WEBVTT - Michael Saylor, the CEO Who Turned a Software Company Into a Bitcoin Company 0:00:10.840 --> 0:00:14.760 Hello, and welcome to another episode of the Odd Lots podcast. 0:00:14.800 --> 0:00:20.400 I'm Joe Wisenthal and I'm Tracy all Away. So, Tracy, um, 0:00:20.440 --> 0:00:24.439 you know, there's still no bitcoin e t F, as 0:00:24.480 --> 0:00:26.760 you know, I mean, for years people have been trying 0:00:26.800 --> 0:00:30.360 to float one. Still that one, But there are various 0:00:30.400 --> 0:00:35.879 some publicly listed instruments that have exposure to Bitcoin that 0:00:36.000 --> 0:00:40.120 in the meantime people are buying and selling to uh, yeah, 0:00:40.159 --> 0:00:43.479 basically find a way to get exposure to the asset 0:00:43.520 --> 0:00:45.879 class or whatever you want to call it through a 0:00:45.960 --> 0:00:50.400 listed equity. Yeah, that's right. And I know we've been 0:00:50.400 --> 0:00:52.839 talking about the possibility of a Bitcoin e t F 0:00:52.960 --> 0:00:57.160 for many many years now, it's kind of surprising that 0:00:57.160 --> 0:01:00.120 that hasn't happened just yet. But you're right, there are 0:01:00.120 --> 0:01:02.480 a number of public companies that are now a play 0:01:02.560 --> 0:01:06.880 on bitcoin, and they kind of range from the more 0:01:07.760 --> 0:01:11.560 I guess you could say outrageous or unusual to um, 0:01:11.600 --> 0:01:14.479 the more traditional. So at one end of the spectrum 0:01:14.560 --> 0:01:19.240 you have a grayscale Bitcoin Trust, which is sort of 0:01:19.280 --> 0:01:22.680 trying to replicate the e t F structure without explicitly 0:01:22.680 --> 0:01:24.360 being in e t F. And then at the other 0:01:24.520 --> 0:01:28.679 end you have remember all those companies like Long Island 0:01:28.800 --> 0:01:31.959 Iced Tea that changed their name to include blockchain and 0:01:32.040 --> 0:01:34.840 just sort of jumped on the bandwagon, and those have 0:01:34.920 --> 0:01:37.520 been going up this year along with the bitcoin price 0:01:37.600 --> 0:01:40.120 as well. And then of course you have everything in between, 0:01:41.160 --> 0:01:44.600 right is exactly right. So some companies are very tangentially 0:01:45.319 --> 0:01:49.040 related to crypto, or they're like, oh, we're suddenly a 0:01:49.040 --> 0:01:52.640 blockchain company, even though we used to sell iced tea um. 0:01:52.760 --> 0:01:55.320 Or some companies they're like, oh, we bought some bitcoin 0:01:55.400 --> 0:01:57.600 mining rigs and we're going to do something like that. 0:01:58.080 --> 0:02:00.960 So there is a range of exposures. But over the 0:02:01.040 --> 0:02:04.760 last several months, um, really since this summer, i'd say 0:02:04.840 --> 0:02:08.760 one company has sort of really jumped out from the 0:02:08.760 --> 0:02:12.760 rest of the pack in the degree to which people 0:02:12.840 --> 0:02:16.160 view it as kind of a bitcoin play or a 0:02:16.240 --> 0:02:20.920 real sort of a direct exposure to fluctuations in the 0:02:21.000 --> 0:02:24.320 coin itself. Yeah, I think that's fair to say. And 0:02:24.880 --> 0:02:29.359 that company is of course micro Strategy. We've seen them 0:02:29.600 --> 0:02:33.200 buy up a bunch of bitcoin, so basically using their 0:02:33.240 --> 0:02:37.200 cash reserves to buy bitcoin, So instead of holding a 0:02:37.240 --> 0:02:41.160 bunch of government bonds in their sort of corporate treasury function, 0:02:41.520 --> 0:02:44.680 they hold something like bitcoin or instead of holding bonds 0:02:44.680 --> 0:02:48.000 and stocks and gold, they hold bitcoin. And it's been 0:02:48.040 --> 0:02:50.760 a really interesting development because it's actually meant that the 0:02:50.800 --> 0:02:57.000 company's share price is basically tracking the price of Krypto. Now, yeah, 0:02:57.160 --> 0:02:59.480 exactly right. So, uh and it was a really well 0:02:59.600 --> 0:03:01.360 timed I mean, I think it was like the middle 0:03:01.360 --> 0:03:04.040 of the summer, maybe it was August. I think they 0:03:04.440 --> 0:03:08.800 announced that they were going to buy some bitcoin, a 0:03:08.800 --> 0:03:11.400 pretty good chunk of it, and then they announced that 0:03:11.400 --> 0:03:14.040 they're going to buy some more. They recently even UM 0:03:14.320 --> 0:03:17.640 sold a convertible note to buy more bitcoin. At the 0:03:17.680 --> 0:03:20.760 same time, the price of bitcoin is skyrocketed over the 0:03:20.840 --> 0:03:23.760 last two or three months, shares of micro Strategy have 0:03:23.880 --> 0:03:27.840 skyrocketed in a concert and so they've really become the 0:03:27.919 --> 0:03:33.160 sort of the publicly listed bitcoin exposed company. I guess 0:03:33.200 --> 0:03:35.160 you could say that people are talking about this year 0:03:35.240 --> 0:03:38.920 and the company has already also become like legendary. All 0:03:39.000 --> 0:03:44.160 the bitcoin hardcore bitcoin maximalism fanboys love this company now 0:03:44.520 --> 0:03:47.800 because they see it as UM sort of paving the 0:03:47.800 --> 0:03:51.760 way and maybe leading to more companies having bitcoin exposure 0:03:51.880 --> 0:03:56.080 in their in their treasury. Yeah, and we should know 0:03:56.160 --> 0:03:59.800 that micro Strategy is also led by Michael Sailor, and 0:04:00.200 --> 0:04:03.960 he's become a big, big name in the bitcoin community. 0:04:04.040 --> 0:04:08.960 I think Baron's called him Bitcoin's most important proselytizer, So 0:04:09.240 --> 0:04:14.200 that gives you some indication of the regard that he 0:04:14.280 --> 0:04:18.320 has within uh crypta exactly right. Every all the bitcoin 0:04:18.440 --> 0:04:21.880 people I follow on Twitter absolutely love it. They love him, 0:04:22.000 --> 0:04:26.760 and I'm excited that Michael Sailor, the CEO and founder 0:04:26.839 --> 0:04:30.320 of micro Strategy, is joining us today. So Michael, thank 0:04:30.320 --> 0:04:33.760 you very much for joining us. Tracy Joe, thanks for 0:04:33.800 --> 0:04:38.440 having me. Happy to be here. So what is micro Strategy? 0:04:38.480 --> 0:04:40.599 I mean, I feel like a lot of people probably 0:04:40.600 --> 0:04:44.000 first heard about the company this summer when you announced 0:04:44.000 --> 0:04:47.200 that you're going to be putting some of your holdings 0:04:47.200 --> 0:04:49.080 into bitcoin, but you've been around a long time. What 0:04:49.240 --> 0:04:51.000 is what is micro Strategy? What does it do? What's 0:04:51.000 --> 0:04:55.400 the story? Micro Strategy is the world's largest publicly traded 0:04:55.440 --> 0:05:00.600 business intelligence software company. We got started in nine and 0:05:00.800 --> 0:05:05.120 in the early nineties we um invented an approach for 0:05:05.240 --> 0:05:10.000 doing analytics against large relational databases. So if you had 0:05:10.040 --> 0:05:13.440 billions of rows of data your McDonald's or your target 0:05:14.040 --> 0:05:18.200 and you needed to extract insight like market basket analysis 0:05:18.279 --> 0:05:21.320 or marketing uplift. If you're a big bank and you 0:05:21.360 --> 0:05:24.360 wanted to do credit analytics against the portfolio of hundreds 0:05:24.400 --> 0:05:28.560 of millions of accounts, you needed to do complicated analytics 0:05:28.600 --> 0:05:31.640 on a large relational database. Nobody in the world knew 0:05:31.640 --> 0:05:34.000 how to do it, and we invented an approach and 0:05:34.040 --> 0:05:38.040 created this software platform too to build those apps, and 0:05:38.080 --> 0:05:41.200 that was that was our early breakthrough, and we grew 0:05:41.279 --> 0:05:46.680 on that platform, became public and uh we competed against 0:05:47.000 --> 0:05:50.960 reporting companies like Crystal and Business Objects and old app 0:05:51.000 --> 0:05:54.640 companies like Hyperion and s base. And they're probably a 0:05:54.720 --> 0:05:58.760 hundred different business intelligence companies that came and went, some 0:05:58.839 --> 0:06:03.479 went out of business, any of them merge, many were amalgamated. Eventually, 0:06:03.480 --> 0:06:08.120 our largest competitors were merged into were bought up by IBM, 0:06:08.520 --> 0:06:14.000 s a P, Salesforce, Oracle, and today we're the pure 0:06:14.080 --> 0:06:18.520 play business intelligence company and we compete against business intelligence 0:06:18.560 --> 0:06:22.080 divisions at IBM and Oracle and s A P and like, 0:06:22.680 --> 0:06:25.880 and so it's enterprise software. We saw it everywhere in 0:06:25.920 --> 0:06:29.039 the world. We have about four thousand very large customers, 0:06:29.680 --> 0:06:37.200 big hotel chains, airlines, governments, retailers, big tech companies, most 0:06:37.240 --> 0:06:40.919 of the major banks, and uh, we're about two thousand 0:06:40.920 --> 0:06:45.240 people in twenty seven countries. That's what we do. So 0:06:45.400 --> 0:06:48.160 unlike many of your competitors, you came through the tech 0:06:48.200 --> 0:06:53.000 bubble intact. And as you mentioned, you you've grown since then. 0:06:54.160 --> 0:07:00.480 What inspired you too by bitcoin? Rather something like what 0:07:00.920 --> 0:07:03.640 was the thought process that went into it? Because as 0:07:03.880 --> 0:07:06.799 Joe and I mentioned, it is quite unusual to see 0:07:06.880 --> 0:07:11.640 a company buying bitcoy in this way. Well, I mean, 0:07:11.680 --> 0:07:15.640 we ran a very responsible business. We were profitable, We 0:07:15.760 --> 0:07:19.840 generated a lot of cash. We uh, we spent hundreds 0:07:19.840 --> 0:07:22.720 of millions of dollars over the past few years buying 0:07:22.720 --> 0:07:24.880 our stock back and we and we came into the 0:07:24.960 --> 0:07:30.760 year with about five hundred million dollars in excess cash 0:07:30.800 --> 0:07:34.440 and our treasury and we kept it for a rainy day. 0:07:34.640 --> 0:07:38.320 We thought, let's have no debt, let's save the cash, 0:07:38.720 --> 0:07:41.920 let's run the business. And and we were running a 0:07:41.960 --> 0:07:44.960 business where we were we were hiring people and spending 0:07:45.000 --> 0:07:50.440 heavily on sales and marketing and services activities and um, 0:07:50.520 --> 0:07:53.840 and then March hit and when the pandemic and by way, 0:07:53.840 --> 0:07:56.640 we didn't think much about my view of cash was 0:07:57.120 --> 0:08:00.480 I invested in short term treasuries, and by way, those 0:08:00.480 --> 0:08:03.560 short term treasuries yielded five percent interest in two thousand 0:08:03.560 --> 0:08:08.360 and ten, and then ancient history. I'm old enough to 0:08:08.440 --> 0:08:10.480 remember when you could get five and a half percent 0:08:10.520 --> 0:08:15.360 interest on overnight money, Joe, right, you know. So, so 0:08:15.560 --> 0:08:18.960 I watched that interest rate whittled down until it became 0:08:19.080 --> 0:08:22.520 nearly nothing, you know, down to like twenty basis points 0:08:22.680 --> 0:08:26.360 or something, and uh, I kind of stealed myself just 0:08:26.400 --> 0:08:28.720 to accept that. And we started thinking, well, what are 0:08:28.760 --> 0:08:31.560 we gonna do with the money. But then March came 0:08:31.600 --> 0:08:35.319 and COVID hit and there were lockdowns and you couldn't 0:08:35.320 --> 0:08:37.360 fly and you couldn't go to hotel and all and 0:08:37.400 --> 0:08:40.160 all of our marketing events got canceled, and all the 0:08:40.200 --> 0:08:44.520 traditional ways of doing things changed, and we encountered what 0:08:44.600 --> 0:08:47.440 I'll call a virtual wave in essence, all of our 0:08:47.480 --> 0:08:51.439 sales and marketing and services that could be virtualized over 0:08:51.559 --> 0:08:56.640 zoom or turned into streaming videos became virtualized. And and first, 0:08:56.960 --> 0:08:59.760 you know, first we were you know, unhappy and more 0:08:59.800 --> 0:09:03.240 to hide, right because everybody's mortified in March what's going 0:09:03.280 --> 0:09:07.439 to happen? And then we realized that our value proposition 0:09:07.480 --> 0:09:11.440 was intact, everybody wanted our software. We only do business 0:09:11.520 --> 0:09:15.520 with you know, mega corporations and mega governments, so they're 0:09:15.520 --> 0:09:19.040 all fine. They wanted the software more than ever. But 0:09:19.200 --> 0:09:23.400 the cost of doing business decreased because now even if 0:09:23.440 --> 0:09:26.160 we wanted to spend millions of dollars on marketing events, 0:09:26.200 --> 0:09:29.839 we couldn't. And and at that point we realized that 0:09:30.280 --> 0:09:33.920 a we didn't really need the five million dollars to 0:09:34.040 --> 0:09:36.440 sell and market and grow the business because you couldn't 0:09:36.440 --> 0:09:38.599 throw money at the problem anymore. You're just going to 0:09:38.760 --> 0:09:41.800 post videos and you're gonna zoom everywhere at the speed 0:09:41.840 --> 0:09:44.560 of light and then be We realized that we were 0:09:44.559 --> 0:09:47.439 going to generate a lot more cash in the future 0:09:47.440 --> 0:09:49.680 than we had in the past because we had thirty 0:09:49.800 --> 0:09:52.480 or forty million dollars of costs fall out of our business. 0:09:53.240 --> 0:09:56.480 And so all of a sudden, we go from thinking, well, 0:09:56.520 --> 0:09:59.000 we've got a good treasury. It's responsible to keep the 0:09:59.080 --> 0:10:01.120 cash and save it for a rainy day in case 0:10:01.160 --> 0:10:04.319 we need to spend it. Two, we have more money 0:10:04.320 --> 0:10:08.120 than we need. Our stock is in the tank, our 0:10:08.160 --> 0:10:11.400 investors don't value the cash. At one point, we were 0:10:11.480 --> 0:10:15.200 valued at one time's revenue plus the cash or two 0:10:15.240 --> 0:10:18.400 times revenue, and the cash was worth nothing. And the 0:10:18.440 --> 0:10:21.520 investors literally told me to my face, they said, we 0:10:21.559 --> 0:10:25.199 don't value the money is worth anything. And so that's 0:10:25.280 --> 0:10:29.000 one dilemma. And the other dilemma is we're gonna generate 0:10:29.679 --> 0:10:32.200 five million more dollars than we thought we were going 0:10:32.240 --> 0:10:34.760 to generate. And then there's a third and that's not 0:10:34.800 --> 0:10:38.559 a dilemma, that's a that's a development because the virtual wave. 0:10:39.080 --> 0:10:42.280 And then we watched as the Federal Reserve and the 0:10:42.320 --> 0:10:46.880 EU Central Bank started printing money, and we realized that 0:10:47.160 --> 0:10:52.960 there was massive rampant hyper inflation in assets. There's no 0:10:53.040 --> 0:10:56.600 inflation and consumer goods that do not include food and 0:10:56.760 --> 0:11:00.520 energy and assets but like there's no inflation, and YouTube 0:11:00.600 --> 0:11:03.360 streaming videos and Netflix, you're never gonna get inflation, and 0:11:03.400 --> 0:11:06.040 that you've got inflation in the ten year bond, the 0:11:06.120 --> 0:11:10.280 thirty year bond, Hampton's real estate Apple shares doubled, even 0:11:10.320 --> 0:11:14.720 though the EPs was constant. All the assets and the 0:11:15.080 --> 0:11:19.360 the energy rich products inflated at a rapid rate and 0:11:19.400 --> 0:11:23.120 there was a k shape recovery. And that's when I 0:11:23.160 --> 0:11:25.960 started looking at the world differently and what I realized 0:11:26.120 --> 0:11:30.760 was the money supply the end two money supply that 0:11:30.880 --> 0:11:33.560 had been expanding at about five percent a year for 0:11:33.640 --> 0:11:38.640 the past decade was now expanding percent a year. And 0:11:38.720 --> 0:11:42.160 any reasonable person would expect that the money supply is 0:11:42.200 --> 0:11:44.920 going to expand by ten to fifteen percent a year 0:11:45.040 --> 0:11:47.760 every year for the next four to five years. And 0:11:47.800 --> 0:11:51.920 then I realized we have rampant asset inflation. And another 0:11:51.920 --> 0:11:55.480 way to say that is the purchasing power of the 0:11:55.600 --> 0:12:01.640 cash is being degraded. The Federal Reserve is devaluing the 0:12:01.720 --> 0:12:06.840 currency at fifteen percent a year. And so what that 0:12:06.880 --> 0:12:09.439 means is if you're sitting on cash, you can expect 0:12:09.440 --> 0:12:11.920 to lose half your purchasing power in thirty six to 0:12:12.000 --> 0:12:16.080 forty eight months, guaranteed. And so I went from thinking 0:12:16.200 --> 0:12:19.160 I needed the cash and I might get a yield 0:12:19.280 --> 0:12:22.520 and maybe maybe there's a two percent inflation rate to 0:12:23.559 --> 0:12:26.840 the real inflation rate is like been running six percent, 0:12:26.960 --> 0:12:31.160 but now it's about to run And so my cash 0:12:31.240 --> 0:12:34.000 is a melting ice cube and it's a it's really 0:12:34.040 --> 0:12:37.520 a violation of my fiduciary duties to watch the cash 0:12:37.640 --> 0:12:40.720 burn away, like if someone came into your backyard and 0:12:40.760 --> 0:12:44.840 started stealing your money every year. I mean, how many 0:12:44.920 --> 0:12:47.199 years would you wait before you took the cash out 0:12:47.200 --> 0:12:50.560 of the backyard. So that that's the dilemma, and that's 0:12:50.559 --> 0:12:54.360 where we went in March when we went down this journey. Well, yeah, 0:12:54.400 --> 0:12:58.760 so you made the decision to put a big chunk 0:12:58.800 --> 0:13:05.760 of that into coin. Why not do another possibility of um, 0:13:05.800 --> 0:13:08.760 you know, like a special one time dividend or something 0:13:08.800 --> 0:13:12.479 like that, so that the shareholders could in theory allocate 0:13:12.760 --> 0:13:15.600 the cash however they wanted. That is a good question. 0:13:15.840 --> 0:13:19.840 First of all our choices where we could just give 0:13:19.880 --> 0:13:22.920 it all back to the shareholders, right, we could divdated 0:13:22.960 --> 0:13:26.080 it out or do a massive stock buy back. Or 0:13:26.120 --> 0:13:29.079 the second choices, we could do a big acquisition of 0:13:29.120 --> 0:13:32.800 another company, which a lot of times people do to 0:13:32.840 --> 0:13:36.319 try to grow our top line. And the third choices, 0:13:36.920 --> 0:13:40.559 we could invest it in something liquid as a treasury asset, 0:13:40.600 --> 0:13:43.960 which was going to appreciate and price faster than the 0:13:44.040 --> 0:13:47.080 rate at which the central bank printed money. So those 0:13:47.080 --> 0:13:51.400 are the three logical choices. So so what did we do? Well, 0:13:51.600 --> 0:13:54.920 we actually went right down the middle. What's the problem 0:13:54.960 --> 0:13:57.720 with just giving all the money back? Well, Joe, if 0:13:57.760 --> 0:14:00.480 I give all the money back I decapitalized the company, 0:14:00.600 --> 0:14:03.760 and then if we have a negative event, were insolvent, Like, 0:14:04.040 --> 0:14:07.400 why doesn't Harvard give all the money back of the endowment, right? 0:14:07.440 --> 0:14:09.199 And why don't you take all the money in your 0:14:09.200 --> 0:14:11.840 bank account and give it to the needy? Right? The 0:14:11.880 --> 0:14:15.200 answer is because Harvard wants an endowment, and because you 0:14:15.200 --> 0:14:17.320 want to have money in case your family needs it, 0:14:17.720 --> 0:14:20.040 And why doesn't a company might give all of its 0:14:20.080 --> 0:14:22.720 money back to its shareholders because they might actually have 0:14:22.840 --> 0:14:25.160 to make good on a contract with a vendor, or 0:14:25.200 --> 0:14:28.880 pay an employee, or like if I, you know, all 0:14:28.920 --> 0:14:31.240 my customers are expecting me to be in business for 0:14:31.280 --> 0:14:34.520 the next twenty years, so if I drained my treasury, 0:14:34.600 --> 0:14:38.440 they might lose confidence in me. So you know, giving 0:14:38.480 --> 0:14:42.000 it all back is decapitalizing the business, and you might 0:14:42.040 --> 0:14:44.760 as well drain the endowment of every institution on earth. 0:14:44.800 --> 0:14:46.760 It does. It doesn't make a lot of sense to 0:14:46.840 --> 0:14:51.400 do that completely. Having said that, what we actually decided 0:14:51.440 --> 0:14:55.840 to do was embark on a program where we agreed 0:14:56.560 --> 0:14:59.240 to buy back to spend half of it to buy 0:14:59.240 --> 0:15:03.240 back stock and the other half to invest in alternative assets. 0:15:04.440 --> 0:15:06.760 And we decided we would go look for some kind 0:15:06.760 --> 0:15:10.480 of inflation hedge, and we put this out on the wire. 0:15:10.520 --> 0:15:13.120 We announced it to our shareholders because we wanted them 0:15:13.120 --> 0:15:16.200 to be able to digest that news. And then we 0:15:16.240 --> 0:15:20.480 went on a pretty intense search, and we considered everything 0:15:20.520 --> 0:15:23.560 we might invest in our endowment, in our treasury, in 0:15:23.640 --> 0:15:26.880 and we considered buying real estate, and we considered buying bonds, 0:15:26.880 --> 0:15:31.240 and we considered buying stocks. And the problem is, you 0:15:31.280 --> 0:15:35.280 can't buy any other currency because they're all debasing as 0:15:35.320 --> 0:15:38.760 fast as the dollar or faster against heart assets. You 0:15:38.800 --> 0:15:41.480 can't buy bonds because no bond is going to yield 0:15:41.480 --> 0:15:44.720 a coupon of more than fifteen percent a year. And 0:15:44.800 --> 0:15:47.080 the only way your bond is gonna hold its value 0:15:47.560 --> 0:15:50.680 is if it's not yielding fift interest is if the 0:15:50.720 --> 0:15:53.960 interest rates keep clicking down to go negative. And so 0:15:54.000 --> 0:15:56.640 if you don't believe interest rates are going negative, bonds 0:15:56.680 --> 0:15:59.400 absolutely won't hold their value. And it looks like bonds 0:15:59.440 --> 0:16:01.640 got to the to the line when the thirty year 0:16:01.720 --> 0:16:05.640 got to seventy two basis points or the fit you know, 0:16:05.760 --> 0:16:08.480 the ten years got the fifty basis points or whatever 0:16:08.480 --> 0:16:12.120 they got to. So bonds don't work. Then real estate 0:16:12.200 --> 0:16:14.960 doesn't work because commercial real estate trades like a bond. 0:16:15.000 --> 0:16:17.320 And and how are you going to grow your rents 0:16:17.360 --> 0:16:20.320 by fifteen percent? The cost of capital literally went from 0:16:20.400 --> 0:16:23.360 five percent to fifteen percent. So real estate is not 0:16:23.400 --> 0:16:25.000 going to hold his value, nor is it gonna have 0:16:25.000 --> 0:16:27.800 a cash yield of fifteen percent. And by the way, 0:16:27.840 --> 0:16:29.880 half of it's impaired. And I mean, how do you 0:16:29.920 --> 0:16:32.680 pick unimpaired real estate, you know, going through the time 0:16:32.720 --> 0:16:35.120 of COVID. So now you've got to go to stocks. 0:16:35.120 --> 0:16:38.200 You've got to buy a portfolio of stocks. Well, stocks 0:16:38.200 --> 0:16:41.480 are fiat instruments that are valued based upon the discounted 0:16:41.560 --> 0:16:44.840 value of the cash flows over time. If the monetary 0:16:44.880 --> 0:16:47.640 supply is expanding at five percent a year, then Google 0:16:47.640 --> 0:16:50.560 and Facebook and Amazon work because they're growing twenty percent 0:16:50.560 --> 0:16:53.400 a year. But if you've got a business it's only 0:16:53.400 --> 0:16:55.800 growing five percent a year, you have to leverage up. 0:16:55.840 --> 0:16:58.800 You have to borrow money short the dollar, buy your 0:16:58.800 --> 0:17:01.960 stock back to leverage up your cash flow per share 0:17:02.040 --> 0:17:05.679 in order to beat the hurdle rate. That's almost possible 0:17:05.720 --> 0:17:11.320 at five hurdle rate. It's impossible at hurdle rate for 0:17:11.359 --> 0:17:14.760 just about anybody. And again the problem is the you know, 0:17:15.119 --> 0:17:18.800 I can leverage up a corporation, and they've been leveraging up. 0:17:19.200 --> 0:17:22.480 But with interest rates pegged at zero or near zero, 0:17:22.560 --> 0:17:24.439 you can't go negative. So it's the end of the 0:17:24.480 --> 0:17:28.240 line for leverage equity. So we dismissed all three of 0:17:28.280 --> 0:17:30.960 those and we went to gold. And the problem with 0:17:31.000 --> 0:17:33.760 gold is the gold miners produced two percent more gold 0:17:33.800 --> 0:17:37.480 every year, and gold is centrally controlled and corruptible, and 0:17:37.520 --> 0:17:40.560 then people print gold derivatives that aren't fully bound by 0:17:40.560 --> 0:17:43.199 the gold, and so you can expect a two to 0:17:43.280 --> 0:17:48.720 four percent dedegradation of gold over time over a hundred years. 0:17:48.720 --> 0:17:51.040 That means you're gonna lose nine of your value. If 0:17:51.040 --> 0:17:53.720 you invest in gold over a hundred years, you're gonna 0:17:53.720 --> 0:17:56.680 losecent of your values. You invest in the US dollar 0:17:56.800 --> 0:17:59.800 increasing at five percent, are expanding at five percent a year, 0:18:00.480 --> 0:18:02.800 and of course the real the real likelihood as you 0:18:02.920 --> 0:18:06.240 lose nine percent of your value because most of the 0:18:06.520 --> 0:18:10.959 currencies collapse over a hundred years. So that took us 0:18:10.960 --> 0:18:13.879 to crypto, and we got to crypto. We looked at 0:18:13.880 --> 0:18:16.720 six thousand, five hundred cryptos and we found that bitcoin 0:18:17.440 --> 0:18:22.479 is the dominant crypto asset network. It's times bigger than 0:18:22.520 --> 0:18:26.119 the next closest thing that looks like it, and it 0:18:26.200 --> 0:18:29.240 had more than two hundred billion dollars of monetary energy 0:18:29.280 --> 0:18:33.760 in it. Bitcoin is an essence Facebook for money or 0:18:33.800 --> 0:18:37.440 Google for money. Uh. It's and this is the nuance 0:18:37.520 --> 0:18:41.679 most people haven't realized yet. What you have is a 0:18:41.760 --> 0:18:46.760 dominant digital network that's been engineered to host a safe 0:18:46.840 --> 0:18:51.240 haven treasury reserve assets superior to gold in all respects. 0:18:51.840 --> 0:18:56.800 It's pharmaceutical grade gold. If God gold as a treasury 0:18:56.800 --> 0:19:00.000 reserve asset to hold for a hundred years, he would 0:19:00.000 --> 0:19:03.520 create twenty one million gold coins. He'd make it impossible 0:19:03.560 --> 0:19:06.480 to make anymore. He would make it possible to audit 0:19:06.520 --> 0:19:09.639 it anywhere on Earth from any node every ten minutes. 0:19:10.119 --> 0:19:14.400 He would make it. He would make it unhackable and uh. 0:19:14.440 --> 0:19:17.480 And he would make it an open architecture that's programmable, 0:19:17.520 --> 0:19:19.840 so you could build it into an iPhone or Square 0:19:19.920 --> 0:19:24.040 or PayPal or any other exchange without permission. And he 0:19:24.080 --> 0:19:27.120 would distribute it everywhere on Earth with these with these 0:19:27.160 --> 0:19:31.000 crypto shaw to fifty six miners, so that no company 0:19:31.040 --> 0:19:35.080 controls it, no ceo controls it, no country controls it, 0:19:35.400 --> 0:19:39.520 no regulator controls it. So that's kind of the perfect 0:19:40.160 --> 0:19:44.000 synthetic safe haven asset, and that's what we found in 0:19:44.080 --> 0:20:02.640 our search. So you touched on this earlier. But corporate 0:20:02.640 --> 0:20:08.240 treasuries are generally supposed to be full of liquid assets because, 0:20:08.320 --> 0:20:10.680 as you mentioned, you don't know when the company might 0:20:10.800 --> 0:20:13.840 experience some sort of emergency event where it actually needs 0:20:14.440 --> 0:20:20.000 cash on hand. How liquid is bitcoin? And also how 0:20:20.000 --> 0:20:24.399 did you go about buying it? Because again, as we mentioned, 0:20:24.400 --> 0:20:27.560 you built up a pretty big position, So I'm curious, like, 0:20:27.880 --> 0:20:30.000 buying it up, what was that like? And then in 0:20:30.119 --> 0:20:33.560 your mind, what would selling it all in an emergency 0:20:33.640 --> 0:20:37.200 scenario be? Like? Well, I mean it's a good point. 0:20:37.400 --> 0:20:41.840 Bitcoin is the best treasury reserve asset on earth for 0:20:41.920 --> 0:20:45.360 anybody at our scale. It might not be the ideal 0:20:45.400 --> 0:20:48.480 asset for someone that needs to store a hundred billion 0:20:48.560 --> 0:20:52.040 dollars at a shot, like a like Apple or maybe 0:20:52.080 --> 0:20:55.760 a nation state, but for a billion dollar company or 0:20:55.760 --> 0:20:59.200 a multibillion dollar company where you're going to move ten 0:20:59.320 --> 0:21:02.480 to a hundred million, two hundreds of millions at a time, 0:21:03.080 --> 0:21:07.400 it's ideal. How liquid is it? It trades seven three 0:21:07.480 --> 0:21:11.040 sixty five every minute in every country, in every language, 0:21:11.040 --> 0:21:16.640 and nearly every currency pair over Thanksgiving, Apple Stock, Amazon Stock, 0:21:17.280 --> 0:21:20.960 most all the all the US capital markets shut down 0:21:20.960 --> 0:21:24.840 at four pm on Wednesday. They traded nine thirty am 0:21:24.920 --> 0:21:28.639 to one pm on Friday. They didn't reopen again until 0:21:28.720 --> 0:21:32.480 nine thirty am the following Monday. That means over one 0:21:32.560 --> 0:21:37.400 hundred and thirteen point five hours US capital markets function 0:21:37.720 --> 0:21:40.919 Three and a half hours three point one percent of 0:21:41.000 --> 0:21:43.639 the time was the banking and the capital market system 0:21:43.680 --> 0:21:48.240 working for treasury. Bitcoin was functioning all one hundred thirteen 0:21:48.320 --> 0:21:54.680 point five hours trading, mark the markets, every country, every currency. 0:21:54.800 --> 0:21:59.440 It's really it is the global asset of choice. If 0:21:59.480 --> 0:22:05.399 what you unted was transparency, marked the market and liquidity. 0:22:05.520 --> 0:22:09.439 On average, uh, it normally trades about two billion dollars 0:22:09.480 --> 0:22:12.640 a day. UH. Sometimes it trades a bit harder than 0:22:12.640 --> 0:22:17.719 that three billion. You could reasonably liquid a hundred million 0:22:17.760 --> 0:22:24.000 dollars over a few hours on a Saturday afternoon. During weekdays, 0:22:24.640 --> 0:22:27.560 the volume increases and you could probably do it faster. 0:22:28.520 --> 0:22:32.160 So in that size or scale, it's fine. I mean, 0:22:32.160 --> 0:22:35.360 if again, if you wanted to liquidate fifty billion dollars 0:22:35.359 --> 0:22:37.640 worth of stuff, it's a little bit too small because 0:22:37.680 --> 0:22:41.840 the network is about three or fifty billion dollars right now. Liquidity. 0:22:42.080 --> 0:22:45.000 But you put your finger on an important point, which 0:22:45.080 --> 0:22:50.320 is the value of bitcoin is to serve up liquidity. 0:22:50.359 --> 0:22:53.320 As the price goes up, the liquidity goes up, the 0:22:53.480 --> 0:22:56.560 value the use case goes up. The value and use 0:22:56.640 --> 0:22:59.720 goes up. When bitcoin goes up by a factor of ten, 0:22:59.840 --> 0:23:02.080 it will be ten times better, and when it goes 0:23:02.160 --> 0:23:04.399 up by a hundred, it will be a hundred times better. 0:23:05.080 --> 0:23:07.919 And so you have a positive feedback loop as a 0:23:07.960 --> 0:23:12.520 treasury asset. And what you see right now is people 0:23:12.560 --> 0:23:15.320 are starting to adopt it and plug their treasuries into 0:23:15.400 --> 0:23:19.760 this network. It starts with small, mid size, then high 0:23:19.800 --> 0:23:23.360 net worth individuals, small mid size companies, and it will 0:23:23.520 --> 0:23:27.760 roll to larger and larger institutions over time as people 0:23:27.800 --> 0:23:30.639 start to discover it and as the network is bigger. 0:23:32.400 --> 0:23:34.160 Let me let me ask you a question. I wanna 0:23:34.240 --> 0:23:36.680 you know, I wanna sort of said to the sort 0:23:36.720 --> 0:23:38.760 of bigger strategy in a second, but I want to 0:23:38.800 --> 0:23:42.360 press you on one thing. And you're talking about fifteen 0:23:42.480 --> 0:23:48.399 percent inflation or degradation of the dollar value. But just 0:23:48.480 --> 0:23:51.440 to be clear, I mean your costs. I mean you 0:23:51.520 --> 0:23:55.440 run a business, and so you have salary and computer 0:23:56.119 --> 0:24:01.160 you know, technological infrastructure, spend and rent for your offices, 0:24:01.600 --> 0:24:06.000 uh travel when travel exists, those class haven't been surging 0:24:06.080 --> 0:24:08.520 fifteent of years. So when you say that, it's not 0:24:08.600 --> 0:24:13.600 actually consumption, right, you're talking about financial assets rising, not 0:24:13.760 --> 0:24:18.639 actually purchasing power of day to day business needs. You know, 0:24:19.119 --> 0:24:22.160 I'm gonna be fairly brutal about this. I'm gonna say 0:24:22.200 --> 0:24:25.520 that everybody on Earth, all three hundred trillion dollars worth 0:24:25.520 --> 0:24:28.159 of investors, are going to lose half their wealth in 0:24:28.160 --> 0:24:31.000 the next forty eight months due to the currency collapse. 0:24:31.600 --> 0:24:33.760 And that's in the that's in the Western world and 0:24:33.960 --> 0:24:37.480 US and Europe. It's much worse. It's loss. If you 0:24:37.520 --> 0:24:43.000 go to Argentina, Brazil, Venezuela, Nigeria, South Africa, Turkey, Lebanon 0:24:43.160 --> 0:24:45.880