Speaker 1: So, how's life in Miami. It's lovely here, all right,
Speaker 1: you guys? Ready, okay, Hi everyone. I'm Emily Chang and
Speaker 1: welcome to this edition of the Bloomberg Studio One Point podcast.
Speaker 1: Today's guest is none other than one of the biggest
Speaker 1: crypto bawls out there. He runs the company that owns
Speaker 1: more bitcoin than any other company in the world, at
Speaker 1: least as of the end. Also, he may well be
Speaker 1: the longest running software CEO in history. Michael Sailor started
Speaker 1: his career riding the dot com wave and saw that
Speaker 1: bubble pop firsthand. Could crypto be another bubble waiting to burst?
Speaker 1: Or is it the future? Joining me on this edition
Speaker 1: of Bloomberg Studio at One Point, Oh, micro Strategy, Chairman
Speaker 1: and CEO, Michael Sailor, micro Strategy. Holding all this bitcoin,
Speaker 1: does it ever make you at all nervous? No, Actually,
Speaker 1: it gives me great comfort. I don't really think we
Speaker 1: could do anything better to position our company in an
Speaker 1: inflationary environment than to convert our balance sheet to bitcoin,
Speaker 1: because we basically built a balance sheet on a non
Speaker 1: sovereign store of value that's not a currency derivative. Two
Speaker 1: years ago, we were sitting on a bunch of cash,
Speaker 1: and that cash was losing about ten percent of its
Speaker 1: purchasing power a year. And then when COVID struck and
Speaker 1: the FED took a more accommodated monetary policy, that cash
Speaker 1: started losing of its purchasing power years. So my anxiety
Speaker 1: was maximized around April May when we had the k
Speaker 1: shape recovery and I realized that cash is trash. Everything's
Speaker 1: about to get much more expensive, and we needed a strategy.
Speaker 1: So we adopted a bitcoin strategy. It's driven up our
Speaker 1: stock by a factor of five. You know, in my opinion,
Speaker 1: it's saved the company from from a not very pleasant fate.
Speaker 1: So I'm totally pleased with where we are today. Just Bitcoin,
Speaker 1: none of those other thousands of cryptocurrencies. Look, bitcoin is
Speaker 1: digital property. It's universally acknowledged as common property because that
Speaker 1: at a fair distribution. No I c oh, no management team.
Speaker 1: So Toshi disappeared. It's parap issue to a commodity, to land,
Speaker 1: to gold, uh, and it's pretty important that that would
Speaker 1: be deemed property. Um, the rest of the cryptos could
Speaker 1: be securities. There's there's just a lot of of regulatory
Speaker 1: overhanging question about whether their securities or not. And I
Speaker 1: think that the great innovation is the creation of common
Speaker 1: property in cyberspace. It took us thirteen years to get
Speaker 1: to the point where that's universally acknowledged. So that makes
Speaker 1: bitcoin the safe haven for a public investor or a
Speaker 1: public company. Everything else feels more like either venture capital
Speaker 1: or expect elation. Now you personally are and the Internet
Speaker 1: can correct me if I'm wrong. The longest running software
Speaker 1: CEO in history, you founded it in nine when you
Speaker 1: were twenty four years old. What has this thirty two
Speaker 1: year ride been like? You know, I learned a lot
Speaker 1: of humility became public in so you know, now I've
Speaker 1: been in public company CEO for many, many, many quarters.
Speaker 1: I lived to see percent of my peers exit the business.
Speaker 1: So I didn't really understand this at the time, but
Speaker 1: now as I look back, what I realized is all
Speaker 1: my peers exited the business because they're forced to grow
Speaker 1: their top line in their cash flows at a frenetic rate,
Speaker 1: and eventually they get undone by delutive acquisitions and then
Speaker 1: they have to sell themselves. Micro strategy. We've been very fortunate,
Speaker 1: We've been focused. We soldiered on and We've always had
Speaker 1: a passion to make the best software we could and
Speaker 1: uh and as our competitors disappeared, we found opportunities. You
Speaker 1: grew up as an Air Force brat traveling around the world.
Speaker 1: What kind of kid were you? Tell us about your
Speaker 1: upbringing a young teenage, Michael, I read a lot of
Speaker 1: science fiction. I read pretty much every science fiction book
Speaker 1: by all the great science fiction writers. Probably two or
Speaker 1: three times. I played Dungeons and Dragons. You know, before
Speaker 1: we actually had these, UH, Wizard Warcraft and other games
Speaker 1: on computers. We actually had to draw out the dragons,
Speaker 1: and we had to write down what's in the dungeon,
Speaker 1: and we had to construct our entire virtual world. So
Speaker 1: so I think before computers, we used our imaginations to
Speaker 1: create simulations and to exercise probability and distribution, and it
Speaker 1: taught me a lot about practical statistics. My background led
Speaker 1: me eventually to trip over a book by Robert heinel
Speaker 1: and called Have Space Suit, Will Travel, where the protagonists
Speaker 1: Gallivant's cross the universe, saves the human race from bug
Speaker 1: eyed monsters, and for for his services to humanity, gets
Speaker 1: a full tuition scholarship to m I T. And it's
Speaker 1: stuck in my head that M I T was probably
Speaker 1: a good place to go if you believed in engineering
Speaker 1: and making the world a better place. You studied aeronautics,
Speaker 1: I believe, and then you pivoted to tech and and
Speaker 1: founded micro Strategy with one of your M I T
Speaker 1: fraternity brothers. And the software basically provides business intelligence, helps
Speaker 1: companies make sense of their data, so that, for example,
Speaker 1: McDonald's could learn how many Big max it might sell
Speaker 1: in a given night in Chicago. Is that right? Yeah.
Speaker 1: The idea is to extract all of the data at
Speaker 1: an atomic level, like every item sold, every every hour
Speaker 1: of the day, and every store in the world, for
Speaker 1: every McDonald's. What we discovered is the world's full of
Speaker 1: companies that have billions of lines of data, and they're
Speaker 1: trying to make sense of them. And they had to
Speaker 1: extract those those sophisticated sets of data, compare them to
Speaker 1: each other in order to make a decision about a
Speaker 1: marketing campaign or a product launch, or even something as
Speaker 1: simple as how many items should I have on each
Speaker 1: store shelf. And it's worth a lot of money to
Speaker 1: get it right, and if you get it wrong, you
Speaker 1: find out that you don't have the products you need
Speaker 1: when people want to buy those things, and it costs
Speaker 1: you a lot of money. So we were in the
Speaker 1: right place at the right time. There, you've witnessed some
Speaker 1: serious roller coasters. You saw that dot com bubble blow
Speaker 1: up and burst before your eyes. What lessons have you
Speaker 1: taken away from that that informs your strategy today? I
Speaker 1: would boil it down to this stoic observation. Right, you
Speaker 1: can acquire a thing, but you know, can you maintain
Speaker 1: the thing? And if you can maintain the thing, can
Speaker 1: you enjoy the thing? And what I discovered is a
Speaker 1: lot of people acquire things they can't maintain and a
Speaker 1: lot of things people can maintain things, but they can't
Speaker 1: ever enjoy. And so you want to boil it down
Speaker 1: to another metaphor, it's laser focus. You have to figure
Speaker 1: out what you are the best in the world at
Speaker 1: and what you can continue to be the best at
Speaker 1: the world at in the face of unrelenting, exponentially increasing competition.
Speaker 1: And once you figure out what that is, focus on
Speaker 1: it with all of your resolve. And if you do that,
Speaker 1: then you can stay in business. Uh. You know that
Speaker 1: That's the first thing I learned. That's why I have
Speaker 1: laser eyes on Twitter. The whole point of laser eyes
Speaker 1: is you've got to you've got a solution. Focus on
Speaker 1: the solution. Don't get distracted by all of your good
Speaker 1: ideas and allow it to dilute your focus on your
Speaker 1: great idea. You're listening to the Bloomberg Studio At one
Speaker 1: point o podcast with micro Strategies at Michael Sailor up
Speaker 1: next about this crypto winter. Is he feeling the cold?
Speaker 1: Sailor shares his predictions for where the bitcoin market or
Speaker 1: roller coaster is going next. Stay with us. The decision
Speaker 1: to bet on bitcoin to acquire the thing. Would you
Speaker 1: say that's your phoenix moment? I would say it probably is.
Speaker 1: I never said it like I thought about it like that,
Speaker 1: but I feel like, uh, most of my life was
Speaker 1: leading up to this point. And I understood the power
Speaker 1: of dominant digital networks like Google and Facebook and Amazon
Speaker 1: and Apple because I wrote that for a decade. I
Speaker 1: also understood the detriment of not being that dominant network.
Speaker 1: Micro strategy comp eats against Microsoft. We compete against companies
Speaker 1: a hundred times as big as us. When we got
Speaker 1: to what I saw was the winning strategy is digital
Speaker 1: transformation a view of the dominant network. The losing strategy
Speaker 1: is to continue to work, to work harder and exponentially
Speaker 1: harder for a currency growing exponentially weaker. And I had
Speaker 1: a sense of the consequences if we did nothing, because
Speaker 1: I had seen the demise of of my competitors and
Speaker 1: I could see where we were headed. If we stuck
Speaker 1: with the status quo, we would have to either adopt
Speaker 1: a bitcoin strategy or sell the company. And we uh,
Speaker 1: and we elected to pursue bitcoin. What was the reaction
Speaker 1: from from investors, from other CEO CFOs when you put
Speaker 1: bitcoin on your balance sheet in such a big way
Speaker 1: Compared to the way they're reacting now, you know, uh,
Speaker 1: many people didn't really understand bitcoin very well. They haven't
Speaker 1: taken the time to focus on it. Even today, I
Speaker 1: would say that of the population hasn't spent ten hours
Speaker 1: thinking hard about bitcoin, so so uh in the year,
Speaker 1: I think most people are just ignoring it. Um they
Speaker 1: really it wasn't really registering with them, maybe one per cent.
Speaker 1: I think that when we talk to our investors, what
Speaker 1: was interesting is privately, most investors were aware of bitcoin
Speaker 1: and they thought it was a good idea publicly. Their
Speaker 1: institutions that they're part of our have a three to
Speaker 1: five year um time lag from the point at which
Speaker 1: they can adopt new ideas. So about this possible winter,
Speaker 1: are you really not feeling the cold? Um? Look, if
Speaker 1: you're going to invest in bitcoin, a short time horizon
Speaker 1: is four years, a midtime horizon is ten years. The
Speaker 1: right time horizon is forever. You know, Warren Buffett said,
Speaker 1: you know, if you wouldn't hold it for ten years,
Speaker 1: you shouldn't hold it for ten minutes. So if you
Speaker 1: look at the course of four years, no one's ever
Speaker 1: lost money over four years holding bitcoin. And and if
Speaker 1: you look at you know, our experience. We started buying
Speaker 1: it at ten thousand dollars and now it's up by
Speaker 1: a factor of four. So so given the right time horizon,
Speaker 1: you're fine. So it's a blessing and a curse. The
Speaker 1: blessing is it makes it the most exciting, interesting thing
Speaker 1: in the financial universe everywhere in the world. And the
Speaker 1: curses it can induce anxiety for people that have a
Speaker 1: short attention span or or are focused on a narrow
Speaker 1: time horizon. What do you think, then, is behind this
Speaker 1: early crash. I think that UM. There's a lot of
Speaker 1: dynamics here. If you look at the entire crypto ecosystem,
Speaker 1: you have UM. You have a set of regulatory uncertainty,
Speaker 1: especially regulatory uncertainty around stable coins and crypto tokens UH
Speaker 1: and whether or not their securities, and that creates a
Speaker 1: little bit of anxiety. You have a lot of leverage offshore,
Speaker 1: right You have a lot of crypto exchanges that can
Speaker 1: trade with up to twenty x leverage, and those crypto
Speaker 1: exchanges have many many tokens that are cross collateralized, and
Speaker 1: between them and the DeFi exchanges, you can get much
Speaker 1: higher than twenty x leverage. So that's the second source
Speaker 1: of volatility. The crypto markets are almost designed to encourage volatility,
Speaker 1: and that creates kind of a love hate relationship between
Speaker 1: the crypto ecosystem and the bitcoin hoddlers. The bitcoin hoddlers
Speaker 1: are holding for you know, a decade, you know, and
Speaker 1: and sometimes for a hundred years and sometimes for a
Speaker 1: thousand years. And yet you've got fast money hedge funds
Speaker 1: that have a tax incentive, a huge amount of leverage,
Speaker 1: and massive volatility. But you have two totally different investment
Speaker 1: mental at ease here and when they come together. The
Speaker 1: result is you've got, in my opinion, the world's least
Speaker 1: risky asset to hold over the next century called bitcoin,
Speaker 1: and you've got the world's most volatile fast money market
Speaker 1: you know, called crypto. And they're both conjoined, joined at
Speaker 1: the hip for better for worse in the year. So
Speaker 1: clearly our hold alert. But for the people who are terrified,
Speaker 1: who have never been on this roller coaster before, shorter term,
Speaker 1: what does the trajectory of bitcoin look like to you
Speaker 1: this year? I feel like it's consolidated this level. This
Speaker 1: is a great entry point for institutional investors I talked to.
Speaker 1: I talked to high net worth individuals, family offices, public
Speaker 1: company executives, private company owners, and they watch bitcoin run
Speaker 1: up in one and there are a lot of people
Speaker 1: that would be afraid to own it if it was
Speaker 1: going up four percent a year, But if they're staring
Speaker 1: at it and it's and off the all time high,
Speaker 1: and it's consolidating, and they see that as being embraced
Speaker 1: by people like Bill Miller, by very well respected investors.
Speaker 1: It's being embraced by the regulators, it's being embraced by
Speaker 1: senators and congressmen and public investors and public companies they're
Speaker 1: looking at. This is like a good entry point I'd
Speaker 1: ever miss, Emily not to make a more important point,
Speaker 1: which is what's really going on here at the macro
Speaker 1: level is inflation. The CPI headline inflation is seven percent.
Speaker 1: Look at the Turkish lira, it's collapsing. The paco is collapsing.
Speaker 1: So there's a volatility story. For a conventional investor in
Speaker 1: Manhattan that's got a portfolio of equities, but the world
Speaker 1: can't buy the SMP index there in Africa, Asia, South America,
Speaker 1: and if they've got their assets and banks, they're going
Speaker 1: to have them seized. I can't buy the equity. So
Speaker 1: the real story here is digital property that solves a
Speaker 1: problem that eight billion people face. The big question is
Speaker 1: then are you going to buy more? Yes or no? Yeah,
Speaker 1: we're gonna buy more. You know, we're buying more with
Speaker 1: our cash flows. We've adopted a bitcoin standard, Emily. That
Speaker 1: means that when we generate cash, we sweep it into bitcoin.
Speaker 1: We've been generating you know, anywhere from seventy to a
Speaker 1: hundred million dollars of cash flow. So we will also
Speaker 1: buy bitcoin with debt. We bought bitcoin with one point
Speaker 1: seven billion dollars worth a convertible debt. We bought bitcoin
Speaker 1: with a five hundred million dollar senior secured note that
Speaker 1: we pay six and an eight percent interest on. We
Speaker 1: also issued a billion dollars worth of equity at the
Speaker 1: market and we converted it all in the bitcoin. So
Speaker 1: combinations of cash flow, equity, debt, potentially through other partnerships.
Speaker 1: This is Bloomberg Studio. At one point, oh with micro
Speaker 1: Strategy founder and CEO Michael Sailor, he promised to host
Speaker 1: a yacht party when bitcoin hit one thousand dollars. When
Speaker 1: does he think that will be? And what kind of
Speaker 1: regulation is he planning for ahead? That's next. This is
Speaker 1: Bloomberg Studio. At one point out you promised to host
Speaker 1: a yacht party when bitcoin got to a hundred thousand.
Speaker 1: When do you think that will be the hundred k party?
Speaker 1: You know, when I did that interview, it was the
Speaker 1: fall like of and I think bitcoin is training at
Speaker 1: fifteen thousand and and uh, you know, John Vallez wrope
Speaker 1: me and he said will you host the hunter k party?
Speaker 1: And I said, well, sure I will. There was no
Speaker 1: doubt in their mind the party is coming quite soon.
Speaker 1: I was just amazed at the confidence of bitcoiners. Um,
Speaker 1: I don't have a price target for when it's gonna happen.
Speaker 1: What I learned is laser focus stuff takes time. I'm
Speaker 1: comfortable with us working through this year over year. I
Speaker 1: don't I don't need instant overnight success. What kind of
Speaker 1: regulation are you anticipating? Which way do you think the
Speaker 1: Washington winds are blowing. There's a profound shared appreciation that uh,
Speaker 1: digital assets are the future of the financial industry in
Speaker 1: the United States needs to lead and I've been pretty
Speaker 1: impressed at the support in the Senate, in Congress, from
Speaker 1: the administration, and from regulators all around the world for
Speaker 1: this entire crypto economy and in the use case as
Speaker 1: digital property. I think that the regulatory treatment is pretty clear.
Speaker 1: If you sell it at a profit, you lower capital
Speaker 1: games on it, just like if you sold any other property.
Speaker 1: I think that with regard to the cryptocurrencies, the stable
Speaker 1: coins like tether and circle, they're going to be regulated
Speaker 1: as currencies. Clearly, the administration wants to see f d
Speaker 1: i C approved and ensured banks issue them, so I
Speaker 1: think that they we're gonna see the banking sector enter
Speaker 1: into the stable coin market. UM. I think that many
Speaker 1: other cryptos are deemed as securities and will be deemed
Speaker 1: as securities, and they're gonna be regulated as securities. I
Speaker 1: think that the marketplace is waiting to see what those
Speaker 1: expectations will be. And I think it's pretty clear that, um,
Speaker 1: the writing is on the wall with regard to crypto exchanges,
Speaker 1: right the SEC wants them to be to abide by
Speaker 1: the principles and the rules of national securities exchanges, and
Speaker 1: they've said that in the spot et F denial letter
Speaker 1: that they wrote and on several occasions. So I think
Speaker 1: the regulation is coming to exchanges. I think regulation is
Speaker 1: coming to security token, to the crypto security tokens. I
Speaker 1: think it's I think that with regard to stable coins,
Speaker 1: this is gonna be a good thing. Right now, the
Speaker 1: stable coin market is maybe a hundred and seventy billion
Speaker 1: dollars all in. It's grown dramatically, but the truth is
Speaker 1: there's a demand for trillions of dollars of US dollar
Speaker 1: stable coins, and the reason that that entire market hasn't
Speaker 1: grown by an order of magnitude is because companies like
Speaker 1: Amazon and Microsoft and government agencies aren't going to move
Speaker 1: billions of dollars of stable coins around unless they feel
Speaker 1: comfortable that Treasury and Administration endorses them. And when we
Speaker 1: see f d i S approved banks, when you see
Speaker 1: a JP Morgan issue a stable coin, you may see
Speaker 1: a trillion dollars worth of that. And let me just
Speaker 1: characterize the entire movement. This is a rotation from an
Speaker 1: entrepreneurial driven industry to an institution to really driven industry.
Speaker 1: And we're sitting at this point where we're crossing the chasm.
Speaker 1: And the question is which and which entrepreneurs will be
Speaker 1: institutionalized income public and and get the appropriate regulatory licenses,
Speaker 1: Which existing institutions will choose to enter the market, Which
Speaker 1: banks like the silver Gate banks of the world will
Speaker 1: enter the market, and then um, there will be a shakeout.
Speaker 1: And obviously crypto currencies are not going to be around
Speaker 1: here in a decade. You're going to see many of
Speaker 1: these things go away as the industry shakes out and
Speaker 1: as it matures. All right, well, you let me write
Speaker 1: to our lightning round. So I want to do some
Speaker 1: rapid fire questions here, just looking for quick short answers.
Speaker 1: Top three tips for people who want to get into
Speaker 1: crypto but don't know where to start. You know, you
Speaker 1: should educate yourself first and uh, and you shouldn't really
Speaker 1: do anything. And until you have a firm conviction, then
Speaker 1: do your dilage ends, be very thoughtful about which vendors
Speaker 1: that you work with and and how you move forward.
Speaker 1: And then third, take a long, a long time arizon.
Speaker 1: Bitcoin is digital property, digital energy, or digital gold. You
Speaker 1: have to pick one. Bitcoin is digital energy and it
Speaker 1: is the future of the Internet Web two point oh
Speaker 1: or three point oh? What do you think? I think?
Speaker 1: You know? They're all marketing phrases. If you actually put
Speaker 1: a layer of digital energy or in this case, wraps
Speaker 1: stoss around your persona as you navigate through cyberspace, you
Speaker 1: can completely eliminate all the things that plague us in
Speaker 1: the Internet. The next Internet, the next version the Internet
Speaker 1: is a layer of digital energy wrapped around digital information.
Speaker 1: Quick one m favorite chess move? What is it? Um?
Speaker 1: I guess the queen's gambit as an opening? Okay, um,
Speaker 1: I hear you like routines. What is your daily routine?
Speaker 1: I scan the news, I tweet, hopefully something inspirational and
Speaker 1: constructive and cheerful to the entire bitcoin community. I hit
Speaker 1: the gym, get in some daily exercise, and then I
Speaker 1: take a round of meetings, either business meetings or podcast
Speaker 1: or something, work through a bunch of business issues. When
Speaker 1: do you look at the price? Is that the first
Speaker 1: or second thing? Sometimes? Some days I don't look at
Speaker 1: the price, some days I do. Mostly I just I
Speaker 1: just look to see the mood so I so I
Speaker 1: can read the room and figure out what's appropriate and
Speaker 1: constructive to say in order to drive the narrative forward.
Speaker 1: You mentioned Twitter, Your Twitter evolution is kind of epic,
Speaker 1: and I've got a recent tweet. We've just got a
Speaker 1: minute left I want to read back to you. Um.
Speaker 1: Bitcoin is a swarm of cyber horn. It's serving the
Speaker 1: Goddess of wisdom, feeding on the fire of truth, exponentially
Speaker 1: growing ever, smarter, faster, and stronger behind a wall of
Speaker 1: encrypted energy. What's the goal here with these tweets? Where
Speaker 1: are you going with that? I tweeted that once I
Speaker 1: fully grasp what's going on with bitcoin. Bitcoin is a descent.
Speaker 1: Is a decentralized network, which means that there are hundred
Speaker 1: million plus people out there that are supporters of bitcoin.
Speaker 1: There are millions and millions of nodes. It is a
Speaker 1: swarm creature right, It's a chain reaction in cyberspace. And
Speaker 1: once you understand that that bitcoin is a chain reaction
Speaker 1: in cyberspace, it changes your view of the asset and
Speaker 1: your view of the world, in your view of the future.
Speaker 1: So what does keep you up at night, Michael, I mean,
Speaker 1: you have to think about the risks. What do you
Speaker 1: worry about? It can't be bitcoin sunshine and rainbows in
Speaker 1: Miami every day. The truth is, I'm much more comfortable
Speaker 1: today than any point in my business career because I
Speaker 1: feel like we have found the right strategy at micro Strategy, right,
Speaker 1: the Bitcoin standard strategy. And you know, I'm I'm happier
Speaker 1: going to bed every night than ever have been because
Speaker 1: I have a mission and my mission is to educate
Speaker 1: the world on bitcoin and I think I can do
Speaker 1: a lot of good doing that and the world has
Speaker 1: a need. So nothing really keeps me up at night.
Speaker 1: I'm more motivated than ever. I think that's a great
Speaker 1: place to end it. Michael Saylor, founder and CEO of
Speaker 1: micro Strategy, Thank you for joining us. I'm so glad
Speaker 1: we had some extended time today. I appreciate you taking
Speaker 1: the time. Thank you. Emily Bloomberg Studio at One Point
Speaker 1: I was produced and edited by Lauren Ellis and Matt Soto,
Speaker 1: with special help Mallory Abelhausen, Tiffany Perez, and Margarite Gallerini.
Speaker 1: I'm Emily Chang, your host and executive producer. We've got
Speaker 1: a great year of shows coming up, so please subscribe
Speaker 1: and leave us a review and check out some of
Speaker 1: our recent episodes, including my chat with Alphabet and Google
Speaker 1: CEO Sundar Pichai and YouTube CEO Susan Wijetski. And from
Speaker 1: the crypto world Ethereum creator Vitalic Bututerin and coin Based
Speaker 1: co founder fred Urson. Find it all in the Studio
Speaker 1: one Point Oh Library