1 00:00:10,840 --> 00:00:14,760 Speaker 1: Hello, and welcome to another episode of the Odd Lots podcast. 2 00:00:14,800 --> 00:00:20,400 Speaker 1: I'm Joe Wisenthal and I'm Tracy all Away. So, Tracy, um, 3 00:00:20,440 --> 00:00:24,439 Speaker 1: you know, there's still no bitcoin e t F, as 4 00:00:24,480 --> 00:00:26,760 Speaker 1: you know, I mean, for years people have been trying 5 00:00:26,800 --> 00:00:30,360 Speaker 1: to float one. Still that one, But there are various 6 00:00:30,400 --> 00:00:35,879 Speaker 1: some publicly listed instruments that have exposure to Bitcoin that 7 00:00:36,000 --> 00:00:40,120 Speaker 1: in the meantime people are buying and selling to uh, yeah, 8 00:00:40,159 --> 00:00:43,479 Speaker 1: basically find a way to get exposure to the asset 9 00:00:43,520 --> 00:00:45,879 Speaker 1: class or whatever you want to call it through a 10 00:00:45,960 --> 00:00:50,400 Speaker 1: listed equity. Yeah, that's right. And I know we've been 11 00:00:50,400 --> 00:00:52,839 Speaker 1: talking about the possibility of a Bitcoin e t F 12 00:00:52,960 --> 00:00:57,160 Speaker 1: for many many years now, it's kind of surprising that 13 00:00:57,160 --> 00:01:00,120 Speaker 1: that hasn't happened just yet. But you're right, there are 14 00:01:00,120 --> 00:01:02,480 Speaker 1: a number of public companies that are now a play 15 00:01:02,560 --> 00:01:06,880 Speaker 1: on bitcoin, and they kind of range from the more 16 00:01:07,760 --> 00:01:11,560 Speaker 1: I guess you could say outrageous or unusual to um, 17 00:01:11,600 --> 00:01:14,479 Speaker 1: the more traditional. So at one end of the spectrum 18 00:01:14,560 --> 00:01:19,240 Speaker 1: you have a grayscale Bitcoin Trust, which is sort of 19 00:01:19,280 --> 00:01:22,680 Speaker 1: trying to replicate the e t F structure without explicitly 20 00:01:22,680 --> 00:01:24,360 Speaker 1: being in e t F. And then at the other 21 00:01:24,520 --> 00:01:28,679 Speaker 1: end you have remember all those companies like Long Island 22 00:01:28,800 --> 00:01:31,959 Speaker 1: Iced Tea that changed their name to include blockchain and 23 00:01:32,040 --> 00:01:34,840 Speaker 1: just sort of jumped on the bandwagon, and those have 24 00:01:34,920 --> 00:01:37,520 Speaker 1: been going up this year along with the bitcoin price 25 00:01:37,600 --> 00:01:40,120 Speaker 1: as well. And then of course you have everything in between, 26 00:01:41,160 --> 00:01:44,600 Speaker 1: right is exactly right. So some companies are very tangentially 27 00:01:45,319 --> 00:01:49,040 Speaker 1: related to crypto, or they're like, oh, we're suddenly a 28 00:01:49,040 --> 00:01:52,640 Speaker 1: blockchain company, even though we used to sell iced tea um. 29 00:01:52,760 --> 00:01:55,320 Speaker 1: Or some companies they're like, oh, we bought some bitcoin 30 00:01:55,400 --> 00:01:57,600 Speaker 1: mining rigs and we're going to do something like that. 31 00:01:58,080 --> 00:02:00,960 Speaker 1: So there is a range of exposures. But over the 32 00:02:01,040 --> 00:02:04,760 Speaker 1: last several months, um, really since this summer, i'd say 33 00:02:04,840 --> 00:02:08,760 Speaker 1: one company has sort of really jumped out from the 34 00:02:08,760 --> 00:02:12,760 Speaker 1: rest of the pack in the degree to which people 35 00:02:12,840 --> 00:02:16,160 Speaker 1: view it as kind of a bitcoin play or a 36 00:02:16,240 --> 00:02:20,920 Speaker 1: real sort of a direct exposure to fluctuations in the 37 00:02:21,000 --> 00:02:24,320 Speaker 1: coin itself. Yeah, I think that's fair to say. And 38 00:02:24,880 --> 00:02:29,359 Speaker 1: that company is of course micro Strategy. We've seen them 39 00:02:29,600 --> 00:02:33,200 Speaker 1: buy up a bunch of bitcoin, so basically using their 40 00:02:33,240 --> 00:02:37,200 Speaker 1: cash reserves to buy bitcoin, So instead of holding a 41 00:02:37,240 --> 00:02:41,160 Speaker 1: bunch of government bonds in their sort of corporate treasury function, 42 00:02:41,520 --> 00:02:44,680 Speaker 1: they hold something like bitcoin or instead of holding bonds 43 00:02:44,680 --> 00:02:48,000 Speaker 1: and stocks and gold, they hold bitcoin. And it's been 44 00:02:48,040 --> 00:02:50,760 Speaker 1: a really interesting development because it's actually meant that the 45 00:02:50,800 --> 00:02:57,000 Speaker 1: company's share price is basically tracking the price of Krypto. Now, yeah, 46 00:02:57,160 --> 00:02:59,480 Speaker 1: exactly right. So, uh and it was a really well 47 00:02:59,600 --> 00:03:01,360 Speaker 1: timed I mean, I think it was like the middle 48 00:03:01,360 --> 00:03:04,040 Speaker 1: of the summer, maybe it was August. I think they 49 00:03:04,440 --> 00:03:08,800 Speaker 1: announced that they were going to buy some bitcoin, a 50 00:03:08,800 --> 00:03:11,400 Speaker 1: pretty good chunk of it, and then they announced that 51 00:03:11,400 --> 00:03:14,040 Speaker 1: they're going to buy some more. They recently even UM 52 00:03:14,320 --> 00:03:17,640 Speaker 1: sold a convertible note to buy more bitcoin. At the 53 00:03:17,680 --> 00:03:20,760 Speaker 1: same time, the price of bitcoin is skyrocketed over the 54 00:03:20,840 --> 00:03:23,760 Speaker 1: last two or three months, shares of micro Strategy have 55 00:03:23,880 --> 00:03:27,840 Speaker 1: skyrocketed in a concert and so they've really become the 56 00:03:27,919 --> 00:03:33,160 Speaker 1: sort of the publicly listed bitcoin exposed company. I guess 57 00:03:33,200 --> 00:03:35,160 Speaker 1: you could say that people are talking about this year 58 00:03:35,240 --> 00:03:38,920 Speaker 1: and the company has already also become like legendary. All 59 00:03:39,000 --> 00:03:44,160 Speaker 1: the bitcoin hardcore bitcoin maximalism fanboys love this company now 60 00:03:44,520 --> 00:03:47,800 Speaker 1: because they see it as UM sort of paving the 61 00:03:47,800 --> 00:03:51,760 Speaker 1: way and maybe leading to more companies having bitcoin exposure 62 00:03:51,880 --> 00:03:56,080 Speaker 1: in their in their treasury. Yeah, and we should know 63 00:03:56,160 --> 00:03:59,800 Speaker 1: that micro Strategy is also led by Michael Sailor, and 64 00:04:00,200 --> 00:04:03,960 Speaker 1: he's become a big, big name in the bitcoin community. 65 00:04:04,040 --> 00:04:08,960 Speaker 1: I think Baron's called him Bitcoin's most important proselytizer, So 66 00:04:09,240 --> 00:04:14,200 Speaker 1: that gives you some indication of the regard that he 67 00:04:14,280 --> 00:04:18,320 Speaker 1: has within uh crypta exactly right. Every all the bitcoin 68 00:04:18,440 --> 00:04:21,880 Speaker 1: people I follow on Twitter absolutely love it. They love him, 69 00:04:22,000 --> 00:04:26,760 Speaker 1: and I'm excited that Michael Sailor, the CEO and founder 70 00:04:26,839 --> 00:04:30,320 Speaker 1: of micro Strategy, is joining us today. So Michael, thank 71 00:04:30,320 --> 00:04:33,760 Speaker 1: you very much for joining us. Tracy Joe, thanks for 72 00:04:33,800 --> 00:04:38,440 Speaker 1: having me. Happy to be here. So what is micro Strategy? 73 00:04:38,480 --> 00:04:40,599 Speaker 1: I mean, I feel like a lot of people probably 74 00:04:40,600 --> 00:04:44,000 Speaker 1: first heard about the company this summer when you announced 75 00:04:44,000 --> 00:04:47,200 Speaker 1: that you're going to be putting some of your holdings 76 00:04:47,200 --> 00:04:49,080 Speaker 1: into bitcoin, but you've been around a long time. What 77 00:04:49,240 --> 00:04:51,000 Speaker 1: is what is micro Strategy? What does it do? What's 78 00:04:51,000 --> 00:04:55,400 Speaker 1: the story? Micro Strategy is the world's largest publicly traded 79 00:04:55,440 --> 00:05:00,600 Speaker 1: business intelligence software company. We got started in nine and 80 00:05:00,800 --> 00:05:05,120 Speaker 1: in the early nineties we um invented an approach for 81 00:05:05,240 --> 00:05:10,000 Speaker 1: doing analytics against large relational databases. So if you had 82 00:05:10,040 --> 00:05:13,440 Speaker 1: billions of rows of data your McDonald's or your target 83 00:05:14,040 --> 00:05:18,200 Speaker 1: and you needed to extract insight like market basket analysis 84 00:05:18,279 --> 00:05:21,320 Speaker 1: or marketing uplift. If you're a big bank and you 85 00:05:21,360 --> 00:05:24,360 Speaker 1: wanted to do credit analytics against the portfolio of hundreds 86 00:05:24,400 --> 00:05:28,560 Speaker 1: of millions of accounts, you needed to do complicated analytics 87 00:05:28,600 --> 00:05:31,640 Speaker 1: on a large relational database. Nobody in the world knew 88 00:05:31,640 --> 00:05:34,000 Speaker 1: how to do it, and we invented an approach and 89 00:05:34,040 --> 00:05:38,040 Speaker 1: created this software platform too to build those apps, and 90 00:05:38,080 --> 00:05:41,200 Speaker 1: that was that was our early breakthrough, and we grew 91 00:05:41,279 --> 00:05:46,680 Speaker 1: on that platform, became public and uh we competed against 92 00:05:47,000 --> 00:05:50,960 Speaker 1: reporting companies like Crystal and Business Objects and old app 93 00:05:51,000 --> 00:05:54,640 Speaker 1: companies like Hyperion and s base. And they're probably a 94 00:05:54,720 --> 00:05:58,760 Speaker 1: hundred different business intelligence companies that came and went, some 95 00:05:58,839 --> 00:06:03,479 Speaker 1: went out of business, any of them merge, many were amalgamated. Eventually, 96 00:06:03,480 --> 00:06:08,120 Speaker 1: our largest competitors were merged into were bought up by IBM, 97 00:06:08,520 --> 00:06:14,000 Speaker 1: s a P, Salesforce, Oracle, and today we're the pure 98 00:06:14,080 --> 00:06:18,520 Speaker 1: play business intelligence company and we compete against business intelligence 99 00:06:18,560 --> 00:06:22,080 Speaker 1: divisions at IBM and Oracle and s A P and like, 100 00:06:22,680 --> 00:06:25,880 Speaker 1: and so it's enterprise software. We saw it everywhere in 101 00:06:25,920 --> 00:06:29,039 Speaker 1: the world. We have about four thousand very large customers, 102 00:06:29,680 --> 00:06:37,200 Speaker 1: big hotel chains, airlines, governments, retailers, big tech companies, most 103 00:06:37,240 --> 00:06:40,919 Speaker 1: of the major banks, and uh, we're about two thousand 104 00:06:40,920 --> 00:06:45,240 Speaker 1: people in twenty seven countries. That's what we do. So 105 00:06:45,400 --> 00:06:48,160 Speaker 1: unlike many of your competitors, you came through the tech 106 00:06:48,200 --> 00:06:53,000 Speaker 1: bubble intact. And as you mentioned, you you've grown since then. 107 00:06:54,160 --> 00:07:00,480 Speaker 1: What inspired you too by bitcoin? Rather something like what 108 00:07:00,920 --> 00:07:03,640 Speaker 1: was the thought process that went into it? Because as 109 00:07:03,880 --> 00:07:06,799 Speaker 1: Joe and I mentioned, it is quite unusual to see 110 00:07:06,880 --> 00:07:11,640 Speaker 1: a company buying bitcoy in this way. Well, I mean, 111 00:07:11,680 --> 00:07:15,640 Speaker 1: we ran a very responsible business. We were profitable, We 112 00:07:15,760 --> 00:07:19,840 Speaker 1: generated a lot of cash. We uh, we spent hundreds 113 00:07:19,840 --> 00:07:22,720 Speaker 1: of millions of dollars over the past few years buying 114 00:07:22,720 --> 00:07:24,880 Speaker 1: our stock back and we and we came into the 115 00:07:24,960 --> 00:07:30,760 Speaker 1: year with about five hundred million dollars in excess cash 116 00:07:30,800 --> 00:07:34,440 Speaker 1: and our treasury and we kept it for a rainy day. 117 00:07:34,640 --> 00:07:38,320 Speaker 1: We thought, let's have no debt, let's save the cash, 118 00:07:38,720 --> 00:07:41,920 Speaker 1: let's run the business. And and we were running a 119 00:07:41,960 --> 00:07:44,960 Speaker 1: business where we were we were hiring people and spending 120 00:07:45,000 --> 00:07:50,440 Speaker 1: heavily on sales and marketing and services activities and um, 121 00:07:50,520 --> 00:07:53,840 Speaker 1: and then March hit and when the pandemic and by way, 122 00:07:53,840 --> 00:07:56,640 Speaker 1: we didn't think much about my view of cash was 123 00:07:57,120 --> 00:08:00,480 Speaker 1: I invested in short term treasuries, and by way, those 124 00:08:00,480 --> 00:08:03,560 Speaker 1: short term treasuries yielded five percent interest in two thousand 125 00:08:03,560 --> 00:08:08,360 Speaker 1: and ten, and then ancient history. I'm old enough to 126 00:08:08,440 --> 00:08:10,480 Speaker 1: remember when you could get five and a half percent 127 00:08:10,520 --> 00:08:15,360 Speaker 1: interest on overnight money, Joe, right, you know. So, so 128 00:08:15,560 --> 00:08:18,960 Speaker 1: I watched that interest rate whittled down until it became 129 00:08:19,080 --> 00:08:22,520 Speaker 1: nearly nothing, you know, down to like twenty basis points 130 00:08:22,680 --> 00:08:26,360 Speaker 1: or something, and uh, I kind of stealed myself just 131 00:08:26,400 --> 00:08:28,720 Speaker 1: to accept that. And we started thinking, well, what are 132 00:08:28,760 --> 00:08:31,560 Speaker 1: we gonna do with the money. But then March came 133 00:08:31,600 --> 00:08:35,319 Speaker 1: and COVID hit and there were lockdowns and you couldn't 134 00:08:35,320 --> 00:08:37,360 Speaker 1: fly and you couldn't go to hotel and all and 135 00:08:37,400 --> 00:08:40,160 Speaker 1: all of our marketing events got canceled, and all the 136 00:08:40,200 --> 00:08:44,520 Speaker 1: traditional ways of doing things changed, and we encountered what 137 00:08:44,600 --> 00:08:47,440 Speaker 1: I'll call a virtual wave in essence, all of our 138 00:08:47,480 --> 00:08:51,439 Speaker 1: sales and marketing and services that could be virtualized over 139 00:08:51,559 --> 00:08:56,640 Speaker 1: zoom or turned into streaming videos became virtualized. And and first, 140 00:08:56,960 --> 00:08:59,760 Speaker 1: you know, first we were you know, unhappy and more 141 00:08:59,800 --> 00:09:03,240 Speaker 1: to hide, right because everybody's mortified in March what's going 142 00:09:03,280 --> 00:09:07,439 Speaker 1: to happen? And then we realized that our value proposition 143 00:09:07,480 --> 00:09:11,440 Speaker 1: was intact, everybody wanted our software. We only do business 144 00:09:11,520 --> 00:09:15,520 Speaker 1: with you know, mega corporations and mega governments, so they're 145 00:09:15,520 --> 00:09:19,040 Speaker 1: all fine. They wanted the software more than ever. But 146 00:09:19,200 --> 00:09:23,400 Speaker 1: the cost of doing business decreased because now even if 147 00:09:23,440 --> 00:09:26,160 Speaker 1: we wanted to spend millions of dollars on marketing events, 148 00:09:26,200 --> 00:09:29,839 Speaker 1: we couldn't. And and at that point we realized that 149 00:09:30,280 --> 00:09:33,920 Speaker 1: a we didn't really need the five million dollars to 150 00:09:34,040 --> 00:09:36,440 Speaker 1: sell and market and grow the business because you couldn't 151 00:09:36,440 --> 00:09:38,599 Speaker 1: throw money at the problem anymore. You're just going to 152 00:09:38,760 --> 00:09:41,800 Speaker 1: post videos and you're gonna zoom everywhere at the speed 153 00:09:41,840 --> 00:09:44,560 Speaker 1: of light and then be We realized that we were 154 00:09:44,559 --> 00:09:47,439 Speaker 1: going to generate a lot more cash in the future 155 00:09:47,440 --> 00:09:49,680 Speaker 1: than we had in the past because we had thirty 156 00:09:49,800 --> 00:09:52,480 Speaker 1: or forty million dollars of costs fall out of our business. 157 00:09:53,240 --> 00:09:56,480 Speaker 1: And so all of a sudden, we go from thinking, well, 158 00:09:56,520 --> 00:09:59,000 Speaker 1: we've got a good treasury. It's responsible to keep the 159 00:09:59,080 --> 00:10:01,120 Speaker 1: cash and save it for a rainy day in case 160 00:10:01,160 --> 00:10:04,319 Speaker 1: we need to spend it. Two, we have more money 161 00:10:04,320 --> 00:10:08,120 Speaker 1: than we need. Our stock is in the tank, our 162 00:10:08,160 --> 00:10:11,400 Speaker 1: investors don't value the cash. At one point, we were 163 00:10:11,480 --> 00:10:15,200 Speaker 1: valued at one time's revenue plus the cash or two 164 00:10:15,240 --> 00:10:18,400 Speaker 1: times revenue, and the cash was worth nothing. And the 165 00:10:18,440 --> 00:10:21,520 Speaker 1: investors literally told me to my face, they said, we 166 00:10:21,559 --> 00:10:25,199 Speaker 1: don't value the money is worth anything. And so that's 167 00:10:25,280 --> 00:10:29,000 Speaker 1: one dilemma. And the other dilemma is we're gonna generate 168 00:10:29,679 --> 00:10:32,200 Speaker 1: five million more dollars than we thought we were going 169 00:10:32,240 --> 00:10:34,760 Speaker 1: to generate. And then there's a third and that's not 170 00:10:34,800 --> 00:10:38,559 Speaker 1: a dilemma, that's a that's a development because the virtual wave. 171 00:10:39,080 --> 00:10:42,280 Speaker 1: And then we watched as the Federal Reserve and the 172 00:10:42,320 --> 00:10:46,880 Speaker 1: EU Central Bank started printing money, and we realized that 173 00:10:47,160 --> 00:10:52,960 Speaker 1: there was massive rampant hyper inflation in assets. There's no 174 00:10:53,040 --> 00:10:56,600 Speaker 1: inflation and consumer goods that do not include food and 175 00:10:56,760 --> 00:11:00,520 Speaker 1: energy and assets but like there's no inflation, and YouTube 176 00:11:00,600 --> 00:11:03,360 Speaker 1: streaming videos and Netflix, you're never gonna get inflation, and 177 00:11:03,400 --> 00:11:06,040 Speaker 1: that you've got inflation in the ten year bond, the 178 00:11:06,120 --> 00:11:10,280 Speaker 1: thirty year bond, Hampton's real estate Apple shares doubled, even 179 00:11:10,320 --> 00:11:14,720 Speaker 1: though the EPs was constant. All the assets and the 180 00:11:15,080 --> 00:11:19,360 Speaker 1: the energy rich products inflated at a rapid rate and 181 00:11:19,400 --> 00:11:23,120 Speaker 1: there was a k shape recovery. And that's when I 182 00:11:23,160 --> 00:11:25,960 Speaker 1: started looking at the world differently and what I realized 183 00:11:26,120 --> 00:11:30,760 Speaker 1: was the money supply the end two money supply that 184 00:11:30,880 --> 00:11:33,560 Speaker 1: had been expanding at about five percent a year for 185 00:11:33,640 --> 00:11:38,640 Speaker 1: the past decade was now expanding percent a year. And 186 00:11:38,720 --> 00:11:42,160 Speaker 1: any reasonable person would expect that the money supply is 187 00:11:42,200 --> 00:11:44,920 Speaker 1: going to expand by ten to fifteen percent a year 188 00:11:45,040 --> 00:11:47,760 Speaker 1: every year for the next four to five years. And 189 00:11:47,800 --> 00:11:51,920 Speaker 1: then I realized we have rampant asset inflation. And another 190 00:11:51,920 --> 00:11:55,480 Speaker 1: way to say that is the purchasing power of the 191 00:11:55,600 --> 00:12:01,640 Speaker 1: cash is being degraded. The Federal Reserve is devaluing the 192 00:12:01,720 --> 00:12:06,840 Speaker 1: currency at fifteen percent a year. And so what that 193 00:12:06,880 --> 00:12:09,439 Speaker 1: means is if you're sitting on cash, you can expect 194 00:12:09,440 --> 00:12:11,920 Speaker 1: to lose half your purchasing power in thirty six to 195 00:12:12,000 --> 00:12:16,080 Speaker 1: forty eight months, guaranteed. And so I went from thinking 196 00:12:16,200 --> 00:12:19,160 Speaker 1: I needed the cash and I might get a yield 197 00:12:19,280 --> 00:12:22,520 Speaker 1: and maybe maybe there's a two percent inflation rate to 198 00:12:23,559 --> 00:12:26,840 Speaker 1: the real inflation rate is like been running six percent, 199 00:12:26,960 --> 00:12:31,160 Speaker 1: but now it's about to run And so my cash 200 00:12:31,240 --> 00:12:34,000 Speaker 1: is a melting ice cube and it's a it's really 201 00:12:34,040 --> 00:12:37,520 Speaker 1: a violation of my fiduciary duties to watch the cash 202 00:12:37,640 --> 00:12:40,720 Speaker 1: burn away, like if someone came into your backyard and 203 00:12:40,760 --> 00:12:44,840 Speaker 1: started stealing your money every year. I mean, how many 204 00:12:44,920 --> 00:12:47,199 Speaker 1: years would you wait before you took the cash out 205 00:12:47,200 --> 00:12:50,560 Speaker 1: of the backyard. So that that's the dilemma, and that's 206 00:12:50,559 --> 00:12:54,360 Speaker 1: where we went in March when we went down this journey. Well, yeah, 207 00:12:54,400 --> 00:12:58,760 Speaker 1: so you made the decision to put a big chunk 208 00:12:58,800 --> 00:13:05,760 Speaker 1: of that into coin. Why not do another possibility of um, 209 00:13:05,800 --> 00:13:08,760 Speaker 1: you know, like a special one time dividend or something 210 00:13:08,800 --> 00:13:12,479 Speaker 1: like that, so that the shareholders could in theory allocate 211 00:13:12,760 --> 00:13:15,600 Speaker 1: the cash however they wanted. That is a good question. 212 00:13:15,840 --> 00:13:19,840 Speaker 1: First of all our choices where we could just give 213 00:13:19,880 --> 00:13:22,920 Speaker 1: it all back to the shareholders, right, we could divdated 214 00:13:22,960 --> 00:13:26,080 Speaker 1: it out or do a massive stock buy back. Or 215 00:13:26,120 --> 00:13:29,079 Speaker 1: the second choices, we could do a big acquisition of 216 00:13:29,120 --> 00:13:32,800 Speaker 1: another company, which a lot of times people do to 217 00:13:32,840 --> 00:13:36,319 Speaker 1: try to grow our top line. And the third choices, 218 00:13:36,920 --> 00:13:40,559 Speaker 1: we could invest it in something liquid as a treasury asset, 219 00:13:40,600 --> 00:13:43,960 Speaker 1: which was going to appreciate and price faster than the 220 00:13:44,040 --> 00:13:47,080 Speaker 1: rate at which the central bank printed money. So those 221 00:13:47,080 --> 00:13:51,400 Speaker 1: are the three logical choices. So so what did we do? Well, 222 00:13:51,600 --> 00:13:54,920 Speaker 1: we actually went right down the middle. What's the problem 223 00:13:54,960 --> 00:13:57,720 Speaker 1: with just giving all the money back? Well, Joe, if 224 00:13:57,760 --> 00:14:00,480 Speaker 1: I give all the money back I decapitalized the company, 225 00:14:00,600 --> 00:14:03,760 Speaker 1: and then if we have a negative event, were insolvent, Like, 226 00:14:04,040 --> 00:14:07,400 Speaker 1: why doesn't Harvard give all the money back of the endowment, right? 227 00:14:07,440 --> 00:14:09,199 Speaker 1: And why don't you take all the money in your 228 00:14:09,200 --> 00:14:11,840 Speaker 1: bank account and give it to the needy? Right? The 229 00:14:11,880 --> 00:14:15,200 Speaker 1: answer is because Harvard wants an endowment, and because you 230 00:14:15,200 --> 00:14:17,320 Speaker 1: want to have money in case your family needs it, 231 00:14:17,720 --> 00:14:20,040 Speaker 1: And why doesn't a company might give all of its 232 00:14:20,080 --> 00:14:22,720 Speaker 1: money back to its shareholders because they might actually have 233 00:14:22,840 --> 00:14:25,160 Speaker 1: to make good on a contract with a vendor, or 234 00:14:25,200 --> 00:14:28,880 Speaker 1: pay an employee, or like if I, you know, all 235 00:14:28,920 --> 00:14:31,240 Speaker 1: my customers are expecting me to be in business for 236 00:14:31,280 --> 00:14:34,520 Speaker 1: the next twenty years, so if I drained my treasury, 237 00:14:34,600 --> 00:14:38,440 Speaker 1: they might lose confidence in me. So you know, giving 238 00:14:38,480 --> 00:14:42,000 Speaker 1: it all back is decapitalizing the business, and you might 239 00:14:42,040 --> 00:14:44,760 Speaker 1: as well drain the endowment of every institution on earth. 240 00:14:44,800 --> 00:14:46,760 Speaker 1: It does. It doesn't make a lot of sense to 241 00:14:46,840 --> 00:14:51,400 Speaker 1: do that completely. Having said that, what we actually decided 242 00:14:51,440 --> 00:14:55,840 Speaker 1: to do was embark on a program where we agreed 243 00:14:56,560 --> 00:14:59,240 Speaker 1: to buy back to spend half of it to buy 244 00:14:59,240 --> 00:15:03,240 Speaker 1: back stock and the other half to invest in alternative assets. 245 00:15:04,440 --> 00:15:06,760 Speaker 1: And we decided we would go look for some kind 246 00:15:06,760 --> 00:15:10,480 Speaker 1: of inflation hedge, and we put this out on the wire. 247 00:15:10,520 --> 00:15:13,120 Speaker 1: We announced it to our shareholders because we wanted them 248 00:15:13,120 --> 00:15:16,200 Speaker 1: to be able to digest that news. And then we 249 00:15:16,240 --> 00:15:20,480 Speaker 1: went on a pretty intense search, and we considered everything 250 00:15:20,520 --> 00:15:23,560 Speaker 1: we might invest in our endowment, in our treasury, in 251 00:15:23,640 --> 00:15:26,880 Speaker 1: and we considered buying real estate, and we considered buying bonds, 252 00:15:26,880 --> 00:15:31,240 Speaker 1: and we considered buying stocks. And the problem is, you 253 00:15:31,280 --> 00:15:35,280 Speaker 1: can't buy any other currency because they're all debasing as 254 00:15:35,320 --> 00:15:38,760 Speaker 1: fast as the dollar or faster against heart assets. You 255 00:15:38,800 --> 00:15:41,480 Speaker 1: can't buy bonds because no bond is going to yield 256 00:15:41,480 --> 00:15:44,720 Speaker 1: a coupon of more than fifteen percent a year. And 257 00:15:44,800 --> 00:15:47,080 Speaker 1: the only way your bond is gonna hold its value 258 00:15:47,560 --> 00:15:50,680 Speaker 1: is if it's not yielding fift interest is if the 259 00:15:50,720 --> 00:15:53,960 Speaker 1: interest rates keep clicking down to go negative. And so 260 00:15:54,000 --> 00:15:56,640 Speaker 1: if you don't believe interest rates are going negative, bonds 261 00:15:56,680 --> 00:15:59,400 Speaker 1: absolutely won't hold their value. And it looks like bonds 262 00:15:59,440 --> 00:16:01,640 Speaker 1: got to the to the line when the thirty year 263 00:16:01,720 --> 00:16:05,640 Speaker 1: got to seventy two basis points or the fit you know, 264 00:16:05,760 --> 00:16:08,480 Speaker 1: the ten years got the fifty basis points or whatever 265 00:16:08,480 --> 00:16:12,120 Speaker 1: they got to. So bonds don't work. Then real estate 266 00:16:12,200 --> 00:16:14,960 Speaker 1: doesn't work because commercial real estate trades like a bond. 267 00:16:15,000 --> 00:16:17,320 Speaker 1: And and how are you going to grow your rents 268 00:16:17,360 --> 00:16:20,320 Speaker 1: by fifteen percent? The cost of capital literally went from 269 00:16:20,400 --> 00:16:23,360 Speaker 1: five percent to fifteen percent. So real estate is not 270 00:16:23,400 --> 00:16:25,000 Speaker 1: going to hold his value, nor is it gonna have 271 00:16:25,000 --> 00:16:27,800 Speaker 1: a cash yield of fifteen percent. And by the way, 272 00:16:27,840 --> 00:16:29,880 Speaker 1: half of it's impaired. And I mean, how do you 273 00:16:29,920 --> 00:16:32,680 Speaker 1: pick unimpaired real estate, you know, going through the time 274 00:16:32,720 --> 00:16:35,120 Speaker 1: of COVID. So now you've got to go to stocks. 275 00:16:35,120 --> 00:16:38,200 Speaker 1: You've got to buy a portfolio of stocks. Well, stocks 276 00:16:38,200 --> 00:16:41,480 Speaker 1: are fiat instruments that are valued based upon the discounted 277 00:16:41,560 --> 00:16:44,840 Speaker 1: value of the cash flows over time. If the monetary 278 00:16:44,880 --> 00:16:47,640 Speaker 1: supply is expanding at five percent a year, then Google 279 00:16:47,640 --> 00:16:50,560 Speaker 1: and Facebook and Amazon work because they're growing twenty percent 280 00:16:50,560 --> 00:16:53,400 Speaker 1: a year. But if you've got a business it's only 281 00:16:53,400 --> 00:16:55,800 Speaker 1: growing five percent a year, you have to leverage up. 282 00:16:55,840 --> 00:16:58,800 Speaker 1: You have to borrow money short the dollar, buy your 283 00:16:58,800 --> 00:17:01,960 Speaker 1: stock back to leverage up your cash flow per share 284 00:17:02,040 --> 00:17:05,679 Speaker 1: in order to beat the hurdle rate. That's almost possible 285 00:17:05,720 --> 00:17:11,320 Speaker 1: at five hurdle rate. It's impossible at hurdle rate for 286 00:17:11,359 --> 00:17:14,760 Speaker 1: just about anybody. And again the problem is the you know, 287 00:17:15,119 --> 00:17:18,800 Speaker 1: I can leverage up a corporation, and they've been leveraging up. 288 00:17:19,200 --> 00:17:22,480 Speaker 1: But with interest rates pegged at zero or near zero, 289 00:17:22,560 --> 00:17:24,439 Speaker 1: you can't go negative. So it's the end of the 290 00:17:24,480 --> 00:17:28,240 Speaker 1: line for leverage equity. So we dismissed all three of 291 00:17:28,280 --> 00:17:30,960 Speaker 1: those and we went to gold. And the problem with 292 00:17:31,000 --> 00:17:33,760 Speaker 1: gold is the gold miners produced two percent more gold 293 00:17:33,800 --> 00:17:37,480 Speaker 1: every year, and gold is centrally controlled and corruptible, and 294 00:17:37,520 --> 00:17:40,560 Speaker 1: then people print gold derivatives that aren't fully bound by 295 00:17:40,560 --> 00:17:43,199 Speaker 1: the gold, and so you can expect a two to 296 00:17:43,280 --> 00:17:48,720 Speaker 1: four percent dedegradation of gold over time over a hundred years. 297 00:17:48,720 --> 00:17:51,040 Speaker 1: That means you're gonna lose nine of your value. If 298 00:17:51,040 --> 00:17:53,720 Speaker 1: you invest in gold over a hundred years, you're gonna 299 00:17:53,720 --> 00:17:56,680 Speaker 1: losecent of your values. You invest in the US dollar 300 00:17:56,800 --> 00:17:59,800 Speaker 1: increasing at five percent, are expanding at five percent a year, 301 00:18:00,480 --> 00:18:02,800 Speaker 1: and of course the real the real likelihood as you 302 00:18:02,920 --> 00:18:06,240 Speaker 1: lose nine percent of your value because most of the 303 00:18:06,520 --> 00:18:10,959 Speaker 1: currencies collapse over a hundred years. So that took us 304 00:18:10,960 --> 00:18:13,879 Speaker 1: to crypto, and we got to crypto. We looked at 305 00:18:13,880 --> 00:18:16,720 Speaker 1: six thousand, five hundred cryptos and we found that bitcoin 306 00:18:17,440 --> 00:18:22,479 Speaker 1: is the dominant crypto asset network. It's times bigger than 307 00:18:22,520 --> 00:18:26,119 Speaker 1: the next closest thing that looks like it, and it 308 00:18:26,200 --> 00:18:29,240 Speaker 1: had more than two hundred billion dollars of monetary energy 309 00:18:29,280 --> 00:18:33,760 Speaker 1: in it. Bitcoin is an essence Facebook for money or 310 00:18:33,800 --> 00:18:37,440 Speaker 1: Google for money. Uh. It's and this is the nuance 311 00:18:37,520 --> 00:18:41,679 Speaker 1: most people haven't realized yet. What you have is a 312 00:18:41,760 --> 00:18:46,760 Speaker 1: dominant digital network that's been engineered to host a safe 313 00:18:46,840 --> 00:18:51,240 Speaker 1: haven treasury reserve assets superior to gold in all respects. 314 00:18:51,840 --> 00:18:56,800 Speaker 1: It's pharmaceutical grade gold. If God gold as a treasury 315 00:18:56,800 --> 00:19:00,000 Speaker 1: reserve asset to hold for a hundred years, he would 316 00:19:00,000 --> 00:19:03,520 Speaker 1: create twenty one million gold coins. He'd make it impossible 317 00:19:03,560 --> 00:19:06,480 Speaker 1: to make anymore. He would make it possible to audit 318 00:19:06,520 --> 00:19:09,639 Speaker 1: it anywhere on Earth from any node every ten minutes. 319 00:19:10,119 --> 00:19:14,400 Speaker 1: He would make it. He would make it unhackable and uh. 320 00:19:14,440 --> 00:19:17,480 Speaker 1: And he would make it an open architecture that's programmable, 321 00:19:17,520 --> 00:19:19,840 Speaker 1: so you could build it into an iPhone or Square 322 00:19:19,920 --> 00:19:24,040 Speaker 1: or PayPal or any other exchange without permission. And he 323 00:19:24,080 --> 00:19:27,120 Speaker 1: would distribute it everywhere on Earth with these with these 324 00:19:27,160 --> 00:19:31,000 Speaker 1: crypto shaw to fifty six miners, so that no company 325 00:19:31,040 --> 00:19:35,080 Speaker 1: controls it, no ceo controls it, no country controls it, 326 00:19:35,400 --> 00:19:39,520 Speaker 1: no regulator controls it. So that's kind of the perfect 327 00:19:40,160 --> 00:19:44,000 Speaker 1: synthetic safe haven asset, and that's what we found in 328 00:19:44,080 --> 00:20:02,640 Speaker 1: our search. So you touched on this earlier. But corporate 329 00:20:02,640 --> 00:20:08,240 Speaker 1: treasuries are generally supposed to be full of liquid assets because, 330 00:20:08,320 --> 00:20:10,680 Speaker 1: as you mentioned, you don't know when the company might 331 00:20:10,800 --> 00:20:13,840 Speaker 1: experience some sort of emergency event where it actually needs 332 00:20:14,440 --> 00:20:20,000 Speaker 1: cash on hand. How liquid is bitcoin? And also how 333 00:20:20,000 --> 00:20:24,399 Speaker 1: did you go about buying it? Because again, as we mentioned, 334 00:20:24,400 --> 00:20:27,560 Speaker 1: you built up a pretty big position, So I'm curious, like, 335 00:20:27,880 --> 00:20:30,000 Speaker 1: buying it up, what was that like? And then in 336 00:20:30,119 --> 00:20:33,560 Speaker 1: your mind, what would selling it all in an emergency 337 00:20:33,640 --> 00:20:37,200 Speaker 1: scenario be? Like? Well, I mean it's a good point. 338 00:20:37,400 --> 00:20:41,840 Speaker 1: Bitcoin is the best treasury reserve asset on earth for 339 00:20:41,920 --> 00:20:45,360 Speaker 1: anybody at our scale. It might not be the ideal 340 00:20:45,400 --> 00:20:48,480 Speaker 1: asset for someone that needs to store a hundred billion 341 00:20:48,560 --> 00:20:52,040 Speaker 1: dollars at a shot, like a like Apple or maybe 342 00:20:52,080 --> 00:20:55,760 Speaker 1: a nation state, but for a billion dollar company or 343 00:20:55,760 --> 00:20:59,200 Speaker 1: a multibillion dollar company where you're going to move ten 344 00:20:59,320 --> 00:21:02,480 Speaker 1: to a hundred million, two hundreds of millions at a time, 345 00:21:03,080 --> 00:21:07,400 Speaker 1: it's ideal. How liquid is it? It trades seven three 346 00:21:07,480 --> 00:21:11,040 Speaker 1: sixty five every minute in every country, in every language, 347 00:21:11,040 --> 00:21:16,640 Speaker 1: and nearly every currency pair over Thanksgiving, Apple Stock, Amazon Stock, 348 00:21:17,280 --> 00:21:20,960 Speaker 1: most all the all the US capital markets shut down 349 00:21:20,960 --> 00:21:24,840 Speaker 1: at four pm on Wednesday. They traded nine thirty am 350 00:21:24,920 --> 00:21:28,639 Speaker 1: to one pm on Friday. They didn't reopen again until 351 00:21:28,720 --> 00:21:32,480 Speaker 1: nine thirty am the following Monday. That means over one 352 00:21:32,560 --> 00:21:37,400 Speaker 1: hundred and thirteen point five hours US capital markets function 353 00:21:37,720 --> 00:21:40,919 Speaker 1: Three and a half hours three point one percent of 354 00:21:41,000 --> 00:21:43,639 Speaker 1: the time was the banking and the capital market system 355 00:21:43,680 --> 00:21:48,240 Speaker 1: working for treasury. Bitcoin was functioning all one hundred thirteen 356 00:21:48,320 --> 00:21:54,680 Speaker 1: point five hours trading, mark the markets, every country, every currency. 357 00:21:54,800 --> 00:21:59,440 Speaker 1: It's really it is the global asset of choice. If 358 00:21:59,480 --> 00:22:05,399 Speaker 1: what you unted was transparency, marked the market and liquidity. 359 00:22:05,520 --> 00:22:09,439 Speaker 1: On average, uh, it normally trades about two billion dollars 360 00:22:09,480 --> 00:22:12,640 Speaker 1: a day. UH. Sometimes it trades a bit harder than 361 00:22:12,640 --> 00:22:17,719 Speaker 1: that three billion. You could reasonably liquid a hundred million 362 00:22:17,760 --> 00:22:24,000 Speaker 1: dollars over a few hours on a Saturday afternoon. During weekdays, 363 00:22:24,640 --> 00:22:27,560 Speaker 1: the volume increases and you could probably do it faster. 364 00:22:28,520 --> 00:22:32,160 Speaker 1: So in that size or scale, it's fine. I mean, 365 00:22:32,160 --> 00:22:35,360 Speaker 1: if again, if you wanted to liquidate fifty billion dollars 366 00:22:35,359 --> 00:22:37,640 Speaker 1: worth of stuff, it's a little bit too small because 367 00:22:37,680 --> 00:22:41,840 Speaker 1: the network is about three or fifty billion dollars right now. Liquidity. 368 00:22:42,080 --> 00:22:45,000 Speaker 1: But you put your finger on an important point, which 369 00:22:45,080 --> 00:22:50,320 Speaker 1: is the value of bitcoin is to serve up liquidity. 370 00:22:50,359 --> 00:22:53,320 Speaker 1: As the price goes up, the liquidity goes up, the 371 00:22:53,480 --> 00:22:56,560 Speaker 1: value the use case goes up. The value and use 372 00:22:56,640 --> 00:22:59,720 Speaker 1: goes up. When bitcoin goes up by a factor of ten, 373 00:22:59,840 --> 00:23:02,080 Speaker 1: it will be ten times better, and when it goes 374 00:23:02,160 --> 00:23:04,399 Speaker 1: up by a hundred, it will be a hundred times better. 375 00:23:05,080 --> 00:23:07,919 Speaker 1: And so you have a positive feedback loop as a 376 00:23:07,960 --> 00:23:12,520 Speaker 1: treasury asset. And what you see right now is people 377 00:23:12,560 --> 00:23:15,320 Speaker 1: are starting to adopt it and plug their treasuries into 378 00:23:15,400 --> 00:23:19,760 Speaker 1: this network. It starts with small, mid size, then high 379 00:23:19,800 --> 00:23:23,360 Speaker 1: net worth individuals, small mid size companies, and it will 380 00:23:23,520 --> 00:23:27,760 Speaker 1: roll to larger and larger institutions over time as people 381 00:23:27,800 --> 00:23:30,639 Speaker 1: start to discover it and as the network is bigger. 382 00:23:32,400 --> 00:23:34,160 Speaker 1: Let me let me ask you a question. I wanna 383 00:23:34,240 --> 00:23:36,680 Speaker 1: you know, I wanna sort of said to the sort 384 00:23:36,720 --> 00:23:38,760 Speaker 1: of bigger strategy in a second, but I want to 385 00:23:38,800 --> 00:23:42,360 Speaker 1: press you on one thing. And you're talking about fifteen 386 00:23:42,480 --> 00:23:48,399 Speaker 1: percent inflation or degradation of the dollar value. But just 387 00:23:48,480 --> 00:23:51,440 Speaker 1: to be clear, I mean your costs. I mean you 388 00:23:51,520 --> 00:23:55,440 Speaker 1: run a business, and so you have salary and computer 389 00:23:56,119 --> 00:24:01,160 Speaker 1: you know, technological infrastructure, spend and rent for your offices, 390 00:24:01,600 --> 00:24:06,000 Speaker 1: uh travel when travel exists, those class haven't been surging 391 00:24:06,080 --> 00:24:08,520 Speaker 1: fifteent of years. So when you say that, it's not 392 00:24:08,600 --> 00:24:13,600 Speaker 1: actually consumption, right, you're talking about financial assets rising, not 393 00:24:13,760 --> 00:24:18,639 Speaker 1: actually purchasing power of day to day business needs. You know, 394 00:24:19,119 --> 00:24:22,160 Speaker 1: I'm gonna be fairly brutal about this. I'm gonna say 395 00:24:22,200 --> 00:24:25,520 Speaker 1: that everybody on Earth, all three hundred trillion dollars worth 396 00:24:25,520 --> 00:24:28,159 Speaker 1: of investors, are going to lose half their wealth in 397 00:24:28,160 --> 00:24:31,000 Speaker 1: the next forty eight months due to the currency collapse. 398 00:24:31,600 --> 00:24:33,760 Speaker 1: And that's in the that's in the Western world and 399 00:24:33,960 --> 00:24:37,480 Speaker 1: US and Europe. It's much worse. It's loss. If you 400 00:24:37,520 --> 00:24:43,000 Speaker 1: go to Argentina, Brazil, Venezuela, Nigeria, South Africa, Turkey, Lebanon 401 00:24:43,160 --> 00:24:45,880 Speaker 1: and the like, there's a billion people where the currency 402 00:24:45,960 --> 00:24:48,960 Speaker 1: is literally collapsing. Everybody in the Western world is just 403 00:24:49,000 --> 00:24:52,920 Speaker 1: gonna lose half their wealth if they don't start paying attention. Now, 404 00:24:53,080 --> 00:24:55,560 Speaker 1: let me, I just want to say now to our producer, 405 00:24:55,920 --> 00:25:02,800 Speaker 1: we're definitely rebooking Michael for December fIF team uh two 406 00:25:03,080 --> 00:25:05,120 Speaker 1: to talk about that, all right, So keep going, keep going. 407 00:25:05,160 --> 00:25:09,240 Speaker 1: But I just want to make sure that we follow up. Okay, 408 00:25:09,320 --> 00:25:13,480 Speaker 1: I'm gonna make another important point. Inflation is an irrelevant 409 00:25:13,640 --> 00:25:18,320 Speaker 1: metric as defined by the central banks, central banks and 410 00:25:18,359 --> 00:25:21,399 Speaker 1: the FED, and most of the mainstream media refers to 411 00:25:21,440 --> 00:25:25,360 Speaker 1: inflation incessantly and laments the lack of inflation, and their 412 00:25:25,400 --> 00:25:28,399 Speaker 1: definition of inflation is a market basket of goods and 413 00:25:28,480 --> 00:25:32,040 Speaker 1: services that do not include the highly volatile food and energy. 414 00:25:32,520 --> 00:25:35,800 Speaker 1: And then nobody ever questions that in mainstream media, or 415 00:25:35,800 --> 00:25:38,040 Speaker 1: at least they don't really think hard about it. But 416 00:25:38,600 --> 00:25:41,680 Speaker 1: first of all, there is no planet where anybody can 417 00:25:41,720 --> 00:25:45,200 Speaker 1: live without food and energy, and so tracking a metric 418 00:25:45,359 --> 00:25:50,240 Speaker 1: that does not track food and energy is entertainment, but 419 00:25:50,440 --> 00:25:53,840 Speaker 1: irrelevant when you're contemplating the future of the economy or 420 00:25:53,880 --> 00:25:57,840 Speaker 1: an investment. My second point, if you added food and 421 00:25:57,960 --> 00:26:01,040 Speaker 1: energy such that you did not starve to death, it 422 00:26:01,200 --> 00:26:04,160 Speaker 1: still wouldn't be the proper metric to track. If you're 423 00:26:04,200 --> 00:26:07,879 Speaker 1: actually an investor, the appropriate metric to track would be 424 00:26:08,040 --> 00:26:12,080 Speaker 1: cost a capital or asset inflation, which is the rate 425 00:26:12,119 --> 00:26:15,880 Speaker 1: at which a market basket of assets that are desirable 426 00:26:16,119 --> 00:26:19,679 Speaker 1: by rational people, or the rate at which goods and 427 00:26:19,760 --> 00:26:24,159 Speaker 1: services that are desirable by rational people go up in price. 428 00:26:24,880 --> 00:26:27,119 Speaker 1: And if you were to actually put into that basket 429 00:26:27,119 --> 00:26:31,760 Speaker 1: things like early retirement or social security. How about how 430 00:26:31,800 --> 00:26:34,520 Speaker 1: about a stipend to live, you know, for the rest 431 00:26:34,600 --> 00:26:37,760 Speaker 1: of your life on fifty thousand a year. That used 432 00:26:37,800 --> 00:26:40,879 Speaker 1: to cost a million dollars when bonds yielded five percent, 433 00:26:41,040 --> 00:26:43,560 Speaker 1: and then it costs two million dollars when bonds yielded 434 00:26:43,560 --> 00:26:46,040 Speaker 1: two and a percent, And today that would cost you 435 00:26:46,119 --> 00:26:49,000 Speaker 1: four or five million dollars when bonds or yielding that 436 00:26:48,960 --> 00:26:51,240 Speaker 1: it would cost you six million dollars with a ten 437 00:26:51,320 --> 00:26:55,920 Speaker 1: year bond yielding ninety bases points. So there's definitely rampant 438 00:26:56,080 --> 00:27:01,080 Speaker 1: hyper inflation and annuities, and there's hyper inflation and other assets. 439 00:27:01,200 --> 00:27:03,760 Speaker 1: If you look at the last decade, the cost of 440 00:27:03,880 --> 00:27:06,240 Speaker 1: capital is about five and a half percent. That's the 441 00:27:06,359 --> 00:27:10,040 Speaker 1: end to money money supply expansion. And it turns out 442 00:27:10,080 --> 00:27:14,080 Speaker 1: that you know, the S and P was was appreciating 443 00:27:14,080 --> 00:27:17,760 Speaker 1: it about seven to eight percent. And you you will 444 00:27:17,800 --> 00:27:22,679 Speaker 1: look and see the cost of the cost of buying 445 00:27:22,800 --> 00:27:28,239 Speaker 1: labor intensive highly desirable things people want is going up 446 00:27:28,280 --> 00:27:31,919 Speaker 1: faster than one or two percent. For example, none of 447 00:27:31,960 --> 00:27:35,000 Speaker 1: my employees are willing to keep working for me if 448 00:27:35,040 --> 00:27:38,480 Speaker 1: their salaries increased by one percent a year on average, 449 00:27:38,560 --> 00:27:42,320 Speaker 1: it's about a seven percent increase in costs to keep 450 00:27:42,680 --> 00:27:46,159 Speaker 1: to keep talented people from quitting your company. And so 451 00:27:46,200 --> 00:27:49,439 Speaker 1: if you're tracking technical labor, that's about the rate at 452 00:27:49,480 --> 00:27:51,600 Speaker 1: which the prices go up. If you look at the 453 00:27:51,680 --> 00:27:57,480 Speaker 1: chap would index prices go up across the board undesirable things. 454 00:27:58,040 --> 00:28:02,960 Speaker 1: Real estate in the Hampton's went up in sixteen weeks 455 00:28:02,960 --> 00:28:07,480 Speaker 1: this year, sixteen weeks. Look at any desirable real estate. 456 00:28:07,560 --> 00:28:11,040 Speaker 1: Look at any scarce asset that the FED can't print, 457 00:28:11,080 --> 00:28:15,200 Speaker 1: anything that is not if it's energy intensive, if it's 458 00:28:15,320 --> 00:28:19,679 Speaker 1: labor intensive, or if it's if it's a true financial instrument. 459 00:28:19,960 --> 00:28:25,159 Speaker 1: It's inflating somewhere in the last decade, easily at seven 460 00:28:25,200 --> 00:28:29,440 Speaker 1: percent a year or so. And the problem is it's 461 00:28:29,480 --> 00:28:33,800 Speaker 1: just doubled or tripled because the FED is is pumping 462 00:28:34,040 --> 00:28:38,160 Speaker 1: so much more currency into the economy. If you double 463 00:28:38,200 --> 00:28:40,480 Speaker 1: the amount of currency and you keep the goods and 464 00:28:40,520 --> 00:28:45,000 Speaker 1: services constant ergo, it goes to reason that things that 465 00:28:45,040 --> 00:28:48,680 Speaker 1: are scarce and desirable will double in price. The things 466 00:28:48,720 --> 00:28:54,080 Speaker 1: that won't double in price. Our YouTube streaming videos, information 467 00:28:54,360 --> 00:28:58,920 Speaker 1: rich things with the variable cost of electricity or one 468 00:28:59,040 --> 00:29:03,080 Speaker 1: to five variable cost, or maybe if you've got if 469 00:29:03,080 --> 00:29:05,760 Speaker 1: you've got a high fixed cost, like I spend two 470 00:29:05,800 --> 00:29:09,200 Speaker 1: billion dollars to design the iPhone twelve and I stamp 471 00:29:09,240 --> 00:29:12,120 Speaker 1: out you know, a hundred million of them the fixed 472 00:29:12,160 --> 00:29:15,760 Speaker 1: cost or are high, the variable cost or low. You 473 00:29:15,880 --> 00:29:20,240 Speaker 1: typically don't track inflation on those things. You're gonna track 474 00:29:20,320 --> 00:29:24,200 Speaker 1: inflation on energy intensive goods and services. And where are 475 00:29:24,200 --> 00:29:26,520 Speaker 1: you going to see the real inflation is. You're gonna 476 00:29:26,520 --> 00:29:30,120 Speaker 1: see it on scarce assets. For example, Bitcoin is up 477 00:29:30,120 --> 00:29:34,480 Speaker 1: a hundred and seventy in twelve months. Okay, let that 478 00:29:34,600 --> 00:29:38,080 Speaker 1: sink in. It's the ultimate scarce asset. Gold is up, 479 00:29:39,640 --> 00:29:43,760 Speaker 1: the SNP is up six, Apple stock is doubled, and 480 00:29:43,840 --> 00:29:47,240 Speaker 1: yet EPs of Apple is not doubled. The the P 481 00:29:47,400 --> 00:29:51,600 Speaker 1: T E ratios are blowing out. If you calculate the 482 00:29:51,680 --> 00:29:54,240 Speaker 1: number of hours you have to work, the amount of 483 00:29:54,360 --> 00:29:56,840 Speaker 1: labor you have to actually perform in order to buy 484 00:29:56,840 --> 00:30:01,400 Speaker 1: a share of the SNP five, it's doubling. If you 485 00:30:01,440 --> 00:30:03,520 Speaker 1: calculate the number of hours you have to work to 486 00:30:03,560 --> 00:30:07,560 Speaker 1: buy real estate or residential real estate, and Tokyo. Since 487 00:30:07,600 --> 00:30:11,640 Speaker 1: the central Bank started printing money very rapidly, you realize 488 00:30:11,680 --> 00:30:15,800 Speaker 1: that that ordinary people can't ever make enough to buy 489 00:30:15,880 --> 00:30:21,040 Speaker 1: these things, So you won't get any inflation on on 490 00:30:22,160 --> 00:30:25,960 Speaker 1: low variable cost information rich items. In fact, you will 491 00:30:25,960 --> 00:30:30,680 Speaker 1: get deflation. You're going to get inflation and assets. And 492 00:30:30,720 --> 00:30:33,920 Speaker 1: that's that's the basis of the k shape recovery. So 493 00:30:34,000 --> 00:30:37,400 Speaker 1: let's come back to my fighter siay responsibility as a CEO. 494 00:30:37,520 --> 00:30:40,960 Speaker 1: But the answer is, I have five million dollars. It 495 00:30:41,000 --> 00:30:43,960 Speaker 1: will go to zero and be worth nothing and buy nothing, 496 00:30:44,240 --> 00:30:46,800 Speaker 1: or I can find a way to invest it in 497 00:30:46,880 --> 00:30:50,000 Speaker 1: something that's going to appreciate against the dollar, and if 498 00:30:50,000 --> 00:30:55,000 Speaker 1: it appreciates more than against the dollar, then my purchasing 499 00:30:55,040 --> 00:30:59,160 Speaker 1: power will stay at parody. If it appreciates faster than that, 500 00:30:59,680 --> 00:31:03,480 Speaker 1: then my purchasing power will outstrip the dollar and I 501 00:31:03,560 --> 00:31:06,840 Speaker 1: and I will appreciate and therefore I will create shareholder value. 502 00:31:07,320 --> 00:31:11,640 Speaker 1: So this entire exercises how do I actually grow my 503 00:31:11,760 --> 00:31:15,960 Speaker 1: balance sheet or grow my cash flows faster than the 504 00:31:16,080 --> 00:31:20,640 Speaker 1: rate at which the money supply is expanding? Amazon, Facebook, 505 00:31:20,680 --> 00:31:23,760 Speaker 1: and Google. This is why all those stocks performed so 506 00:31:23,800 --> 00:31:27,840 Speaker 1: well in the last decade, their top lines growing, their 507 00:31:27,840 --> 00:31:31,600 Speaker 1: cash flows are growing. The FED is printing money at 508 00:31:31,640 --> 00:31:36,960 Speaker 1: five percent a year, they're creating at more than the 509 00:31:37,160 --> 00:31:41,040 Speaker 1: risk free cost to capital, and they're effectively monopolies. And 510 00:31:41,080 --> 00:31:44,960 Speaker 1: so if you're holding something like that, you're good. The 511 00:31:45,040 --> 00:31:48,720 Speaker 1: problem is that, you know, but the FED, if they 512 00:31:48,760 --> 00:31:52,800 Speaker 1: triple the cost to capital, the companies can't beat that. 513 00:31:53,400 --> 00:31:55,720 Speaker 1: And if you want to see it illustrated in a 514 00:31:55,760 --> 00:32:00,000 Speaker 1: more brutal fashion, go imagine yourself starting a company in Argentine, 515 00:32:00,280 --> 00:32:03,480 Speaker 1: where the paso traded with dollar to a peso, then 516 00:32:03,520 --> 00:32:06,240 Speaker 1: it went ten dollar ten pacos to the dollar, then 517 00:32:06,280 --> 00:32:09,080 Speaker 1: it went twenty pasos to the dollar. We rolled into 518 00:32:09,120 --> 00:32:11,320 Speaker 1: this year, it said the forty paces to the dollar. 519 00:32:11,800 --> 00:32:15,000 Speaker 1: Now it's eighty paces to the dollar. And by the way, 520 00:32:15,080 --> 00:32:17,680 Speaker 1: the black market rate is a hundred and forty paces 521 00:32:17,720 --> 00:32:21,520 Speaker 1: to the dollar. You know, there's no way you can 522 00:32:21,520 --> 00:32:24,840 Speaker 1: grow a company fast enough. And by the way, it's 523 00:32:24,840 --> 00:32:27,080 Speaker 1: a hundred and forty paces to the dollar and the 524 00:32:27,120 --> 00:32:30,520 Speaker 1: dollar is only worth half as much against scarce assets. 525 00:32:31,160 --> 00:32:35,000 Speaker 1: The same story is true in Mexico. You can't. Mexico 526 00:32:35,040 --> 00:32:37,360 Speaker 1: went from ten pacos to the dollar to twenty paces 527 00:32:37,400 --> 00:32:39,600 Speaker 1: to the dollar. The dollar lost half of its asset 528 00:32:39,680 --> 00:32:44,400 Speaker 1: value against scarce assets, so you lost of your wealth. 529 00:32:44,760 --> 00:32:48,520 Speaker 1: I want to jump in here because you mentioned fiduciary duty, 530 00:32:48,640 --> 00:32:50,640 Speaker 1: and you know you were going to get to it earlier, 531 00:32:50,680 --> 00:32:53,040 Speaker 1: and I think this is an important point. But what 532 00:32:53,200 --> 00:32:57,280 Speaker 1: did your discussions with investors actually look like? Because I 533 00:32:57,160 --> 00:33:00,200 Speaker 1: imagine for the vast majority of them, they put our 534 00:33:00,200 --> 00:33:04,160 Speaker 1: money in a business intelligence firm, a software firm, they're 535 00:33:04,200 --> 00:33:08,240 Speaker 1: not necessarily expecting that firm to go out and buy 536 00:33:08,320 --> 00:33:11,840 Speaker 1: bitcoin in this way. That's true. So let's let's put 537 00:33:11,840 --> 00:33:15,320 Speaker 1: the put the dilemma here. I have a company that's 538 00:33:15,360 --> 00:33:17,800 Speaker 1: may be able to grow five percent a year. It's 539 00:33:17,880 --> 00:33:21,480 Speaker 1: cash flows. It can generate fifty to seventy five million 540 00:33:21,520 --> 00:33:24,840 Speaker 1: dollars in cash flow. It's got five million in in 541 00:33:24,840 --> 00:33:30,800 Speaker 1: in cash. The US Federal Reserve is debasing my treasury 542 00:33:30,880 --> 00:33:33,760 Speaker 1: at the same rate as my company as a creating 543 00:33:33,840 --> 00:33:37,400 Speaker 1: cash flow. So in essence, all of the work of 544 00:33:37,440 --> 00:33:41,680 Speaker 1: the company is for not and then they triple they 545 00:33:41,680 --> 00:33:45,720 Speaker 1: triple the cost the capital. So it's imp it's impossible, 546 00:33:46,120 --> 00:33:49,960 Speaker 1: reasonably speaking, to grow the cash flows a year without 547 00:33:50,000 --> 00:33:55,920 Speaker 1: taking excessive risk in a competitive marketplace. So we're struck 548 00:33:55,920 --> 00:33:59,280 Speaker 1: with the dilemma, what are my choices? Well, I can 549 00:33:59,320 --> 00:34:04,080 Speaker 1: attempt to grow faster than the rate at which the 550 00:34:04,160 --> 00:34:07,640 Speaker 1: Fed prints money, and I will probably fail and they'll 551 00:34:07,680 --> 00:34:10,360 Speaker 1: suffocate me to death or choke me to death. Or 552 00:34:11,280 --> 00:34:15,080 Speaker 1: I can simply invest in a monitoring network that's appreciating 553 00:34:15,080 --> 00:34:20,600 Speaker 1: it or more against the dollar and go about my business. 554 00:34:21,800 --> 00:34:24,279 Speaker 1: And so those are the two choices. One of them 555 00:34:25,120 --> 00:34:27,760 Speaker 1: well and bye. This is the choice that every business faces, 556 00:34:27,880 --> 00:34:30,880 Speaker 1: and this is the choice that every individual faces, and 557 00:34:30,880 --> 00:34:33,080 Speaker 1: and you can see one of them is like, you 558 00:34:33,120 --> 00:34:36,279 Speaker 1: continue to do your work in Venezuela, working harder as 559 00:34:36,320 --> 00:34:41,040 Speaker 1: the currency collapses, or in Argentina. The other choice is 560 00:34:41,600 --> 00:34:44,000 Speaker 1: you invest in a treasury asset that's going to go 561 00:34:44,080 --> 00:34:47,400 Speaker 1: up a hundred percent a year. It's easy to say, well, 562 00:34:47,520 --> 00:34:49,640 Speaker 1: why don't you just give the money back to the investors. 563 00:34:49,640 --> 00:34:52,560 Speaker 1: What the answer is, We're still going to suffocate. We're 564 00:34:52,560 --> 00:34:55,320 Speaker 1: still going to choke to death. You've got to consider 565 00:34:55,600 --> 00:34:58,480 Speaker 1: everybody on the planet is going to freeze to death 566 00:34:58,600 --> 00:35:02,560 Speaker 1: or suffocate if we keep sucking the oxygen out of 567 00:35:02,600 --> 00:35:07,440 Speaker 1: the room as as we monetary value out of the currency. 568 00:35:08,040 --> 00:35:11,080 Speaker 1: It's creating a life or death situation for everybody. Now 569 00:35:11,160 --> 00:35:12,799 Speaker 1: let me come back to your point, because you ask 570 00:35:12,840 --> 00:35:15,520 Speaker 1: me a question, I want to answer. What I did 571 00:35:15,880 --> 00:35:19,600 Speaker 1: was I went to the investors and I said, we 572 00:35:19,680 --> 00:35:22,520 Speaker 1: believe we have to have a treasury. We're going to 573 00:35:22,560 --> 00:35:26,680 Speaker 1: invest it in some asset that will actually appreciate faster 574 00:35:26,960 --> 00:35:30,080 Speaker 1: than the rate of the mind of the currency collapse, 575 00:35:30,400 --> 00:35:33,120 Speaker 1: the rate of collapse of the dollar inflation rate, the 576 00:35:33,160 --> 00:35:36,319 Speaker 1: asset inflation rate. And then I also said, and we're 577 00:35:36,320 --> 00:35:40,279 Speaker 1: gonna start buying the stock back. One week later, we 578 00:35:40,440 --> 00:35:43,440 Speaker 1: tendered for two or fifty million dollars worth of stock. 579 00:35:43,760 --> 00:35:47,439 Speaker 1: Our our stock was trading about one, and we did 580 00:35:47,440 --> 00:35:49,919 Speaker 1: a Dutch auction and we offered to buy back two 581 00:35:50,360 --> 00:35:54,160 Speaker 1: fifty million dollars worth of the stock at a premium 582 00:35:54,239 --> 00:35:58,400 Speaker 1: up to one. And so we also then announced we 583 00:35:58,440 --> 00:36:02,840 Speaker 1: bought two fifty million dollars worth the bitcoin. Why because 584 00:36:02,920 --> 00:36:05,640 Speaker 1: it's the best performing asset of the decade, the last 585 00:36:05,680 --> 00:36:08,000 Speaker 1: five years, the last two years, the last one year, 586 00:36:08,040 --> 00:36:12,560 Speaker 1: the last three months, it's up four thousand in five years, 587 00:36:12,560 --> 00:36:16,719 Speaker 1: it's up a one year. Because it's the best treasury 588 00:36:16,760 --> 00:36:19,799 Speaker 1: reserve asset that you could buy. So that's why we 589 00:36:19,880 --> 00:36:24,440 Speaker 1: did that. We tendered, We waited twenty days. The stock 590 00:36:24,600 --> 00:36:28,440 Speaker 1: traded up first below the tender, then above the tender price. 591 00:36:29,000 --> 00:36:32,399 Speaker 1: Anybody that didn't like bitcoin was able to sell their 592 00:36:32,480 --> 00:36:37,839 Speaker 1: stock between one forty and one fifty one. They all 593 00:36:37,920 --> 00:36:40,759 Speaker 1: got a premium if they didn't want to take that risk. 594 00:36:41,320 --> 00:36:44,320 Speaker 1: Then some people tender their stock. We had sixty millions 595 00:36:44,320 --> 00:36:48,600 Speaker 1: share our sixty million dollars tendered. We bought all that stock, 596 00:36:49,239 --> 00:36:52,320 Speaker 1: and then the stock of the company started trading north 597 00:36:52,480 --> 00:36:56,359 Speaker 1: of the tender price because we had rotated our shareholder 598 00:36:56,360 --> 00:36:59,919 Speaker 1: base from people that had invested in an enterprise off 599 00:37:00,000 --> 00:37:03,560 Speaker 1: a company, two people that understood that it was wise 600 00:37:03,680 --> 00:37:08,440 Speaker 1: for us to invest our treasury in an asset like bitcoin, 601 00:37:08,600 --> 00:37:11,120 Speaker 1: and they were comfortable with it. And from there the 602 00:37:11,160 --> 00:37:16,560 Speaker 1: stock traded to one sixty two hundred twenty to fifty 603 00:37:16,600 --> 00:37:22,560 Speaker 1: two eighty three hundred and above three hundred because there 604 00:37:22,560 --> 00:37:25,040 Speaker 1: are there are a lot of people that agree with 605 00:37:25,080 --> 00:37:29,719 Speaker 1: me and they like the idea of investing. By the way, 606 00:37:29,840 --> 00:37:32,560 Speaker 1: would you rather invest in a company that's growing its 607 00:37:32,600 --> 00:37:35,920 Speaker 1: cash flows a percent a year or growing its cash 608 00:37:35,960 --> 00:37:40,600 Speaker 1: flows five a year? Because what we did was invest 609 00:37:40,640 --> 00:37:44,080 Speaker 1: a bunch of cash in an asset that has traditionally, 610 00:37:44,120 --> 00:37:47,080 Speaker 1: over the last decade grown faster than a hundred percent 611 00:37:47,120 --> 00:37:49,440 Speaker 1: a year. You can see that's what we did, and 612 00:37:49,480 --> 00:37:51,800 Speaker 1: that was the investor base we had when we finished 613 00:37:51,920 --> 00:37:54,879 Speaker 1: that exercise. You know, absolutely, So looking at your chart, 614 00:37:54,920 --> 00:37:58,640 Speaker 1: I mean, obviously the stock has done phenomenally well, you know, 615 00:37:58,680 --> 00:38:01,319 Speaker 1: as you mentioned, you know, going back to this jill 616 00:38:01,560 --> 00:38:03,880 Speaker 1: in July, it was just over a hundred dollars to 617 00:38:03,960 --> 00:38:08,480 Speaker 1: share one twenty share. It recently peaked around three forty share. 618 00:38:08,520 --> 00:38:11,919 Speaker 1: It's come back a little bit. But um, how does 619 00:38:12,000 --> 00:38:15,520 Speaker 1: your You have over two thousand employees who up until 620 00:38:15,719 --> 00:38:19,440 Speaker 1: a few months ago, we're working in for a business 621 00:38:19,480 --> 00:38:23,920 Speaker 1: intelligence company sort of standard uh cloud, Uh, you know, 622 00:38:24,000 --> 00:38:29,160 Speaker 1: software company, who now have in some sense their fates, 623 00:38:29,239 --> 00:38:32,400 Speaker 1: the fates of these over two thousand people tied in 624 00:38:32,560 --> 00:38:36,480 Speaker 1: what is kind of a sort of a levered play 625 00:38:36,520 --> 00:38:39,000 Speaker 1: on bitcoin. And so I'm curious, Um, you know it's 626 00:38:39,040 --> 00:38:41,799 Speaker 1: worked out well because bitcoin has really rallied over the 627 00:38:41,840 --> 00:38:46,200 Speaker 1: last few months. What are the internal communications like a 628 00:38:46,280 --> 00:38:49,560 Speaker 1: sort of all the employees sort of realizing that the 629 00:38:49,600 --> 00:38:53,160 Speaker 1: fortunes of their company is a typed to bitcoin. And two, 630 00:38:53,800 --> 00:38:56,520 Speaker 1: you know, you obviously as the CEO, you spend a 631 00:38:56,520 --> 00:38:59,240 Speaker 1: lot of time focus on bitcoin. You talk about on Twitter, 632 00:38:59,360 --> 00:39:02,319 Speaker 1: you have some amazing uh sort of analogies that you use. 633 00:39:02,400 --> 00:39:04,719 Speaker 1: I think called it the hive or something like that, 634 00:39:04,840 --> 00:39:09,160 Speaker 1: the electric hive. How do the what's the internal feeling? 635 00:39:09,239 --> 00:39:13,080 Speaker 1: Like all these people suddenly their careers associated with a 636 00:39:13,200 --> 00:39:15,879 Speaker 1: levered bitcoin play all of a sudden. Let's start with 637 00:39:16,560 --> 00:39:20,880 Speaker 1: one observation. It's not a levered bitcoin play until last week. 638 00:39:21,280 --> 00:39:24,680 Speaker 1: Last week we did a convertible debt offering which added 639 00:39:24,719 --> 00:39:29,560 Speaker 1: some leverage to it. It was an unleveraged treasury decision 640 00:39:29,760 --> 00:39:33,880 Speaker 1: until last week. And um, by the way, it's the 641 00:39:33,920 --> 00:39:36,640 Speaker 1: same reaction your family would have if they were all 642 00:39:36,680 --> 00:39:39,360 Speaker 1: going bankrupt and going to starve to death because the 643 00:39:39,400 --> 00:39:43,080 Speaker 1: currency was collapsing, and then use in Argentina or Nigeria 644 00:39:43,200 --> 00:39:46,040 Speaker 1: or Brazil or even in the US. If you know, 645 00:39:46,200 --> 00:39:48,240 Speaker 1: if your family said, we're gonna lose half our stuff 646 00:39:48,320 --> 00:39:50,920 Speaker 1: and be bankrupt, and if you said, I invested it 647 00:39:50,920 --> 00:39:53,080 Speaker 1: in bitcoin, and by the way, we just doubled our 648 00:39:53,080 --> 00:39:56,680 Speaker 1: money and now we're rich, Like, how would your family react. 649 00:39:57,280 --> 00:40:00,600 Speaker 1: It's like we we had we had five third million 650 00:40:00,640 --> 00:40:03,359 Speaker 1: dollars that was going to zero, and now we have 651 00:40:03,560 --> 00:40:07,319 Speaker 1: eight hundred million worth of bitcoin which has been appreciating 652 00:40:07,320 --> 00:40:10,879 Speaker 1: a hundred percent a year. So first of all, there's 653 00:40:10,880 --> 00:40:13,600 Speaker 1: a collective side of relief. Now we have an endowment 654 00:40:13,680 --> 00:40:17,360 Speaker 1: which is actually appreciating faster than the rate of currency collapse. 655 00:40:17,400 --> 00:40:20,920 Speaker 1: So that's a good thing. Second, the stocks up, a 656 00:40:20,920 --> 00:40:24,239 Speaker 1: lot of the shareholders, a lot of them have options. 657 00:40:24,400 --> 00:40:29,000 Speaker 1: Of course they're delighted about that. Third, the you know, 658 00:40:29,280 --> 00:40:33,719 Speaker 1: the company had a massive jolta of electricity shot into it. 659 00:40:34,080 --> 00:40:40,880 Speaker 1: Bitcoin is hope. If you're living in a country Nigeria, Argentina, Brazil, wherever, 660 00:40:40,960 --> 00:40:43,239 Speaker 1: and the currency is collapsing and you're going bankrupt and 661 00:40:43,239 --> 00:40:47,560 Speaker 1: you're going to start to death, they're you're hopeless. And 662 00:40:47,640 --> 00:40:51,640 Speaker 1: so the ability to actually buy a liquid asset which 663 00:40:51,680 --> 00:40:55,719 Speaker 1: is going to appreciate and protect you against the currency collapse. 664 00:40:56,600 --> 00:40:59,280 Speaker 1: It's like getting on an art right. We say bitcoin 665 00:40:59,440 --> 00:41:02,800 Speaker 1: is like an arc against you know, to avoid drowning 666 00:41:02,800 --> 00:41:05,759 Speaker 1: in a currency flood. Right, It's like wouldn't you like 667 00:41:05,840 --> 00:41:09,000 Speaker 1: a life raft? I mean, it's pretty motivational to know 668 00:41:09,120 --> 00:41:13,359 Speaker 1: you're not going to drown when the macro economy is collapsing, 669 00:41:13,800 --> 00:41:17,200 Speaker 1: you know, and you might you know, there's a certain 670 00:41:17,200 --> 00:41:19,480 Speaker 1: set of people that own stocks in this in this 671 00:41:19,560 --> 00:41:22,040 Speaker 1: country and they think it's all fine, but there's a 672 00:41:22,080 --> 00:41:25,320 Speaker 1: lot of people that aren't really owning all those assets 673 00:41:25,360 --> 00:41:28,239 Speaker 1: that have bounced into k shape recovery, and it's not 674 00:41:28,400 --> 00:41:31,799 Speaker 1: fine for them. Right, There's a there's a quite a 675 00:41:31,800 --> 00:41:35,720 Speaker 1: macro economic dilemma right now around the world, and seven 676 00:41:35,719 --> 00:41:39,759 Speaker 1: point eight billion people have collapsing currencies. The best they're 677 00:41:39,760 --> 00:41:42,520 Speaker 1: collapsing at ten to fifteen percent a year. The worst 678 00:41:42,560 --> 00:41:48,640 Speaker 1: are collapsing faster. Every investor has a problem. So my employees. 679 00:41:49,080 --> 00:41:53,160 Speaker 1: The employees are happy because stocks up. The awareness of 680 00:41:53,200 --> 00:41:56,879 Speaker 1: the company is up by a factor of ten thousand, right, 681 00:41:56,960 --> 00:41:59,799 Speaker 1: I mean, everybody is aware of what we're doing. We've 682 00:41:59,840 --> 00:42:05,040 Speaker 1: had million, million, millions of hours of video on YouTube. 683 00:42:05,400 --> 00:42:09,600 Speaker 1: People know the company, they know about micro strategy, business intelligence. 684 00:42:10,239 --> 00:42:14,800 Speaker 1: Our customers like it. You know. By the way, every 685 00:42:14,840 --> 00:42:18,520 Speaker 1: company with a treasury has the same problem. Guys like 686 00:42:19,160 --> 00:42:22,200 Speaker 1: you can you can paint me as like this crazy 687 00:42:22,239 --> 00:42:25,239 Speaker 1: guy taking a risk. But on the other hand, it's 688 00:42:25,280 --> 00:42:27,120 Speaker 1: not a risk if I told you you're going to 689 00:42:27,239 --> 00:42:30,239 Speaker 1: freeze to death in forty eight months, it's not a 690 00:42:30,360 --> 00:42:33,239 Speaker 1: risk to step out of your house and try something new. 691 00:42:33,680 --> 00:42:36,560 Speaker 1: And so every company that we do business with is 692 00:42:36,600 --> 00:42:40,320 Speaker 1: thinking about these things. So we've actually taken a leadership 693 00:42:40,360 --> 00:42:45,240 Speaker 1: position with our customers, are partners, are vendors, are employees. 694 00:42:45,880 --> 00:42:49,120 Speaker 1: The brand has been created, everybody knows more about the brand, 695 00:42:49,120 --> 00:42:51,760 Speaker 1: They know more about the stock, they know more about 696 00:42:51,800 --> 00:42:55,799 Speaker 1: the product, and everybody, you know, how do you think 697 00:42:55,840 --> 00:42:59,279 Speaker 1: employees at Tesla field? They like working at Tesla, They 698 00:42:59,320 --> 00:43:02,719 Speaker 1: like working on a for a company that's doing progressive 699 00:43:02,719 --> 00:43:06,320 Speaker 1: things that are going to improve the planet. Everybody likes 700 00:43:06,320 --> 00:43:11,160 Speaker 1: the mission. And so micro Strategy was a very focused 701 00:43:11,560 --> 00:43:15,960 Speaker 1: business intelligence company. In February, we were faced with a 702 00:43:16,080 --> 00:43:21,160 Speaker 1: challenge our challenges. We could either basically decapitalize the company 703 00:43:21,200 --> 00:43:27,560 Speaker 1: and struggle against a currency collapse, or we could craft 704 00:43:27,600 --> 00:43:32,400 Speaker 1: ourselves a bitcoin sale, turn our ship into you know, 705 00:43:32,480 --> 00:43:36,319 Speaker 1: into the wind, catch the wind, and start sailing. And 706 00:43:36,400 --> 00:43:39,080 Speaker 1: so what we did is a transformation on the balance 707 00:43:39,120 --> 00:43:43,319 Speaker 1: sheet of the company in order to instead of suffering 708 00:43:43,480 --> 00:43:47,760 Speaker 1: from the devaluation of the currency, we wanted to benefit 709 00:43:48,040 --> 00:43:52,399 Speaker 1: from the devaluation of the currency and uh and that's 710 00:43:52,440 --> 00:43:55,640 Speaker 1: been very motivational for everybody, and it's it's providing us 711 00:43:55,640 --> 00:43:59,319 Speaker 1: with lots of opportunities on the business side too. So 712 00:44:00,400 --> 00:44:19,440 Speaker 1: I think it's it's generally been quite positively received. So 713 00:44:19,560 --> 00:44:24,200 Speaker 1: we mentioned at the outset of this conversation that somewhat surprisingly, 714 00:44:24,239 --> 00:44:28,239 Speaker 1: there isn't a bitcoin e t F in existence just yet. 715 00:44:28,800 --> 00:44:32,040 Speaker 1: Some people have been saying that your company, now given 716 00:44:32,040 --> 00:44:36,520 Speaker 1: the bitcoin holding resembles and E t F on bitcoin, 717 00:44:36,640 --> 00:44:39,719 Speaker 1: or at least to play on on on bitcoin. What 718 00:44:39,760 --> 00:44:42,640 Speaker 1: do you say in response, because I saw you tweeting 719 00:44:42,880 --> 00:44:46,760 Speaker 1: a little bit about this recently, but what's your response 720 00:44:46,800 --> 00:44:49,279 Speaker 1: to people who say that micro Strategy is now just 721 00:44:49,400 --> 00:44:52,320 Speaker 1: a Bitcoin e t F. We're not a bitcoin e 722 00:44:52,440 --> 00:44:55,320 Speaker 1: t F. And E t F is an investment company 723 00:44:55,400 --> 00:44:59,239 Speaker 1: per the forty Securities Act, and and that means it 724 00:44:59,280 --> 00:45:03,359 Speaker 1: has the whole securities and it's a company that's fashioned 725 00:45:03,360 --> 00:45:08,120 Speaker 1: to hold securities like stocks or bonds. First of all, 726 00:45:08,440 --> 00:45:11,920 Speaker 1: we're not an investment company. We're an operating company. Second 727 00:45:11,920 --> 00:45:15,640 Speaker 1: of all, bitcoin is not a security. I mean, Jake 728 00:45:15,719 --> 00:45:18,080 Speaker 1: Clayton just went on TV two weeks ago it was 729 00:45:18,200 --> 00:45:22,040 Speaker 1: very emphatic about that bitcoin is property. It's like owning 730 00:45:22,120 --> 00:45:26,239 Speaker 1: land in Texas. You cannot it's it's it's property. You 731 00:45:26,239 --> 00:45:29,880 Speaker 1: can own land without being uh an e t F. 732 00:45:30,480 --> 00:45:34,400 Speaker 1: So we have a treasury. We could own cash. We 733 00:45:34,600 --> 00:45:38,840 Speaker 1: chose to actually invest our treasury in in some property 734 00:45:38,880 --> 00:45:43,000 Speaker 1: that we thought was scarce that would appreciate faster than 735 00:45:43,400 --> 00:45:47,880 Speaker 1: uh than the rate of monetary inflation. So that does 736 00:45:48,000 --> 00:45:51,359 Speaker 1: mean that if you invest in micro strategy, you have 737 00:45:51,520 --> 00:45:55,400 Speaker 1: some exposure to bitcoin. But again we're not an E 738 00:45:55,480 --> 00:45:58,680 Speaker 1: T F, right, I mean, those are very special purpose vehicles. 739 00:45:59,040 --> 00:46:02,360 Speaker 1: People are you know, you're buying gold shares of i 740 00:46:02,520 --> 00:46:06,520 Speaker 1: AU and you're hoping that the company will balance you know, 741 00:46:06,680 --> 00:46:10,200 Speaker 1: the assets under management to the share account and we're 742 00:46:10,239 --> 00:46:14,040 Speaker 1: not engaged at anything like that. Is there any regulatory 743 00:46:14,120 --> 00:46:17,440 Speaker 1: limit like to how much you could lever up do 744 00:46:17,800 --> 00:46:19,600 Speaker 1: sort of? Does there get to be a point where 745 00:46:19,600 --> 00:46:23,560 Speaker 1: the company lawyers get concerned that maybe a regulator could 746 00:46:23,680 --> 00:46:26,600 Speaker 1: view you as an e t P that or an 747 00:46:26,600 --> 00:46:27,960 Speaker 1: E t N or an e t F that's not 748 00:46:28,080 --> 00:46:31,319 Speaker 1: filed properly, Like does that potentially create any risks? Now 749 00:46:31,360 --> 00:46:34,120 Speaker 1: I tweeted this out and you can see my tweets. 750 00:46:34,120 --> 00:46:37,920 Speaker 1: I wanted to clarify it. It's quite It's quite clear, 751 00:46:38,560 --> 00:46:41,160 Speaker 1: you know, an E t P and an E t 752 00:46:41,440 --> 00:46:46,320 Speaker 1: F our investment companies. They're very special vehicles defined defined 753 00:46:46,360 --> 00:46:51,520 Speaker 1: precisely by the Securities Act of forty. Bitcoin is not 754 00:46:51,719 --> 00:46:55,759 Speaker 1: a security nor nor is it a commodity under the 755 00:46:55,800 --> 00:46:59,719 Speaker 1: definition of the E t P. It's just property, and 756 00:46:59,760 --> 00:47:02,000 Speaker 1: you and own as much of property as you want 757 00:47:02,600 --> 00:47:05,680 Speaker 1: as an operating company. You know, you don't trip these 758 00:47:05,719 --> 00:47:10,000 Speaker 1: things until your owning security security as a share of 759 00:47:10,080 --> 00:47:13,520 Speaker 1: stock or a bond or something. So that's a different thing. 760 00:47:14,320 --> 00:47:16,960 Speaker 1: If you wanted, uh, if you wanted to review all 761 00:47:17,000 --> 00:47:19,319 Speaker 1: the literature on it, you know, I could send you 762 00:47:19,440 --> 00:47:23,160 Speaker 1: some stuff, but I think you the digging, you'll find 763 00:47:23,360 --> 00:47:27,040 Speaker 1: it's quite black and white. Right. We're not a a 764 00:47:27,160 --> 00:47:30,960 Speaker 1: t F. We're not an a t P. There's no limit, right, 765 00:47:30,960 --> 00:47:33,240 Speaker 1: I mean people see to think like I'm getting away 766 00:47:33,239 --> 00:47:36,440 Speaker 1: with something because what because I'm not losing money, Like 767 00:47:37,000 --> 00:47:39,600 Speaker 1: because I happen to own a lot of assets, right, 768 00:47:40,280 --> 00:47:43,719 Speaker 1: I mean, it's a company that owns assets. You know, 769 00:47:43,880 --> 00:47:48,840 Speaker 1: presumably if we owned a million acres of land in Texas, 770 00:47:49,440 --> 00:47:51,200 Speaker 1: that wouldn't make us an E t F or an 771 00:47:51,200 --> 00:47:53,520 Speaker 1: a t P either, right, we would just have assets 772 00:47:53,560 --> 00:47:56,960 Speaker 1: on the balance sheet. This is this is a piece 773 00:47:57,000 --> 00:48:01,640 Speaker 1: of property that our treasury is invested. And so one 774 00:48:01,640 --> 00:48:04,920 Speaker 1: thing I'm really curious about um, and I remember there 775 00:48:04,960 --> 00:48:08,000 Speaker 1: was a lot of discussion about this among retail investors 776 00:48:08,000 --> 00:48:10,640 Speaker 1: in bitcoin when we had some of the earlier pops 777 00:48:10,680 --> 00:48:14,240 Speaker 1: in price. But how do you actually go about paying 778 00:48:14,480 --> 00:48:18,920 Speaker 1: taxes on on bitcoin gains? Because I imagine for a 779 00:48:18,960 --> 00:48:23,600 Speaker 1: company it might be different, or it might be um 780 00:48:23,640 --> 00:48:28,200 Speaker 1: even more difficult to calculate that tax. Right, Bitcoin is property, 781 00:48:29,040 --> 00:48:33,360 Speaker 1: So you buy it, there is no tax on it 782 00:48:33,440 --> 00:48:35,680 Speaker 1: until you sell it, and if you sell it, you 783 00:48:35,719 --> 00:48:38,560 Speaker 1: pay the short term or long term capital gains tax, 784 00:48:38,640 --> 00:48:42,560 Speaker 1: depending upon the holding period. So for a treasury asset 785 00:48:42,680 --> 00:48:47,799 Speaker 1: like this our use cases, we simply buy it, we 786 00:48:47,880 --> 00:48:53,239 Speaker 1: put it in cold storage, and we hold it likely forever, right, 787 00:48:53,280 --> 00:48:56,160 Speaker 1: I mean highly likely we never sell it. This is 788 00:48:56,320 --> 00:48:59,840 Speaker 1: this is the ultimate long duration safe haven treasure reserve asset. 789 00:49:00,080 --> 00:49:02,440 Speaker 1: You're buying it. You're buying it to hold for a 790 00:49:02,480 --> 00:49:07,200 Speaker 1: hundred years. Now when under what circumstances would you sell it? 791 00:49:07,280 --> 00:49:10,600 Speaker 1: Probably never because you don't want to generate a taxable event. 792 00:49:10,680 --> 00:49:13,279 Speaker 1: I mean, people hold a block of real estate in 793 00:49:13,320 --> 00:49:15,240 Speaker 1: New York City for a hundred years in their family 794 00:49:15,280 --> 00:49:18,440 Speaker 1: and they never sell it. Right, what if you needed cash? 795 00:49:18,640 --> 00:49:21,319 Speaker 1: If you needed cash, you borrow against it, right, I 796 00:49:21,320 --> 00:49:23,960 Speaker 1: mean it's just like if I have a billion dollars 797 00:49:23,960 --> 00:49:27,080 Speaker 1: of assets and I needed twenty million dollars, I would 798 00:49:27,080 --> 00:49:30,759 Speaker 1: go and borrow against the asset, you know, at the 799 00:49:30,760 --> 00:49:33,280 Speaker 1: best rate that I could get, like any other asset. 800 00:49:33,320 --> 00:49:37,600 Speaker 1: And there's no tax on a borrowing. It's just it's 801 00:49:37,640 --> 00:49:40,759 Speaker 1: just a loan, right, So if you were to sell it, 802 00:49:40,800 --> 00:49:44,160 Speaker 1: you would pay capital gains tax based on the period, 803 00:49:44,440 --> 00:49:47,840 Speaker 1: just like another asset. But otherwise, you know, it just 804 00:49:47,840 --> 00:49:52,200 Speaker 1: sits on your balance sheet. So you referenced this already, 805 00:49:52,239 --> 00:49:56,759 Speaker 1: but you recently went to market with a convertible debt 806 00:49:56,840 --> 00:50:01,800 Speaker 1: offering explicitly to raise cash and to buy more bitcoin. 807 00:50:02,239 --> 00:50:06,160 Speaker 1: So a I'm curious, um, what that conversation was like 808 00:50:06,320 --> 00:50:09,560 Speaker 1: actually getting people to lend you money to buy bitcoin. 809 00:50:09,640 --> 00:50:11,719 Speaker 1: But more importantly, can you just talk a little bit 810 00:50:11,760 --> 00:50:15,560 Speaker 1: about the mechanics of the trade, because it's how smooth 811 00:50:15,600 --> 00:50:19,920 Speaker 1: it was to buy several hundred million dollars of bitcoin 812 00:50:20,000 --> 00:50:23,920 Speaker 1: without front running yourself by making the announcement without creating 813 00:50:23,920 --> 00:50:27,080 Speaker 1: too much of a ripple, and the price how sophisticated 814 00:50:27,280 --> 00:50:30,480 Speaker 1: is the trading aspect of it, or the acquisition, so 815 00:50:30,520 --> 00:50:33,279 Speaker 1: that you're not driving the price up like crazy as 816 00:50:33,320 --> 00:50:36,319 Speaker 1: you move cash into bitcoin. Okay, So if you want 817 00:50:36,320 --> 00:50:38,080 Speaker 1: to buy bitcoin, and if you want to buy it 818 00:50:38,080 --> 00:50:42,960 Speaker 1: and stize like you would, you would line up an 819 00:50:42,960 --> 00:50:46,000 Speaker 1: institutional broker and there there are a bunch of good 820 00:50:46,040 --> 00:50:50,920 Speaker 1: institutional brokerages that you could go to and uh, you 821 00:50:50,960 --> 00:50:53,760 Speaker 1: would do your diligence and pick the one you like. Generally, 822 00:50:53,800 --> 00:50:56,400 Speaker 1: they all have trading algorithms and you can have a 823 00:50:56,440 --> 00:50:59,200 Speaker 1: computer sit there and trade every three seconds for you 824 00:50:59,320 --> 00:51:01,960 Speaker 1: for two days in a row. You'll just put a 825 00:51:02,920 --> 00:51:06,239 Speaker 1: time weighted algorithm out there and it'll just sit and 826 00:51:06,280 --> 00:51:12,520 Speaker 1: it'll run across every market seven three subject to your order. 827 00:51:12,600 --> 00:51:16,359 Speaker 1: So it's programmatic acquisition. You know, there are other ways 828 00:51:16,400 --> 00:51:18,480 Speaker 1: to buy and sell it, but but the logical way, 829 00:51:18,760 --> 00:51:20,799 Speaker 1: the way that Square did it, the way that we 830 00:51:20,840 --> 00:51:24,280 Speaker 1: did it, is just on a t WAP algorithm over time, 831 00:51:24,760 --> 00:51:26,840 Speaker 1: and that's not that hard. You just have to you 832 00:51:26,880 --> 00:51:29,799 Speaker 1: just have to choose, uh, your broker that you're going 833 00:51:29,840 --> 00:51:32,960 Speaker 1: to use. By the way, Square and PayPal are using 834 00:51:33,040 --> 00:51:36,279 Speaker 1: something similar to that to sell bitcoin to people that 835 00:51:36,360 --> 00:51:39,920 Speaker 1: use Square in cash or Paypals mobile wallet, and they're 836 00:51:39,920 --> 00:51:43,720 Speaker 1: buying billions of dollars of it. I think Square about 837 00:51:43,719 --> 00:51:45,839 Speaker 1: one point seven billion in the last quarter, So they're 838 00:51:45,840 --> 00:51:47,879 Speaker 1: buying a hundred million a week or two hundred million 839 00:51:47,920 --> 00:51:50,160 Speaker 1: a week of this stuff and they're just running it 840 00:51:50,320 --> 00:51:55,000 Speaker 1: via computer algorithms. So that's not terribly difficult. With regard 841 00:51:55,080 --> 00:51:58,400 Speaker 1: to the second question, there are different pools of capital. 842 00:51:58,920 --> 00:52:04,799 Speaker 1: So one pool of capital are progressive, forward thinking companies 843 00:52:04,840 --> 00:52:09,160 Speaker 1: and high net worth individuals and family offices and hedge 844 00:52:09,239 --> 00:52:12,879 Speaker 1: funds that want to buy bitcoin directly, and so they 845 00:52:12,880 --> 00:52:17,240 Speaker 1: would go and set up those custodian and institutional relationships, 846 00:52:18,120 --> 00:52:21,360 Speaker 1: you know, with night Egg or coin base or Genesis 847 00:52:21,480 --> 00:52:24,520 Speaker 1: or or gray Scale, and they would buy it. They 848 00:52:24,520 --> 00:52:27,000 Speaker 1: would either buy the underlying asset or they would buy 849 00:52:27,000 --> 00:52:29,720 Speaker 1: a fund like gray Scale and buy into the funder. 850 00:52:29,920 --> 00:52:33,919 Speaker 1: And and they have those choices. Um. The second pool 851 00:52:34,000 --> 00:52:37,600 Speaker 1: of capital are are people that have just you know, 852 00:52:37,680 --> 00:52:41,680 Speaker 1: raised money to invest in in uh US equities or 853 00:52:41,719 --> 00:52:44,520 Speaker 1: equities in general. Right, they can buy a nastac or 854 00:52:44,560 --> 00:52:47,960 Speaker 1: a nice listed stock. They can't buy bitcoin is not 855 00:52:48,000 --> 00:52:50,960 Speaker 1: in their charter, their limited partners would never allow them. 856 00:52:51,160 --> 00:52:54,400 Speaker 1: They can't buy bonds. They can buy stocks. Sometimes they 857 00:52:54,400 --> 00:52:57,600 Speaker 1: can only buy tech stocks, right, I mean whatever, So 858 00:52:57,719 --> 00:53:00,880 Speaker 1: there's a lot of pool of capital there for those people. 859 00:53:01,160 --> 00:53:04,920 Speaker 1: They can buy ms tr right, So our company is 860 00:53:04,920 --> 00:53:07,400 Speaker 1: is one thing they can buy. They you know, in theory, 861 00:53:07,440 --> 00:53:10,080 Speaker 1: they could also buy GBTC, right, they could buy the 862 00:53:10,080 --> 00:53:14,840 Speaker 1: gray scale thing they might buy as other PayPal and 863 00:53:14,960 --> 00:53:18,680 Speaker 1: Square people been buying them. PayPal stock traded up after 864 00:53:18,760 --> 00:53:23,279 Speaker 1: they announced their bitcoin strategy, for example. So so there 865 00:53:23,320 --> 00:53:26,600 Speaker 1: are some companies that are on the bitcoin network. Right. 866 00:53:26,800 --> 00:53:29,839 Speaker 1: Bitcoin is a monetary network. You can plug into it. 867 00:53:29,960 --> 00:53:33,120 Speaker 1: We plugged in our treasury to it, but Square and 868 00:53:33,200 --> 00:53:36,399 Speaker 1: PayPal plugged in their mobile apps to it. And then 869 00:53:36,440 --> 00:53:41,480 Speaker 1: Square plugged in fifty million of their treasury to it. Googgenheim, 870 00:53:41,520 --> 00:53:43,719 Speaker 1: you know, they plugged in there, you know, part of 871 00:53:43,760 --> 00:53:46,560 Speaker 1: their asset fund to it. So so that's one way 872 00:53:46,600 --> 00:53:49,520 Speaker 1: you can plug into it. And uh, and there are 873 00:53:49,560 --> 00:53:51,840 Speaker 1: a few public toy traded companies that are plugging in 874 00:53:51,840 --> 00:53:54,239 Speaker 1: the network right now, and I think that will grow 875 00:53:54,239 --> 00:53:58,319 Speaker 1: over time. Now, let's go to converts and the bond market. Well, 876 00:53:58,360 --> 00:54:00,800 Speaker 1: there's a lot of funds that the raised convert bonds. 877 00:54:00,840 --> 00:54:05,040 Speaker 1: There are convert funds there either convertible arbitrage, and they 878 00:54:05,120 --> 00:54:11,040 Speaker 1: exist to arbitrage convertible debt versus equity, and that's their 879 00:54:11,080 --> 00:54:14,480 Speaker 1: strategy and that's all they do. And they're good at 880 00:54:14,520 --> 00:54:16,720 Speaker 1: it and they have models. And there are other people 881 00:54:16,880 --> 00:54:20,480 Speaker 1: that have convert long funds. It's like we would we 882 00:54:20,520 --> 00:54:22,799 Speaker 1: will invest in a company, but we want to buy 883 00:54:22,800 --> 00:54:26,360 Speaker 1: the convert we don't buy the underlying comment three types 884 00:54:26,400 --> 00:54:30,360 Speaker 1: of volatility, right and risk. I can buy the bitcoin, 885 00:54:30,440 --> 00:54:32,120 Speaker 1: but that's hard to buy, and I've got to change 886 00:54:32,160 --> 00:54:35,600 Speaker 1: my charter, and I got security issues. I'm you know, 887 00:54:35,680 --> 00:54:37,759 Speaker 1: how do I secure it in the custodian And I 888 00:54:37,760 --> 00:54:41,120 Speaker 1: gotta work through that issue. We figured all that out. 889 00:54:42,360 --> 00:54:46,120 Speaker 1: There's another set of companies. They're gonna buy the equity, 890 00:54:46,160 --> 00:54:48,400 Speaker 1: but the equity might go up, they might equity might 891 00:54:48,400 --> 00:54:54,239 Speaker 1: go down. That's another risk reward idea. And then convert, well, 892 00:54:54,360 --> 00:54:57,719 Speaker 1: maybe I go convert long and like I buy the 893 00:54:57,760 --> 00:55:00,919 Speaker 1: convertible bond. Like if you were to buy the micro 894 00:55:00,960 --> 00:55:06,120 Speaker 1: Strategy convertible bond, you have a bond with the security 895 00:55:06,200 --> 00:55:11,400 Speaker 1: of an enterprise software company with reliable cash flows okay, 896 00:55:11,480 --> 00:55:15,200 Speaker 1: and a long tenure history. So we in essence borrowed 897 00:55:15,280 --> 00:55:19,640 Speaker 1: against an enterprise software company that's stable, has good cash flow, 898 00:55:19,920 --> 00:55:25,200 Speaker 1: that's low growth, and we then we then also had 899 00:55:25,800 --> 00:55:28,560 Speaker 1: eight hundred million dollars of extra liquidity in the form 900 00:55:28,600 --> 00:55:32,600 Speaker 1: of bitcoin and cash. So someone wants to loan US 901 00:55:32,760 --> 00:55:35,640 Speaker 1: four hundred million dollars and we've got eight hundred million liquidity, 902 00:55:35,640 --> 00:55:37,399 Speaker 1: that would be a loan to value of thirty three 903 00:55:37,880 --> 00:55:42,040 Speaker 1: against our liquid assets. Plus we're gonna generate four hundred 904 00:55:42,040 --> 00:55:44,440 Speaker 1: million in cash flow over time. So that's that's the 905 00:55:44,480 --> 00:55:48,200 Speaker 1: second credit benefit. And then the third is you have 906 00:55:48,239 --> 00:55:50,919 Speaker 1: first lean against an entire software company with no other 907 00:55:51,000 --> 00:55:53,319 Speaker 1: debt on it. Right, So if you're if you're a 908 00:55:53,320 --> 00:55:56,320 Speaker 1: debt a bond holder, you're thinking, okay, that's three forms 909 00:55:56,360 --> 00:56:01,240 Speaker 1: of downside protection. And then your upside is the company 910 00:56:01,320 --> 00:56:04,120 Speaker 1: makes a creative investment. If I borrow money at one 911 00:56:04,160 --> 00:56:07,239 Speaker 1: percent and I invest in something that yields a or 912 00:56:07,320 --> 00:56:11,200 Speaker 1: ten percent or right, it's a creative that's good. Or 913 00:56:11,640 --> 00:56:16,880 Speaker 1: maybe maybe um I get benefit and MSTR stock because 914 00:56:17,000 --> 00:56:19,640 Speaker 1: people like the stock better because we become even more 915 00:56:19,800 --> 00:56:23,719 Speaker 1: prominent in the bitcoin world because we have more exposure. 916 00:56:23,760 --> 00:56:26,000 Speaker 1: If you like the bitcoin before, now we're gonna have 917 00:56:26,040 --> 00:56:29,840 Speaker 1: double that exposure or more whatever the number is, depending 918 00:56:29,840 --> 00:56:32,960 Speaker 1: on what we buy. And then the third is we're 919 00:56:33,000 --> 00:56:36,200 Speaker 1: carving a channel between the convertible debt market and the 920 00:56:36,239 --> 00:56:40,080 Speaker 1: bitcoin market. This is a bitcoin convert which means that's 921 00:56:40,080 --> 00:56:44,480 Speaker 1: a creative to bitcoin. We were making bitcoin and investment 922 00:56:44,520 --> 00:56:48,200 Speaker 1: great asset. If you like the bitcoin, By the way, 923 00:56:48,840 --> 00:56:52,520 Speaker 1: you could buy a convertible bond where the downside is 924 00:56:52,560 --> 00:56:55,040 Speaker 1: protected by an enterprise software company and just have the 925 00:56:55,120 --> 00:56:59,840 Speaker 1: upside right like you know, under certain circumstances. I joked, 926 00:56:59,880 --> 00:57:01,480 Speaker 1: I said, you know, guys, if I was on the 927 00:57:01,520 --> 00:57:03,359 Speaker 1: other side of the table, I'd buy the entire thing. 928 00:57:03,400 --> 00:57:05,400 Speaker 1: I would club everybody over the head and take it. 929 00:57:05,440 --> 00:57:08,480 Speaker 1: Because where do you get to buy a bitcoin and 930 00:57:08,520 --> 00:57:11,960 Speaker 1: have downside protection at the same time. Now that's the 931 00:57:12,080 --> 00:57:16,200 Speaker 1: convert longs. If you're a convertible arbitrage player, they're what 932 00:57:16,360 --> 00:57:19,280 Speaker 1: they're doing is they simply want to buy the convert 933 00:57:19,400 --> 00:57:21,400 Speaker 1: and then they want to short the common and as 934 00:57:21,440 --> 00:57:24,040 Speaker 1: long as the common stock has volatility and it goes 935 00:57:24,120 --> 00:57:26,439 Speaker 1: up and down, they make money. That's their strategy. They're 936 00:57:26,440 --> 00:57:29,240 Speaker 1: not they're not expressing a pause, a short or a 937 00:57:29,280 --> 00:57:32,920 Speaker 1: long sentiment. There is arbitraging the volatility against the bond. 938 00:57:33,000 --> 00:57:35,840 Speaker 1: So they need a bond to arbitrage against the stock. 939 00:57:36,360 --> 00:57:39,920 Speaker 1: And now guess what what, How do arbitragers make the 940 00:57:39,960 --> 00:57:45,400 Speaker 1: most money? They need volatility what creates volatility Bitcoin. Okay, 941 00:57:45,440 --> 00:57:48,680 Speaker 1: so if you plug a high volatility asset, and if 942 00:57:48,680 --> 00:57:52,080 Speaker 1: you're gonna say we hate bitcoin is highly volatible, Well 943 00:57:52,320 --> 00:57:55,440 Speaker 1: tell me who in the world wants volatility more than 944 00:57:55,480 --> 00:58:01,200 Speaker 1: a bond arbitrager, right, that's actually a volatility engine for them. 945 00:58:01,240 --> 00:58:05,000 Speaker 1: So what we did was we went to the market 946 00:58:05,240 --> 00:58:10,440 Speaker 1: and we offered we offered UH investors in common stock 947 00:58:11,280 --> 00:58:15,040 Speaker 1: a company which had bitcoin exposure, you know, after going 948 00:58:15,040 --> 00:58:18,600 Speaker 1: through our tender offer and after all these announcements and 949 00:58:18,880 --> 00:58:22,240 Speaker 1: we we were able to attract new capital the believed 950 00:58:22,240 --> 00:58:25,200 Speaker 1: in bitcoin and liked that idea. And then we went 951 00:58:25,240 --> 00:58:28,080 Speaker 1: to the debt market and we offered the debt markets 952 00:58:28,120 --> 00:58:32,120 Speaker 1: an instrument and convertible debt that offered them exposure to 953 00:58:32,200 --> 00:58:37,240 Speaker 1: bitcoin and and the credit worthiness of a responsibly run 954 00:58:37,320 --> 00:58:42,000 Speaker 1: enterprise software company. And we were rewarded with an over subscription. 955 00:58:42,320 --> 00:58:45,960 Speaker 1: We were going to raise fourn million. We had massive demand, 956 00:58:46,080 --> 00:58:49,760 Speaker 1: and so we upsized the deal to five fifty million, 957 00:58:49,840 --> 00:58:52,160 Speaker 1: and we had a green shoe, and then we executed 958 00:58:52,200 --> 00:58:53,920 Speaker 1: the green shoe the next day and it became a 959 00:58:53,920 --> 00:58:58,480 Speaker 1: six fifty million dollar deal. Because because this is the 960 00:58:58,560 --> 00:59:02,400 Speaker 1: only UH convert doable debt instrument in the market in 961 00:59:02,440 --> 00:59:06,960 Speaker 1: the world where you could actually have the upside bitcoin, 962 00:59:07,280 --> 00:59:11,880 Speaker 1: the volatility a bitcoin, and the downside protection of a 963 00:59:11,920 --> 00:59:16,240 Speaker 1: credit worthy company that's got like double or triple collateral coverage, 964 00:59:16,640 --> 00:59:19,240 Speaker 1: and so like, why wouldn't you like that deal? I mean, 965 00:59:19,600 --> 00:59:22,680 Speaker 1: people say, they're like, well, who would blown your money 966 00:59:22,680 --> 00:59:25,200 Speaker 1: at seventy five basis points because that was the coupon. 967 00:59:25,680 --> 00:59:28,680 Speaker 1: And the answer is, well, it's got great volatility, it's 968 00:59:28,720 --> 00:59:32,160 Speaker 1: got it's got warrants with great upside opportunity, and it's 969 00:59:32,200 --> 00:59:35,880 Speaker 1: got good downside protection. And what are their choices? Can 970 00:59:35,920 --> 00:59:39,480 Speaker 1: I jump in here and ask, because we've been talking 971 00:59:39,520 --> 00:59:41,760 Speaker 1: for I think a little over an hour now and 972 00:59:41,880 --> 00:59:45,280 Speaker 1: we've been entirely focused on bitcoin, I'm curious, how do 973 00:59:45,320 --> 00:59:48,880 Speaker 1: you feel about other cryptocurrencies and would you consider an 974 00:59:48,920 --> 00:59:54,440 Speaker 1: investment in non bitcoin something else. Look, I think bitcoin 975 00:59:54,960 --> 01:00:01,560 Speaker 1: is the investment grade, long duration safe haven asset. It's 976 01:00:01,640 --> 01:00:06,000 Speaker 1: the best purest synthetic treasury asset invented in the history 977 01:00:06,040 --> 01:00:08,360 Speaker 1: of the world. Now what does it take for it 978 01:00:08,400 --> 01:00:10,560 Speaker 1: to be that good? Well, it needs to be the 979 01:00:10,640 --> 01:00:13,520 Speaker 1: dominant network, so it needs to be fifty times bigger 980 01:00:13,520 --> 01:00:15,840 Speaker 1: than the next thing, and it is. It's fifty times 981 01:00:15,880 --> 01:00:19,280 Speaker 1: bigger than bitcoin cash or bitcoins. To total vision, it 982 01:00:19,280 --> 01:00:22,480 Speaker 1: needs to go through ten years without changing the architecture 983 01:00:22,600 --> 01:00:25,800 Speaker 1: to be Lendy secure, and it is. It needs to be. 984 01:00:25,880 --> 01:00:28,000 Speaker 1: It needs to have a history of not being hacked. 985 01:00:28,000 --> 01:00:32,080 Speaker 1: It needs to be adopted with a political contingent, a senator, 986 01:00:32,960 --> 01:00:35,600 Speaker 1: a congressional caucus. It needs the endorsement of the I 987 01:00:35,760 --> 01:00:39,160 Speaker 1: R S D SEC right when, for example, when J 988 01:00:39,360 --> 01:00:44,280 Speaker 1: Clayton was on television, he said bitcoin and ethereum are property, 989 01:00:45,440 --> 01:00:49,080 Speaker 1: they're not securities. He was silent on every other crypto. 990 01:00:49,720 --> 01:00:52,760 Speaker 1: So you understand where I'm coming here. Every other crypto 991 01:00:52,880 --> 01:00:56,000 Speaker 1: may or may not be a security and and uh, 992 01:00:56,160 --> 01:00:58,360 Speaker 1: and I don't know. I'm not an expert. But what 993 01:00:58,440 --> 01:01:00,320 Speaker 1: I would say is, if you wanted to say segment 994 01:01:00,400 --> 01:01:03,760 Speaker 1: the market of crypto, you have one asset which is 995 01:01:03,760 --> 01:01:09,760 Speaker 1: three or fifty billion dollar guerrilla juggernaut, dominant digital network, 996 01:01:10,360 --> 01:01:14,800 Speaker 1: the monetary network, the most powerful thing that I've ever seen, 997 01:01:14,960 --> 01:01:18,360 Speaker 1: a hundred times more valuable than Facebook, a hundred times 998 01:01:18,360 --> 01:01:22,040 Speaker 1: more valuable than Google. It's the money network, right, that's 999 01:01:22,120 --> 01:01:27,480 Speaker 1: Bitcoin in the world doesn't understand it. Everybody needs it. 1000 01:01:27,480 --> 01:01:31,160 Speaker 1: It's the solution to everybody's problem on Earth. Everybody needs 1001 01:01:31,200 --> 01:01:34,360 Speaker 1: to not lose their wealth and not have the economic 1002 01:01:34,440 --> 01:01:37,960 Speaker 1: energy sucked out of their currency and all their investments. 1003 01:01:38,320 --> 01:01:43,720 Speaker 1: That's bitcoin. There is no comparable asset. You have another category, 1004 01:01:43,840 --> 01:01:47,960 Speaker 1: call it unicorns. I put a theoryum in there. It's 1005 01:01:47,960 --> 01:01:52,240 Speaker 1: a unicorn, like an Airbnb or you know, or an uber. 1006 01:01:52,880 --> 01:01:56,520 Speaker 1: It's a big it's like fifty six billion in market cap. 1007 01:01:56,560 --> 01:02:01,520 Speaker 1: People are excited about it. It's it's complicated, it's compelling. 1008 01:02:01,560 --> 01:02:04,160 Speaker 1: There are a lot of people enthusiastic about it. And 1009 01:02:04,200 --> 01:02:07,240 Speaker 1: then after that, you've got a bunch of venture capital investments, 1010 01:02:07,240 --> 01:02:10,200 Speaker 1: a bunch of crypto networks doing different things, very exciting. 1011 01:02:10,720 --> 01:02:14,000 Speaker 1: There's going to be a high failure rate. There's like 1012 01:02:14,040 --> 01:02:17,560 Speaker 1: ten thousand cryptos launched right, so it's like who's gonna 1013 01:02:17,560 --> 01:02:20,200 Speaker 1: be Instagram, who's gonna be What's Up? Who's gonna be Facebook? 1014 01:02:20,600 --> 01:02:23,760 Speaker 1: And then what are the other ten thousand? And maybe 1015 01:02:23,760 --> 01:02:28,160 Speaker 1: one of them will become Snapchat and then maybe them 1016 01:02:28,160 --> 01:02:31,880 Speaker 1: will go away. I don't know. I would bucket your 1017 01:02:31,880 --> 01:02:36,400 Speaker 1: money into this is my treasury reserve asset. Massachusetts Mutual 1018 01:02:36,440 --> 01:02:38,160 Speaker 1: will put a hundred million in a bitcoin it's a 1019 01:02:38,200 --> 01:02:43,240 Speaker 1: treasury reserve asset. It's institutional grade asset. I would bet 1020 01:02:43,400 --> 01:02:47,240 Speaker 1: five million on this. The next thing, you know, soft 1021 01:02:47,240 --> 01:02:50,480 Speaker 1: bank may buy a big piece of of a theory. Um, 1022 01:02:50,520 --> 01:02:52,880 Speaker 1: they buy a big piece of Uber Airbnb. You know 1023 01:02:53,080 --> 01:02:56,240 Speaker 1: that's you know, we were right, that's a soft bank play. 1024 01:02:56,320 --> 01:02:58,680 Speaker 1: And the last is venture capital. You know, you bet 1025 01:02:58,760 --> 01:03:02,160 Speaker 1: venture capital. You expect massive gains. You except risk. It's 1026 01:03:02,800 --> 01:03:05,520 Speaker 1: it's all uncertain and complicated. And that's how I feel 1027 01:03:05,520 --> 01:03:10,480 Speaker 1: about the crypto space. Let me, you know, wrap up soon, 1028 01:03:10,560 --> 01:03:13,160 Speaker 1: but let me ask you. You know, I mentioned you 1029 01:03:13,200 --> 01:03:18,360 Speaker 1: tweet a lot about bitcoin. Uh, extremely compelling case for it. 1030 01:03:18,800 --> 01:03:22,320 Speaker 1: How much of your sort of like mental, sort of 1031 01:03:22,360 --> 01:03:25,680 Speaker 1: like capacity is focused on it? And are you still 1032 01:03:25,720 --> 01:03:29,640 Speaker 1: active in the sort of day to day business intelligence 1033 01:03:30,200 --> 01:03:34,120 Speaker 1: business of micro strategy, Because bitcoin, I mean, it definitely 1034 01:03:34,160 --> 01:03:36,920 Speaker 1: takes over people's minds and I see it. I know 1035 01:03:37,160 --> 01:03:39,800 Speaker 1: a lot of people who are intuited. Becomes their thing. 1036 01:03:39,880 --> 01:03:43,560 Speaker 1: It becomes like the main focus of their energy, it 1037 01:03:43,600 --> 01:03:48,640 Speaker 1: becomes their obsession. You're clearly very into it, um are 1038 01:03:48,800 --> 01:03:52,400 Speaker 1: do you are you also like running the sort of 1039 01:03:52,440 --> 01:03:54,480 Speaker 1: the software company. Let's say I'm kind of at the 1040 01:03:54,560 --> 01:04:00,240 Speaker 1: Larry Ellison stage, where Larry was responsible for technology, he 1041 01:04:00,360 --> 01:04:05,640 Speaker 1: delegated sales and services and marketing to to the president. 1042 01:04:05,800 --> 01:04:08,720 Speaker 1: So fond Lee is the president of the company and 1043 01:04:08,840 --> 01:04:13,200 Speaker 1: sales and services and marketing that he's running the day 1044 01:04:13,200 --> 01:04:16,200 Speaker 1: to day operations of the business. I'm the CEO and 1045 01:04:16,240 --> 01:04:19,720 Speaker 1: the chairman. About half of my time is spent on 1046 01:04:19,800 --> 01:04:25,520 Speaker 1: business matters, technology initiatives, corporate initiatives, other business things. Probably 1047 01:04:25,560 --> 01:04:29,640 Speaker 1: half of my time is spent on on corporate marketing, 1048 01:04:29,960 --> 01:04:35,880 Speaker 1: corporate balance sheet and communication of around bitcoin and the like. 1049 01:04:36,080 --> 01:04:38,800 Speaker 1: So I'd say fifty percent of it is balance sheets 1050 01:04:38,880 --> 01:04:44,680 Speaker 1: stuff which is increasingly macroeconomics and bitcoin. Other is, you know, 1051 01:04:44,800 --> 01:04:48,560 Speaker 1: being the CEO, but I'm not day to day running 1052 01:04:49,080 --> 01:04:52,600 Speaker 1: every deal and running every operation. Fong does that and 1053 01:04:52,640 --> 01:04:56,000 Speaker 1: he does it very well. Could you see yourself, could 1054 01:04:56,040 --> 01:05:02,040 Speaker 1: you see micro Strategy starting a a bitcoin related or 1055 01:05:02,120 --> 01:05:05,400 Speaker 1: bitcoin specific business in the future. Are there, for instance, 1056 01:05:05,480 --> 01:05:09,760 Speaker 1: software opportunities that you could provide for crypto, bitcoins and 1057 01:05:09,800 --> 01:05:13,040 Speaker 1: monetary network and everybody figures out how plug into it? Right? 1058 01:05:13,120 --> 01:05:16,240 Speaker 1: So in our case, all of our assets are around 1059 01:05:16,240 --> 01:05:20,640 Speaker 1: business intelligence. So we've been exploring how we might bring 1060 01:05:20,760 --> 01:05:25,880 Speaker 1: bitcoin intelligence, uh to the to the bitcoin space and 1061 01:05:25,920 --> 01:05:29,680 Speaker 1: blockchain intelligence, and and we're looking at different options. And 1062 01:05:29,720 --> 01:05:32,880 Speaker 1: if we find a way to plug the plug the 1063 01:05:32,960 --> 01:05:38,520 Speaker 1: blockchain and bitcoin related things into micro strategy, then we 1064 01:05:38,600 --> 01:05:42,520 Speaker 1: will release that. We're we're going to release some some 1065 01:05:42,680 --> 01:05:47,560 Speaker 1: cool analytics um to the community to help them evaluate 1066 01:05:48,080 --> 01:05:53,320 Speaker 1: alternative investments and all and to make treasury decisions. But 1067 01:05:53,360 --> 01:05:56,320 Speaker 1: I think it's more of a marketing benefit to us. 1068 01:05:56,760 --> 01:05:59,720 Speaker 1: So we'll get marketing benefits, we get some QA benefits. 1069 01:06:00,120 --> 01:06:05,320 Speaker 1: We might release some some software that does blockchain analytics, 1070 01:06:05,400 --> 01:06:07,720 Speaker 1: but we haven't really determined that yet. We're really kicking 1071 01:06:07,720 --> 01:06:10,640 Speaker 1: the tires in an R and D stage there, Like 1072 01:06:10,760 --> 01:06:13,360 Speaker 1: we're not going to go into bitcoin mining just I mean, 1073 01:06:13,440 --> 01:06:15,720 Speaker 1: just people think because you buy bitcoin, that means you're 1074 01:06:15,720 --> 01:06:18,400 Speaker 1: gonna love everything bitcoin. But you know, if you run 1075 01:06:18,480 --> 01:06:22,360 Speaker 1: data centers and you have free electricity and you own electricity, 1076 01:06:22,360 --> 01:06:24,280 Speaker 1: then maybe you should think about mining. But if you 1077 01:06:24,320 --> 01:06:26,800 Speaker 1: don't have free electricity, and if you don't own data 1078 01:06:26,840 --> 01:06:29,840 Speaker 1: centers and that's not your thing, you know, it for 1079 01:06:29,920 --> 01:06:32,760 Speaker 1: PayPal and Square to plug their mobile payment apps and 1080 01:06:32,760 --> 01:06:36,480 Speaker 1: the bitcoin totally rational. They have mobile payment businesses, right, 1081 01:06:36,520 --> 01:06:40,000 Speaker 1: I don't I won't go into that business. Every you know, 1082 01:06:40,080 --> 01:06:42,920 Speaker 1: if you run an investment fund, it makes sense for 1083 01:06:42,960 --> 01:06:45,880 Speaker 1: you to create a bitcoin investment fund and marketed institutions 1084 01:06:45,880 --> 01:06:50,000 Speaker 1: because that's your business. So everybody finds they're part of 1085 01:06:50,000 --> 01:06:54,880 Speaker 1: the economy. It's very competitive. It's the most competitive economy 1086 01:06:55,080 --> 01:06:58,480 Speaker 1: I can imagine, because anybody can compete in cyberspace from 1087 01:06:58,480 --> 01:07:01,200 Speaker 1: anywhere on Earth, and so you better be the best 1088 01:07:01,240 --> 01:07:04,560 Speaker 1: in the world at whatever you decide to bring to market. 1089 01:07:05,440 --> 01:07:07,600 Speaker 1: So so I would say, we're looking at it. But 1090 01:07:08,320 --> 01:07:11,680 Speaker 1: you don't have to change your product offering or your 1091 01:07:11,720 --> 01:07:14,520 Speaker 1: service offering to plug into the network. You can plug 1092 01:07:14,560 --> 01:07:18,640 Speaker 1: your treasury. If you're a dentist, you can still be 1093 01:07:18,680 --> 01:07:20,880 Speaker 1: a dentist. But what I would tell you is the 1094 01:07:21,000 --> 01:07:23,560 Speaker 1: value of your cash flows for being a dentist. You're 1095 01:07:23,560 --> 01:07:25,880 Speaker 1: gonna go down ten percent a year every year for 1096 01:07:25,920 --> 01:07:28,280 Speaker 1: the next decade, and so you might want to sweep 1097 01:07:28,320 --> 01:07:30,920 Speaker 1: those cash flows into treasury, put that in bitcoin, so 1098 01:07:30,960 --> 01:07:33,920 Speaker 1: they go up a dent a year, so that you 1099 01:07:33,960 --> 01:07:37,040 Speaker 1: are a wealthy dentist in a decade instead of being 1100 01:07:37,080 --> 01:07:40,240 Speaker 1: a poor, starving dentist in a decade. So that the 1101 01:07:40,360 --> 01:07:43,840 Speaker 1: easiest way for most people to plug into bitcoin is 1102 01:07:43,880 --> 01:07:47,120 Speaker 1: to plug their treasuries into bitcoin. It's a monetary network. 1103 01:07:47,280 --> 01:07:51,280 Speaker 1: It's it's a straightforward thing before we go. I mean, 1104 01:07:51,680 --> 01:07:54,320 Speaker 1: you say you're never the goal is never have to sell. 1105 01:07:54,400 --> 01:07:57,040 Speaker 1: It could be something that micro strategy holds for a 1106 01:07:57,120 --> 01:08:01,320 Speaker 1: hundred years. But if bitcoin go is to a hundred thousand, 1107 01:08:01,800 --> 01:08:04,360 Speaker 1: are you gonna throw a wild party or what? I 1108 01:08:04,400 --> 01:08:06,360 Speaker 1: will throw a wild party. I agreed to do that 1109 01:08:06,480 --> 01:08:08,760 Speaker 1: for John Wallace. You know, he hit me up. He 1110 01:08:08,800 --> 01:08:10,880 Speaker 1: said the Hornets won a party at a hundred thousand 1111 01:08:10,880 --> 01:08:14,000 Speaker 1: where you host. So I feel like I have that 1112 01:08:14,280 --> 01:08:19,160 Speaker 1: obligation that I've committed to and so yeah, okay, and 1113 01:08:19,200 --> 01:08:22,080 Speaker 1: you're invited. I was just gonna I was just gonna say, 1114 01:08:22,280 --> 01:08:26,839 Speaker 1: Tracy and Tracy and I are very excited about joining 1115 01:08:26,840 --> 01:08:30,000 Speaker 1: you at your party. I'd love to have you and 1116 01:08:30,040 --> 01:08:33,719 Speaker 1: I appreciate you on your show today. Yeah that was great, 1117 01:08:33,760 --> 01:08:38,240 Speaker 1: this is We appreciate you joining us. Said fantastic conversation, 1118 01:08:38,400 --> 01:08:41,840 Speaker 1: and I wish you the best of luck. Thanks same 1119 01:08:41,920 --> 01:08:46,840 Speaker 1: to you by Tracy, by Joe. Thanks Michael, Thank you 1120 01:08:46,960 --> 01:08:50,280 Speaker 1: really appreciated that. Thanks Michael. That was great. Yeah, that 1121 01:08:50,360 --> 01:09:20,639 Speaker 1: was a lot of fun. Take care. Oh well, here's 1122 01:09:20,680 --> 01:09:25,880 Speaker 1: a very uh energetic prose would say, I think that's 1123 01:09:25,880 --> 01:09:28,160 Speaker 1: a fair characters trying to figure out exactly the right 1124 01:09:28,160 --> 01:09:29,559 Speaker 1: way to put it. I'm kind of thinking what the 1125 01:09:29,600 --> 01:09:32,120 Speaker 1: party would be like, but you know, a lot of 1126 01:09:32,160 --> 01:09:34,960 Speaker 1: fun I imagine um and a lot of talking as 1127 01:09:35,000 --> 01:09:38,400 Speaker 1: well about bitcoin. Um. Okay, here's one thing that I 1128 01:09:38,439 --> 01:09:40,880 Speaker 1: was thinking at the beginning of the conversation, which is 1129 01:09:41,200 --> 01:09:45,439 Speaker 1: I I hadn't necessarily thought about what So I've been 1130 01:09:45,439 --> 01:09:48,760 Speaker 1: thinking a long time about low economic growth, and uh, 1131 01:09:49,160 --> 01:09:51,439 Speaker 1: you know what that means for companies, and this idea 1132 01:09:51,600 --> 01:09:54,360 Speaker 1: that in an environment of sluggish economic growth, you kind 1133 01:09:54,400 --> 01:09:58,519 Speaker 1: of have to engineer profit growth in one way or another. 1134 01:09:58,600 --> 01:10:00,479 Speaker 1: So lots of companies have done that through M and 1135 01:10:00,560 --> 01:10:04,080 Speaker 1: A deals. Others have done that through buybacks and dividends. 1136 01:10:04,160 --> 01:10:06,960 Speaker 1: But the theme overall is that a lot of companies 1137 01:10:07,000 --> 01:10:10,679 Speaker 1: have a lot of cash. I hadn't really considered that 1138 01:10:10,680 --> 01:10:14,839 Speaker 1: that problem has grown more stark in the COVID area 1139 01:10:15,000 --> 01:10:19,519 Speaker 1: era and Michael laid out a really interesting description of it. 1140 01:10:19,600 --> 01:10:21,840 Speaker 1: This idea that you know, sales are still going to 1141 01:10:21,880 --> 01:10:24,639 Speaker 1: the through the roof for a software company, but at 1142 01:10:24,640 --> 01:10:28,040 Speaker 1: the same time, expenses are down quite a lot, and 1143 01:10:28,120 --> 01:10:30,559 Speaker 1: so they're swimming in cash at the moment, and you 1144 01:10:30,600 --> 01:10:32,519 Speaker 1: get back to the age old problem of what to 1145 01:10:32,560 --> 01:10:37,640 Speaker 1: do with all that corporate cash. Yeah, I mean, you know, 1146 01:10:37,760 --> 01:10:42,599 Speaker 1: some companies obviously will reinvest it and their businesses are 1147 01:10:42,680 --> 01:10:45,680 Speaker 1: just going so strong. I mean, if you're like, you know, 1148 01:10:46,360 --> 01:10:48,559 Speaker 1: some of these really hot you know, if you're like 1149 01:10:48,560 --> 01:10:51,799 Speaker 1: a snowflake or one of these like really hot enterprise 1150 01:10:51,800 --> 01:10:55,120 Speaker 1: software companies that people are crazy about, there's probably kinds 1151 01:10:55,120 --> 01:10:59,280 Speaker 1: of reinvestment opportunities, fast growth. You know, a business intelligence 1152 01:10:59,280 --> 01:11:01,559 Speaker 1: company has been a round like what they say, like 1153 01:11:01,600 --> 01:11:06,439 Speaker 1: almost thirty years, maybe not as many opportunities to do that. 1154 01:11:06,920 --> 01:11:09,640 Speaker 1: You know. I would just say, like I I disagree 1155 01:11:09,840 --> 01:11:12,680 Speaker 1: a little bit. I would say with maybe some of 1156 01:11:12,880 --> 01:11:17,960 Speaker 1: Michael's characterization of the macro economy and the FED or 1157 01:11:18,439 --> 01:11:21,439 Speaker 1: measuring inflation or the value of the dollar. But you know, 1158 01:11:21,479 --> 01:11:23,360 Speaker 1: who knows, We'll be back here in four years and 1159 01:11:23,439 --> 01:11:26,640 Speaker 1: forty eight months to see if the dollar has collapsed. 1160 01:11:27,040 --> 01:11:32,560 Speaker 1: But on the other hand, I think he is on ironically, 1161 01:11:32,640 --> 01:11:37,080 Speaker 1: genuinely a very good articulator of many of the bull 1162 01:11:37,200 --> 01:11:42,519 Speaker 1: cases for bitcoin, the characterizations property, the network effects, the 1163 01:11:42,640 --> 01:11:47,200 Speaker 1: always on nous of it, the increasing liquidity, the flywheels 1164 01:11:47,200 --> 01:11:49,879 Speaker 1: such that the more the market value grows, the easier 1165 01:11:49,920 --> 01:11:52,240 Speaker 1: it is to transact in it. There were a lot 1166 01:11:52,280 --> 01:11:54,599 Speaker 1: of like sort of like big ideas that when he 1167 01:11:54,760 --> 01:11:57,519 Speaker 1: puts it sort of some of the macro and fetch 1168 01:11:57,520 --> 01:12:00,840 Speaker 1: stuff aside I found compelling. Well, my mind, it gets 1169 01:12:00,840 --> 01:12:03,479 Speaker 1: back to that growth point, which is one of the 1170 01:12:03,520 --> 01:12:06,640 Speaker 1: ways to achieve growth in the current environment is to 1171 01:12:06,720 --> 01:12:12,080 Speaker 1: try to select the asset that's not going to I 1172 01:12:12,080 --> 01:12:15,160 Speaker 1: guess he would say be debased in the future, right, 1173 01:12:15,200 --> 01:12:17,760 Speaker 1: But I guess what I'm getting at is like there's 1174 01:12:17,760 --> 01:12:19,560 Speaker 1: a lot of money out there at the moment, and 1175 01:12:19,600 --> 01:12:23,479 Speaker 1: they're all chasing a pool of assets, and to some extent, 1176 01:12:23,720 --> 01:12:26,479 Speaker 1: the value of those assets is being driven by flows, right, 1177 01:12:26,560 --> 01:12:30,400 Speaker 1: So identifying the asset with the most flows and the 1178 01:12:30,439 --> 01:12:35,080 Speaker 1: most potential for upside makes some sense in the current environment. 1179 01:12:35,160 --> 01:12:37,559 Speaker 1: Although I think a lot of people in the traditional 1180 01:12:37,600 --> 01:12:40,600 Speaker 1: investment community are still wrapping their heads around bitcoin and 1181 01:12:40,600 --> 01:12:44,240 Speaker 1: they don't necessarily see bitcoin as the asset um that's 1182 01:12:44,280 --> 01:12:46,519 Speaker 1: going to be the most successful. But for sure you 1183 01:12:46,560 --> 01:12:49,439 Speaker 1: can see it getting those flows at the moment. And 1184 01:12:49,520 --> 01:12:51,800 Speaker 1: you know what, I'll just say that it's like there's 1185 01:12:51,880 --> 01:12:56,200 Speaker 1: people like me and other people although like not technically 1186 01:12:56,320 --> 01:13:00,240 Speaker 1: the definition of inflation or you know, it's like what ever, 1187 01:13:00,640 --> 01:13:04,839 Speaker 1: But it's like, to some extent the future crypto aside, 1188 01:13:04,880 --> 01:13:08,200 Speaker 1: bitcoin of side, the future belongs to people that are 1189 01:13:08,240 --> 01:13:13,040 Speaker 1: really excited about a story. And the people who say, like, well, 1190 01:13:13,040 --> 01:13:16,200 Speaker 1: that's technically not how inflation are measured, they're like, you know, 1191 01:13:16,560 --> 01:13:19,640 Speaker 1: they do podcasts, tweet and stuff, and their journalists for 1192 01:13:19,640 --> 01:13:23,080 Speaker 1: a living. So I risk, even if I like would 1193 01:13:23,120 --> 01:13:26,519 Speaker 1: poke some holes in his view, I actually think probably 1194 01:13:26,560 --> 01:13:29,000 Speaker 1: like the long term winners are more people like that 1195 01:13:29,080 --> 01:13:31,479 Speaker 1: than people like me. Does that make sense? Do you 1196 01:13:31,479 --> 01:13:34,200 Speaker 1: get what I'm saying? No, it does. I think this 1197 01:13:34,360 --> 01:13:38,720 Speaker 1: story about hopes and dreams and fixing the world is 1198 01:13:38,840 --> 01:13:42,599 Speaker 1: definitely more compelling than the story about actually you should 1199 01:13:42,600 --> 01:13:46,040 Speaker 1: think about inflation in this way and and here's how 1200 01:13:46,040 --> 01:13:52,080 Speaker 1: we construct an inflation that's not technically debate. Yeah, yeah, yeah. 1201 01:13:52,280 --> 01:13:54,680 Speaker 1: The future does not belong to people who did pick 1202 01:13:54,720 --> 01:13:59,920 Speaker 1: about inflation index construction. Um, so we leave it there, 1203 01:14:00,520 --> 01:14:02,800 Speaker 1: all right, Yeah, let's leave it there. This has been 1204 01:14:02,880 --> 01:14:06,040 Speaker 1: another episode of the All Thoughts podcast. I'm Tracy Alloway. 1205 01:14:06,120 --> 01:14:09,320 Speaker 1: You can follow me on Twitter at Tracy Allowa. I'm Joe, 1206 01:14:09,400 --> 01:14:11,840 Speaker 1: why Isn't All? You can follow me on Twitter at 1207 01:14:11,840 --> 01:14:15,559 Speaker 1: The Stalwart. Follow our guest Michael Sailor on Twitter. He's 1208 01:14:15,640 --> 01:14:20,320 Speaker 1: at Michael Underscore Sailor. Follow our producer Laura Carlson. She's 1209 01:14:20,400 --> 01:14:23,639 Speaker 1: at Laura, I'm Carlson. Follow the Bloomberg head of podcast 1210 01:14:23,680 --> 01:14:28,040 Speaker 1: Francesca Levi at Francesca Today, and check out all of 1211 01:14:28,040 --> 01:14:31,960 Speaker 1: our podcasts at Bloomberg under the handle at podcasts. Thanks 1212 01:14:32,040 --> 01:15:02,280 Speaker 1: for listening.