
00:34:17,920 --> 00:34:20,360
Speaker 1: duration on the other instruments ends up being between like,

584
00:34:20,680 --> 00:34:23,319
Speaker 1: you know, eight and twenty years or eight and fifteen years.

585
00:34:23,360 --> 00:34:27,040
Speaker 1: It's very long range. Take of a lever that's one

586
00:34:27,120 --> 00:34:30,600
Speaker 1: hundred and twenty months to two hundred and forty months long,

587
00:34:30,760 --> 00:34:33,200
Speaker 1: and you know, you have a little change in interest rates,

588
00:34:33,200 --> 00:34:36,160
Speaker 1: and that's a very big lever to the good of bad.

589
00:34:36,960 --> 00:34:40,560
Speaker 1: But with Stretch, the idea is a one month duration.

590
00:34:40,760 --> 00:34:44,400
Speaker 1: Of course, inherently that's going to be less volatile. And

591
00:34:44,480 --> 00:34:46,600
Speaker 1: you're like, well, I'm not going to get capital appreciation

592
00:34:46,680 --> 00:34:49,440
Speaker 1: if Soufur dives by foreignerd basis points, I'm not going

593
00:34:49,520 --> 00:34:53,240
Speaker 1: to double my money. Well, exaly, exactly, it's the treasury instrument.

594
00:34:53,239 --> 00:34:55,239
Speaker 1: You're not buying it to double your money. If you

595
00:34:55,239 --> 00:34:57,480
Speaker 1: want it to double your money if Sofur dives, you

596
00:34:57,480 --> 00:35:01,360
Speaker 1: would buy strife. Right, that's the instrument for the credit

597
00:35:01,440 --> 00:35:04,279
Speaker 1: investor that wants to actually ride it up when interst

598
00:35:04,320 --> 00:35:07,319
Speaker 1: rates fall, or wants to do the opposite when interustrates rise.

599
00:35:07,680 --> 00:35:12,120
Speaker 1: That's a different instrument. It turns out the most people, right,

600
00:35:12,239 --> 00:35:17,040
Speaker 1: corporate treasurers, retirees, retail most people, they're not really interested

601
00:35:17,080 --> 00:35:22,160
Speaker 1: in being long duration credit investors. Like ask the average person,

602
00:35:22,200 --> 00:35:25,600
Speaker 1: do you have a bank account? Yes? Do you have

603
00:35:25,640 --> 00:35:29,960
Speaker 1: a thirty year treasury bond?

604
00:35:30,880 --> 00:35:30,960
Speaker 2: No?

605
00:35:32,400 --> 00:35:35,520
Speaker 1: Like the difference is like fifty to one. Stretch came last,

606
00:35:36,480 --> 00:35:40,080
Speaker 1: But ironically, stretches the best piece of financial engineering, and

607
00:35:40,120 --> 00:35:45,839
Speaker 1: it's probably the most universally applicable product because what you're

608
00:35:45,880 --> 00:35:50,839
Speaker 1: doing is just giving people pure currency cash flow, pure

609
00:35:51,000 --> 00:35:55,240
Speaker 1: pure currency yield without the volatility, the risk, the duration,

610
00:35:56,719 --> 00:36:00,440
Speaker 1: or the delta. It's like, you know, some people want delta,

611
00:36:00,480 --> 00:36:02,399
Speaker 1: like I want the thirty I want thirty or forty

612
00:36:02,400 --> 00:36:05,400
Speaker 1: percent of the upside of the common stock. Other people don't.

613
00:36:06,080 --> 00:36:07,880
Speaker 1: Other people like I want nothing to do with the

614
00:36:07,920 --> 00:36:11,000
Speaker 1: common stock. I just want you to pay me ten

615
00:36:11,080 --> 00:36:15,040
Speaker 1: percent on my money until I ask for my money back, right,

616
00:36:15,080 --> 00:36:18,719
Speaker 1: That's what they want. It's a very different, uh financial

617
00:36:18,800 --> 00:36:20,320
Speaker 1: instrument for a different investor.

618
00:36:21,280 --> 00:36:24,680
Speaker 2: You mentioned how when Boeing issues debt it's because they

619
00:36:24,680 --> 00:36:27,920
Speaker 2: need the money. And when you do it, when Mike,

620
00:36:27,960 --> 00:36:29,879
Speaker 2: when Strategy does it, you're issuing the debt because that's

621
00:36:29,920 --> 00:36:32,800
Speaker 2: the product. And we think about like, if I'm buying

622
00:36:32,840 --> 00:36:36,040
Speaker 2: the debt of Boeing, then I'm trusting that their investment

623
00:36:36,160 --> 00:36:39,799
Speaker 2: into their airline will have enough cash flow maybe to

624
00:36:39,840 --> 00:36:42,560
Speaker 2: pay me in the future, versus I'm paying you, but

625
00:36:42,640 --> 00:36:45,800
Speaker 2: you're buying the asset, so I'm not depending on future

626
00:36:45,800 --> 00:36:47,560
Speaker 2: cash flows because I know you have the asset and

627
00:36:47,600 --> 00:36:51,000
Speaker 2: the debt is over collateralized. Yeah, governments will never stop

628
00:36:51,040 --> 00:36:54,600
Speaker 2: printing money, so inflation it's not going away. Now. If

629
00:36:54,600 --> 00:36:57,120
Speaker 2: your money's not earning at least ten percent a year,

630
00:36:57,360 --> 00:36:59,920
Speaker 2: you're losing purchasing power. Now, that's why I talk about big.

631
00:37:00,320 --> 00:37:02,840
Speaker 2: It's the number one way to beat inflation and secure

632
00:37:02,880 --> 00:37:05,759
Speaker 2: your future. And the question I get asked almost every

633
00:37:05,840 --> 00:37:09,120
Speaker 2: day is where do you buy your bitcoin? Now? For years,

634
00:37:09,160 --> 00:37:11,920
Speaker 2: I've personally use River dot Com and I only take

635
00:37:11,920 --> 00:37:14,799
Speaker 2: on sponsors that I use and I trust, and I

636
00:37:14,840 --> 00:37:17,840
Speaker 2: trust them because River's bitcoin only. They have one hundred

637
00:37:17,880 --> 00:37:21,080
Speaker 2: percent reserve, and they keep your bitcoin safe in cold

638
00:37:21,120 --> 00:37:24,360
Speaker 2: storage with no middlemen, and you can actually talk to

639
00:37:24,440 --> 00:37:28,799
Speaker 2: a real person, a US based support, dedicated manager. Now,

640
00:37:29,000 --> 00:37:32,080
Speaker 2: try getting that peace of mind from coinbase. Of course

641
00:37:32,080 --> 00:37:35,560
Speaker 2: you can't. Now the perks. If you set up auto buys,

642
00:37:35,800 --> 00:37:38,520
Speaker 2: you can pay zero fees plus instead of you're bank

643
00:37:38,520 --> 00:37:40,960
Speaker 2: paying you, you know, zero point four percent on cash.

644
00:37:41,320 --> 00:37:44,640
Speaker 2: River pays you three point seventy five percent on cash

645
00:37:45,000 --> 00:37:47,440
Speaker 2: paid in bitcoin. So if you're ready to build your

646
00:37:47,440 --> 00:37:51,200
Speaker 2: bitcoin position with confidence, go to River dot com, slash

647
00:37:51,400 --> 00:37:53,759
Speaker 2: Mark Moss and get up to one hundred dollars in

648
00:37:53,800 --> 00:37:57,120
Speaker 2: bitcoin when you sign up. Because freedom starts when you

649
00:37:57,200 --> 00:37:59,680
Speaker 2: own your money, and your money starts with bitcoin.

650
00:38:00,040 --> 00:38:01,680
Speaker 1: Well, if you look at the credit markets. You've got

651
00:38:01,680 --> 00:38:05,279
Speaker 1: corporate credit that's basically a credit issued against future cash

652
00:38:05,280 --> 00:38:08,120
Speaker 1: flows of a company. You've got investment great corporate credit

653
00:38:08,920 --> 00:38:12,840
Speaker 1: from Apple or Microsoft, and you've got distressed corporate credit

654
00:38:12,920 --> 00:38:17,279
Speaker 1: from quasi bankrupt companies. You've got junk from companies that

655
00:38:17,320 --> 00:38:21,480
Speaker 1: can barely cover that cash, right, And so that's corporate credit.

656
00:38:21,880 --> 00:38:25,400
Speaker 1: You've got mortgage back credit. It's when you're basically issuing

657
00:38:25,400 --> 00:38:28,839
Speaker 1: credit back by mortgage payments of homeowners.

658
00:38:28,920 --> 00:38:31,080
Speaker 2: Yeah, we saw that play on two thousand and eight.

659
00:38:31,239 --> 00:38:34,680
Speaker 1: Yeah, and you know it's like the good news bad

660
00:38:34,719 --> 00:38:38,040
Speaker 1: news is if it yields a lot, they probably can't

661
00:38:38,040 --> 00:38:40,640
Speaker 1: afford to pay it. And if it yields a little,

662
00:38:40,640 --> 00:38:44,360
Speaker 1: you're not getting much yield. Right, So either they're not

663
00:38:44,400 --> 00:38:46,920
Speaker 1: going to default but it doesn't pay you much, or

664
00:38:48,239 --> 00:38:50,400
Speaker 1: it pays you a lot and they're probably going to default.

665
00:38:50,480 --> 00:38:55,160
Speaker 1: And that's the Great Financial Crisis. And we learn that. Well,

666
00:38:55,160 --> 00:39:00,000
Speaker 1: then you've got municipal credit. You know, a little bit safe,

667
00:39:00,320 --> 00:39:03,000
Speaker 1: but it pays nothing, right, it's like almost no two

668
00:39:03,040 --> 00:39:06,000
Speaker 1: to three very little yield in municipal credit back by

669
00:39:06,040 --> 00:39:09,760
Speaker 1: cities and projects like you know, you've got bank credit.

670
00:39:10,560 --> 00:39:14,799
Speaker 1: That is when you deposit a million dollars in the

671
00:39:14,840 --> 00:39:19,120
Speaker 1: bank account you bought bank credit. You know, they're selling

672
00:39:19,160 --> 00:39:22,560
Speaker 1: you bank credit and they're paying you the sofa rate

673
00:39:22,640 --> 00:39:25,839
Speaker 1: or the risk free rate, et cetera. So that's there's that,

674
00:39:26,200 --> 00:39:30,239
Speaker 1: but you know it's pretty uncompelling in most countries. I

675
00:39:30,239 --> 00:39:33,360
Speaker 1: mean the best is the US, In Switzerland and in Japan,

676
00:39:33,440 --> 00:39:35,400
Speaker 1: it's like nothing, right, it doesn't pay anything.

677
00:39:36,160 --> 00:39:36,279
Speaker 2: Uh.

678
00:39:36,520 --> 00:39:39,960
Speaker 1: And then you've got sovereign credit fiat credit. You know,

679
00:39:40,080 --> 00:39:42,080
Speaker 1: the government of the United States or the government of

680
00:39:42,120 --> 00:39:45,479
Speaker 1: the UK issues it's sovereign debt and it's and that's

681
00:39:45,520 --> 00:39:48,400
Speaker 1: backed by the cash flows of the country in theory,

682
00:39:48,480 --> 00:39:50,880
Speaker 1: the taxing ability of the country, or just the ability

683
00:39:50,880 --> 00:39:54,440
Speaker 1: the country to print its own currency. And when the

684
00:39:54,440 --> 00:39:58,799
Speaker 1: country has a collapsing currency Turkey, those interest rates have

685
00:39:58,880 --> 00:40:03,200
Speaker 1: to be very high. But the country's currency is collapsing.

686
00:40:03,280 --> 00:40:05,680
Speaker 1: And the issue is are you going to want what

687
00:40:05,719 --> 00:40:07,600
Speaker 1: are you gonna be able to buy with the currency

688
00:40:07,760 --> 00:40:11,239
Speaker 1: or the issue you're gonna get paid? So really, the

689
00:40:11,280 --> 00:40:14,480
Speaker 1: big bran, when's the last time in one hundred years

690
00:40:14,520 --> 00:40:18,160
Speaker 1: there's a new form of credit. Every one of those

691
00:40:18,200 --> 00:40:21,319
Speaker 1: credit instruments, they've all been around for a while. You

692
00:40:21,360 --> 00:40:27,120
Speaker 1: could argue that mortgage credit evolved into a higher form

693
00:40:27,160 --> 00:40:30,840
Speaker 1: with Freddie, Freddie Mac and Fannie May. Right when what

694
00:40:30,960 --> 00:40:34,080
Speaker 1: happened the government started underwriting the credit risk of mortgages.

695
00:40:34,160 --> 00:40:37,839
Speaker 1: That drove down the rates, that created systemic risk, right,

696
00:40:38,680 --> 00:40:42,200
Speaker 1: so that changed a little bit. But the idea that

697
00:40:42,320 --> 00:40:46,160
Speaker 1: a company's going to borrow money, or someone's going to

698
00:40:46,239 --> 00:40:49,080
Speaker 1: mortgage their property, or a government's going to borrow money,

699
00:40:49,120 --> 00:40:50,879
Speaker 1: or a seat's going to borrow money, none of those

700
00:40:50,920 --> 00:40:53,200
Speaker 1: are new ideas, right that you can trace them all

701
00:40:53,239 --> 00:40:57,680
Speaker 1: back for hundreds of not thousands of years. So the

702
00:40:57,800 --> 00:41:02,120
Speaker 1: idea that you know, what was a quasi stable idea

703
00:41:02,200 --> 00:41:06,000
Speaker 1: issue credit on gold on a monetary asset, well that

704
00:41:06,360 --> 00:41:08,680
Speaker 1: you know, we saw that in the seventeenth century, the

705
00:41:08,719 --> 00:41:11,719
Speaker 1: eighteenth century, the nineteenth century, even the twentieth century. You

706
00:41:11,719 --> 00:41:16,200
Speaker 1: could argue, you know, British sovereign debt, French sovereign debt,

707
00:41:16,200 --> 00:41:19,680
Speaker 1: they were all gold back credit instruments, and they were

708
00:41:19,680 --> 00:41:22,399
Speaker 1: all backed by various amounts of gold, but it was

709
00:41:22,600 --> 00:41:25,920
Speaker 1: almost never one to one. It was always like under collateralized,

710
00:41:25,920 --> 00:41:29,960
Speaker 1: and eventually it would probably got down to five percent collateralized.

711
00:41:30,120 --> 00:41:33,279
Speaker 1: In nineteen seventy one, and that's the end of the

712
00:41:33,280 --> 00:41:36,799
Speaker 1: gold back credit era, right right. And so now you

713
00:41:36,840 --> 00:41:40,960
Speaker 1: have digital credit, you have digital gold, you have bitcoin.

714
00:41:41,080 --> 00:41:45,520
Speaker 1: Bitcoin is digital gold digital capital. The killer use case

715
00:41:45,560 --> 00:41:50,240
Speaker 1: of digital gold is issued digital credit instruments. And the aha,

716
00:41:51,000 --> 00:41:55,120
Speaker 1: the aha moment is any company, any publicly traded company,

717
00:41:55,760 --> 00:42:04,320
Speaker 1: can create a digital credit instrument with any degree of yield, duration, delta,

718
00:42:05,640 --> 00:42:11,000
Speaker 1: or risk, and to a certain degree with a man

719
00:42:11,280 --> 00:42:15,200
Speaker 1: with any amount of volatility that they want. Right, if

720
00:42:15,200 --> 00:42:18,080
Speaker 1: you want extremely low volatility, you can't create a lot

721
00:42:18,120 --> 00:42:20,680
Speaker 1: of it. Like if you have one hundred billion dollars

722
00:42:20,680 --> 00:42:23,080
Speaker 1: a capital, can you create one hundred billion dollars of credit?

723
00:42:23,120 --> 00:42:26,840
Speaker 1: That's low volatility enough. But you know, the real interesting

724
00:42:26,920 --> 00:42:29,879
Speaker 1: question for all of us in the industry is can

725
00:42:29,920 --> 00:42:33,160
Speaker 1: I create ten billion dollars of low volatility credit with

726
00:42:33,200 --> 00:42:37,359
Speaker 1: one hundred billion in capital? Or do do I need

727
00:42:37,360 --> 00:42:40,520
Speaker 1: one hundred x? Can I only create a I'm sure

728
00:42:40,600 --> 00:42:44,480
Speaker 1: I can create one billion dollars of very very low

729
00:42:44,560 --> 00:42:47,759
Speaker 1: volatile at one hundred times over collateralization. You certainly get

730
00:42:47,880 --> 00:42:52,280
Speaker 1: done with ten x over collateralization. I think you'll probably

731
00:42:52,320 --> 00:42:56,479
Speaker 1: also get it done at what level five x, three

732
00:42:56,719 --> 00:43:00,120
Speaker 1: x too? It at what level can you not? And

733
00:43:00,160 --> 00:43:04,080
Speaker 1: of course that's a function of the bitcoin volatility too,

734
00:43:04,239 --> 00:43:07,520
Speaker 1: because the less volatile Bitcoin gets, the easier it is

735
00:43:07,560 --> 00:43:11,560
Speaker 1: to create these low volatility credit instruments.

736
00:43:12,239 --> 00:43:15,359
Speaker 2: Would it also depend on the credit worthiness, the trustworthiness

737
00:43:15,360 --> 00:43:16,439
Speaker 2: of the company issuing it.

738
00:43:16,880 --> 00:43:22,880
Speaker 1: Yeah, I think it's a function of the issuer, their reputation,

739
00:43:23,680 --> 00:43:27,879
Speaker 1: their balance sheet, what senior and junior the instrument. It's

740
00:43:27,880 --> 00:43:31,560
Speaker 1: a function of the type of credit instrument. Is it

741
00:43:31,600 --> 00:43:36,839
Speaker 1: a bond, is it a preferred stock? The container it's in,

742
00:43:37,040 --> 00:43:40,680
Speaker 1: the security design, the rails it's running on. Is it

743
00:43:40,719 --> 00:43:43,520
Speaker 1: trading on the New York Stock Exchange, the NASDAQ, the

744
00:43:43,560 --> 00:43:48,799
Speaker 1: Frankfurt Exchange, the Toronto Stock Exchange, how much liquidity. It's

745
00:43:48,840 --> 00:43:53,680
Speaker 1: a function of the regulators because in a more flexible

746
00:43:53,719 --> 00:43:58,560
Speaker 1: regulatory environment, the issuer has more tools to strip the volatility,

747
00:43:59,480 --> 00:44:07,240
Speaker 1: and more inflexible traditional primitive regulatory environment, the issuer doesn't

748
00:44:07,239 --> 00:44:13,279
Speaker 1: have the tools. They can't legally take the action, and

749
00:44:13,320 --> 00:44:18,760
Speaker 1: even the technology rails. For example, you know, on the NASDA,

750
00:44:18,880 --> 00:44:23,600
Speaker 1: you can't tissue a preferred stock denominated in euros on

751
00:44:23,640 --> 00:44:26,960
Speaker 1: the NASDAK on the Nasdaq can't do it. You know,

752
00:44:27,719 --> 00:44:30,440
Speaker 1: So what if I wanted to pay a weekly dividend,

753
00:44:31,160 --> 00:44:34,040
Speaker 1: in theory it would be less volatile. But technically, with

754
00:44:34,120 --> 00:44:38,959
Speaker 1: the existing US banking system, it's not practical to snapshot

755
00:44:39,040 --> 00:44:41,440
Speaker 1: the holders of record every week because there's like a

756
00:44:41,440 --> 00:44:45,880
Speaker 1: three day delay, you know, So it's very problematic to

757
00:44:45,960 --> 00:44:49,360
Speaker 1: pay a daily dividend or a weekly dividend. Even monthly

758
00:44:49,520 --> 00:44:54,200
Speaker 1: is about the quickest anybody's done. You know. There are

759
00:44:54,280 --> 00:45:00,360
Speaker 1: some exchanges where they they're more inflexible on your about

760
00:45:00,400 --> 00:45:03,640
Speaker 1: to say, do ATMs and issue securities at the market.

761
00:45:04,520 --> 00:45:07,640
Speaker 1: You know, there are other there are other places in

762
00:45:07,680 --> 00:45:11,680
Speaker 1: Switzerland they never issued. There's no support for preferred stocks

763
00:45:11,719 --> 00:45:15,000
Speaker 1: in the market, okay, just the entire countries.

764
00:45:14,760 --> 00:45:17,120
Speaker 2: Right, you know, in the UK they're hardly used as

765
00:45:17,160 --> 00:45:18,600
Speaker 2: well preference share well.

766
00:45:18,560 --> 00:45:20,799
Speaker 1: So there's an issue of whether they're used or whether

767
00:45:20,840 --> 00:45:23,319
Speaker 1: it's impossible to do it too. And then and then

768
00:45:23,360 --> 00:45:26,200
Speaker 1: of course it's there's a question of can the exchange

769
00:45:26,200 --> 00:45:28,840
Speaker 1: you want to trade on support it? And the second

770
00:45:28,920 --> 00:45:33,400
Speaker 1: question is can will the regulator allow you to issue it?

771
00:45:33,480 --> 00:45:38,560
Speaker 1: And the third question is will the investors in the

772
00:45:38,600 --> 00:45:41,600
Speaker 1: country buy it? And the fourth question is will the

773
00:45:41,640 --> 00:45:45,279
Speaker 1: bankers that control those networks sell it?

774
00:45:45,880 --> 00:45:46,000
Speaker 2: Right?

775
00:45:46,320 --> 00:45:51,640
Speaker 1: And so you really have many, many layers of support

776
00:45:51,760 --> 00:45:55,880
Speaker 1: that you need, and I think over time many of

777
00:45:55,920 --> 00:45:59,840
Speaker 1: the better ideas will spread. But it's just like this

778
00:46:00,080 --> 00:46:04,080
Speaker 1: right of electricity or gasoline or crude oil or whatever.

779
00:46:04,120 --> 00:46:05,960
Speaker 1: It's like they didn't all spread in the first year,

780
00:46:06,200 --> 00:46:11,319
Speaker 1: right right, take take Robinhood. Robinhood is is the way

781
00:46:11,360 --> 00:46:14,040
Speaker 1: people buy a lot of securities today. They hold they

782
00:46:14,040 --> 00:46:18,440
Speaker 1: support common stocks, but they don't support preferreds. You can't

783
00:46:18,480 --> 00:46:23,279
Speaker 1: buy stretched, strike, strife stride on robin Hood. Why you

784
00:46:23,280 --> 00:46:26,520
Speaker 1: can't buy any preferred on robin Hood. Why because no

785
00:46:26,560 --> 00:46:30,600
Speaker 1: one ever created one anybody wanted to buy. Because the market,

786
00:46:30,640 --> 00:46:36,000
Speaker 1: because most there's a market for garbage, like there's a

787
00:46:36,080 --> 00:46:42,080
Speaker 1: market for twentieth century traditional defective crippled credit instruments in

788
00:46:42,120 --> 00:46:47,400
Speaker 1: the preferred market. Okay, they all pay six percent, they're undercollateralized,

789
00:46:47,400 --> 00:46:52,000
Speaker 1: their opaque, their heterogeneous credit right, and they're issued by

790
00:46:52,120 --> 00:46:55,239
Speaker 1: any of five thousand regional banks you've never heard of,

791
00:46:55,920 --> 00:46:59,279
Speaker 1: or buy five thousand reach you've never heard of. And

792
00:46:59,600 --> 00:47:02,480
Speaker 1: they train cheap. They're all liquid. The bit ass breads

793
00:47:02,480 --> 00:47:06,400
Speaker 1: are wide, they have QSIP numbers, there are no ATMs

794
00:47:06,440 --> 00:47:09,160
Speaker 1: on them. No one's ever heard of them. Your private

795
00:47:09,200 --> 00:47:11,320
Speaker 1: wealth that you know, think about this, one hundred thousand

796
00:47:11,400 --> 00:47:15,080
Speaker 1: private wealth advisors. They're you know, pulling out their Bloomberg

797
00:47:15,120 --> 00:47:18,520
Speaker 1: and they're finding the ninety seventh issue of some big

798
00:47:18,560 --> 00:47:21,640
Speaker 1: bank preferred and they're putting it in your retirement portfolio.

799
00:47:22,120 --> 00:47:24,160
Speaker 1: And when it comes due or it gets called, they're

800
00:47:24,200 --> 00:47:26,719
Speaker 1: rolling into something else and they manage your money and

801
00:47:26,760 --> 00:47:29,840
Speaker 1: they charge you an x percent fee. And the person

802
00:47:29,840 --> 00:47:32,839
Speaker 1: that actually owns that thing doesn't know what they own.

803
00:47:33,920 --> 00:47:38,880
Speaker 1: They've got xxy QSIP fourteen nine two two three and

804
00:47:38,880 --> 00:47:41,320
Speaker 1: they couldn't even read the screen. And by the way,

805
00:47:41,680 --> 00:47:43,279
Speaker 1: there is no quote on the screen. You have to

806
00:47:43,280 --> 00:47:45,400
Speaker 1: buy a Bloomberg and pay twenty five thousand a year

807
00:47:45,440 --> 00:47:51,000
Speaker 1: to get the quote. So yeah, there's that market. But uh,

808
00:47:51,239 --> 00:47:55,239
Speaker 1: but the modern retail market, the digital market is like

809
00:47:55,360 --> 00:47:57,680
Speaker 1: fifty million people you know, want to be able to

810
00:47:57,719 --> 00:48:01,560
Speaker 1: trade on Saturday afternoon. And so that's that is not

811
00:48:01,680 --> 00:48:04,800
Speaker 1: a criticism by the way of Robinhood. That's an observation

812
00:48:05,960 --> 00:48:11,480
Speaker 1: that you invent a new thing, the existing distribution infrastructure

813
00:48:11,600 --> 00:48:14,800
Speaker 1: never seen the new thing. There was no demand, so

814
00:48:14,880 --> 00:48:17,040
Speaker 1: they didn't build out the rails to move the new thing.

815
00:48:18,160 --> 00:48:21,600
Speaker 1: So there's been an inertia in the system. At the

816
00:48:21,600 --> 00:48:24,880
Speaker 1: point that those things become screaming home runs and twenty

817
00:48:24,880 --> 00:48:30,200
Speaker 1: seven million people ask for them, then you know, somebody

818
00:48:30,280 --> 00:48:32,920
Speaker 1: upgrades the rails and then they start to distribute them.

819
00:48:32,960 --> 00:48:36,160
Speaker 1: And so that's what's going on in the world right now.

820
00:48:36,440 --> 00:48:39,359
Speaker 2: It's interesting that you use Robin in an example because

821
00:48:39,360 --> 00:48:43,320
Speaker 2: they're one of the newer digitally tech forward into crypto,

822
00:48:43,440 --> 00:48:45,480
Speaker 2: so they're sort of at the forefront of that, and

823
00:48:45,520 --> 00:48:46,800
Speaker 2: yet they're still behind the girt.

824
00:48:46,640 --> 00:48:49,200
Speaker 1: And their defense. What I've just described didn't exist in

825
00:48:49,320 --> 00:48:53,960
Speaker 1: January of this year, sure, right, Like we're literally about

826
00:48:53,960 --> 00:48:57,000
Speaker 1: to be October, and in January, none of these digital

827
00:48:57,000 --> 00:49:00,480
Speaker 1: credit instruments existed. So even if you move back lightning

828
00:49:00,520 --> 00:49:03,840
Speaker 1: fast is within a year or two years, right, Most

829
00:49:03,840 --> 00:49:06,640
Speaker 1: big banks they take three to five years to study something.

830
00:49:07,640 --> 00:49:11,279
Speaker 1: There are literally credit investors and fixed income investors their

831
00:49:11,280 --> 00:49:13,000
Speaker 1: of you as well, and money manager's got to have

832
00:49:13,000 --> 00:49:15,520
Speaker 1: a three to five year track record before we'll consider

833
00:49:15,560 --> 00:49:19,240
Speaker 1: an allocation to them. Yeah, right, So I'm not again

834
00:49:19,320 --> 00:49:23,920
Speaker 1: not being critical. That's just the natural inertia of the world.

835
00:49:23,960 --> 00:49:27,680
Speaker 1: And we are moving very very fast in our industry

836
00:49:27,760 --> 00:49:29,640
Speaker 1: right now, and the world's going to take a while

837
00:49:29,640 --> 00:49:30,120
Speaker 1: to catch up.

838
00:49:30,200 --> 00:49:33,040
Speaker 2: Yeah, when we were in London, I was meeting with

839
00:49:33,040 --> 00:49:34,400
Speaker 2: some of the bankers there. We were talking to the

840
00:49:34,480 --> 00:49:36,840
Speaker 2: Rothschilds and they're like, you know, we have this century

841
00:49:36,960 --> 00:49:40,600
Speaker 2: long timetable and we don't move really quickly, and preference

842
00:49:40,600 --> 00:49:42,799
Speaker 2: shares aren't really something that's used a lot in the UK.

843
00:49:43,200 --> 00:49:45,240
Speaker 2: And I said, forget the preference shares for a minute.

844
00:49:45,400 --> 00:49:48,560
Speaker 2: Is there an appetite for overclladalized debt that pays ten percent?

845
00:49:48,640 --> 00:49:51,640
Speaker 2: And they're like, well, of course right, So of course

846
00:49:51,640 --> 00:49:53,120
Speaker 2: the appetite is there. You just have to get a

847
00:49:53,160 --> 00:49:55,680
Speaker 2: packaged up vitally in front of the right people.

848
00:49:55,840 --> 00:49:58,960
Speaker 1: For example, like we could have sold our stuff as

849
00:49:59,000 --> 00:50:01,279
Speaker 1: a ten year bond, a twenty year bond, or a

850
00:50:01,280 --> 00:50:04,440
Speaker 1: thirty year bond, or you could do a five year bond.

851
00:50:04,840 --> 00:50:08,680
Speaker 1: The reason that we didn't do it is because you

852
00:50:08,760 --> 00:50:11,239
Speaker 1: can sell prefer in the US, and if it's a

853
00:50:11,280 --> 00:50:15,160
Speaker 1: perpetual instrument, you can attach at the market shelf registration

854
00:50:15,280 --> 00:50:18,080
Speaker 1: to it. And if your goal was not to sell

855
00:50:18,120 --> 00:50:20,880
Speaker 1: a billion dollars or half a billion of bonds, but

856
00:50:21,000 --> 00:50:25,040
Speaker 1: rather to sell a billion dollars a quarter forever, if

857
00:50:25,040 --> 00:50:27,680
Speaker 1: you wanted to sell billions of dollars a year forever,

858
00:50:27,880 --> 00:50:31,239
Speaker 1: then you need to do with the perpetual instrument. And

859
00:50:31,280 --> 00:50:33,400
Speaker 1: of course a five year bonds no good because in

860
00:50:33,480 --> 00:50:37,200
Speaker 1: three years the bond's almost about to be called so.

861
00:50:37,280 --> 00:50:39,200
Speaker 2: And you'd have to liquidate the bitcoin and give it back,

862
00:50:39,239 --> 00:50:42,000
Speaker 2: which goes against the entire purpose of accumulating the bitcoin.

863
00:50:42,160 --> 00:50:44,080
Speaker 1: The reason that we don't use that kind of debt

864
00:50:44,360 --> 00:50:47,719
Speaker 1: is because eventually there's a refinancing event, and you know,

865
00:50:47,800 --> 00:50:50,920
Speaker 1: we wouldn't liquidate the bitcoin. We want to refinance the bond,

866
00:50:50,960 --> 00:50:53,640
Speaker 1: so we'd issue a new bond. But the point is,

867
00:50:53,680 --> 00:50:56,640
Speaker 1: who wants to be beholden to the bond market? Do

868
00:50:56,680 --> 00:50:59,160
Speaker 1: you want to issue Do I want to raise a

869
00:50:59,160 --> 00:51:01,440
Speaker 1: billion dollars account up the every four years for the

870
00:51:01,440 --> 00:51:06,759
Speaker 1: next hundred years, because that's twenty five deals and each

871
00:51:06,800 --> 00:51:09,160
Speaker 1: one of them is two percent fee, and so I'm

872
00:51:09,160 --> 00:51:12,000
Speaker 1: going to pay fifty You're going to pay five hundred

873
00:51:12,040 --> 00:51:15,680
Speaker 1: million dollars in underwriting fees. Or do I just want

874
00:51:15,719 --> 00:51:18,680
Speaker 1: to issue the billion dollars once for the next hundred

875
00:51:18,719 --> 00:51:22,160
Speaker 1: years and was not paid the next fifty percent in fees?

876
00:51:22,680 --> 00:51:24,840
Speaker 1: And of course the problem is not just the fees.

877
00:51:25,480 --> 00:51:28,520
Speaker 1: The problem is the risk because if you get to

878
00:51:28,560 --> 00:51:33,200
Speaker 1: a refinance point and there's a financial crisis or bank crisis,

879
00:51:33,280 --> 00:51:37,440
Speaker 1: in the window to refinance bonds closes and now you

880
00:51:37,600 --> 00:51:40,279
Speaker 1: have to actually sell some of the underlying assets. So

881
00:51:42,480 --> 00:51:44,719
Speaker 1: you know what, speaking of the raw Child's, if you

882
00:51:44,760 --> 00:51:46,719
Speaker 1: read the history of the raw Childs, they were very

883
00:51:46,719 --> 00:51:53,720
Speaker 1: famous for selling consoles which were British government sovereign debt

884
00:51:54,440 --> 00:52:00,600
Speaker 1: issued you know, from like seventeen sixty on, you know,

885
00:52:00,719 --> 00:52:03,960
Speaker 1: for a hundred years, and they paid three to five percent.

886
00:52:04,040 --> 00:52:06,440
Speaker 1: They were perpetual that never came to par value one

887
00:52:06,520 --> 00:52:10,759
Speaker 1: hundred pounds. So if you think about what that is,

888
00:52:11,680 --> 00:52:16,560
Speaker 1: that's actually just what stride is or strife. It's you know,

889
00:52:16,600 --> 00:52:21,560
Speaker 1: what we did is just copied British sovereign debt from

890
00:52:21,560 --> 00:52:25,719
Speaker 1: two hundred years ago. And it's a very humbling to

891
00:52:25,800 --> 00:52:29,920
Speaker 1: notice that the world went backwards. In my opinion, one

892
00:52:30,000 --> 00:52:33,800
Speaker 1: hundred dollars pounds one hundred dollars par value in pounds

893
00:52:33,800 --> 00:52:37,960
Speaker 1: that pays five percent forever. A perpetual instrument is a

894
00:52:37,960 --> 00:52:41,480
Speaker 1: better way for the government of the UK to raise capital.

895
00:52:41,840 --> 00:52:45,480
Speaker 1: It's a better instrument for an investor to hold. It

896
00:52:45,520 --> 00:52:48,840
Speaker 1: would adjust the par value, adjust up above par or

897
00:52:48,840 --> 00:52:51,960
Speaker 1: the principle adjust the above part or below part, depending upon

898
00:52:52,080 --> 00:52:55,120
Speaker 1: the risk of the nation and the prevailing you know,

899
00:52:55,280 --> 00:53:00,400
Speaker 1: interest rate environment. You never have to refinance it. What

900
00:53:00,560 --> 00:53:05,880
Speaker 1: happened between then and now, we forgot We swapped that

901
00:53:06,040 --> 00:53:09,319
Speaker 1: for issuing five year notes, three year notes, one year notes,

902
00:53:09,440 --> 00:53:13,920
Speaker 1: three month notes, and in the preferred market we issue

903
00:53:14,000 --> 00:53:17,799
Speaker 1: retail preferreds baby preferred to the part value twenty five

904
00:53:17,840 --> 00:53:22,399
Speaker 1: dollars or institutional part value one thousand dollars. I mean,

905
00:53:22,480 --> 00:53:26,080
Speaker 1: is it not obvious to a schoolboy that one hundred

906
00:53:26,880 --> 00:53:30,160
Speaker 1: is a better part value than twenty five? Yeah, on

907
00:53:30,200 --> 00:53:34,239
Speaker 1: one thousand, And isn't it obvious that having a perpetual

908
00:53:34,280 --> 00:53:36,920
Speaker 1: thing that never comes due is a lot more elegant

909
00:53:36,920 --> 00:53:42,320
Speaker 1: way to raise capital than having nineteen different You literally,

910
00:53:42,320 --> 00:53:44,759
Speaker 1: if you look at US government debt, right, you have

911
00:53:44,800 --> 00:53:49,080
Speaker 1: stuff coming due in March, in September, in April. Like

912
00:53:50,640 --> 00:53:57,120
Speaker 1: you've converted a simple idea into twenty five or fifty

913
00:53:57,160 --> 00:54:00,840
Speaker 1: different tranches of individual securities that have to be continually

914
00:54:00,920 --> 00:54:04,080
Speaker 1: joggled and traded. Yeah, you made it an accounting nightmare.

915
00:54:04,120 --> 00:54:06,160
Speaker 1: You've made it a tax nightmare. You've made it a

916
00:54:06,200 --> 00:54:11,160
Speaker 1: trading nightmare. What about that is better than the way

917
00:54:11,200 --> 00:54:13,800
Speaker 1: that the British did it during the Napoleonic Wars.

918
00:54:14,120 --> 00:54:18,000
Speaker 2: Yeah, you know, sometimes we have to relearn those lessons.

919
00:54:18,440 --> 00:54:20,920
Speaker 2: Speaking of relearning those lessons, you've been moving fast than

920
00:54:20,960 --> 00:54:23,719
Speaker 2: you've been pioneering this whole industry obviously, and so sort

921
00:54:23,760 --> 00:54:28,120
Speaker 2: of micro strategy which used the convertible debt now strategy

922
00:54:28,239 --> 00:54:30,080
Speaker 2: which is maybe the two point zero version, using the

923
00:54:30,120 --> 00:54:33,359
Speaker 2: ATM and prefs, You've rolled out four prefs you called

924
00:54:33,400 --> 00:54:36,680
Speaker 2: stretch like the iPhone moment it had this huge splash

925
00:54:36,719 --> 00:54:38,839
Speaker 2: you were over subscribed I think two point six billion

926
00:54:38,840 --> 00:54:44,080
Speaker 2: in the IPO something like that. Now, looking backwards, is

927
00:54:44,120 --> 00:54:46,719
Speaker 2: stretched the perfect instrument? Or really do we need all

928
00:54:46,719 --> 00:54:49,680
Speaker 2: those different instruments for all the different people? And more specifically,

929
00:54:49,880 --> 00:54:53,120
Speaker 2: my question is if you were starting over, would you

930
00:54:53,200 --> 00:54:56,040
Speaker 2: skip ahead to like a stretch and maybe strike? Being

931
00:54:56,080 --> 00:54:59,520
Speaker 2: convertible isn't the best instrument anymore? Real estate or bitcoin

932
00:54:59,719 --> 00:55:02,600
Speaker 2: which every one's better. Well, it's not about choosing one,

933
00:55:02,760 --> 00:55:06,400
Speaker 2: it's about using both together. Because today sixty percent of

934
00:55:06,440 --> 00:55:09,920
Speaker 2: American homeowners net worth is trapped in their home and

935
00:55:10,000 --> 00:55:11,960
Speaker 2: there's no way to put it to work. In bitcoin.

936
00:55:12,440 --> 00:55:15,840
Speaker 2: Until now, Horizons help you unlock a portion of your

937
00:55:15,880 --> 00:55:19,520
Speaker 2: home equity to buy bitcoin. And it's not alone. There's

938
00:55:19,600 --> 00:55:21,919
Speaker 2: no new monthly payments and you stay in your home

939
00:55:22,080 --> 00:55:24,960
Speaker 2: just as usual, but you leverage your equity to get

940
00:55:24,960 --> 00:55:29,200
Speaker 2: bitcoin exposure. Now what makes Horizon stand out, Well, there's

941
00:55:29,239 --> 00:55:32,000
Speaker 2: no term limits. You keep one hundred percent of the

942
00:55:32,160 --> 00:55:34,840
Speaker 2: upside of the bitcoin, and the bitcoin is yours to

943
00:55:34,920 --> 00:55:38,600
Speaker 2: custody however you want, with no risk of forced liquidation.

944
00:55:39,080 --> 00:55:41,239
Speaker 2: So if you've got equity but you don't want to

945
00:55:41,320 --> 00:55:44,080
Speaker 2: refinance or take on new debt, but you would like

946
00:55:44,120 --> 00:55:48,120
Speaker 2: some bitcoin exposure, Horizon could be the perfect option. So

947
00:55:48,200 --> 00:55:51,200
Speaker 2: check out Joinhorizon dot com to learn more and get

948
00:55:51,200 --> 00:55:53,960
Speaker 2: an extra five hundred dollars in bitcoin. If you use

949
00:55:53,960 --> 00:55:57,120
Speaker 2: my code moss MSS and you get funded again, that's

950
00:55:57,360 --> 00:56:00,720
Speaker 2: join Horizon dot com code moss to get an extra

951
00:56:00,840 --> 00:56:02,480
Speaker 2: five hundred dollars in bitcoin.

952
00:56:02,840 --> 00:56:07,840
Speaker 1: I think we have provided the entire market with a roadmap.

953
00:56:08,000 --> 00:56:09,759
Speaker 1: With all those instruments, they can see how you can

954
00:56:09,800 --> 00:56:12,719
Speaker 1: see how they all trade. You can see the the

955
00:56:12,760 --> 00:56:16,120
Speaker 1: way the volatility profiles come off them, like, for example,

956
00:56:17,080 --> 00:56:22,040
Speaker 1: the senior credit instrument STRISS is traded to a ten bowl.

957
00:56:23,120 --> 00:56:26,799
Speaker 1: Stretch traded about a ten ball. The junior instrument is

958
00:56:26,800 --> 00:56:29,480
Speaker 1: more like a twenty bowl. Strike is more like a

959
00:56:29,480 --> 00:56:33,000
Speaker 1: twenty seven ball, the equity is more like a fifty

960
00:56:33,040 --> 00:56:36,279
Speaker 1: bowl or something. So you can actually see that. You

961
00:56:36,320 --> 00:56:38,719
Speaker 1: can see the demand in each one of them. You

962
00:56:38,760 --> 00:56:43,680
Speaker 1: can see the liquidity profile. They all do serve different

963
00:56:43,880 --> 00:56:47,359
Speaker 1: investor bases, so I don't regret having any of them

964
00:56:47,400 --> 00:56:50,080
Speaker 1: out there. We will let the market decide what their

965
00:56:50,080 --> 00:56:54,400
Speaker 1: appetite is. For each of the four. I would say,

966
00:56:54,520 --> 00:56:56,960
Speaker 1: you know, in terms of plan, what we know is

967
00:56:57,440 --> 00:57:01,400
Speaker 1: we won't focus on convertible bonds or eight bonds, junk bonds,

968
00:57:01,480 --> 00:57:06,360
Speaker 1: unsecured bonds. We won't do that. We will gradually equitize

969
00:57:06,400 --> 00:57:10,319
Speaker 1: our convertible bonds as they come do and then, uh,

970
00:57:10,360 --> 00:57:14,840
Speaker 1: if I were giving advice to a new digital asset company,

971
00:57:14,840 --> 00:57:18,360
Speaker 1: a new bitcoin treasury company, if you will, I would say,

972
00:57:18,800 --> 00:57:20,680
Speaker 1: you want to raise as much capital as you can,

973
00:57:21,320 --> 00:57:23,160
Speaker 1: You want to buy as much bitcoin as you can.

974
00:57:24,840 --> 00:57:28,880
Speaker 1: You don't really want to have senior debt. You don't

975
00:57:28,880 --> 00:57:33,400
Speaker 1: want to have debt that has a lean on the bitcoin.

976
00:57:34,600 --> 00:57:37,560
Speaker 1: You know, you in the ideal world, you might do

977
00:57:37,640 --> 00:57:40,280
Speaker 1: a convertible bond, but you don't. But it's not clear

978
00:57:40,280 --> 00:57:44,760
Speaker 1: to me that you should. If someone wanted to buy

979
00:57:44,800 --> 00:57:48,160
Speaker 1: a convertible bond from you while you're private, if they

980
00:57:48,200 --> 00:57:50,440
Speaker 1: showed up with two hundred million cash and said, i'll

981
00:57:50,440 --> 00:57:52,560
Speaker 1: give you two hundred million dollars in you and I

982
00:57:52,600 --> 00:57:54,440
Speaker 1: don't want the equity, but I want to bond with

983
00:57:54,560 --> 00:57:57,840
Speaker 1: conversion right and a thirty five percent premium, I might

984
00:57:57,880 --> 00:58:04,520
Speaker 1: take that money. That's not really reasonable. Having said that,

985
00:58:04,600 --> 00:58:10,160
Speaker 1: if you're already trading in the aftermarket, the reason to

986
00:58:10,160 --> 00:58:12,520
Speaker 1: do a convertible bond is you want to raise a

987
00:58:12,520 --> 00:58:14,640
Speaker 1: lot of capital in a hurry. But the way you're

988
00:58:14,680 --> 00:58:17,200
Speaker 1: going to raise the capital is the person that buys

989
00:58:17,200 --> 00:58:19,960
Speaker 1: the bond is going to sell that much of your

990
00:58:20,000 --> 00:58:24,520
Speaker 1: equity in four hours. So if you sell a two

991
00:58:24,560 --> 00:58:27,480
Speaker 1: hundred million dollars bond, you're probably gonna create one hundred

992
00:58:27,480 --> 00:58:30,320
Speaker 1: and fifty million dollars of selling pressure on the equity

993
00:58:30,440 --> 00:58:33,439
Speaker 1: that day. And then the question you'd have to ask

994
00:58:33,440 --> 00:58:37,400
Speaker 1: yourself is whyannt you to sell the equity yourself? Right?

995
00:58:37,920 --> 00:58:39,280
Speaker 1: And so a lot of five people that have the

996
00:58:39,280 --> 00:58:42,400
Speaker 1: convertible bond, they don't have an ATM, so if you don't,

997
00:58:42,400 --> 00:58:44,880
Speaker 1: if you're crippled because you don't have an ATM, the

998
00:58:44,960 --> 00:58:51,000
Speaker 1: convertible bond is the de facto. You know, try party ATM,

999
00:58:51,600 --> 00:58:54,440
Speaker 1: but you pay a price. Right, you might as well

1000
00:58:54,520 --> 00:58:56,520
Speaker 1: just dump two hundred million dollars of your own stock

1001
00:58:56,560 --> 00:58:59,760
Speaker 1: on the market, not owe anybody. The stock will take it.

1002
00:59:00,120 --> 00:59:02,040
Speaker 1: Going to do it anyway, the stock will take a hit.

1003
00:59:02,120 --> 00:59:03,880
Speaker 1: But if you do the convert the stock will take

1004
00:59:03,920 --> 00:59:06,440
Speaker 1: a hit, but you'll still owe the money. You see,

1005
00:59:06,640 --> 00:59:11,480
Speaker 1: So I think that you could potentially skip that stage,

1006
00:59:12,280 --> 00:59:16,080
Speaker 1: and then you know, if you take if you take

1007
00:59:16,120 --> 00:59:20,880
Speaker 1: the perfect structure. Here, here's here's an ideal structure. You

1008
00:59:20,960 --> 00:59:23,640
Speaker 1: raise a billion dollars, you buy bitcoin, and then you

1009
00:59:23,720 --> 00:59:25,560
Speaker 1: go to the market and you sell two hundred million

1010
00:59:25,600 --> 00:59:30,840
Speaker 1: dollars worth of treasury preferred credit instruments treasury preferred stock

1011
00:59:31,080 --> 00:59:35,160
Speaker 1: like stretch like if you just wanted as simple as possible.

1012
00:59:36,120 --> 00:59:42,680
Speaker 1: The equity is high ball, high performance, high risk, and

1013
00:59:42,760 --> 00:59:44,720
Speaker 1: the credit is lowball.

1014
00:59:45,720 --> 00:59:49,320
Speaker 2: So you have tools and the preferred.

1015
00:59:49,280 --> 00:59:53,000
Speaker 1: Yeah, right, And the leverage for the equity comes from

1016
00:59:53,040 --> 00:59:57,720
Speaker 1: the preferred and the collateral right, And you know, for

1017
00:59:57,880 --> 01:00:01,080
Speaker 1: the preferred comes from the equity sale and from the

1018
01:00:01,080 --> 01:00:04,840
Speaker 1: bitcoin capital and then sell the equity to pay the

1019
01:00:04,880 --> 01:00:06,520
Speaker 1: divenot on the preferred.

1020
01:00:06,520 --> 01:00:09,480
Speaker 2: Yeah, so that might be the best kind of combination

1021
01:00:09,560 --> 01:00:10,040
Speaker 2: to come out with.

1022
01:00:10,080 --> 01:00:12,520
Speaker 1: You could very well build one hundred million dollar company

1023
01:00:13,160 --> 01:00:19,160
Speaker 1: from scratch with one credit instrument. Just yeah. So if

1024
01:00:19,200 --> 01:00:21,640
Speaker 1: you were to say, you know, what would I do? Yeah,

1025
01:00:21,720 --> 01:00:28,880
Speaker 1: I would distill kerosene, Like, is that a big enough market? Yeah,

1026
01:00:29,200 --> 01:00:32,080
Speaker 1: it's thirty trillion dollars in the US, it's seven trillion

1027
01:00:32,120 --> 01:00:37,600
Speaker 1: dollars in Japan. Must be fifteen trillion dollars. Right, Basically,

1028
01:00:37,640 --> 01:00:40,600
Speaker 1: ask yourself what is the sum of bank deposits, money

1029
01:00:40,600 --> 01:00:47,200
Speaker 1: market accounts, treasury preferred repo, short duration treasury credit instruments,

1030
01:00:47,200 --> 01:00:50,760
Speaker 1: and then you're given capital market. I would just uh,

1031
01:00:51,560 --> 01:00:54,200
Speaker 1: what is the word? Like, skip all the intermediary steps

1032
01:00:54,200 --> 01:00:55,600
Speaker 1: and go direct to the answer.

1033
01:00:55,800 --> 01:00:56,200
Speaker 2: Yeah.

1034
01:00:56,560 --> 01:01:01,760
Speaker 1: In my opinion is uh kerosene is the answer, or

1035
01:01:01,760 --> 01:01:07,880
Speaker 1: in this case, treasury credit. A bitcoin treasury company is

1036
01:01:07,920 --> 01:01:12,840
Speaker 1: in the unique position to create treasury credit, digital credit,

1037
01:01:13,360 --> 01:01:17,360
Speaker 1: digital treasury credit. And people are gonna they're going to

1038
01:01:17,480 --> 01:01:20,400
Speaker 1: endlessly torture you and say, well, why should the equity

1039
01:01:20,440 --> 01:01:24,120
Speaker 1: trade at a premium? And the answer is because an operating

1040
01:01:24,160 --> 01:01:29,600
Speaker 1: company can create digital credit, an ETF cannot, and like,

1041
01:01:29,640 --> 01:01:32,040
Speaker 1: well why would I all? I like, well, I whant

1042
01:01:32,080 --> 01:01:33,600
Speaker 1: I just buy the bitcoin? It's like, well, I'm not

1043
01:01:33,680 --> 01:01:35,840
Speaker 1: selling to the big to people that want bitcoin. I'm

1044
01:01:35,880 --> 01:01:39,320
Speaker 1: selling to people that want ten percent bank accounts. Do

1045
01:01:39,360 --> 01:01:40,800
Speaker 1: you do you have a bank account the year is

1046
01:01:40,840 --> 01:01:41,280
Speaker 1: ten percent?

1047
01:01:42,760 --> 01:01:43,440
Speaker 2: No? What I want want?

1048
01:01:43,520 --> 01:01:46,440
Speaker 1: Yeah? Yeah, well once just buy bitcoin instead. But but

1049
01:01:47,080 --> 01:01:50,520
Speaker 1: and that basically tears apart in the argument of the

1050
01:01:50,560 --> 01:01:53,160
Speaker 1: short sellers, Like the reason that people aren't going to

1051
01:01:53,200 --> 01:01:56,120
Speaker 1: buy bitcoin is they don't want bitcoin. What they want

1052
01:01:56,880 --> 01:02:01,040
Speaker 1: is a bank account that's high yield. And in Switzerland

1053
01:02:01,040 --> 01:02:04,480
Speaker 1: they want ten percent, not zero percent. In Japan they

1054
01:02:04,480 --> 01:02:08,000
Speaker 1: want eight percent, not five you know nothing. In Europe

1055
01:02:08,040 --> 01:02:12,640
Speaker 1: they don't. They want more than nothing. Right, So the

1056
01:02:12,680 --> 01:02:16,360
Speaker 1: beauty of just focusing upon that mark is it's such

1057
01:02:16,360 --> 01:02:20,240
Speaker 1: a simple story. It's like, I have a company, we

1058
01:02:20,360 --> 01:02:23,040
Speaker 1: own bitcoin, it's digital capital. We use it to back

1059
01:02:23,080 --> 01:02:26,200
Speaker 1: digital credit. We're selling a creditement or what does it do? Oh,

1060
01:02:26,200 --> 01:02:29,960
Speaker 1: it pays you five percent more than your bank account.

1061
01:02:30,600 --> 01:02:32,360
Speaker 1: Do you want it? Of course I want it? Right,

1062
01:02:32,440 --> 01:02:35,720
Speaker 1: So what's the objection? The only objection is it is

1063
01:02:35,760 --> 01:02:40,120
Speaker 1: the principal value stable, How volatile is the principle? How

1064
01:02:40,200 --> 01:02:45,360
Speaker 1: risky is it if it's If it's under collateralized and volatile,

1065
01:02:45,400 --> 01:02:48,200
Speaker 1: you're not going to sell that much of it. If

1066
01:02:48,200 --> 01:02:52,800
Speaker 1: it's over collateralized and stable and theory, you're going to

1067
01:02:52,840 --> 01:02:56,680
Speaker 1: sell quite a lot, right, And just that simple. The

1068
01:02:56,760 --> 01:02:59,720
Speaker 1: largest IPO of the year this year, And you know,

1069
01:02:59,800 --> 01:03:04,680
Speaker 1: as states is stretch is our IPO. You're asking why

1070
01:03:05,240 --> 01:03:07,920
Speaker 1: because it's the simplest, most obvious thing. I'm going to

1071
01:03:07,920 --> 01:03:08,960
Speaker 1: give you ten percent?

1072
01:03:09,440 --> 01:03:12,520
Speaker 2: Yeah, the biggest tam ten percent.

1073
01:03:12,600 --> 01:03:15,120
Speaker 1: You know, strip away the risk and the volatility. Yeah,

1074
01:03:15,560 --> 01:03:17,720
Speaker 1: And like, I don't know what will happen in the future,

1075
01:03:17,760 --> 01:03:19,920
Speaker 1: but I'll just park my money there until I figure

1076
01:03:19,960 --> 01:03:22,360
Speaker 1: out where what gives me better than ten percent. That's

1077
01:03:22,400 --> 01:03:26,320
Speaker 1: the idea. And it's a very simple idea and you

1078
01:03:26,320 --> 01:03:28,400
Speaker 1: can test it. Just go walk down the street and

1079
01:03:28,480 --> 01:03:33,200
Speaker 1: ask one hundred people. Would you like a stable investment

1080
01:03:33,280 --> 01:03:39,400
Speaker 1: that yielded ten percent, you know, tax deferred? Yeah, and like,

1081
01:03:39,440 --> 01:03:41,480
Speaker 1: of course I would. And it's a question that do

1082
01:03:41,520 --> 01:03:44,600
Speaker 1: I trust you? Do I trust bitcoin? So you reduce

1083
01:03:44,680 --> 01:03:49,840
Speaker 1: the entire thing down to is bitcoin? Am I trusting Bitcoin?

1084
01:03:49,960 --> 01:03:53,360
Speaker 1: Is the basis? You know, and do I trust the company?

1085
01:03:54,400 --> 01:03:57,200
Speaker 1: And it's kind of like, Hey, I have this penthouse apartment,

1086
01:03:57,520 --> 01:04:02,680
Speaker 1: you know, in an island city and it's beautiful and

1087
01:04:02,720 --> 01:04:05,480
Speaker 1: it's free. Do you want it? And the question is, well,

1088
01:04:05,560 --> 01:04:07,600
Speaker 1: is the only going to sink underneath the ocean? Do

1089
01:04:07,640 --> 01:04:10,880
Speaker 1: I want to live there? That's bitcoin? Is the granite solid?

1090
01:04:11,040 --> 01:04:11,600
Speaker 2: Yeah?

1091
01:04:11,640 --> 01:04:13,960
Speaker 1: And then oh yeah, who built the building? And then

1092
01:04:14,280 --> 01:04:15,439
Speaker 1: do the elevators work?

1093
01:04:15,520 --> 01:04:16,640
Speaker 2: And do I trust them?

1094
01:04:16,720 --> 01:04:17,560
Speaker 1: Yeah? Do I trust?

1095
01:04:17,640 --> 01:04:17,800
Speaker 2: You know?

1096
01:04:17,840 --> 01:04:20,160
Speaker 1: Do I trust the neighborhood? So if I get comfortable

1097
01:04:20,200 --> 01:04:23,240
Speaker 1: with the company and get trump comfortable with the locale,

1098
01:04:24,440 --> 01:04:26,440
Speaker 1: but of course I want it, it's better than my

1099
01:04:26,520 --> 01:04:31,200
Speaker 1: current situation. So it's a very straightforward, constructive thing to

1100
01:04:31,320 --> 01:04:32,120
Speaker 1: focus on.

1101
01:04:33,040 --> 01:04:35,160
Speaker 2: The trust piece was the one I was thinking about

1102
01:04:35,200 --> 01:04:37,960
Speaker 2: if maybe the stretch one takes more trust, and so

1103
01:04:38,240 --> 01:04:41,040
Speaker 2: a strike or strife might be a little bit less trust.

1104
01:04:41,080 --> 01:04:43,400
Speaker 2: So maybe as a new company, easier to roll out

1105
01:04:43,400 --> 01:04:45,160
Speaker 2: because they're a little bit more senior in the stack,

1106
01:04:45,320 --> 01:04:48,120
Speaker 2: build some track record and then roll out the stretch.

1107
01:04:48,440 --> 01:04:50,360
Speaker 1: I don't think. So, to tell you the truth, I've

1108
01:04:50,400 --> 01:04:53,080
Speaker 1: thought about it a lot. I mean to be honest,

1109
01:04:53,960 --> 01:04:57,000
Speaker 1: we did strike because it was the first thing we

1110
01:04:57,040 --> 01:05:02,640
Speaker 1: thought to do, and it felt like a perpetual convertible bond,

1111
01:05:03,360 --> 01:05:08,080
Speaker 1: and we were bootstrapping it with existing convertible debt investors

1112
01:05:08,120 --> 01:05:11,919
Speaker 1: and existing equity investors, you know, and we didn't really

1113
01:05:11,920 --> 01:05:14,480
Speaker 1: have a big base of retail or fixed income investors.

1114
01:05:14,520 --> 01:05:17,360
Speaker 1: That's where we did it. It was a gateway product, yeah,

1115
01:05:17,400 --> 01:05:19,640
Speaker 1: and it's got a role. But and then we did

1116
01:05:19,720 --> 01:05:23,120
Speaker 1: Strife because it was the next obvious thing we thought

1117
01:05:23,160 --> 01:05:26,680
Speaker 1: of we needed a perpetual instrument, and we didn't. It

1118
01:05:26,680 --> 01:05:29,560
Speaker 1: didn't occurt us we could do anything variable. So we

1119
01:05:29,600 --> 01:05:32,240
Speaker 1: did the perpetual ten percent because that's what we could sell.

1120
01:05:32,760 --> 01:05:34,960
Speaker 1: And then after we did it, we did Stride because

1121
01:05:34,960 --> 01:05:39,280
Speaker 1: we thought, well, if we strip away the cumulative rights,

1122
01:05:39,720 --> 01:05:44,720
Speaker 1: then this instrument potentially gives us unlimited leverage risk free,

1123
01:05:45,480 --> 01:05:47,880
Speaker 1: like we could in theory sell one hundred billion dollars

1124
01:05:47,880 --> 01:05:53,960
Speaker 1: of it with no credit risk. So, you know, why not.

1125
01:05:54,240 --> 01:05:58,120
Speaker 1: And because we'd already sold Strife, and Strife and Strike

1126
01:05:58,120 --> 01:06:02,520
Speaker 1: were already successful, they already traded above par, it wasn't

1127
01:06:02,520 --> 01:06:05,760
Speaker 1: a hard thing to sell the identical instrument at a

1128
01:06:05,800 --> 01:06:08,560
Speaker 1: thirty percent discount through the thing that people already owned.

1129
01:06:08,880 --> 01:06:12,880
Speaker 1: You see. Yeah, we did stretch because we ran into

1130
01:06:12,920 --> 01:06:16,280
Speaker 1: a bunch of other headaches trying to trying to globalize

1131
01:06:16,520 --> 01:06:19,240
Speaker 1: the first three. It's just the lawyers are slow, the

1132
01:06:19,280 --> 01:06:21,800
Speaker 1: regulators are slow. I thought, what can I do in

1133
01:06:21,840 --> 01:06:26,600
Speaker 1: the US market, which is not going to cannibalize those

1134
01:06:26,680 --> 01:06:28,439
Speaker 1: I thought, well, I'm on the fart of the yield curve.

1135
01:06:28,520 --> 01:06:31,560
Speaker 1: Let's go to the short end end of the yeld curve, right,

1136
01:06:31,600 --> 01:06:34,200
Speaker 1: the short end of the duration curve. So we kind

1137
01:06:34,240 --> 01:06:38,440
Speaker 1: of stumbled on it accidentally, and then as we iterated

1138
01:06:38,480 --> 01:06:42,240
Speaker 1: through it, we realized that it really was, you know,

1139
01:06:42,760 --> 01:06:47,120
Speaker 1: a better product, and that's what people really wanted. So

1140
01:06:47,160 --> 01:06:48,960
Speaker 1: a lot of people that were buying the other instruments,

1141
01:06:48,960 --> 01:06:51,080
Speaker 1: they were buying the high yield, but they were getting

1142
01:06:51,080 --> 01:06:53,920
Speaker 1: the duration not because they wanted it. They wanted like,

1143
01:06:54,800 --> 01:06:57,120
Speaker 1: do you want the twelve percent with the risk that

1144
01:06:57,520 --> 01:06:59,360
Speaker 1: the principal will move up and down? You just want

1145
01:06:59,360 --> 01:06:59,880
Speaker 1: twelve percent?

1146
01:07:00,360 --> 01:07:00,480
Speaker 2: Right?

1147
01:07:00,880 --> 01:07:03,520
Speaker 1: I just want the twelve percent, right to say. So,

1148
01:07:03,640 --> 01:07:04,800
Speaker 1: they were buying it, but.

1149
01:07:04,720 --> 01:07:07,080
Speaker 2: They were stomach in the volatility because they wanted the yield.

1150
01:07:07,440 --> 01:07:10,120
Speaker 1: Yeah, yeah, you took the delta, you took the vall

1151
01:07:10,320 --> 01:07:13,680
Speaker 1: because you wanted the yield. So with stretch, we stripped away,

1152
01:07:13,720 --> 01:07:18,919
Speaker 1: the delta stripped away, they'll the vall kept the yield. Yeah,

1153
01:07:19,800 --> 01:07:23,760
Speaker 1: and so I think that it's a simpler product. It's

1154
01:07:23,960 --> 01:07:27,439
Speaker 1: you know, look, it's a bank account. If you put

1155
01:07:27,440 --> 01:07:30,000
Speaker 1: in ninety nine dollars and ninety nine cents, you'll get

1156
01:07:30,040 --> 01:07:32,960
Speaker 1: back down to the last penny. With a money market,

1157
01:07:33,160 --> 01:07:35,600
Speaker 1: you know, you expect to get back down to like

1158
01:07:36,040 --> 01:07:39,920
Speaker 1: one significant digit past the decimal point of something very close.

1159
01:07:40,680 --> 01:07:43,000
Speaker 1: May not be the last penny, but it's you know,

1160
01:07:43,120 --> 01:07:47,040
Speaker 1: plus or minus, you know, a small rounding error with

1161
01:07:47,200 --> 01:07:50,080
Speaker 1: a product that's a preferred stock, that's trading. You know,

1162
01:07:50,160 --> 01:07:52,920
Speaker 1: you're not looking to get to the sixth significant digit

1163
01:07:53,040 --> 01:07:57,720
Speaker 1: or the third decimal point, but you want to be

1164
01:07:57,760 --> 01:08:02,200
Speaker 1: plus or minus you know, ten, twenty, thirty, fifty basis points. Yeah,

1165
01:08:02,240 --> 01:08:04,720
Speaker 1: you don't want to be varying by one or two percent.

1166
01:08:04,760 --> 01:08:07,560
Speaker 1: You want to be varying by fractions of a percent.

1167
01:08:08,360 --> 01:08:11,160
Speaker 1: And what you offer in return is, okay, I'll give

1168
01:08:11,200 --> 01:08:17,960
Speaker 1: you five percent more yield, and that is just slightly more.

1169
01:08:18,520 --> 01:08:21,680
Speaker 1: It's it's more flexible than a money market. And you

1170
01:08:21,760 --> 01:08:23,519
Speaker 1: got to go into that. It's not a money market.

1171
01:08:23,560 --> 01:08:25,200
Speaker 1: You got to go into it with your eyes open

1172
01:08:25,280 --> 01:08:28,400
Speaker 1: that money markets are trying not to break the buck,

1173
01:08:29,240 --> 01:08:33,880
Speaker 1: you know, at all. But on the other hand, you're

1174
01:08:33,920 --> 01:08:35,479
Speaker 1: targeting something to pay double.

1175
01:08:36,120 --> 01:08:38,639
Speaker 2: Yeah, the yield is going to make up for that volatil.

1176
01:08:39,000 --> 01:08:41,840
Speaker 1: You know, we're giving you a competitive money market to

1177
01:08:41,880 --> 01:08:46,880
Speaker 1: pace double that will get of his attention. That's a

1178
01:08:46,880 --> 01:08:49,760
Speaker 1: simple discussion. Also, I mean, the truth of the matter

1179
01:08:49,920 --> 01:08:52,439
Speaker 1: is it's easier to judge whether it's successful or not.

1180
01:08:53,240 --> 01:08:58,519
Speaker 1: For example, you know, stretches March from ninety up to

1181
01:08:58,680 --> 01:09:02,080
Speaker 1: ninety seven and some chain now and you know the

1182
01:09:02,160 --> 01:09:05,080
Speaker 1: target is one hundred, and when it gets to one hundred,

1183
01:09:05,880 --> 01:09:08,160
Speaker 1: you know, if it were to jerk up to one

1184
01:09:08,200 --> 01:09:10,720
Speaker 1: oh five or down to ninety five, you know it's

1185
01:09:10,760 --> 01:09:14,000
Speaker 1: not working. But if you look at strike or you

1186
01:09:14,040 --> 01:09:17,719
Speaker 1: look at strife, those things could trade if the interest

1187
01:09:17,800 --> 01:09:20,880
Speaker 1: rates fall one hundred basis points, strife could trade up

1188
01:09:21,080 --> 01:09:25,679
Speaker 1: ten or twenty percent. And that's not because it's failing, right,

1189
01:09:26,040 --> 01:09:29,120
Speaker 1: you know. And if you know, when Jerome Palell gives

1190
01:09:29,120 --> 01:09:31,479
Speaker 1: a speech and says, you know, I don't I don't

1191
01:09:31,479 --> 01:09:33,760
Speaker 1: really think we're going to lower instrates as fast. You know,

1192
01:09:33,880 --> 01:09:39,760
Speaker 1: So strife trades down three four five dollars ten it

1193
01:09:39,760 --> 01:09:42,719
Speaker 1: could trade quite a bit because of what Jerome Powell said.

1194
01:09:43,040 --> 01:09:45,920
Speaker 1: That's not a failure of our instrument, you see, but

1195
01:09:46,240 --> 01:09:49,000
Speaker 1: you understand how much more complicated it is to explain

1196
01:09:49,040 --> 01:09:55,680
Speaker 1: that strife reacted rationally to the forward yield curve expectations, right,

1197
01:09:56,520 --> 01:10:00,920
Speaker 1: whereas with Stretch, I don't have to With Stretch, everybody

1198
01:10:00,960 --> 01:10:02,760
Speaker 1: knows the mission. It's like we're pegging it to be

1199
01:10:02,760 --> 01:10:05,240
Speaker 1: between ninety nine and one o one, Like we're targeting

1200
01:10:05,320 --> 01:10:07,800
Speaker 1: for ninety nine to one oh one. And the way

1201
01:10:07,840 --> 01:10:09,840
Speaker 1: you'll know that it's in the range is what it's

1202
01:10:09,880 --> 01:10:12,439
Speaker 1: between ninety nine and one oh one, right, And when

1203
01:10:12,439 --> 01:10:16,760
Speaker 1: you canted, like my goal for strife is I want

1204
01:10:16,800 --> 01:10:20,439
Speaker 1: to see a trade to one fifty or two hundred, Right,

1205
01:10:20,479 --> 01:10:23,920
Speaker 1: you can imagine a world where strife is way over collateralize.

1206
01:10:24,000 --> 01:10:26,120
Speaker 1: The risk cre rate in the US is two percent.

1207
01:10:26,800 --> 01:10:29,679
Speaker 1: We have a three hundred basis point credit spread. Strife

1208
01:10:29,680 --> 01:10:31,800
Speaker 1: trades with an effective yield to five percent, which means

1209
01:10:31,800 --> 01:10:35,759
Speaker 1: it should trade it two hundred. You see, that's success

1210
01:10:35,760 --> 01:10:38,840
Speaker 1: for that, but you understand how much more complicated that is,

1211
01:10:39,640 --> 01:10:42,160
Speaker 1: because what if it gets a two hundred, Well, we're

1212
01:10:42,200 --> 01:10:44,360
Speaker 1: going to be paying an effective yield to five percent.

1213
01:10:44,400 --> 01:10:45,960
Speaker 1: We'll be selling at a two hundred. But now what

1214
01:10:45,960 --> 01:10:48,559
Speaker 1: happens if you buy it at two hundred and interest

1215
01:10:48,640 --> 01:10:50,519
Speaker 1: rates get jacked two percent of the trades down to

1216
01:10:50,560 --> 01:10:55,360
Speaker 1: one sixty. Did it work Yeah? Exactly as designed? Is

1217
01:10:55,360 --> 01:10:59,679
Speaker 1: some is a retiree going to be irate? Yeah? Like, waitmen,

1218
01:10:59,840 --> 01:11:02,680
Speaker 1: I got five percent more, three percent more, but it

1219
01:11:02,760 --> 01:11:05,840
Speaker 1: traded down twenty percent or something, and that's not what

1220
01:11:05,920 --> 01:11:09,919
Speaker 1: I signed up for. So you understand that looks scary.

1221
01:11:10,080 --> 01:11:14,280
Speaker 1: Those long duration, high delta, high high duration, high delta

1222
01:11:14,320 --> 01:11:17,720
Speaker 1: instruments look scary. They're very exciting for people that are

1223
01:11:17,760 --> 01:11:21,200
Speaker 1: professional investors. But we're we talked about the iPhone moment.

1224
01:11:21,280 --> 01:11:24,559
Speaker 1: I mean, it's iPhone is kind of maybe not even

1225
01:11:24,600 --> 01:11:29,360
Speaker 1: the perfect metaphor. I mean, the perfect metaphor is a

1226
01:11:29,400 --> 01:11:32,680
Speaker 1: comfortable retirement. It's like you pick up the phone and

1227
01:11:32,720 --> 01:11:34,840
Speaker 1: call your dad and you say, hey, Dad, you know

1228
01:11:35,000 --> 01:11:37,080
Speaker 1: you have some capital and your four to one k.

1229
01:11:37,240 --> 01:11:39,840
Speaker 1: You put it in a stretch. It was paying you

1230
01:11:39,920 --> 01:11:42,599
Speaker 1: thirty two thousand a year. You put in a stretches

1231
01:11:42,640 --> 01:11:44,519
Speaker 1: going to pay you one hundred and twenty five thousand

1232
01:11:44,600 --> 01:11:48,960
Speaker 1: a year. What's the risk? Okay, there's no risk. I

1233
01:11:49,000 --> 01:11:51,320
Speaker 1: mean there's risk, you know of a security. But the

1234
01:11:51,320 --> 01:11:53,760
Speaker 1: point is, you know, it looks like it's eight x

1235
01:11:53,800 --> 01:11:56,880
Speaker 1: over collateralized or five x over collateralized, which is more

1236
01:11:56,880 --> 01:12:00,599
Speaker 1: than investment grade companies offer you. Right, So it's great

1237
01:12:00,720 --> 01:12:04,320
Speaker 1: comparable risk if you believe in bitcoin. If you hate bitcoin, dad,

1238
01:12:04,360 --> 01:12:06,679
Speaker 1: don't take it. But if you think the bitcoin is okay,

1239
01:12:06,720 --> 01:12:09,280
Speaker 1: I can jack your retirement income from thirty thousand to

1240
01:12:09,360 --> 01:12:12,479
Speaker 1: one hundred and twenty thousand. If you do this, well,

1241
01:12:12,479 --> 01:12:13,320
Speaker 1: what do I have to do?

1242
01:12:13,880 --> 01:12:17,040
Speaker 2: Nothing is buy it in your equity a brokerids account.

1243
01:12:17,360 --> 01:12:20,000
Speaker 1: You know, like a lot of eighty year olds don't

1244
01:12:20,080 --> 01:12:23,160
Speaker 1: use an iPhone, A lot of senior citizens have a

1245
01:12:23,200 --> 01:12:27,160
Speaker 1: hard time using technology. No one has a hard time

1246
01:12:27,360 --> 01:12:32,200
Speaker 1: collecting a pension. So what we're really talking about is

1247
01:12:32,320 --> 01:12:37,120
Speaker 1: creating a living stipend or creating an annuity or a pension.

1248
01:12:37,360 --> 01:12:40,160
Speaker 1: And so what's the offers like happily ever after to

1249
01:12:40,880 --> 01:12:45,639
Speaker 1: It's social security. That's the products for how many people?

1250
01:12:45,800 --> 01:12:49,880
Speaker 1: Like a billion? Like everybody? Right, it's it's basically social

1251
01:12:49,880 --> 01:12:52,839
Speaker 1: security and living happily ever after for a billion people.

1252
01:12:53,200 --> 01:12:55,360
Speaker 1: What do I got to do? All you got to

1253
01:12:55,400 --> 01:12:58,439
Speaker 1: do is just A, understand bitcoin, trust it, and then

1254
01:12:58,439 --> 01:13:02,320
Speaker 1: b you've got to trust the company or the security

1255
01:13:02,439 --> 01:13:04,679
Speaker 1: that you're buying. But once you get over those two,

1256
01:13:05,560 --> 01:13:08,280
Speaker 1: those two barriers, what do you get. It's like how

1257
01:13:08,280 --> 01:13:10,240
Speaker 1: many people would like their salary to go from thirty

1258
01:13:10,240 --> 01:13:12,000
Speaker 1: thousand to one hundred thousand dollars a year?

1259
01:13:12,200 --> 01:13:13,400
Speaker 2: Everyone?

1260
01:13:14,479 --> 01:13:17,000
Speaker 1: So you understand why I would say that's the simplest

1261
01:13:17,040 --> 01:13:20,040
Speaker 1: product to sell. Yeah, because it's like the other ones

1262
01:13:20,120 --> 01:13:23,519
Speaker 1: lead you down a path of explaining conversion rights in

1263
01:13:23,600 --> 01:13:27,200
Speaker 1: delta and duration, interest rate risk, and it's just you know,

1264
01:13:27,280 --> 01:13:30,719
Speaker 1: and the like and what happens if the central bankers

1265
01:13:30,760 --> 01:13:32,920
Speaker 1: say this and do that and you make get this boost,

1266
01:13:32,960 --> 01:13:35,800
Speaker 1: but you might not get that, and it's a lot

1267
01:13:35,880 --> 01:13:38,920
Speaker 1: more complicated. And if you create something which is simple,

1268
01:13:39,000 --> 01:13:40,680
Speaker 1: that means you'll sell ten to one hundred times and

1269
01:13:40,800 --> 01:13:43,320
Speaker 1: much of it, right, But if it's a hundred times

1270
01:13:43,120 --> 01:13:45,800
Speaker 1: as much you sold, it's gonna be a hundred times

1271
01:13:45,800 --> 01:13:48,479
Speaker 1: of liquid. If it's liquid, it means you get in

1272
01:13:48,520 --> 01:13:50,040
Speaker 1: and you get out, right. So what we're trying to

1273
01:13:50,080 --> 01:13:52,599
Speaker 1: do is and that means there's less volatility. So at

1274
01:13:52,600 --> 01:13:56,479
Speaker 1: the end of the day, the simple universal product that

1275
01:13:56,520 --> 01:13:59,479
Speaker 1: everybody needs that's the most liquid with the highest day

1276
01:13:59,520 --> 01:14:03,639
Speaker 1: you whim you see. My criticism of the preferred stock

1277
01:14:03,760 --> 01:14:10,760
Speaker 1: market and the corporate bond market is is they were

1278
01:14:10,760 --> 01:14:13,599
Speaker 1: never trying to create good credit. It was always crippled credit.

1279
01:14:13,720 --> 01:14:16,960
Speaker 1: It's like, why doesn't a big bank have one hundred

1280
01:14:17,200 --> 01:14:20,680
Speaker 1: billion dollars worth of a single preferred instrument with a

1281
01:14:20,720 --> 01:14:23,160
Speaker 1: four letter ticker that trades five billion a day with

1282
01:14:23,200 --> 01:14:27,720
Speaker 1: a bit ass spread of a penny. Because because they

1283
01:14:27,800 --> 01:14:32,600
Speaker 1: never really wanted to create a good credit instrument, they

1284
01:14:33,120 --> 01:14:38,360
Speaker 1: they created, you know, ninety seven tranches of rolling debt issuances.

1285
01:14:38,760 --> 01:14:42,840
Speaker 1: It's it's an it's a traditional market and insider game

1286
01:14:42,920 --> 01:14:47,000
Speaker 1: they play with themselves. There is a set of traditional investors,

1287
01:14:47,040 --> 01:14:49,439
Speaker 1: and a set of traditional bankers, and a set of

1288
01:14:49,479 --> 01:14:54,360
Speaker 1: traditional issuers, and a set of a traditional mode and

1289
01:14:54,400 --> 01:15:00,160
Speaker 1: they're all basically they're going through this hyper inefficient process. Yes,

1290
01:15:01,680 --> 01:15:05,000
Speaker 1: whereas when we created these instruments like stretch, you know,

1291
01:15:05,120 --> 01:15:07,120
Speaker 1: ask me what I want. I want to sell fifty

1292
01:15:07,160 --> 01:15:10,120
Speaker 1: billion dollars of it? I want I want fifty billion

1293
01:15:10,160 --> 01:15:11,840
Speaker 1: with two billion three but I want it to be

1294
01:15:11,880 --> 01:15:16,559
Speaker 1: the largest, you know, outstanding preferred stock issued in the

1295
01:15:16,720 --> 01:15:21,599
Speaker 1: history of the world. And already these four credit instruments,

1296
01:15:21,600 --> 01:15:25,240
Speaker 1: they're already the most liquid preferred stocks of the century. Yeah,

1297
01:15:25,280 --> 01:15:27,960
Speaker 1: and that's in the first few months of their life.

1298
01:15:28,439 --> 01:15:31,320
Speaker 1: Imagine what happens three to five years from now after

1299
01:15:31,400 --> 01:15:37,080
Speaker 1: we've actually sold via the ATM every single month for

1300
01:15:37,120 --> 01:15:38,400
Speaker 1: the next thirty six months.

1301
01:15:38,479 --> 01:15:41,719
Speaker 2: Yeah. The difference is, as you said, for like Boeing,

1302
01:15:42,160 --> 01:15:44,640
Speaker 2: they're taking debt to build their product, and so a

1303
01:15:44,680 --> 01:15:47,320
Speaker 2: bank or Boeing, they're not trying to make the credit.

1304
01:15:47,360 --> 01:15:49,519
Speaker 2: It's not the product, it's not attractive. Whereas you want

1305
01:15:49,520 --> 01:15:51,200
Speaker 2: to sell the credit as the products. You're trying to

1306
01:15:51,200 --> 01:15:53,360
Speaker 2: make it to reach the biggest addressable market. And if

1307
01:15:53,400 --> 01:15:55,680
Speaker 2: you look at in the developed world, we have two

1308
01:15:55,720 --> 01:15:58,720
Speaker 2: to fifty million retirees, right and they all want the

1309
01:15:58,800 --> 01:16:01,080
Speaker 2: yield with no volatilities. The tam that told just what

1310
01:16:01,200 --> 01:16:04,720
Speaker 2: market is massive. As you've explained, the profit margin for

1311
01:16:04,760 --> 01:16:06,840
Speaker 2: you to create that product is also big. It's simple.

1312
01:16:07,000 --> 01:16:07,840
Speaker 2: The market's big.

1313
01:16:08,840 --> 01:16:14,559
Speaker 1: You see what breaks people's brains though, because they think

1314
01:16:16,000 --> 01:16:18,960
Speaker 1: of credit issuance as a mean to the end, and

1315
01:16:19,000 --> 01:16:25,080
Speaker 1: the end is tax arbitrage. At Apple, it's it's it's uh,

1316
01:16:25,720 --> 01:16:30,080
Speaker 1: you know, leveraging him. Microsoft stock Right, if you look

1317
01:16:30,120 --> 01:16:32,599
Speaker 1: at all the big well run companies in the world,

1318
01:16:32,880 --> 01:16:36,400
Speaker 1: they're solving a tax issue, a shareholder related they're trying

1319
01:16:36,400 --> 01:16:40,160
Speaker 1: to improve the quality of their equity or their EPs performance,

1320
01:16:40,200 --> 01:16:43,519
Speaker 1: or they're or they're building airplanes, or they're building buildings,

1321
01:16:43,600 --> 01:16:46,960
Speaker 1: or they're developing skyscrapers. Right, it's it's a means to

1322
01:16:47,040 --> 01:16:50,600
Speaker 1: the end. Or it's like the bank is, they're not

1323
01:16:51,160 --> 01:16:54,800
Speaker 1: bragging about issuing the world's greatest preferred stock. They did

1324
01:16:54,800 --> 01:16:57,720
Speaker 1: it because they have to for like tier one capital,

1325
01:16:57,960 --> 01:17:02,800
Speaker 1: mezzanine capital allocations so that they can make commercial loans

1326
01:17:02,880 --> 01:17:07,960
Speaker 1: so that they can do something else. Right, So what

1327
01:17:08,040 --> 01:17:10,519
Speaker 1: we stumbled upon in the bitcoin treasury business is we

1328
01:17:10,640 --> 01:17:15,120
Speaker 1: just realized that if you were the first well run

1329
01:17:15,200 --> 01:17:22,000
Speaker 1: company that actually thought of credit as the product, then

1330
01:17:22,240 --> 01:17:26,760
Speaker 1: the killer application of bitcoin and the killer application of

1331
01:17:26,840 --> 01:17:30,120
Speaker 1: capital is to issue credit. And the killer application of

1332
01:17:30,160 --> 01:17:34,280
Speaker 1: bitcoin is to issue digital credit. And now, if you

1333
01:17:34,320 --> 01:17:37,240
Speaker 1: look at the at these things that were languishing, any

1334
01:17:37,280 --> 01:17:39,400
Speaker 1: public company in the US can issue a preferred stock.

1335
01:17:39,520 --> 01:17:42,120
Speaker 1: Most just choose not to. When's the last time you

1336
01:17:42,120 --> 01:17:45,960
Speaker 1: bought a preferred stock from Microsoft? Microsoft, in theory could

1337
01:17:46,000 --> 01:17:48,559
Speaker 1: give you a ten percent yielding preferred stock. But could

1338
01:17:48,560 --> 01:17:51,040
Speaker 1: you imagine discussing that or pitching it to the CFO.

1339
01:17:51,880 --> 01:17:54,040
Speaker 1: They're like, are you out of your mind? Why would

1340
01:17:54,040 --> 01:17:59,760
Speaker 1: we do that? Right? And so most companies in the

1341
01:17:59,840 --> 01:18:03,400
Speaker 1: un less they could have, but it was never really

1342
01:18:03,640 --> 01:18:07,920
Speaker 1: I mean, it was never strategic to them. The ATM

1343
01:18:08,960 --> 01:18:12,320
Speaker 1: was developed I think by Michael Milken many many years ago,

1344
01:18:12,360 --> 01:18:15,880
Speaker 1: the at the market shelf registration. But you know, if

1345
01:18:15,880 --> 01:18:18,839
Speaker 1: you were to go to Microsoft or Apple or Google

1346
01:18:19,000 --> 01:18:21,600
Speaker 1: or Amazon or Meta and say, hey, what do you

1347
01:18:21,600 --> 01:18:24,519
Speaker 1: guys think about selling your own equity, They're like, are

1348
01:18:24,520 --> 01:18:27,719
Speaker 1: you out of your mind? We buy our equity the money. Yeah,

1349
01:18:27,800 --> 01:18:29,400
Speaker 1: we have no use of the money. We don't have

1350
01:18:29,479 --> 01:18:32,599
Speaker 1: the use of capital. Okay, well you could issue credit

1351
01:18:32,680 --> 01:18:35,800
Speaker 1: instruments at the market. Well, we don't want to issue

1352
01:18:35,800 --> 01:18:40,760
Speaker 1: credit instruments. And so what we did is we took

1353
01:18:41,120 --> 01:18:46,400
Speaker 1: existing ATM, applied it to a preferred stock, paired it

1354
01:18:46,439 --> 01:18:53,640
Speaker 1: with a radical different view toward treasury capital. We inverted

1355
01:18:53,680 --> 01:18:58,439
Speaker 1: the company, inverted the balance sheet, inverted the business model. Right,

1356
01:18:59,200 --> 01:19:03,360
Speaker 1: we're selling that's literally what we do. We credit is

1357
01:19:03,400 --> 01:19:09,360
Speaker 1: the product we created, We engineer the product, right, then

1358
01:19:09,400 --> 01:19:14,439
Speaker 1: we issue the product. We use the proceeds to build

1359
01:19:14,600 --> 01:19:19,000
Speaker 1: the capital structure, which then thereby boosts the performance of

1360
01:19:19,000 --> 01:19:23,320
Speaker 1: the equity. Right, the elegance of it, it really is

1361
01:19:23,520 --> 01:19:29,639
Speaker 1: a symmetric thing of beauty. We're selling US dollar yield

1362
01:19:29,880 --> 01:19:35,679
Speaker 1: us D yield to create BTC yield. That's the swap. Right.

1363
01:19:36,200 --> 01:19:40,479
Speaker 1: The equity investors value the company based on BTC yield,

1364
01:19:40,520 --> 01:19:45,040
Speaker 1: the appretion of bitpoint per share. Credit investors value the

1365
01:19:45,080 --> 01:19:51,200
Speaker 1: credit the credit security based upon us D yield. And

1366
01:19:51,280 --> 01:19:55,280
Speaker 1: so just swapping a FIAT yield, a y in a euro,

1367
01:19:55,439 --> 01:20:00,200
Speaker 1: a US dollar yield for a BTC yield with the

1368
01:20:00,240 --> 01:20:04,840
Speaker 1: bitcoin as the collateral on the middle is the business,

1369
01:20:05,800 --> 01:20:10,040
Speaker 1: you know, And and the skeptics and the cynics they

1370
01:20:10,120 --> 01:20:14,040
Speaker 1: choose to be strategically ignorant. And it's like like a hater,

1371
01:20:14,680 --> 01:20:17,800
Speaker 1: I don't want to understand the business because I might

1372
01:20:17,880 --> 01:20:20,280
Speaker 1: have to agree with you. So if I've already decided

1373
01:20:20,320 --> 01:20:23,719
Speaker 1: I hate you, I don't want you to explain why

1374
01:20:23,760 --> 01:20:26,000
Speaker 1: what you're doing is going to save the world or

1375
01:20:26,000 --> 01:20:29,000
Speaker 1: help anybody, or help the shareholders. I just don't want

1376
01:20:29,040 --> 01:20:31,920
Speaker 1: to know. I'm going to choose to stick my head

1377
01:20:31,920 --> 01:20:36,639
Speaker 1: in the sand and be ignorant. But if you're more

1378
01:20:36,680 --> 01:20:41,240
Speaker 1: open minded about the entire thing, and you just embrace

1379
01:20:41,320 --> 01:20:45,160
Speaker 1: the idea that this is a new kind of company,

1380
01:20:45,840 --> 01:20:48,840
Speaker 1: a new It's not a bank because it doesn't it's

1381
01:20:48,880 --> 01:20:53,680
Speaker 1: not regulated, doesn't take consumer and commercial deposits. It's not

1382
01:20:53,760 --> 01:20:57,960
Speaker 1: that kind of bank. It is a financial kind of company, right,

1383
01:20:58,000 --> 01:21:00,120
Speaker 1: and it's a new form of company. They're a bank,

1384
01:21:00,200 --> 01:21:04,599
Speaker 1: they're insurance companies, you know, et cetera. So, a treasury

1385
01:21:04,680 --> 01:21:10,000
Speaker 1: company is a company that issues securities in order to

1386
01:21:10,080 --> 01:21:16,120
Speaker 1: acquire capital. Now a commodity really you're issuing securities to

1387
01:21:16,160 --> 01:21:19,080
Speaker 1: buy a commodity. And if you pick a commodity that

1388
01:21:19,120 --> 01:21:25,280
Speaker 1: happen to be scarce, you create a very powerful feedback loop. Right,

1389
01:21:25,360 --> 01:21:27,400
Speaker 1: work through your mind. If I if I do this

1390
01:21:27,479 --> 01:21:29,640
Speaker 1: on bitcoin going at fifty percent a year, I can

1391
01:21:29,680 --> 01:21:34,200
Speaker 1: easily pay ten percent capture the forty percent spread. That

1392
01:21:34,360 --> 01:21:35,360
Speaker 1: is an amplifier.

1393
01:21:35,640 --> 01:21:36,080
Speaker 2: Yeah.

1394
01:21:36,600 --> 01:21:40,599
Speaker 1: If I issued the credit to buy soybeans, Yeah, without

1395
01:21:40,640 --> 01:21:44,960
Speaker 1: the keg gar or natural gas or crude oil or

1396
01:21:45,000 --> 01:21:49,639
Speaker 1: some other you know commodity that returned three five percent

1397
01:21:50,280 --> 01:21:53,519
Speaker 1: anything less than the cost of the credit, then I've

1398
01:21:53,760 --> 01:21:56,320
Speaker 1: run the feedback loop. In the opposite direction. I'm destroying

1399
01:21:56,320 --> 01:21:59,880
Speaker 1: capital as fast as I can. The business is not

1400
01:22:00,080 --> 01:22:03,800
Speaker 1: really much more complicated than that. It's just no one's

1401
01:22:03,840 --> 01:22:05,840
Speaker 1: ever seen it before, which is why people just have

1402
01:22:05,920 --> 01:22:08,719
Speaker 1: a hard time getting their head around it.

1403
01:22:08,720 --> 01:22:11,639
Speaker 2: And if they don't believe in bitcoin. Now you've talked

1404
01:22:11,640 --> 01:22:14,200
Speaker 2: about the different preferreds and how even just one could work,

1405
01:22:14,240 --> 01:22:16,720
Speaker 2: and it gives you leverage. And in the in the

1406
01:22:16,880 --> 01:22:19,599
Speaker 2: last quarterly report, which are brilliant by the way you're

1407
01:22:19,640 --> 01:22:22,439
Speaker 2: changing industry with that. It's great. You showed several slides

1408
01:22:22,520 --> 01:22:26,040
Speaker 2: of this Bitcoin factor, which is like this amplification of bitcoin,

1409
01:22:26,439 --> 01:22:28,799
Speaker 2: and so by doing the preferge, you're adding the leverage

1410
01:22:28,960 --> 01:22:30,880
Speaker 2: which then over time you use a ten year window,

1411
01:22:31,120 --> 01:22:32,960
Speaker 2: you can give you a bitcoin factor of two point

1412
01:22:32,960 --> 01:22:37,479
Speaker 2: eight to five six whatever. Does that number sort of

1413
01:22:37,520 --> 01:22:40,759
Speaker 2: relate into this m NAB number over a long period

1414
01:22:40,760 --> 01:22:43,200
Speaker 2: of time and sort of justify or show why that

1415
01:22:43,360 --> 01:22:45,639
Speaker 2: m NAB number should be greater than two or three

1416
01:22:45,760 --> 01:22:46,080
Speaker 2: or four.

1417
01:22:47,120 --> 01:22:50,519
Speaker 1: Yeah. So if you think about think about the value

1418
01:22:50,560 --> 01:22:55,800
Speaker 1: of the equity over and above net asset value. If

1419
01:22:55,800 --> 01:22:58,800
Speaker 1: the company did nothing, if it just bought bitcoin and

1420
01:22:58,840 --> 01:23:03,480
Speaker 1: held bitcoin forever, it starts to look like an ETF.

1421
01:23:04,240 --> 01:23:09,320
Speaker 1: Probably a trades around NAB The way that a company

1422
01:23:09,439 --> 01:23:13,880
Speaker 1: generates a premium to NAB is primarily through credit amplification.

1423
01:23:14,760 --> 01:23:20,240
Speaker 1: So if a company can generate, say thirty percent leverage,

1424
01:23:20,439 --> 01:23:24,760
Speaker 1: then it's going to create an amplifier because you can

1425
01:23:24,800 --> 01:23:28,959
Speaker 1: see systemically, I issue a billion dollars of a preferred

1426
01:23:28,960 --> 01:23:33,479
Speaker 1: stock paying ten percent, I buy a billion of bitcoin. Right,

1427
01:23:33,479 --> 01:23:37,040
Speaker 1: if I own a billion dollars a bitcoin already and

1428
01:23:37,080 --> 01:23:38,920
Speaker 1: I was able to do that trade, I'd have two

1429
01:23:38,960 --> 01:23:43,360
Speaker 1: billion dollars a bitcoin, no additional common stock outstanding, you know,

1430
01:23:43,520 --> 01:23:47,400
Speaker 1: so you end up with fifty percent leverage on that.

1431
01:23:47,520 --> 01:23:53,679
Speaker 1: So you start to generate amplification. Now we have models

1432
01:23:53,720 --> 01:23:56,559
Speaker 1: to calculate how accretive that is, how does that contribute

1433
01:23:56,560 --> 01:24:00,240
Speaker 1: to bitcoin per share? And it turns out that it's

1434
01:24:00,280 --> 01:24:03,599
Speaker 1: more accreative. But this won't come as a surprise. It's

1435
01:24:03,640 --> 01:24:07,280
Speaker 1: more accreative if the cost of capital falls. For example,

1436
01:24:08,040 --> 01:24:10,599
Speaker 1: raising the ten billion at five percent instead of ten

1437
01:24:10,640 --> 01:24:15,080
Speaker 1: percent is more accreative, right raising it at one percent.

1438
01:24:16,520 --> 01:24:19,639
Speaker 1: Imagine borrowing a billion dollars at one percent and buying

1439
01:24:19,720 --> 01:24:24,040
Speaker 1: bitcoin that returns fifty five percent. You're capturing fifty four

1440
01:24:24,040 --> 01:24:27,479
Speaker 1: percent spread, right, So the spread that you're capturing as

1441
01:24:27,520 --> 01:24:30,200
Speaker 1: the function of you're cost to capital. So the lower

1442
01:24:30,240 --> 01:24:34,160
Speaker 1: the cost of capital, the more the amplication. The higher

1443
01:24:34,240 --> 01:24:39,040
Speaker 1: the leverage, the more the amplification, the faster. If you

1444
01:24:39,120 --> 01:24:41,800
Speaker 1: did all that the bitcoin went up zero percent a year,

1445
01:24:43,680 --> 01:24:46,680
Speaker 1: it's not terribly You don't get a lot of good amplification. Right.

1446
01:24:46,720 --> 01:24:50,439
Speaker 1: So it bitcoin goes out fifty percent a year, right,

1447
01:24:51,080 --> 01:24:54,840
Speaker 1: that's more amplification. So the rate of growth of bitcoin,

1448
01:24:54,920 --> 01:24:58,080
Speaker 1: the ar bitcoin plus the leverage, plus the cost of capital,

1449
01:24:58,160 --> 01:25:02,040
Speaker 1: all those are primary factors that drive the amplification. That

1450
01:25:02,160 --> 01:25:04,120
Speaker 1: is a rule of thumb. You know, we kind of

1451
01:25:04,120 --> 01:25:07,880
Speaker 1: calculated that. You know, assuming bitcoin appreciates thirty percent a

1452
01:25:07,960 --> 01:25:10,240
Speaker 1: year and we get thirty percent leverage, then we should

1453
01:25:10,240 --> 01:25:13,360
Speaker 1: be able to get a three x BTC factor, or

1454
01:25:13,479 --> 01:25:16,800
Speaker 1: we can accumulate three times more bitcoin per share over

1455
01:25:16,840 --> 01:25:20,960
Speaker 1: a ten year timeframe. So you could imagine an m

1456
01:25:21,040 --> 01:25:25,920
Speaker 1: non floor of three, right, makes sense? Or you know,

1457
01:25:25,960 --> 01:25:27,720
Speaker 1: how what do you do in percentage? Or you do

1458
01:25:27,760 --> 01:25:31,600
Speaker 1: that a factor and you know, for when you're evaluating

1459
01:25:31,600 --> 01:25:34,680
Speaker 1: a company, the question is how high can they take

1460
01:25:34,720 --> 01:25:36,639
Speaker 1: the leverage? How much is it going to cost them?

1461
01:25:37,160 --> 01:25:40,200
Speaker 1: There as second order effects like credit risk. Right, So

1462
01:25:40,320 --> 01:25:43,439
Speaker 1: I'm describing perpetual instrument never comes to there is no

1463
01:25:43,520 --> 01:25:45,920
Speaker 1: credit risk there. But if you were, if you were

1464
01:25:45,960 --> 01:25:51,280
Speaker 1: achieving that leverage with a six month loan, yeah right,

1465
01:25:51,520 --> 01:25:54,120
Speaker 1: you can go on an exchange and you can actually

1466
01:25:54,120 --> 01:25:56,599
Speaker 1: crank up the leverage to three or four or five.

1467
01:25:57,560 --> 01:26:02,200
Speaker 1: But the duration is instant, right, you get forced liquidated overnight.

1468
01:26:02,640 --> 01:26:07,040
Speaker 1: When we're managing the business, we're constructing credit amplification in

1469
01:26:07,080 --> 01:26:10,160
Speaker 1: the most intelligent way. And of course, in my opinion,

1470
01:26:10,680 --> 01:26:14,520
Speaker 1: the least risky, most intelligent way to create credit amplification

1471
01:26:14,880 --> 01:26:18,800
Speaker 1: is through publicly issue preferred stocks that are perpetual. Right,

1472
01:26:18,920 --> 01:26:21,519
Speaker 1: for the obvious reason, you never refinance them. The principle

1473
01:26:21,560 --> 01:26:24,879
Speaker 1: doesn't come due, and so the risk on the principle

1474
01:26:24,920 --> 01:26:28,599
Speaker 1: is the minimus. And then the dividends you know, are

1475
01:26:28,800 --> 01:26:31,360
Speaker 1: are subject to the approval of the board of directors,

1476
01:26:31,400 --> 01:26:34,120
Speaker 1: and the company can suspend the dividend or delay it

1477
01:26:34,160 --> 01:26:39,360
Speaker 1: for a time under financial duress, and so the coupon

1478
01:26:39,520 --> 01:26:43,640
Speaker 1: risk is dominimous as well as the principal risk. The

1479
01:26:43,680 --> 01:26:49,040
Speaker 1: opposite extreme is a one year senior loan pledge the

1480
01:26:49,080 --> 01:26:52,599
Speaker 1: coladal of bitcoin, pay off the principle in one year

1481
01:26:53,120 --> 01:26:55,880
Speaker 1: and pay interest every month as a coupon, missed the

1482
01:26:55,920 --> 01:26:58,759
Speaker 1: interest in a month, you're in default, missed the principal

1483
01:26:59,040 --> 01:27:01,719
Speaker 1: delay it you're in default, missed the principle, you're in default,

1484
01:27:02,560 --> 01:27:06,400
Speaker 1: and the claudal gets ripped away and the entire company collapses. Right,

1485
01:27:07,040 --> 01:27:13,240
Speaker 1: So intelligent leverage unintelligent risky leverage. Right, you want to

1486
01:27:13,240 --> 01:27:14,320
Speaker 1: go for one not the other.

1487
01:27:14,880 --> 01:27:17,360
Speaker 2: So you think it sets in that example. And as

1488
01:27:17,360 --> 01:27:19,120
Speaker 2: you said, there's three different factors in there, but that's

1489
01:27:19,120 --> 01:27:21,360
Speaker 2: sort of that. In that example, that set an m

1490
01:27:21,400 --> 01:27:24,000
Speaker 2: NAB number about a three times. When you look at

1491
01:27:24,040 --> 01:27:27,920
Speaker 2: other hat asset heavy companies banking, insurance, oil, they kind

1492
01:27:27,920 --> 01:27:30,479
Speaker 2: of trade in that one to two times. But do

1493
01:27:30,560 --> 01:27:32,599
Speaker 2: you think, because this is not oil as an asset,

1494
01:27:32,640 --> 01:27:35,000
Speaker 2: that's got this fifty times or call it a thirty

1495
01:27:35,080 --> 01:27:38,000
Speaker 2: times kagar over this long period of time.

1496
01:27:39,160 --> 01:27:41,639
Speaker 1: I would stop there and I would say m NAB

1497
01:27:41,760 --> 01:27:46,000
Speaker 1: is just price to book value. Okay, Well, run banks

1498
01:27:46,200 --> 01:27:50,200
Speaker 1: traded a price to balk north of two, but what

1499
01:27:50,360 --> 01:27:54,800
Speaker 1: is Microsoft's price to book value? It's like twenty ten.

1500
01:27:55,360 --> 01:28:00,400
Speaker 1: So a lot of companies traded a price to book five, six, seven, eight, ten, right,

1501
01:28:01,120 --> 01:28:03,880
Speaker 1: Like they have very productive capital, right, they have huge

1502
01:28:03,960 --> 01:28:08,880
Speaker 1: leverage on it. Right, So an m NAB of three

1503
01:28:08,960 --> 01:28:12,080
Speaker 1: is just a price to book of three, So you know,

1504
01:28:12,200 --> 01:28:14,920
Speaker 1: how do you get there? There? It's it's simple to

1505
01:28:14,920 --> 01:28:17,479
Speaker 1: figure out how you get there. For example, if you

1506
01:28:17,600 --> 01:28:25,040
Speaker 1: have ten billion dollars a bitcoin and you sell ten

1507
01:28:25,080 --> 01:28:29,559
Speaker 1: billion dollars worth of Stride s TRD, you would have

1508
01:28:29,600 --> 01:28:38,120
Speaker 1: a leverage factor of fifty percent no credit risk. Yeah, right, right,

1509
01:28:38,160 --> 01:28:41,720
Speaker 1: so you'd sell another five dolling of Stride right if

1510
01:28:41,760 --> 01:28:44,280
Speaker 1: you can sell it? Right? This all comes down to

1511
01:28:44,840 --> 01:28:47,000
Speaker 1: not should you? Can you?

1512
01:28:47,240 --> 01:28:48,280
Speaker 2: Can you? Right?

1513
01:28:48,320 --> 01:28:51,320
Speaker 1: Not should you? And if you do, you will get there?

1514
01:28:51,439 --> 01:28:54,240
Speaker 1: Right if in that particular case, it all comes down

1515
01:28:54,240 --> 01:28:58,800
Speaker 1: to what kind of credit can you issue and under

1516
01:28:58,840 --> 01:29:00,599
Speaker 1: what terms and how rapidly?

1517
01:29:01,120 --> 01:29:03,439
Speaker 2: So at fifty percent leverage with no credit risk, I mean,

1518
01:29:03,479 --> 01:29:05,760
Speaker 2: then there's the five times right.

1519
01:29:05,840 --> 01:29:07,400
Speaker 1: Yeah, you could get to it and have a five,

1520
01:29:07,479 --> 01:29:09,600
Speaker 1: or you could be priced a book at five. But

1521
01:29:10,080 --> 01:29:12,000
Speaker 1: ask you off the question, how do banks get to

1522
01:29:12,040 --> 01:29:14,799
Speaker 1: a price to book more than one? Leverage?

1523
01:29:15,160 --> 01:29:15,280
Speaker 2: Right?

1524
01:29:16,439 --> 01:29:19,400
Speaker 1: Why do preferred stocks exist at all? So banks can

1525
01:29:19,439 --> 01:29:23,360
Speaker 1: generate leverage on the common yeah? Right? And so everything

1526
01:29:23,400 --> 01:29:26,879
Speaker 1: I'm describing is it's not we didn't invent that, Yeah,

1527
01:29:27,000 --> 01:29:29,280
Speaker 1: there's five thousand banks in the country right now. There

1528
01:29:29,280 --> 01:29:32,639
Speaker 1: are twenty five thousand banks one hundred years ago, thousands

1529
01:29:32,720 --> 01:29:35,200
Speaker 1: and thousands of banks, and you know, all sorts of

1530
01:29:35,240 --> 01:29:41,719
Speaker 1: finance companies. They generate intelligent leverage using various various tiers

1531
01:29:41,720 --> 01:29:47,840
Speaker 1: of equity, capital, mezzanine equity, preferred equity, senior, preferred, junior, preferred,

1532
01:29:48,479 --> 01:29:51,080
Speaker 1: little bit of debt, and then they got common equity.

1533
01:29:52,320 --> 01:29:54,840
Speaker 1: And the question is, so why, I mean, why does

1534
01:29:54,880 --> 01:29:57,400
Speaker 1: your favorite bank have to issue anything at all? They're

1535
01:29:57,439 --> 01:29:59,679
Speaker 1: the bank. And the answer is because they're actually creating

1536
01:29:59,680 --> 01:30:02,240
Speaker 1: a luck. What are you on the They're generating leverage

1537
01:30:02,280 --> 01:30:05,479
Speaker 1: on the common that's all. I mean, JP Morgan, all

1538
01:30:05,520 --> 01:30:09,080
Speaker 1: these they could basically pay off all their debt if

1539
01:30:09,080 --> 01:30:12,960
Speaker 1: they wanted. But the point is they're they're trying to

1540
01:30:13,000 --> 01:30:17,080
Speaker 1: create leverage on the common to give the common stock value.

1541
01:30:17,680 --> 01:30:23,599
Speaker 1: So the only difference is they're not really strategic about

1542
01:30:23,640 --> 01:30:26,040
Speaker 1: their They're not trying to make their credit instruments the

1543
01:30:26,040 --> 01:30:27,880
Speaker 1: best in the world and brag about it, make them

1544
01:30:27,920 --> 01:30:29,320
Speaker 1: homo genius and transparent.

1545
01:30:30,439 --> 01:30:33,720
Speaker 2: We are, right right, Yeah, they're trying to set the

1546
01:30:33,760 --> 01:30:35,840
Speaker 2: terms for them. You're trying to set the terms for

1547
01:30:35,880 --> 01:30:38,719
Speaker 2: the customer. So it's like a different difference. Yeah, different

1548
01:30:38,720 --> 01:30:42,160
Speaker 2: there part of there you talk about the common I

1549
01:30:42,200 --> 01:30:44,479
Speaker 2: remember in Prague you talked about you give a vivid

1550
01:30:44,479 --> 01:30:50,360
Speaker 2: example how how MSTR trades as volatilated bitcoin and everybody

1551
01:30:50,439 --> 01:30:52,800
Speaker 2: wants it to trade volatileated bitcoin. And you gave this

1552
01:30:52,880 --> 01:30:54,559
Speaker 2: example that if God came and spoke to you tonight

1553
01:30:54,560 --> 01:30:56,040
Speaker 2: and told you the market was going to crash tomorrow,

1554
01:30:56,080 --> 01:30:58,120
Speaker 2: and you woke up and headed your position in the

1555
01:30:58,120 --> 01:31:00,519
Speaker 2: market crash, but Microsoft didn't go down, be great, And

1556
01:31:00,560 --> 01:31:02,840
Speaker 2: you said, no, that wouldn't because the market expects us

1557
01:31:02,880 --> 01:31:06,200
Speaker 2: to move with bitcoin. And I think you were trying

1558
01:31:06,240 --> 01:31:08,599
Speaker 2: to explain to us during that during that is that

1559
01:31:09,240 --> 01:31:11,800
Speaker 2: sort of when the company is lean and sort of

1560
01:31:11,840 --> 01:31:15,000
Speaker 2: strips down, it can trade volatility to bitcoin. And so

1561
01:31:15,040 --> 01:31:17,960
Speaker 2: I'm curious your take on sort of then having like

1562
01:31:18,000 --> 01:31:21,760
Speaker 2: that pure play company versus a company that's like a

1563
01:31:22,439 --> 01:31:27,920
Speaker 2: big underlying business that has a bitcoin treasury, and how

1564
01:31:28,000 --> 01:31:31,360
Speaker 2: that then maybe maybe potentially takes that common away from

1565
01:31:31,360 --> 01:31:33,639
Speaker 2: really being used like in the ATM, sort of almost

1566
01:31:33,640 --> 01:31:34,840
Speaker 2: neutralizes that part of the tool.

1567
01:31:34,960 --> 01:31:38,600
Speaker 1: Yeah, so you can have an operating company h that

1568
01:31:38,720 --> 01:31:42,759
Speaker 1: has cash flows that uses bitcoin as a treasury asset,

1569
01:31:44,080 --> 01:31:47,880
Speaker 1: if it's a retailer, if it's a utley company, a

1570
01:31:47,920 --> 01:31:51,160
Speaker 1: power company and water company, of you know, fill in

1571
01:31:51,200 --> 01:31:54,599
Speaker 1: the blank software company. The world's every one of the

1572
01:31:54,760 --> 01:31:57,680
Speaker 1: mag seven companies. The world's full of companies that have

1573
01:31:57,760 --> 01:32:01,200
Speaker 1: good businesses to generate cash flows, but they have a

1574
01:32:01,280 --> 01:32:06,520
Speaker 1: defective treasury strategy. All of those companies have a treasury

1575
01:32:06,720 --> 01:32:11,840
Speaker 1: which is not schinerating shareholder value. Right, if you take

1576
01:32:11,960 --> 01:32:14,880
Speaker 1: a billion dollars and you buy money markets with it,

1577
01:32:14,960 --> 01:32:20,200
Speaker 1: the yeld two percent are three percent after tax, and

1578
01:32:20,360 --> 01:32:24,160
Speaker 1: if the S and P is generating fourteen percent, then

1579
01:32:24,200 --> 01:32:28,280
Speaker 1: you've underperformed the cost to capital by eleven percent. Therefore,

1580
01:32:28,520 --> 01:32:32,080
Speaker 1: your treasury is a cost center, not a profit center

1581
01:32:32,200 --> 01:32:35,799
Speaker 1: for the shareholders. And so what happens is it shribles

1582
01:32:35,880 --> 01:32:40,280
Speaker 1: up the company, basically decapitalizes the balance sheet, and they

1583
01:32:40,280 --> 01:32:43,479
Speaker 1: give all the money away. And that it just describes

1584
01:32:43,479 --> 01:32:46,320
Speaker 1: in a nutshell, every well run company in the United States,

1585
01:32:46,400 --> 01:32:52,920
Speaker 1: right except Berkshire, Hathway, everyonewhere else, like all the MAGS seven.

1586
01:32:53,400 --> 01:32:56,720
Speaker 1: What they do is they defund the treasury. So if

1587
01:32:56,760 --> 01:33:00,840
Speaker 1: you're one of those companies, you could just place money

1588
01:33:00,840 --> 01:33:06,240
Speaker 1: markets with well, you could replace it with bitcoin instead,

1589
01:33:06,240 --> 01:33:09,920
Speaker 1: and bitcoin is fifty percent, or let's say a reasonable

1590
01:33:09,920 --> 01:33:13,280
Speaker 1: twenty year forecast is thirty percent. If you're a believer,

1591
01:33:14,240 --> 01:33:18,040
Speaker 1: twenty percent of you're an investor, ten percent of your

1592
01:33:18,080 --> 01:33:21,840
Speaker 1: a skeptic. Right, But whether it's ten or twenty or

1593
01:33:21,880 --> 01:33:25,240
Speaker 1: thirty percent, they're all better than two percent or three percent,

1594
01:33:25,280 --> 01:33:31,040
Speaker 1: which is the status quo. Right, So if you're in

1595
01:33:31,120 --> 01:33:36,040
Speaker 1: the twenty or thirty percent camp, it outperforms the hurdle rate,

1596
01:33:36,080 --> 01:33:37,920
Speaker 1: which is the S and P index. And so at

1597
01:33:37,920 --> 01:33:40,639
Speaker 1: that point, the treasury in the balance sheet becomes profit center,

1598
01:33:40,720 --> 01:33:43,519
Speaker 1: which means that you would stop paying dividends, you would

1599
01:33:43,520 --> 01:33:47,800
Speaker 1: stop doing buybacks, you would roll it into bitcoin, and

1600
01:33:47,840 --> 01:33:51,479
Speaker 1: the company's market cap would grow faster and the stock

1601
01:33:51,479 --> 01:33:55,000
Speaker 1: would grow faster. Right, So that's whay to create sheeriolder value.

1602
01:33:56,160 --> 01:33:58,920
Speaker 1: You won't be better than us, you won't be better

1603
01:33:58,960 --> 01:34:02,759
Speaker 1: than a pure play try company, but you'll be better

1604
01:34:02,880 --> 01:34:07,280
Speaker 1: than your peers. Right, Like, if if you're a native

1605
01:34:07,320 --> 01:34:09,840
Speaker 1: business or your organic business is growing ten percent, you

1606
01:34:09,840 --> 01:34:14,439
Speaker 1: will go thirteen. Right. If every other retailer is losing money,

1607
01:34:14,479 --> 01:34:21,439
Speaker 1: you'll make money. Right. What we've done is created a

1608
01:34:21,479 --> 01:34:25,960
Speaker 1: pure treasury company. So risk, our risk free rate, our

1609
01:34:25,960 --> 01:34:28,599
Speaker 1: HERD rate is thirty percent. That's what I expect at

1610
01:34:28,600 --> 01:34:32,080
Speaker 1: a bitcoin over the next twenty years, twenty nine percent

1611
01:34:32,120 --> 01:34:35,840
Speaker 1: of let's call it thirty percent round up. So my

1612
01:34:36,520 --> 01:34:39,320
Speaker 1: benchmark rate is thirty percent. If I put leverage on it,

1613
01:34:39,360 --> 01:34:43,599
Speaker 1: I should be we'll grow fifty or forty. I don't

1614
01:34:43,640 --> 01:34:48,080
Speaker 1: think there's any any non financial company. There's no there's

1615
01:34:48,120 --> 01:34:50,760
Speaker 1: no physical company that's going to actually appreciate at that

1616
01:34:50,880 --> 01:34:53,400
Speaker 1: rate because you can't do it with real estate or

1617
01:34:53,400 --> 01:34:57,160
Speaker 1: oil or natural gas. The investment cycles are too slow,

1618
01:34:58,240 --> 01:35:02,080
Speaker 1: you know, the develop cycles are too slow, the risks

1619
01:35:02,080 --> 01:35:07,000
Speaker 1: are too ineff of ball, et cetera. So I would say,

1620
01:35:07,640 --> 01:35:12,360
Speaker 1: across thousands of companies, every company ought to recapitalize their

1621
01:35:12,400 --> 01:35:14,960
Speaker 1: balance sheet on bitcoin because that will cause them to

1622
01:35:15,000 --> 01:35:18,760
Speaker 1: grow fifty percent faster than their peers or than they

1623
01:35:18,760 --> 01:35:23,120
Speaker 1: would otherwise. They'll just be better and the compounds. Yeah,

1624
01:35:23,120 --> 01:35:25,160
Speaker 1: so a billion dollar company will be worth ten billion

1625
01:35:25,200 --> 01:35:30,040
Speaker 1: dollars instead of two billion dollars in a decade. Okay,

1626
01:35:30,160 --> 01:35:32,400
Speaker 1: if they were a pure play, they might go from

1627
01:35:32,439 --> 01:35:35,800
Speaker 1: a billion dollars to one hundred billion. They won't do that,

1628
01:35:36,840 --> 01:35:39,760
Speaker 1: but that's not their bogie, And the truth is they

1629
01:35:39,760 --> 01:35:42,720
Speaker 1: probably can't get political consensus to change their retail or

1630
01:35:42,760 --> 01:35:46,439
Speaker 1: to sell the retail business and become a pure financial company.

1631
01:35:46,439 --> 01:35:49,439
Speaker 1: That's probably not going to happen. So I just think

1632
01:35:50,479 --> 01:35:54,600
Speaker 1: it's not a bad idea, but your expectations ought to

1633
01:35:54,600 --> 01:36:00,320
Speaker 1: be adjusted based upon the enterprise value mix, right Yeah.

1634
01:36:00,479 --> 01:36:03,720
Speaker 1: Like if Microsoft bought one hundred million dollars a bitcoin tomorrow,

1635
01:36:04,840 --> 01:36:07,680
Speaker 1: ninety eight percent of the enterprise value would still be

1636
01:36:08,000 --> 01:36:11,240
Speaker 1: index to the software business, right yeah. If they bought

1637
01:36:11,240 --> 01:36:14,519
Speaker 1: a trillion dollars a bitcoin tomorrow, they still be seventy

1638
01:36:14,560 --> 01:36:18,519
Speaker 1: five percent indexed to the software business. So you can't

1639
01:36:18,600 --> 01:36:24,879
Speaker 1: get to one hundred percent digital exposure unless you actually

1640
01:36:24,920 --> 01:36:26,639
Speaker 1: start with a clean balance sheet.

1641
01:36:26,400 --> 01:36:28,479
Speaker 2: And starting with a clean balancee So it seems like

1642
01:36:28,520 --> 01:36:30,400
Speaker 2: for the new crop of companies that are starting up

1643
01:36:31,200 --> 01:36:33,640
Speaker 2: in micro strategy, when you raise the convertible debt, then

1644
01:36:33,680 --> 01:36:35,160
Speaker 2: you had the debt to cover. So then there was

1645
01:36:35,200 --> 01:36:36,800
Speaker 2: a lot of questions in the industry about how you

1646
01:36:37,120 --> 01:36:39,360
Speaker 2: cover the debt with the underlining business model. But in

1647
01:36:39,479 --> 01:36:42,040
Speaker 2: sort of the strategy two point zero version skipt that

1648
01:36:42,280 --> 01:36:44,120
Speaker 2: if you could just go raise a billion dollars of

1649
01:36:44,120 --> 01:36:46,120
Speaker 2: bitcoin and start issuing preferred SR doing.

1650
01:36:46,040 --> 01:36:48,559
Speaker 1: It again, I'd raise a billion dollars, I'd take the

1651
01:36:48,640 --> 01:36:52,040
Speaker 1: thing public, and then I'd sell one hundred million, two

1652
01:36:52,160 --> 01:36:54,519
Speaker 1: hundred million, three hundred million worth of preferred stock as

1653
01:36:54,560 --> 01:36:57,320
Speaker 1: soon as possible yep. And then I'd rock back and

1654
01:36:57,360 --> 01:37:00,280
Speaker 1: forth between levering delevering the thing, and I would grow

1655
01:37:00,320 --> 01:37:06,120
Speaker 1: it with the minimum most elegant set of credit instruments. Well,

1656
01:37:06,160 --> 01:37:08,559
Speaker 1: if you look at expansions for US right now, stretch

1657
01:37:08,600 --> 01:37:11,760
Speaker 1: seems like the killer product in the US. Maybe we

1658
01:37:11,840 --> 01:37:15,360
Speaker 1: do the same thing in yen or euros or Canadian

1659
01:37:15,439 --> 01:37:18,400
Speaker 1: or pounds, right, But otherwise there's nothing else that's all

1660
01:37:18,479 --> 01:37:22,160
Speaker 1: that exciting, right, I mean, and even those things are

1661
01:37:22,640 --> 01:37:25,559
Speaker 1: much less exciting than just growing the business in the

1662
01:37:25,680 --> 01:37:27,000
Speaker 1: US by a factor of one hundred.

1663
01:37:27,200 --> 01:37:30,240
Speaker 2: Yeah. So speaking of that, then in New York you

1664
01:37:30,280 --> 01:37:32,519
Speaker 2: had talked about the potential to have a thousand of

1665
01:37:32,560 --> 01:37:36,479
Speaker 2: these companies. Yeah, when you think about if it's just

1666
01:37:36,520 --> 01:37:39,160
Speaker 2: as simple as just selling that one product, can there

1667
01:37:39,160 --> 01:37:41,640
Speaker 2: be a thousand companies selling that one product? Or is

1668
01:37:41,640 --> 01:37:43,439
Speaker 2: it that there's going to be a thousand companies each

1669
01:37:43,479 --> 01:37:47,000
Speaker 2: doing their own variations. Some are like more like insurance companies.

1670
01:37:47,320 --> 01:37:48,880
Speaker 2: Some of the more like banks is we have ten

1671
01:37:48,880 --> 01:37:50,960
Speaker 2: major banks, there's a lot of products. There's thousands of

1672
01:37:51,000 --> 01:37:52,960
Speaker 2: regional banks. There's like ten major banks.

1673
01:37:53,479 --> 01:37:58,400
Speaker 1: Yeah, so I think there's huge amount of How many

1674
01:37:58,439 --> 01:38:01,840
Speaker 1: insurance companies are there in the world, a lot. How

1675
01:38:01,880 --> 01:38:04,120
Speaker 1: many life insurance companies are there in the world that's

1676
01:38:04,160 --> 01:38:07,519
Speaker 1: sell essentially the same exact product, right, like more than

1677
01:38:07,560 --> 01:38:08,320
Speaker 1: a dozen.

1678
01:38:08,360 --> 01:38:09,759
Speaker 2: And they're completely different than banks.

1679
01:38:10,600 --> 01:38:14,120
Speaker 1: Yeah. How many car insurance companies? Right? How many dn

1680
01:38:14,160 --> 01:38:16,240
Speaker 1: O insurance? How many reinsurance companies?

1681
01:38:16,920 --> 01:38:17,000
Speaker 2: Like?

1682
01:38:17,080 --> 01:38:20,000
Speaker 1: So off the top of my head. Products the obvious

1683
01:38:20,040 --> 01:38:27,920
Speaker 1: ones yourself, treasury credit in every country in the world, Brazil, Argentina. Look,

1684
01:38:28,160 --> 01:38:30,760
Speaker 1: you won't be better than a US company, but you

1685
01:38:30,760 --> 01:38:35,120
Speaker 1: will be better than every Argentine company, right the Brazil

1686
01:38:35,240 --> 01:38:38,280
Speaker 1: you know, Brazilian treasury company. It won't be as good

1687
01:38:38,320 --> 01:38:41,800
Speaker 1: as the US one, but it will be better than

1688
01:38:41,840 --> 01:38:45,080
Speaker 1: every country in Brazil. And by the way, in that

1689
01:38:45,160 --> 01:38:48,040
Speaker 1: way it may become better because if you're this, if

1690
01:38:48,040 --> 01:38:52,080
Speaker 1: you're the most compelling, fastest growing company in Brazil, then

1691
01:38:52,120 --> 01:38:54,760
Speaker 1: aren't you going to slurp up all the equity capital

1692
01:38:54,800 --> 01:38:57,040
Speaker 1: and all the credit capital in the entire country?

1693
01:38:57,439 --> 01:38:57,759
Speaker 2: Right?

1694
01:38:59,080 --> 01:39:03,920
Speaker 1: Which is, which is interesting. So you can do this.

1695
01:39:05,760 --> 01:39:11,040
Speaker 1: There's place to create a treasury company in Switzerland, the

1696
01:39:11,120 --> 01:39:13,800
Speaker 1: twenty sixth country is it twenty six or twenty seven

1697
01:39:13,800 --> 01:39:17,559
Speaker 1: countries in the Eurozone, they're all different. There's a German one,

1698
01:39:17,600 --> 01:39:21,000
Speaker 1: a French one, a Swedish one, in Norwegian one. You

1699
01:39:21,080 --> 01:39:30,160
Speaker 1: can do you know, Netherlands, Belgium, UK, Ireland, Spain, Portugal, Italy, right,

1700
01:39:30,400 --> 01:39:37,760
Speaker 1: you know, and then Japan, Korea, China, China, Kingdom of

1701
01:39:37,760 --> 01:39:47,640
Speaker 1: Saudi Arabia, India, Australia, Canada, Mexico. Okay, So there you

1702
01:39:47,680 --> 01:39:51,400
Speaker 1: could just be the first provider of digital credit, right,

1703
01:39:51,479 --> 01:39:53,880
Speaker 1: and maybe you sell kerosene, you sell stretch, but then

1704
01:39:53,880 --> 01:39:57,479
Speaker 1: maybe you also sell long duration credit or convertible credit

1705
01:39:57,520 --> 01:40:01,680
Speaker 1: or whatever. But then let's I've I've broken it down geographically,

1706
01:40:01,880 --> 01:40:04,080
Speaker 1: but then let's come back to the US and break

1707
01:40:04,120 --> 01:40:07,840
Speaker 1: it down by industry sector. Right, you could be the

1708
01:40:07,840 --> 01:40:12,320
Speaker 1: one that specializes in insurance or feeding the insurance company.

1709
01:40:12,400 --> 01:40:15,240
Speaker 1: Or you could create a credit product that's like a

1710
01:40:15,280 --> 01:40:19,920
Speaker 1: reinsurance product. Right, you could you could create various credit

1711
01:40:19,960 --> 01:40:24,800
Speaker 1: products that are tailored to the life insurance, the annuities

1712
01:40:25,760 --> 01:40:28,320
Speaker 1: that you know, every other type of insurance, you know,

1713
01:40:28,439 --> 01:40:33,519
Speaker 1: flood casualty, property insurance businesses. There are a lot of

1714
01:40:33,600 --> 01:40:36,519
Speaker 1: buyers in the market, fixed income buyers. They just will

1715
01:40:36,560 --> 01:40:41,280
Speaker 1: not buy prefers no matter what. They'll want to buy bonds. Okay,

1716
01:40:41,320 --> 01:40:44,120
Speaker 1: So I don't want to sell them because it doesn't

1717
01:40:44,160 --> 01:40:46,599
Speaker 1: make sense for me. But if you were saying, Mike,

1718
01:40:46,640 --> 01:40:48,960
Speaker 1: I got ten billion dollars, I want to compete with you,

1719
01:40:49,000 --> 01:40:51,280
Speaker 1: and I want to grow just fast or what it

1720
01:40:51,280 --> 01:40:54,080
Speaker 1: should I pick up, I'm like, man, I'm not going

1721
01:40:54,160 --> 01:40:56,320
Speaker 1: to do ten year bonds. Why don't you just do

1722
01:40:56,400 --> 01:40:58,920
Speaker 1: what I did, but raise ten billion dollars and issue

1723
01:40:59,000 --> 01:41:02,400
Speaker 1: a billion dollars a bar. It'll do one for four

1724
01:41:02,479 --> 01:41:05,000
Speaker 1: A offerings. Not compete with me. By the way, the

1725
01:41:05,040 --> 01:41:09,040
Speaker 1: market loves them. Yeah, start to do basically over the

1726
01:41:09,080 --> 01:41:12,559
Speaker 1: counter institutional bond offerings. And the debate is do you

1727
01:41:12,600 --> 01:41:16,160
Speaker 1: sell five year instruments. I'm gonna sell five year secured

1728
01:41:16,200 --> 01:41:19,599
Speaker 1: bonds and I'm gonna roll them every quarter, or I'm

1729
01:41:19,600 --> 01:41:22,080
Speaker 1: gonna say, you know, you could go and do the

1730
01:41:22,120 --> 01:41:24,880
Speaker 1: convertible bond market if you want, or you could do unsecured,

1731
01:41:24,960 --> 01:41:27,320
Speaker 1: or you could do secure. I'm like, Mike, I found

1732
01:41:27,360 --> 01:41:29,720
Speaker 1: like the biggest insurance company in the US. They don't

1733
01:41:29,760 --> 01:41:32,280
Speaker 1: want to prefer, they don't want the converts, but they

1734
01:41:32,320 --> 01:41:35,080
Speaker 1: would take senior debt as long as it's they've got

1735
01:41:35,080 --> 01:41:38,160
Speaker 1: a claim on the capitol for up to twenty percent

1736
01:41:38,160 --> 01:41:42,360
Speaker 1: of the capital structure or whatever. Yeah, and they have

1737
01:41:42,400 --> 01:41:45,800
Speaker 1: one hundred billion dollars they'll give me. Do you want it?

1738
01:41:45,840 --> 01:41:49,400
Speaker 1: I'm like, I don't want it right now. It confuses

1739
01:41:49,439 --> 01:41:54,040
Speaker 1: my story, confuses my investors. It puts credit risk senior

1740
01:41:54,160 --> 01:41:56,479
Speaker 1: to all my other instruments, and that kind of is

1741
01:41:56,520 --> 01:41:59,960
Speaker 1: not good for my capital structure. But should you take it? Absolutely?

1742
01:42:00,960 --> 01:42:03,920
Speaker 1: You could probably take one hundred billion dollars. There's probably

1743
01:42:03,920 --> 01:42:07,000
Speaker 1: a one hundred billion dollars senior debt thing, one hundred

1744
01:42:07,000 --> 01:42:10,000
Speaker 1: billion dollars of junk unsecure. There's one hundred billion dollars

1745
01:42:10,080 --> 01:42:12,240
Speaker 1: or fifty billion to take out of the convert market.

1746
01:42:12,720 --> 01:42:15,640
Speaker 1: You could probably write all sorts of custom instruments for

1747
01:42:15,680 --> 01:42:19,240
Speaker 1: the annuity industry, the insurance industry, and guess what, none

1748
01:42:19,240 --> 01:42:22,040
Speaker 1: of that's going to be interesting to the Japanese insurance companies.

1749
01:42:23,160 --> 01:42:25,920
Speaker 1: They're going to want different. So when you say what

1750
01:42:26,000 --> 01:42:29,720
Speaker 1: are all the products, I think the products are if

1751
01:42:29,720 --> 01:42:34,000
Speaker 1: there's three hundred trillion dollars of credit instruments. I think

1752
01:42:34,040 --> 01:42:38,439
Speaker 1: the products are every possible currency every by the way,

1753
01:42:38,439 --> 01:42:42,200
Speaker 1: we can say euro, but you know, French bonds and

1754
01:42:42,320 --> 01:42:47,000
Speaker 1: euros aren't the same as German bonds and euros, right,

1755
01:42:47,040 --> 01:42:52,639
Speaker 1: So it's like every type of currency, every jurisdiction, every

1756
01:42:52,800 --> 01:42:57,080
Speaker 1: type of credits, every flavor of credit. You know, we

1757
01:42:57,160 --> 01:42:59,439
Speaker 1: issued a lot of things that you know. And then

1758
01:42:59,479 --> 01:43:02,920
Speaker 1: every districtribution channel do you go public on that exchange?

1759
01:43:02,960 --> 01:43:08,120
Speaker 1: Do you do direct institutional sales? It's not clear to me.

1760
01:43:08,280 --> 01:43:10,519
Speaker 1: For example, we couldn't do something where we just like

1761
01:43:10,600 --> 01:43:13,479
Speaker 1: roll ten year bonds and you know, it's like, how

1762
01:43:13,479 --> 01:43:15,360
Speaker 1: do you handle the credit risk? Well, just every year

1763
01:43:15,400 --> 01:43:17,639
Speaker 1: we'll refinance ten percent of them, will never have more

1764
01:43:17,640 --> 01:43:21,439
Speaker 1: than ten percent, or maybe I'll just refinancing them every quarter.

1765
01:43:21,520 --> 01:43:25,080
Speaker 1: I'll never have more than two percent two and a

1766
01:43:25,120 --> 01:43:30,320
Speaker 1: half percent. So there there are other credit products that

1767
01:43:30,360 --> 01:43:35,960
Speaker 1: can be created. There are other buyers, they're investors, right,

1768
01:43:36,240 --> 01:43:39,519
Speaker 1: But then again there's also corporations that would bypass, so

1769
01:43:40,479 --> 01:43:43,559
Speaker 1: like the pension funds and the insurance companies would get

1770
01:43:43,600 --> 01:43:46,400
Speaker 1: you could go direct to them and open up a pipe,

1771
01:43:46,960 --> 01:43:49,479
Speaker 1: and then there are all the bond traders and the

1772
01:43:49,479 --> 01:43:52,599
Speaker 1: pimcos and the vanguards and the fidelities of the world,

1773
01:43:52,680 --> 01:43:57,880
Speaker 1: and indirectly the pension funds and the endowments are behind them,

1774
01:43:57,920 --> 01:44:01,479
Speaker 1: right yeah, so you know, you might be able to

1775
01:44:01,479 --> 01:44:05,320
Speaker 1: create the perfect product for an endowment. It's like, well,

1776
01:44:05,360 --> 01:44:07,599
Speaker 1: we like bitcoin, but we don't want we can't stomach

1777
01:44:07,640 --> 01:44:11,680
Speaker 1: the volatility. Can you just give me a ten percent guarantee?

1778
01:44:13,080 --> 01:44:16,080
Speaker 1: And then and then there's issue of liquidity, like, well,

1779
01:44:16,160 --> 01:44:18,519
Speaker 1: we would give you ten billion dollars, but we need

1780
01:44:18,520 --> 01:44:20,800
Speaker 1: the right to redeem five hundred million in any given

1781
01:44:20,880 --> 01:44:24,519
Speaker 1: quarter direct from you. Like I wouldn't do that deal

1782
01:44:25,240 --> 01:44:30,040
Speaker 1: like for my company because it's complicating for me. But

1783
01:44:30,240 --> 01:44:33,000
Speaker 1: you might do that deal if the choice was have

1784
01:44:33,000 --> 01:44:35,320
Speaker 1: one hundred million dollar company and agree to create five

1785
01:44:35,360 --> 01:44:39,719
Speaker 1: hundred million dollars in cash on hand or not, right right, yeah,

1786
01:44:39,880 --> 01:44:42,920
Speaker 1: And but we haven't explored that. But but there's a

1787
01:44:42,920 --> 01:44:44,880
Speaker 1: lot of there's a lot of you could create a

1788
01:44:45,000 --> 01:44:48,559
Speaker 1: quasi money market instrument where you are actually you know,

1789
01:44:48,760 --> 01:44:52,680
Speaker 1: Alix kept five percent of all the capital available for

1790
01:44:52,760 --> 01:44:55,600
Speaker 1: ready redemption on a daily basis, and then you you

1791
01:44:55,640 --> 01:45:01,240
Speaker 1: know how funds they'll create gated redemption windows, Like you're

1792
01:45:01,280 --> 01:45:03,439
Speaker 1: invested with me for seven years, but once a quarter

1793
01:45:03,560 --> 01:45:05,080
Speaker 1: you have a one day when you can give me

1794
01:45:05,200 --> 01:45:07,960
Speaker 1: redemt you can call, you could put you could put

1795
01:45:08,040 --> 01:45:11,000
Speaker 1: call options and put rights or redemption rights into a

1796
01:45:11,040 --> 01:45:18,200
Speaker 1: preferred stock. I haven't you could. It's a different product,

1797
01:45:19,120 --> 01:45:23,720
Speaker 1: you No, some people like polyester, some people like lycra Yeah,

1798
01:45:23,800 --> 01:45:27,800
Speaker 1: you know, nylon. Yeah, right there, there's a lot of

1799
01:45:27,840 --> 01:45:32,040
Speaker 1: things you can do with carbon, hydrogen and oxygen.

1800
01:45:32,400 --> 01:45:33,880
Speaker 2: Yeah, and not everyone's going to want to do all

1801
01:45:33,920 --> 01:45:37,120
Speaker 2: those things. In the US, we have almost five thousand

1802
01:45:37,160 --> 01:45:40,479
Speaker 2: ETFs that are each just a little flavor of something, right,

1803
01:45:40,920 --> 01:45:42,479
Speaker 2: thousands of bonds and a lot of.

1804
01:45:42,520 --> 01:45:44,720
Speaker 1: Us question of what can you market? More like, what

1805
01:45:44,760 --> 01:45:47,240
Speaker 1: can you sell? And what I think there is there'll

1806
01:45:47,280 --> 01:45:52,080
Speaker 1: be a Cambrian explosion in digital credit issuers and there's

1807
01:45:52,120 --> 01:45:53,960
Speaker 1: all you know, You're like, well, isn't that a lot

1808
01:45:53,960 --> 01:45:56,479
Speaker 1: of stuff? Well have you ever studied the mortgage backed

1809
01:45:56,479 --> 01:46:01,080
Speaker 1: security industry? You know, I mean thinks people created. Yeah,

1810
01:46:01,840 --> 01:46:06,479
Speaker 1: I mean there's hundreds of thousands of credit instruments, maybe

1811
01:46:06,560 --> 01:46:10,840
Speaker 1: millions of credit instruments, and you know, start to go

1812
01:46:10,960 --> 01:46:14,240
Speaker 1: online and figure out every possible twist and turn of

1813
01:46:14,280 --> 01:46:18,840
Speaker 1: every credit instrument. The average person can't even name the

1814
01:46:18,880 --> 01:46:24,200
Speaker 1: top five categories or top ten categories. So there's an

1815
01:46:24,240 --> 01:46:30,000
Speaker 1: industry there. The beauty is, the beauty is, there's a

1816
01:46:30,120 --> 01:46:32,960
Speaker 1: there's a methodology or a distribution channel to figure out

1817
01:46:33,000 --> 01:46:35,839
Speaker 1: whether your idea is a good one. Like you create

1818
01:46:36,600 --> 01:46:39,800
Speaker 1: a security and you go and you offer it, and

1819
01:46:39,840 --> 01:46:42,000
Speaker 1: it's a two day road show or a one day

1820
01:46:42,080 --> 01:46:44,599
Speaker 1: road show, and the investors are either going to buy

1821
01:46:44,640 --> 01:46:46,880
Speaker 1: two hundred and fifty million dollars of it in one

1822
01:46:46,960 --> 01:46:48,479
Speaker 1: day or they're going to tell you we don't want

1823
01:46:48,479 --> 01:46:52,240
Speaker 1: any of it. It's very So you can create billion

1824
01:46:52,280 --> 01:46:58,000
Speaker 1: dollar product lines in a conversation with the investors in

1825
01:46:58,040 --> 01:47:03,520
Speaker 1: a one forty four a offering. How many consumer products

1826
01:47:04,080 --> 01:47:06,240
Speaker 1: that are a billion dollars can you create in two

1827
01:47:06,320 --> 01:47:10,960
Speaker 1: days where you know for certainty it's going to work. Yeah,

1828
01:47:10,560 --> 01:47:15,600
Speaker 1: So I think that the capital markets are primed for

1829
01:47:15,880 --> 01:47:20,840
Speaker 1: innovative digital credit issues to go and create a dozen different, interesting,

1830
01:47:20,920 --> 01:47:24,720
Speaker 1: compelling things. You might not come up with the thing

1831
01:47:24,760 --> 01:47:27,559
Speaker 1: they want, but you won't spend more than a few

1832
01:47:27,640 --> 01:47:33,639
Speaker 1: days finding out. And you know, in the real estate business,

1833
01:47:33,680 --> 01:47:35,960
Speaker 1: people create a billion dollar building and no one's to

1834
01:47:36,040 --> 01:47:38,240
Speaker 1: lease it and it takes five years and they lose

1835
01:47:38,280 --> 01:47:42,439
Speaker 1: a billion dollars. Yeah, that's never going to happen with

1836
01:47:42,520 --> 01:47:44,000
Speaker 1: the digital credit instrument.

1837
01:47:44,760 --> 01:47:47,320
Speaker 2: Yeah, you can essentially sell it before you build it.

1838
01:47:48,479 --> 01:47:51,719
Speaker 1: Like we're literally building it in real time, right mark,

1839
01:47:52,120 --> 01:47:56,480
Speaker 1: Like we're open for business every day with four credit ATMs.

1840
01:47:56,479 --> 01:47:58,479
Speaker 1: If someone hit the bid and wanted to buy five

1841
01:47:58,560 --> 01:48:04,320
Speaker 1: hundred million dollars in a minute, we build a building

1842
01:48:04,360 --> 01:48:07,639
Speaker 1: in a minute. Yeah, in sixty seconds, trade is done,

1843
01:48:08,520 --> 01:48:13,040
Speaker 1: cash changes hands, we create the collateral, we bought the

1844
01:48:13,080 --> 01:48:20,479
Speaker 1: bitcoin underlying that day. Sometimes we're literally selling fifty million

1845
01:48:20,520 --> 01:48:22,759
Speaker 1: an hour or one hundred million an hour and buying

1846
01:48:22,760 --> 01:48:27,280
Speaker 1: one hundred million dollars a bitcoin the same hour. Like

1847
01:48:27,439 --> 01:48:31,360
Speaker 1: we could do a billion dollars of capital raising in

1848
01:48:31,400 --> 01:48:34,560
Speaker 1: a day, and we might have twenty million of exposure

1849
01:48:34,800 --> 01:48:39,160
Speaker 1: at four pm, and by five or six pm, we're

1850
01:48:39,160 --> 01:48:44,559
Speaker 1: fully done. The investment cycle is one thousand times faster

1851
01:48:45,960 --> 01:48:51,680
Speaker 1: than technology, real estate, oil and gas, anything else you've

1852
01:48:51,720 --> 01:48:54,320
Speaker 1: ever seen before in your life. And maybe the more

1853
01:48:54,320 --> 01:48:58,240
Speaker 1: profound idea is think about all these other credit instruments.

1854
01:48:58,520 --> 01:49:02,960
Speaker 1: You know, what's backing corporate credit, what's backing mortgage credit,

1855
01:49:03,040 --> 01:49:06,080
Speaker 1: what's backing bank credit, what's backing all the you know

1856
01:49:06,160 --> 01:49:08,920
Speaker 1: all these things. If you saw a billion dollars of

1857
01:49:09,000 --> 01:49:11,759
Speaker 1: mortgage backed securities, who's going to build a billion dollars

1858
01:49:11,760 --> 01:49:13,880
Speaker 1: worth of real estate that someone wants to rent? And

1859
01:49:13,920 --> 01:49:18,719
Speaker 1: how long will that take? So this is a profound

1860
01:49:18,760 --> 01:49:24,560
Speaker 1: new idea and and that's why those digital credit issuers

1861
01:49:24,600 --> 01:49:25,599
Speaker 1: can grow so fast.

1862
01:49:26,439 --> 01:49:28,640
Speaker 2: Man, you've explained it so well. I'm gonna I'm going

1863
01:49:28,680 --> 01:49:31,599
Speaker 2: to wrap it up with this last question here since

1864
01:49:31,640 --> 01:49:35,080
Speaker 2: we're here in Washington, DC and the nation's capital at

1865
01:49:35,120 --> 01:49:38,080
Speaker 2: the at the keynote you justcabed earlier. I love the

1866
01:49:38,080 --> 01:49:39,680
Speaker 2: way that you closed it down. It was like this

1867
01:49:39,720 --> 01:49:42,960
Speaker 2: empowering message of sort of telling people like this amazing

1868
01:49:42,960 --> 01:49:45,280
Speaker 2: opportunity that we have right now. The winds have shifted,

1869
01:49:45,360 --> 01:49:47,000
Speaker 2: like now is the time for those that want to

1870
01:49:47,040 --> 01:49:49,640
Speaker 2: embrace digital intelligence and digital capital. That's kind of how

1871
01:49:49,640 --> 01:49:53,280
Speaker 2: you said it in New York. You had said, I

1872
01:49:53,320 --> 01:49:55,280
Speaker 2: want to push back on the fix the money, fixed

1873
01:49:55,320 --> 01:49:58,559
Speaker 2: the world narrative, and because it was like, in order

1874
01:49:58,560 --> 01:50:01,479
Speaker 2: to succeed, we have to fix the equity and fix

1875
01:50:01,560 --> 01:50:03,320
Speaker 2: the funds and fix the mak. So we need to

1876
01:50:03,320 --> 01:50:04,920
Speaker 2: go build the world that we want, And so I'm

1877
01:50:04,920 --> 01:50:08,200
Speaker 2: just curious, while we're here in DC, think about bitcoin policy,

1878
01:50:08,760 --> 01:50:12,240
Speaker 2: how do you think we should be sort of fixing

1879
01:50:12,280 --> 01:50:16,040
Speaker 2: that in this political environment more of like a constitutionalist

1880
01:50:16,080 --> 01:50:17,760
Speaker 2: we're sort of trying to get them to sort of

1881
01:50:17,800 --> 01:50:20,760
Speaker 2: pass laws that sort of protect us, or we are

1882
01:50:20,760 --> 01:50:23,559
Speaker 2: we pushing for regulations that give us clarity and direction.

1883
01:50:24,360 --> 01:50:26,960
Speaker 1: Well, I think the good news is bitcoin has already

1884
01:50:26,960 --> 01:50:29,800
Speaker 1: got the best regulatory treatment of any digital asset in

1885
01:50:29,800 --> 01:50:35,519
Speaker 1: the world and has rights. It's globally recognized as a

1886
01:50:35,560 --> 01:50:40,599
Speaker 1: digital commodity and property, even in China. In China where

1887
01:50:40,600 --> 01:50:43,920
Speaker 1: crypto trading is illegal, where crypto mining is illegal, bitcoin

1888
01:50:43,960 --> 01:50:48,880
Speaker 1: mining is illegal, bitcoin holding is not illegal, and bitcoin

1889
01:50:49,000 --> 01:50:52,160
Speaker 1: is represented is recognized by the courts as digital property,

1890
01:50:52,200 --> 01:50:55,639
Speaker 1: as property you can own it. So we're already starting

1891
01:50:55,680 --> 01:50:59,719
Speaker 1: with a good place. If your business model is digital credit,

1892
01:51:00,520 --> 01:51:05,320
Speaker 1: we've already got pretty well developed credit laws. The US

1893
01:51:05,400 --> 01:51:08,080
Speaker 1: has the most advanced rules. So if you're a US

1894
01:51:08,160 --> 01:51:11,120
Speaker 1: company you could get There are a thousand ideas I

1895
01:51:11,240 --> 01:51:14,160
Speaker 1: just gave you who knows how many different ones. There's

1896
01:51:14,320 --> 01:51:17,000
Speaker 1: a thousand things you could do starting with bitcoin in

1897
01:51:17,000 --> 01:51:19,320
Speaker 1: a public created company. Right now, you don't need any

1898
01:51:20,680 --> 01:51:23,320
Speaker 1: regulatory changes, You don't need any new laws. You can

1899
01:51:23,360 --> 01:51:26,799
Speaker 1: go at it if you're a bitcoin treasury company outside

1900
01:51:26,840 --> 01:51:28,559
Speaker 1: the you and it's look that the Swiss are a

1901
01:51:28,560 --> 01:51:32,040
Speaker 1: bit behind on some things. The Europeans are slightly behind.

1902
01:51:32,400 --> 01:51:36,280
Speaker 1: They're slower on ATMs, the Swiss are slower on preferred stocks.

1903
01:51:36,280 --> 01:51:38,559
Speaker 1: The Japanese are a bit slower on this and that.

1904
01:51:38,920 --> 01:51:41,320
Speaker 1: So you have to go and lobby those regulators and

1905
01:51:41,360 --> 01:51:47,519
Speaker 1: those politicians to upgrade and update their exchanges, their rigs.

1906
01:51:48,439 --> 01:51:52,439
Speaker 1: Sometimes the tax code is prejudicial, you know, like in Japan,

1907
01:51:52,520 --> 01:51:55,280
Speaker 1: the taxes on bitcoin we're much higher than the taxes

1908
01:51:55,320 --> 01:52:00,760
Speaker 1: on equity. So any company has a responsibility for advocacy

1909
01:52:01,680 --> 01:52:05,439
Speaker 1: on behalf of its investors, you know, and on behalf

1910
01:52:05,439 --> 01:52:08,880
Speaker 1: of its constituents. We think about what's good for the

1911
01:52:08,920 --> 01:52:11,760
Speaker 1: credit buyers, and we think about what's good for the

1912
01:52:11,760 --> 01:52:14,559
Speaker 1: equity holders. Right, we think about what's good for the

1913
01:52:14,600 --> 01:52:18,040
Speaker 1: world and what's good for the United States, and we

1914
01:52:18,160 --> 01:52:22,080
Speaker 1: only advocate for things that are good for everybody. Right.

1915
01:52:22,240 --> 01:52:27,880
Speaker 1: The thing is, there are no losers here except the

1916
01:52:27,960 --> 01:52:34,680
Speaker 1: twentieth century antiquated oligopoly that is selling inferior credit instruments.

1917
01:52:35,439 --> 01:52:38,880
Speaker 1: So it's like you just invented the car, and there

1918
01:52:38,880 --> 01:52:41,400
Speaker 1: are a lot of horse and buggy manufacturers that are

1919
01:52:41,400 --> 01:52:43,360
Speaker 1: going to be out of a job, and if you

1920
01:52:43,439 --> 01:52:47,280
Speaker 1: feel sorry for them, no one's getting cars. And we've

1921
01:52:47,320 --> 01:52:52,760
Speaker 1: got the atomic powered, flying faster than light hover car.

1922
01:52:52,960 --> 01:52:56,320
Speaker 1: And yeah, there's a lot of people selling antiquated, crappy

1923
01:52:56,479 --> 01:52:59,280
Speaker 1: vehicles and no one's going to want to buy them anymore.

1924
01:53:00,760 --> 01:53:03,679
Speaker 1: But that's technology. The human race has got to move forward.

1925
01:53:03,760 --> 01:53:09,439
Speaker 1: So if you're offering digital credit, digital capital, digital equity,

1926
01:53:09,520 --> 01:53:13,880
Speaker 1: it's a better thing, and ultimately you're feeding the four

1927
01:53:13,920 --> 01:53:19,400
Speaker 1: hundred million companies. Look every for every company that can't

1928
01:53:19,439 --> 01:53:22,800
Speaker 1: sell a crappy credit instrument, their treasurer can buy our

1929
01:53:22,840 --> 01:53:26,360
Speaker 1: credit instrument and get triple or quadruple and maybe that'll

1930
01:53:26,360 --> 01:53:30,200
Speaker 1: save the company. Right. So, yeah, there's technology that's putting

1931
01:53:30,240 --> 01:53:32,680
Speaker 1: you out of business all the time, and then there's

1932
01:53:32,680 --> 01:53:35,320
Speaker 1: a new technology that will make you a fortune and

1933
01:53:35,360 --> 01:53:40,519
Speaker 1: put you in business. If you're a critical, skeptical cur mudgeon,

1934
01:53:41,439 --> 01:53:43,680
Speaker 1: you just focus on the negativity, and you're just a

1935
01:53:43,760 --> 01:53:46,400
Speaker 1: negative on everything. I hate that, I hate that that's bad,

1936
01:53:46,439 --> 01:53:48,960
Speaker 1: I hate that. I don't want to change. And if

1937
01:53:48,960 --> 01:53:52,880
Speaker 1: you're constructive and shareful. If you're an optimist, you're like, well,

1938
01:53:53,080 --> 01:53:55,439
Speaker 1: I won't be you know, my a trac take collection

1939
01:53:55,600 --> 01:53:58,559
Speaker 1: isn't that valuable anymore. But I do have unlimited free

1940
01:53:58,560 --> 01:54:02,920
Speaker 1: streaming music. Yeah, you know, And I guess you know.

1941
01:54:03,200 --> 01:54:07,800
Speaker 1: I lost a little money invested in whatever record stores,

1942
01:54:08,400 --> 01:54:12,479
Speaker 1: but I also bought some applestock and made a fortune. Right,

1943
01:54:12,560 --> 01:54:17,280
Speaker 1: And I would say, all these corporate operators, their job is,

1944
01:54:18,360 --> 01:54:21,439
Speaker 1: you know, look at the you know, anticipate the future,

1945
01:54:22,720 --> 01:54:26,720
Speaker 1: look at the past, move forward. Do it in the

1946
01:54:26,720 --> 01:54:34,560
Speaker 1: most graceful, sibyl, responsible, you know, elegant fashion. You can. Right,

1947
01:54:34,600 --> 01:54:36,800
Speaker 1: the world isn't the way it was one hundred years ago.

1948
01:54:36,960 --> 01:54:39,920
Speaker 1: It won't be this way a hundred years from now.

1949
01:54:40,680 --> 01:54:44,360
Speaker 1: That's the human condition. If there were, if there wasn't

1950
01:54:44,400 --> 01:54:46,800
Speaker 1: work to do to move us from the past of

1951
01:54:46,880 --> 01:54:49,280
Speaker 1: the future, you wouldn't have a job. There'd be no

1952
01:54:49,320 --> 01:54:51,240
Speaker 1: reason to get up in the morning. There'd be nothing

1953
01:54:51,240 --> 01:54:56,760
Speaker 1: to get excited about. Right, you're irrelevant. And I got

1954
01:54:56,760 --> 01:54:59,560
Speaker 1: to tell you. You don't want to wake up one

1955
01:54:59,640 --> 01:55:03,920
Speaker 1: day and think I'm irrelevant. Nobody needs me, no one

1956
01:55:03,960 --> 01:55:07,520
Speaker 1: will care. And the way we did it for the

1957
01:55:07,520 --> 01:55:09,760
Speaker 1: past one hundred years is probably just the way we

1958
01:55:09,800 --> 01:55:10,720
Speaker 1: should do it forever.

1959
01:55:11,680 --> 01:55:13,920
Speaker 2: Yeah, that's not a way to succeed. We want to grow.

1960
01:55:14,280 --> 01:55:17,280
Speaker 2: We want to challenge ourselves and learn. All right, Well,

1961
01:55:17,560 --> 01:55:20,560
Speaker 2: I think we covered everything. Thanks so much, And I

1962
01:55:20,560 --> 01:55:22,040
Speaker 2: want to say I kind of said it in New York,

1963
01:55:22,080 --> 01:55:25,040
Speaker 2: but I just want to say thank you for all

1964
01:55:25,080 --> 01:55:26,720
Speaker 2: the education that you put in the space. I mean,

1965
01:55:26,760 --> 01:55:29,720
Speaker 2: you're tiresly going on everybody's show speaking around. I know

1966
01:55:29,760 --> 01:55:32,840
Speaker 2: you're in DC speaking so and the education piece is massive,

1967
01:55:32,880 --> 01:55:34,360
Speaker 2: So thank you for that. I mean it's made a

1968
01:55:34,360 --> 01:55:37,240
Speaker 2: big difference, but also blazing the trail for what's what

1969
01:55:37,280 --> 01:55:39,480
Speaker 2: we can do with these credit instruments and these treasury companies,

1970
01:55:39,560 --> 01:55:42,080
Speaker 2: not just so other companies like ourselves can fall in

1971
01:55:42,080 --> 01:55:45,600
Speaker 2: the footsteps, but all these pensioners that need it right,

1972
01:55:45,680 --> 01:55:48,760
Speaker 2: And so I'm sort of taking bitcoin to the biggest

1973
01:55:48,760 --> 01:55:50,960
Speaker 2: group of people that need it the most but probably

1974
01:55:51,000 --> 01:55:52,960
Speaker 2: won't use it, and now they can have it. So

1975
01:55:53,280 --> 01:55:55,040
Speaker 2: I want to say thank you anything that you want

1976
01:55:55,080 --> 01:55:57,120
Speaker 2: to call out attention to for you to shut it down.

1977
01:55:57,240 --> 01:55:59,520
Speaker 1: Well, thanks for hosting me, and I'm happy to be

1978
01:55:59,560 --> 01:56:00,480
Speaker 1: on the journe I need with you.

1979
01:56:00,640 --> 01:56:01,480
Speaker 2: Yeah, all right, thank you