What's up, everyone? This is Anthony papiano. Most of you know me as pomp you're listening to the podcast. Simply the best podcast out there. Let's kick this thing off. Michael's sailor is an entrepreneur business executive who co-founded and leads microstrategy a company which provides business intelligence mobile software and Cloud Based Services. He has become well known in the Bitcoin Community for using the company's balance sheet to purchase more than 400 million dollars of Bitcoin.
In this conversation we discuss how Michael built microstrategy. What is $500,000,000 dilemma earlier this year was and why he chose to put more than 400 million dollars into Bitcoin with the company's balance sheet. I really enjoyed this conversation with Michael and I hope you do as well before we get into the episode though. I want to quickly talk about our sponsors first up is crypto.com there an all-in-one platform that allows you to buy cell store earn loan or invest crypto all from one place. They've got over 1 million.
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What else grabs them Unstoppable domains.com? Lastly? Don't forget that I write a daily letter to over 50,000 investors about business technology and finance. I break down complex topics into easy to understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pump letter.com again pomp letter.com. All right, let's get in episode Michael. I hope you guys enjoy it Anthony pump Leon. Oh is a partner at Morgan Creek digital all opinions expressed.
Rest by pomp or his guests on this podcast for solely their opinions and do not reflect the opinions of more Creek digital or Morgan Creek Capital Management. You should not treat any opinion expressed by pomp as a specific inducement to make a particular investment or follow a particular strategy. But only as an expression of his opinion this podcast is for informational purposes only. All right guys, bang bang I have. Mr. Michael sailor here. You're an absolute Legend my friend. Thank you so much for
Doing this off. It'll be here. Let's start you are Bitcoin famous. Now for being the CEO of the first publicly traded company to convert a material amount of your balance sheet into Bitcoin and use it as a reserve asset. We will get to all of that fun stuff in a minute, but let's just start with your background and kind of how you got to running microstrategy what that business. Does it kind of that background that really LED you to
this, okay?
Okay, I grew up in an Air Force family lived on military bases my entire life. I went to MIT on an Air Force scholarship.
I I got a degree in astronautical engineering studied spaceship design while I was there. I got another degree in the history of science. I studied the structure of scientific revolutions and Paradigm shifts and became very fascinated with how new new technologies get introduced.
Learn to fly in the air force, but I never went active duty because just as I was about to graduate the Cold War ended the Reagan's Star Wars build up want it and one day my commanding officer walked into the room and said, you know, we paid for Education you're on the hook for five years active duty, but if you want to join the reserve you can do that. If you want to go active duty, then you're going to wait two years before you get called up. So, you know the
I should get paid three times as much in the civilian world or you know and serving The Reserve or wait. So this was an easier choice for me because I was going to be a pilot and in my final semester. I was diagnosed mistakenly with a benign heart murmur and it disqualified me from flying combat Jets. And so my hopes dashed to being a fighter pilot I decided I did not want to wait around and
So I joined the Air Force Reserve and I became a civilian unexpectedly in the final month of my undergraduate career. I thought I wanted to be a professor. I got into into a Ph.D program but had no money. And so I decided I would go work for a year and then I would apply for a fellowship and then I would go back and get my PhD I work for the
Six months the company I work for blew up.
You know and I ended up working at Dupont and I was building computer simulations for Dupont and around the 18-month point. I tendered my resignation to go back to MIT and I was building computer simulations to predict the return on billion dollar Capital Investments and the petrochemical industry and computer models going to be used to justify 1.5 billion dollar investment and the executive that wanted the money, you know, I'm sure he said to a staffer is he?
Tell the kid we need him to finish the job and I was 24 and living in an apartment with milk crates for bookshelves spending 7 or bucks a month. And I knew I didn't want to stay and be a corporate bureaucrat. So I was like, no, I'm not staying and though the executives that will give whatever he wants and I said, well you want to raise is like know what I want to race it. What do you want to said? Well when I was in high school, I wanted to be a rock and roll star.
Our and that was - and when I was in college, I wanted to be a fighter pilot astronaut those hopes were dashed in my third idea is be a professor and that's what I'm going to go do and there's only one last thing on my checklist, which is I like to be a CEO of my own company and I said, okay, so if you want me to stay you going to have to let me start my company. I want I think I got a quarter million dollars in cash two and a half million dollars in contracts. They let me hire 10 people from Du Pont. Give me free off the
space and computer equipment for the first two or three years
I took that you know, they said we can't give you the money up front. You're just a 24 year-old. I said you got to because this is the only time this negotiating strategy ever work. So said you got to give me the money because I have no money. Like I had you know, they said well, but and they went back to their boss and I and they did this deal that you would never ever ever do but I just happen to be the one guy on the East Coast they could make their computer program work and the guy was 12 weeks from getting a billion dollar check from
Mega Corporation and it was all a relevant some they gave me the money. I thought holy crap. I have tuna $50,000. This is enough Capital the last me for seven years. So I figure seven years good let's start and so he's 24. I started microstrategy with the thought that
I didn't want to work for anybody else and when it failed, I would go back to college and it never failed in the first year. We did, you know 10 people and then 20 and then we're a five million than we were 10 million that we were 20 million. Then we were 40 million and in some point. We were 80 million and then we kind of came to the market and you know, 96-97 timeframe and the doc cam revolutions going crazy. Everybody's clamoring and got to go public so we came public in 1998.
And then there was no going back, you know, I got on the roller coaster. And so that's how I started microstrategy. I didn't I didn't mean to I kind of fell off the turnip truck and hit my head on a pot of gold and I'll keep it.
So when you decided to go public this was like right in the heart or at the start really of the kind of this Mania phase talk a little bit about going through as a public company.
Eder kind of the multiple Market Cycles, right? Because if you went public in 98 you get 99 this big boom. You have to get the crash. You kind of been see another rise Alito nine happens, right? Then you kind of get this incredible decade in the equity markets and then you get covid. It's like how have you kind of navigated every single one of these because I don't think about who realize like you sort of come at 24 years old. You're still running that company today, right? And so it's been a journey,
you know, like here's
Ironing, you know, I never got that PhD. I'm just like a silly MIT undergraduate. I remember I was competing in my early years with this guy this professor from MIT who had like umpteen degrees and was so much more educated and you know, I would be running a million-dollar company. He's got a million-dollar company and he said what are you doing? I said, well, I'm building these computer simulations on a Macintosh. She said, you know, we'll all the experts say the Macintosh is going to die. That's a bad idea.
So well Venture, you know eventually ported it to Windows and the next time I saw him the company's five million dollars and we're working on Windows. And you know, what are you doing said? Well, I'm building. I'm building executive information systems on Windows machines using this thing called Wings this new spreadsheet with a programming language. He said oh well experts say the wings will never work Excel is going to dominate this spreadsheet market and sets about you. He was still running the million dollar consulting company giving advice.
I said, okay. Well it turns out he was right and in a year, we flipped the company we rebuilt the product on Visual Basic and we doubled again and he said what are you doing? I said well now we're doing this like executive information decision support system and he goes well that you know, that won't work on Vision as you know you C++ and and he stayed 1 million and we were like 20 minutes and then the next thing you know, we started building decision support systems on relational databases there. We said well that'll never work. That's too slow.
All right, and and it kind of worked until we got to 40 million and then Along Came the lab and we flipped it again. We put a web interface on it and I got us to 80 million and and every single two or three years. There's something new that was simultaneously an existential threat like it's going to kill us or an opportunity if we embrace it.
And we're always inventing the next thing So eventually we found ourselves into the business intelligence business and and we created business intelligence web intelligence relational intelligence and I had three big competitors their business objects cognos, and I'll Crystal Reports and we got to like 2007-2008 and conventional wisdom lies. Well, they all had to sell out. So all three of them sold one soul.
Oracle one sold sap one sold at IBM and we're still standing right and then we accrued some more some more customers and we kept motoring on and then Along Came the iPhone, you know honor and the iPhone the first iPhone in 2007 is kind of a toy had no cut and paste no app store 2009 the iPhone actually started looking pretty interesting and and I just I became very enamored with with the mobile wave this
What happens when software leaps off of a PC out from under your desk? Because that's what they were. I mean computers were rocks under your desk and they were ugly and they had lots of cables coming out of I thought what if the software is running in your hand and what if that phones in your pocket, it's like software going from solid state block of ice. It gets the liquid a laptop and then it goes to Vapor State and a vapor state was on the phone.
And I thought well man that all of a sudden instead of going to the office to sit down at a desk and run your software may be of the software at your kids soccer game on a Saturday afternoon. And then maybe rethink how the software works. So we started doing mobile stuff and we implemented mobile intelligence and that took us to the next level now along the way I kind of I took one path, but I was always kind of a tech inventor.
ER at heart entrepreneurial so back in 96 when the internet hit you needed an email domain so we bought microstrategy.com, but I was too lazy so I thought what am I going to type microstrategy.com? Why don't we buy strategy.com so we went we bought back when no one can we go with strategy.com for like 50 Grand and then I and then I thought why don't we just start buying words so we bought
Dot-com and then we bought Usher.com. And by the way, do you know who owns hope in the world? No, I own. Hope hope.com. Hope Emma. I bought speaker. I bought alert. I bought angel. I bought alarm. I bought voice me and and here's my thinking, you know, they're all these search engines and if you go online and you search for voice you like 2 billion.
It's on Google. Okay, if you want to launch a company named voice and you own voice.com you go to the top of the list of the billions and so my thinking was if 10 billion five billion people go to school and they learn how to spell alert or Mi right Emma. Emm a if they not a spell that and then that a good for a brand and so I started thinking about branding and and I launched
Business alarm.com we eventually spun it off. It's a multi billion dollar publicly-traded company on the NASDAQ today and we made some money. We didn't make the billions but we made a lot of money off in like 30 40 million and then we launched another company about an alarm was all about integrating your home alarm system of the internet.
Yeah, and then we launched another company called Angel an angel was like an early version of Siri. It was an interactive voice response from any telephone like an angel on your shoulder talk to it and they respond we eventually sold that for about a hundred hundred and twenty million. And so you know, what I learned was it's easier to invent things and it's easier, you know, you can invent something you could even get it to scale. Can you can you maintain
It and can you commercialize it right A lot of people finally you can buy that boat. Can you afford to maintain that boat that's harder. Now you maintain that boat. Are you really going to enjoy that both? Are you going to use that thing that's harder the analogy and business is just because you can buy it doesn't mean you can make it competitive and even if its competitive doesn't mean you can make profit from it So eventually I learned that you can't keep inventing stuff and the we streamlined we sold those off and
Now I got to 2021 2019 where I sold voice.com. I tell you a story in a bit, but I got to 2020 and we had a portfolio domain names or sitting there. I appreciated digital scarcity. I thought these are unique in the universe only one person can own the work by the way, you know who owns Michael.com.
Please tell me it's you
yeah, bio and you know who's lazy? I thought well, what if someone just wants to type in Mike?
But that too I'm waiting for Michael Jordan to call me up. So I wouldn't show on michaels.com.
How much money do you think you spent on domains over the years acquiring all of
these?
Two million box million bucks.
Okay. So let's call it low single-digit seven-figure price a million two million three million, whatever it is
back in the back in the day back in the 90s and I just sat on them because I figured the English language is going to be around for a
while. Okay, and before you sold voice.com, how much do you think that you had made from selling the
domains?
We made like 35 million in the alarm transaction and more than a hundred million in the angel transaction. So so but we had we had commercialized businesses with them. So we sold the domain end and the business wear them as part of it and voice was the first the first naked domain sale that we did that was material and we did that one for 30 million and we just sold the domain nothing
else.
When you go to do this when people hear wait a second the same guy who did this Bitcoin thing so domain for 30 million dollars. He also has a business it's worth, you know over a billion dollars in the public markets Etc. He's spun off multiple companies that are now worth tens of millions hundreds of millions of dollars. Like this guy just keeps hit after hit after hit after hit. How does something like voice.com come together do they approach you? Do you put it up on like a broker site and say hey there's a
thirty million dollar domain has that work,
you know at some point I said to my marketing people, why don't you make a list of all of our premium domains and my definition of a premium domain is is a domain where have you hid the Google search you would get 500 million hits or billion or five billion hits when you typed it in the search engine and they're all just you know ideas like wisdom and hope and I said, why don't you make a list of them and send them?
Out every you know, everybody we know and see them he's interested in them and we sent out the letter and we heard back, you know, nothing right? Maybe I got like to venture capitalist called me but nothing ever went anywhere and I was like, okay forget that go back and running my own business and with voice, you know, this is how this goes down. I'm sitting in my desk one day and one of my junior twenty-something Business Development reps walks, and he goes hey some broker, you know called us.
And they offered us like a hundred and fifty thousand dollars, you know for this domain voice, but I looked it up like look I've been waiting for 20 stinking years like $150,000. Is it going to do much for me? I said tell them no. Okay. So nothing nothing goes on and then they come like the they they offered us 300,000. Now I said well tell them no don't bother me. So I waited and then the
Say to come back and they doubled it 600,000.
I said now I'm still not interested childhood dumb. It's going to have to be something north of you know, 10 million bucks. I'm just not interested. Like well, they they offered 1.2 and then it went to three and then I went to six and when it got to 10 or something like that finally that you know, I'm starting. I've got all these other people loving me sales people sitting
Jackals, you know like you're going to want to you know, they're all a you have to sell this you have to sell this and this is where we're selling selling intangible assets. Like anything aren't work it all comes down to how much are they worth to you? Right? And so if you needed the 10 million dollars, you would have taken the 10 million dollars, but at this point
You know, I have five hundred million dollars of cash in the bank. If I and my I love my things, you know, like I love them tears right? Maybe you can tell that I'm a little bit passionate about some of this stuff, you know, so I would rather own it not have the 10 million then sell it for that. So I said, oh no they say, okay. Well they wanted to 22 million. I said, I think when
I said 10 I said the numbers.
I'll sell it for 30 million. So the only price I ever put on the table 39 bucks. I didn't like nothing else. I was like after it gets 10 like I will sell it for 30 million because that's enough. I thought boy. It's an I didn't sell for 30 going to that. I thought that's what it was worth. I think that the word voice in the English language is worth a hundred not like I've seen people drop a hundred million dollars on an ad campaign and you want to drop a hundred million.
Campaign with the with the I voice dotnet type domain it's like that so I thought it was worth more but I thought well, I guess I need to Market to Market. I need to like create some kind of Market comp for it. So we'll do 30 million. So it's home 31. They said they'll give you 22 I said no, but tell them I'll talk to them and so around 22 million. I agreed to get on the phone.
And you know, so like I'm talking to a broker and a lawyer. I'm like, you know all through this were like, well who's the buyer who's the but not some some somebody, you know like and if they said if someone has said yeah, we're a start-up and we've got like 12 million dollars in the bank and will give you all of our cash and this is all we've got maybe they might have swayed me but but I just had a whale on the other end of the line that that
And identify themselves and I thought okay. Well, that's the case. I'm just going to wait until they hit my bid, you know, if you had if you had an acre in Central Park and someone would buy it from you and the price is the price you would wait and then when it's like you don't want it I'll wait. I got another decade I'm not going anywhere. Somebody's going to eventually want to commercialize voice So eventually they got on the phone. I'm talking to a broker you die here like a click click and there's other people he's dropping.
A on the line, so I'm kind of just talking to myself. They said well, we're authorized go to 22 or 23 million. I said, you know, sorry. I said go to the Google search engine and type in voice right now. And then why don't you what you'll notice is that it's more popular than like what's up with the billion users. It's a better brand than you would get. You know, if you were to get a billion people online. It's a better brand than than
Oracle or then sap or than a hundred billion dollar plus companies. So this is how I value and I'm I said like this is like my daughter. I'll marry her off but only to a man that's going to treat her better than I will treat her. So if you guys really value this then
Give me the 30 million. Otherwise, I'm
keeping it, you know and so at some point they come up to 30 million, right you guys agree with
30 million, but did
you know who it was before you agreed? Yeah. No,
really. Oh, I see. Okay. So you agree. I told it in the blind basically saying no from a 150 Grand up to 30 million. And then finally they did it.
Still didn't know how it was until after the transaction closed and then I hear it's some crypto company and that's the end of it for me. And that's my introduction to crypto.
I literally am thinking about the broker who's like, okay just showed up to work hundred fifty thousand dollars trying to buy a domain and next thing they know a couple weeks later their brokering 30 million dollar deals in probably another peeing in their pants, right John. Just hoping the god this goes through because they've already thinking about what house they're gonna buy based on the commission type situation, right? It was
amusing.
It's so you do this you say that it's your first kind of for Ray or experience with crypto. But there's this.
All
right. So there's this tweet.
So there's
this tweet that everyone is begging me to talk to you about it, which is in I think it's 2012 or 2013 you basically put out a tweet. So you're early because it's 2012-2013 about Bitcoin. You're also on Twitter then which was still pretty early for for Twitter in general.
And you basically tweet out, you know, kind of saying what I would consider a pretty down the Fairway critique of Bitcoin, which is like it's not
going anywhere. Yeah right fast forward Seven online gambling. It's days are numbered. Yeah 70
years and now you've got a material part of your balance sheet in Bitcoin. What happens? How does that
happen? Okay Anthony, could I tell you the truth? Of course?
I got an iPhone back in the day. I installed Twitter on it and it used to be really fun. And I used to really enjoy reading the news and tweeting stuff right as like it was like, you know, by the way, there are certain people on Twitter that still seem to enjoy just tweeting out whatever the heck they want. So I was in that stage and I had a lot of opinions and so I'm tweeting stuff and eventually
Lee and buy it I tweeted a thousand things I forgot all the things I tweeted So eventually I realized that it's probably better for my my communication Effectiveness. If I limit my tweeting to stay on brand so like I have a company microstrategy if I have something intelligent to say about microstrategy. I say it and I have a non-profit Foundation the Sailor Academy gives away free.
Should do hundreds of thousands of people were just giving away a free college degree. And if I have something that I can do to help them I say it and then whenever anybody else does anything that I might have an opinion. I keep my mouth shut now because I've realized it's just an opinion and I've lived long enough to be wrong a lot of things but now coming back to that specific treat. I really am ashamed to say I didn't know I tweeted it and until
the day that I tweeted that I bought 250 million worth of bitcoin and then I discovered the hive mind crypto Twitter Consciousness where all of a sudden they all went through all my tweets, they found it. They reminded me of it they compared it and I'm like, oh my God, I literally forgot I ever said that and I you know, but I took it as kind of like kind ribbing. Like I didn't get all worked up about it like you're right.
I was wrong what an idiot. I was I wish I could go back and do it again. Well, the
parts of me that was so funny about all this is one you're right that of Internet never forgets, right? And it sounds like you were using Twitter early on how I use it, which is sometimes I'd literally tweet things and I treat them for myself to remember I what I'm thinking right? Like I just, you know throw something out there the problem is that the internet doesn't forget and even if that was a thought in the moment.
It right you change your mind later. It's a stamp, you know kind of that never goes away. And so when they found it and I saw that I was like, oh my God, this is amazing like literally in a six seven year time period it's not just from a I don't believe it has value to. Oh, maybe it has some value right? I mean you would you consider the move of taking the 250 million the first investment. Is that a bet the company Type move or do you look at that as more?
Conservative than a bet the company type decision.
I wouldn't I would not say it's about the company decision. What I would say is
we looked at it and
Before I made that that decision before the before I was able to convince anybody on the board or the executive team to agree. That was the right idea. We all needed to collectively be of the opinion that we were going to be generating cash ad infinitum. Right? So so like that there's a journey that we went through corporately over the past year and there's a journey that Bitcoin went through over the last seven years, so
We focus upon our journey.
We had 500 600 million in cash and we were buying our stock back a bit. And then we were thinking maybe we will need to buy another company. We need it for a rainy day or maybe something really bad will happen and we'll really need the money. You know, I'm one of my heroes is Steve Jobs and Steve Jobs, you know, you know if you had a near bankruptcy experience and he did and I did too by the way, but I lived I lived to see my stock at go from 333.
dollars a share to 42 cents
Okay, wait, wait, wait. Wait, hold on back up. Yeah stock
price fell what time period is this?
You know, it's not like I like to brag about this stuff because it's not something you want to be proud of but I will tell you that the two of my bragging rights are I am the pretty much the longest-lived public company CEO in my industry because I've been public company CEO for 22 years and the second thing is is I'm pretty sure I'm the only public company CEO that ever presented.
It over a 99.8 percent drop in the stock price and kept his job.
I mean, this is okay. So when does this
happen? Like what is this thousand and three, you know, it's okay. Like it's another story. I learned a lot of lessons at the short. We don't want to get off to something big car in the subject of whatever the short the short lesson there is don't run out of money always have cash on the balance sheet and don't spend more money than you're taking in and I feel like an idiot to give that advice.
Anybody but it's still good advice right now for sure. Let's fast forward back to 2020. So we have the money. We're very conservative. No debt ready for a rainy day ready to seize the opportunity buying our stock back covid hits the pandemic hits everybody's you know our equities in the tank, you know, we're losing momentum and the
First thing that happens in q1 is it's all kind of shock and awe and in Q2 the question is how does this impact my customers our business our product our value proposition and you know, and by the way, everybody gets impacted differently, right if you're running a cruise line or a theater or whatever and sometimes counter-intuitively and in our case, we sell enterprise software that helps you think better. We saw business intelligence and we saw
Just
intelligence to to lots of governments agencies. We sell it to massive Banks. We saw it to in essence Global 2000 companies, even the ones that get impacted their like the national airline. They can't go out of business, right they so that's our customer base. So we realized that our software kept working. The man was still there. Everything is smooth. And in fact, the great thing about software is software you can
an ship even you know over the internet all of our services went remote so our value propositions intact and the the surprise for us is our is our productivity went through the roof on our cost structure compressed all the sudden, you know, 20 million dollars a year of flying around in airplanes went away and ten million dollars worth of trade shows and twenty million dollars worth of marketing things went away, but the customer and the band
Go away, so we actually found that we are much more efficient. So bottom line is yeah. We got that Black Swan event, but that block Swan event actually kicked us into a high gear and productivity. And so that was the that was the positive on the on the p&l side. We realized that we were going to generate more cash and we and there and there was no real no real rational business plan where I take 200 million dollars and I spend it to make
Make the business better. I can burn it to make the bit but I can't spend it to make the business better. So simultaneously we got a gift from the fed and the macroeconomic side. So while we're trying to figure out what happens on on the p&l all of a sudden we see what do we see the long Bond index goes up 22 percent if you would ask me Anthony like what's the what's the investment?
That you do not want to make I would never in a million years by a 30-year bond that yielded two percent interest never ever and yet that was a winner this year. If you bought a 30-year Bond and 2% interest when the answer is go to 1.2. You've actually got a massive Spike. So Equity spiked big Tech Spike Bond spiked and you know, and we looked at our cash and I had to listen to a little
Litany of Talking Heads Ray dalio on doubt, you know if Ray dalio didn't say cash is trash every podcaster the trolled Ray. Dalio said Ray dalio says cash is trash cash is trash it, you know, and then I and then I went to school at some point on you. This is probably this is after I realized I had a problem and I listen to you describe the plight of the Working Man, I you know I go to work.
Get paid five I'll get there is not working. This is working lawyer. I get paid $500,000 a year. I say $50,000. I put it in my piggy bank. I have five hundred thousand in cash in the bank. I have kids and I have a future and then all of a sudden I realized that the cost of a college education is going up at 8% a year and my cash is yielding 0 now at that point, you know, we've got the pump podcast telling me.
I'm crazy to work for dollars and save my cash and if you take the $500,000 in the plight of the lawyer with the two kids were on a sudden the Harvard and the 500 on thousand dollars of cash in the bank yielding 0 and now you multiply everything by a thousand.
That's me. I have 500 million dollar company. We're making fifty million dollars a year. I got thousands of people working as hard as they can possibly work. We're we're sacrificing right and left were squiring our pennies away. We're putting it into the bank account. There it is and you know in 2019 and before we worried about the unknowable and we thought maybe we'll use it for something and
I'm a bit older than you. You know, I remember when you got five percent interest overnight on your money and it wasn't that long ago that the risk-free interest rate was 5% before the great financial crisis, and I'm like, well, I'm going to make 2530 million dollars a year on this and I kept hoping and waiting for those good times come back. I was the guy that when the interest rates, you know, and when the 30-year t-bill entry started with three and a half percent only finally they're going to
For and then you go to find and they're going to got back to normal right normal interest rates. And then of course Hope was dashed it went the other way and what happens next well acid inflation goes through the roof, right and you know this entire conversation and inflation, it's really twisted because every talks about consumer prices CPI CPI inflation that we're not getting enough inflation. We're not getting off and
Inflation. Okay. Well, like you're not getting an you're not getting inflation on YouTube and Netflix streaming videos and candy bars manufactured by robots and factories and Domino's Pizza you're getting inflation on everything you want. If you wanted an Ivy League education if you wanted a beachfront house in Miami if you wanted the apartment in New York if you wanted anything scarce everything you want is going up 7%
And that's asset inflation. All right, if I want if I want a bond that's going to heal $50,000 a year, you know, it used to cost a million bucks and this year it cost 10 million dollars the cost of the asset going on. What up by 2% know I have them I have a house in Miami Beach. It was a nice house built in the 1930s and I have the deed.
That of sale for the house $100,000 for that house in 1930 gone up in price by a factor of a hundred.
It's like, you know, so no inflation kind of inflation, but it's different its asset inflation. So I didn't really think about it until I got slugged in the face with the two by four which kind of happened around March or April when Main Street shut down the economy shut down and bonds went through the roof when mean this evil pawns went up while every city is bankrupt when every when Apple stock and every other
other public Tech Equity went up while and the multiples blew out and the economy went to the worst place. I've seen in 30 years at that point. You start having a thought with yourself, which is what is what is the true inflation rate and and we should probably coin a different term right if you if you looked at asset inflation on a good year for the last decade. It's 7% a year normal right this year.
You can make an argument was 25% I mean if you look at the long Bond index and if you look at these Equity, you can make an argument that the asset inflation rate leap through 25 and 30% depending and and now what does that mean to me? Metaphorically? Well, here's how I feel. I felt like I had five hundred million dollars of cash in the bank safe, and it was yielding to 3% and I'm ready for a rainy day.
And then I'm starting to do stuff with it. And then every month some Banker sends me a note saying the interest went down it went down now, there is no interest.
And then someone took my cash out of the bank and they put it in the backyard and pallets and then they opened my back gate and then every month someone comes along and starts burning two percent of the money.
And then I started thinking well, you know in 12 months 25% of the money is going to be gone.
And then you know then I started thinking what is the point of all this? Right? What am I doing wrong? And of course the answer is you can't hold cash. And so what do you do with it? Right? Well, I mean the okay,
hold on a second here. So you realized the macro issues. I think there was a couple of different things that happen, right? So the macro issues happen and you're sitting there you're in a very unique situation because you have so much cash on a company's balance sheet you
In a business that throws off a lot of cash, right? So you kind of have that Advantage it actually improves economically like you described in terms of your costs are going down that the structure of your contracts kind of or weathering very well through this storm. And so you remain in a strong business position, but you have cash and actually the cash is growing not through investment. It's growing from kind of your income and you begin to get worried about that. How do you get to crypto? Right and I
Leaving you a little bit in terms of you've got a friend who basically kind of hit you over the head a second time. So me tell that story as to kind of what pushes you to at least go explore crypto, and then we can talk about kind of what you do, but just talk through that process of like how you actually arrive at. Okay crypto is a potential solution.
You know what when times are good. Everybody's busy, you know, if you're in love with the iPhone then the answer to everything is iPhone if you're in love with your Apple watch when you're in love with Twitter the answers, you know that you know, so when times are good everybody focuses on that and there's only limited time so
I think I was closed to the possibility. It's just there's so many other things going on and when the covid crisis hit everybody got sent home and we all had to had to contemplate ideas that we had previously rejected and we had Embrace ideas that just were very foreign to us. So, how do I discover crypto? Well first I have a mega mega mega
And the mega problem is I have a lot of cash and I'm watching it melt away. And I and I'm I'm helped to realize I have a mega Problem by this insane V recovery in the bond market and the equity market and you know all of the Talking Heads. So after after that then I have an opportunity which is I've got a cash generating business.
And then I've got one more problem, which is the investors the at the outside investment Community if you go to them and say hey the we're a great enterprise software company and we've got all this cash their answer is well, we don't really value the cash what I mean because they're smarter than I am right now. I'm not being I'm not joking. I'm being serious. They are smarter than him. They knew before I knew that cash is trash and you're a fool to sit on the cash. You're just if
The natural asset inflation rate is 10% It means that every time I generate 50 million in operating income. I burn 50 million in purchasing power on the cash and we're just running as hard as we can to stand still so we weren't getting any credit for the cash. We didn't need the cash Ergo we need to do something. And so what is the thing you're going to do and we started working through it. Like what do you do if you have 500 million dollars of cash.
- you don't need while you can buy your own stock back, right? There's a limit to how fast you can do it. If you go into a market and a thinly traded stock and you're buying 20% of the float every day, you know, that's going to take about 4 years.
Ryan's like you know, if your account if your ice cube is melting 15 or 20% a year, you don't got four years or at least, you know inflation's going to do a better job so that didn't really make sense. So we had we got kicked into high gear. Like everybody got kicked into high gear this year, right? If you didn't know how to use zoom. Yeah, like we started we started on a Monday morning with one video conferencing technology. We discarded it. I'm not going to say
which one we discarded it for another 1 by 11 a.m. By 2:00 p.m. We're using Zoom by 4:00 p.m. The CEO sends out an edict Zoom is not the corporate standard. Everyone will switch over to zoom starting tomorrow, right? That's how and by the way the same CEO that said, I don't believe in remote work. You got to show up to the office or else you're not working for me and I would have sworn up and down. I hated remote work until covid crisis-hit flip. And so
That same idea happen with the balance sheet. They're all these strongly held views. You got to be conservative. You got to invest in cash and short-term t-bills and you don't contemplate anything else and then all of a sudden you contemplate other things. So, I mean, you're an expert you tell me if you had 500 million dollars of cash right now. Where would you invest it?
I'm cheating because you and I see eye-to-eye now is I'd go buy a lot of
Bitcoin. And so if you didn't know what you know, but you were an intelligent person and you watched YouTube and you watched everything else. What would be your laundry list of assets to consider investing in
it? Basically all the inflation hedge assets, right? You look at everything from Real Estate precious metals Bitcoin. You kind of just go down the line hard assets that have some sort of inflation Hedge.
Tape qualities that really are more kind of wealth preservation than anything would be the the general bucket to at least go start exploring with
right. So let's take through them commercial real estate. How do you go by 500 million dollars worth of commercial real estate at a fair price. That's not an impaired asset by something happening in the economy right? Now. How many people want to sell you commercial real estate at a fair price right now that is not
impaired. They all think it's still worth what it was worth and
You are
okay so that you know, that's kind of difficult. So what's my next thing go by I'm not so silly as to go by like 20th Century stock go by Apple Amazon Facebook, you know Twitter. Oh, by the way back in 2012, I wrote the mobile wave. You know what I said in the mobile wave. I said go buy Facebook Amazon Apple Twitter. It was a good idea in 2012 if you had done it, then you would have made.
Ten times your money very good idea. Not the same idea this week, right? I mean at this point, you know, it's is Apple computer going to go up by a factor of 10 from here, right? Maybe it might double might be cut in half but you know, you're with the best equity in the world you got a-you got equal upside downside you really just
is like symmetrical exactly. And so when you start to look at this,
Did you look at real estate precious metals and Bitcoin or kind of what was what was the on the menu if you will for a vitamin
C I went okay, and this is where I got it. I got to give a plug to my friend Eric Weiss are rice running his own Bitcoin Bitcoin investment, you know advisory service, you know, he's saying this is what I'm doing and I'm just dismissing him like one of those Bitcoin thing. I don't know what it is, but it's crazy crypto and sleep shell game. So
He just he keeps mentioning it and I keep thinking about it. And then then it one day were sitting around my pool in Miami and he starts explaining it and something Clicks in my head that maybe this is a pretty good idea. You know, like I have been beaten over the head with a two-by-four and so I'm a bit more open-minded but I start thinking about it and then I realized
I really got to look at precious metal, you know, you got now you go to the Robert Kiyosaki silver gold or Bitcoin, you know choose one. And so we get down to choosing are we going to invest in precious metals or Bitcoin? Am I going to die already dismissed commercial real estate? I dismissed a Market Basket of equities the spider, you know, nasdaq-100 that stuff just not compelling. You know, I tell you what I want right what I want is something
They that might be cut in half they can go up by a factor of 10.
Asymmetric payoff. Why do I that's what any intelligent investor was? That's what you want when you bought Amazon in 2011. That's what you were getting when you bought Apple computer when the iPhone cannot that's what every every rational winners getting you want a 10x upside and then you want I can even live with losing all the money although here's the catch.
You know like every good investment in my opinion if you're going to put a lot of money at work that the winning formula for the past 10 years or 15 years has been find a digital dominant Network. That's dematerialize some some fundamental thing. The mobile network is Apple the information Network at Google the video Network YouTube You Know The Social Network Facebook or even Twitter speech Network dematerialize and
Amazon the retail Network you buy them when they're a hundred billion dollar market cap when something hits a hundred billion dollar and buy when they're 10 times bigger than the next biggest thing and there are a hundred billion dollars.
They're probably going to crush everything and at that point like, you know, I remember lecturing Wall Street guys in 2011 2012 about Apple, you know, and here's what they said. Is it. Well, we know you love apple and you think it's going to beat the world but you know, our idea is if Apple goes up too high. We're going to sell the stock and we're going to buy HP so we can endow so we can diversify your computer portfolio. And then if all your Tech names it apple and Amazon.
On Facebook go up too much. We're going to sell those so you don't get too much in technology. Okay, and my answer was what you know, if you think about it broadly, there's no example of a successful company in the history of the world. There wasn't a technology company Standard Oil was a technology company if you go and go to her, she's Factory, you'll find they figured out how to manufacture 50,000 candy bars and clean room and it's the most sophisticated piece of technology you will ever see in your life.
You think they're not technology companies you're just ignorant there is no there is no winning investment in a company. That's not a technology company at their time General Electric. There's a time when electricity was interesting technology Boeing same thing before we could fly. So so the idea you sell too much Tech is a foolish idea in my opinion the idea that you sell Apple when it gets too big as another foolish idea like well, there's no room.
Company that was 500 billion in market cap what or trillion right there people say that there's never been a company as valuable as Apple because there's never been a company as valuable as apple. And another way to say that is there's never been a company that could create a software camera change the way it works and ship it to a billion people overnight for a nickel and if you could actually ship a product to a billion people overnight for a nickel you could create a lot
Of value with no cost. So obviously these digital networks Facebook Apple Amazon, you know, you could see them. They're all around us. They are they are insanely value generating but there but there's another Dynamic here, which it's a network effect, right metcalfe's law. It's like as soon as as soon as everybody uses Facebook,
You know, you can't how do I get 257 of my closest friends to switch to the next thing. It's really hard like Twitter. You know, how do you get all of your followers on Twitter to switch to the next speech Network you think you know, even if you know, even if a guy has a massive following on Twitter, you think he's going to switch, you know to another thing probably is not he's
gonna be the last person
To
leave so you you know, you're buried in concrete there. So now we come back to bitcoin. Okay, the the number one knock on bitcoin for the outsider is well, it's just software. Someone else can copy it and I think bitcoiners they don't do them selves Justice here. I mean, sometimes I think the exchanges and some of the others they over promote the fact that there's two hundred thirty seven different.
Pairs you can trade right? And if I've done that it's like that is that long tail where all the sudden there's one thing and I want to have a list of 47 things. But but you know, what's an epiphany, you know, the Epiphany is when you're a young CEO and you're like I'm going to put a sales person in every single state in America. There's 50 states 50 salespeople. There's an epiphany when you go to New York City and you realize that half of all the money in the country is in one city.
And then you realize that maybe you're being captured by Orthodoxy. So in this entire crypto area, it's great to have all the Innovation and it's good to experiment with this and that in defy and maybe that'll work and maybe at work and maybe that'll work but to The Outsider.
The Outsider you look at it and you're like, well what if everybody moves her money off a Bitcoin to the to Ether or to whatever or to yoyo coin and you know and they stopped and and then someone puts this language Eight Pages of language in front of you what happens if there's a hard fork or soft Fork, you know how debilitating anxiety inducing that would be to get to deliver Eight Pages of legal disclaimers on hard Forks off or
Just like you mean like my crypto can float away and they get all anxiety-ridden. So you got to get beyond that I'll cut and but it's easy to get beyond that the easy way to get Beyond it is to say look. This is a proof-of-work crypto Network designed to be a store of value. And the only thing we're going to do is maintain a constant store of value is a digital gold and we're going to expend a huge amounts of energy to protect that Network.
And upgrade that not work and you can take your 500 million dollars out of the bank and put it on our Network and everybody in the community is going to spend every iota of their energy to make sure no one else with that Network.
Okay. All right, so hold on. So when you when you start to understand this, it sounds like you pretty astutely Bitcoin everything else. There's a separation in your mind in terms of understanding that
And as you were learning about that, were you going into this with an open mind as I don't even remember that I tweeted this thing, you know in the past. I know I've got this problem. This is the promise of this thing as a store of value. Like let me go explore it or do you basically have people who are kind of guiding you and pushing you and saying hey, this is the solution. This is your solution like this is a self-guided tour or is this externally got
a tweet why I am completely
oblivious to any previous opinion I had has been the before by I didn't follow Bitcoin all through the 2017 Bitcoin cash for any of the fireworks that were very colorful I missed it. All right? Okay. So I you know, I show up with a clean slate and 2020 and I'm reading about this is history and I'm looking at you know, andreas's you know videos and your videos and Dan hell's videos and I'm reading the Bitcoin.
Advise a 4D and reading Parker Lewis has essays and
and you got it. You got indoctrinated by the Bitcoin Community. You got hit with all the content.
Yeah, and and the mall the maximalist and I'm saying Max Keiser and you know, and I'm sure it's not like I'm trying to figure out there seems to be some interesting drama here, but it's more entertaining for me, right? And here's the thing that really just that just kicks you over the edge though. It's just
When you go to real Bitcoin dominance and you look at Bitcoin and then Bitcoin cash and then the next one the next one your eyes Okay, Bitcoin is 92% of everything and the next competitor is 2% And then the next competitor is 1.5 percent. Okay, the number one knock on bitcoin is what maybe it's the Myspace to Facebook's like absolutely not if you know anything about my space you realize that my space.
Never worth more than a billion dollars. Okay, Myspace was one was two hundred times smaller than Bitcoin is right now. It was never that case, right? There's never an example of a hundred billion dollar Monster Digital Network that was vanquished. Once it got to that dominant position. So all you got to do is see that chart and then you think about the think about the dynamic and the network effect and you're like, this is
Already one right? It's one it's been tested and you know, and by the way the hard forks, I think are a big Advantage the fact that the fact that Bitcoin went through it and we saw what happened and we saw that the community would defend Bitcoin. That's what gives a person like me confidence to invest hundreds of millions of dollars in Bitcoin. Like I don't want to hear that. You've got a new idea and you're upset over transaction fees.
Said you would like to implement smart contracts. So you got to change everything. I don't want to hear that. I want to hear that you're going to defend the network to the death against someone that's going to break it or compromise it in any way shape or form
when you decide personally. This is a good idea. I'm going to take a material amount of the 500 million dollars. I'm gonna go buy Bitcoin with it. You've got a board. You've got shareholders you've got
You laters, there's there's a number of key stakeholders right that people who either have financial interest in what you're doing or really care about what you're doing for where I get to my standpoint. What are those conversations? Like do you just go to the board and say hey there's a thing called Bitcoin. I'm going to take 250 billion dollars. I'm gonna go buy it. Do you kind of warm up with some information first? Like what is that conversation at the board level? Like
I started signing them homework.
And they all know you so they you know, they've all watched a variety of your podcast they all know on dries.
They all they all required to watch the debate between Erik Voorhees and Peter Schiff on gold on Fiat versus Bitcoin. What does better money? Right? And then a Non-Stop stream of essays, you know on macroeconomics and Bitcoin Theory and you know Pete, you know, they'll who's who Litany of people you've interviewed when Alden publishes her piece and goes to my board, you know, the bullish case.
That guy goes to the board all of those things and and it's and between them and The General Counsel on the CFO and myself. We're all basically just going down the rabbit hole and following that is a decision, you know is a series of discussions.
One-on-ones with everybody everybody goes off does her own homework. We all come together lots of group discussion. We all split the CFO goes off to to to organize and start to consult with a raise of accountants The General Counsel goes off to consult with the Rays of attorneys, you know, then we go off and then consult with the Rays and financial advisors. Then we consult with arrays and bankers then we come back together.
And then we share then we have deliberations. Then we deliberate some more and then we think very carefully about what is the appropriate and prudent way in order to begin to move forward with our effective
strategy here. Alright. So the first purchase is 250 million dollars you announced today that you did another hundred seventy five million. So you're now at 425 million dollars, which is
almost all of that 500 million dollars of cash or a good portion of it walk us through I got a ton of questions around what I'll call operationally investing hundreds of millions of dollars. So, how do you think about entering the market and try not to move price? How do you think about OTC right desks? Obviously for those who are listening who might be confused Michael and the team is not going on coinbase and letting a 400 million-dollar, you know Market order rip.
There's some very thoughtful things that go into this. Let's talk first just about how do you actually acquire this much Bitcoin without kind of moving
price? And before I get there, I'll make one more point. We had 500 million in cash. We wanted to buy our own stock back with it or put it into some in some asset like Bitcoin. Our first step is to announce that we're thinking that through our second step is a now so tender offer for our stock 250 million.
That took place the same day. We announced we bought the tune of 50 million Bitcoin. Then we have a 20-day period where we wait for our shareholders to decide if they're going to Tender and how month so we had to move through that when we got done. We actually bought 60 million dollars worth of our stock that hit the wire in the last few days to so what we are real goal was to invest it. All
God is he said that was the is going to be so is 250 in Bitcoin the tender ends up being 60 million or so.
You're like 310 and then that Pat you had kind of another hundred seventy five million that you can play with and still keep some cash in the
bank and it's the shareholders decision as to how much of that will be tender. Right? So we wait for them and then after the tender offer, we had excess cash in our treasury. So the next step is for us to put is to invest our treasury captions. So that's what we announced today that we've wrapped. It also substantially 95% of that money.
He is either invested in our stock or in Bitcoin and we've accomplished that in short order right like over the course of six weeks or four weeks now regarding acquiring that much Bitcoin first of all.
I can't give you like exact blow-by-blow details because I've got security issues and the world is watching and I
I can't but what I can do is is I can describe to you if you were running a company how you should think about this, you know, if you were in my position, which is you're going to go and you're on you're going to audition a bunch of bunch of institutional grade exchanges.
You're going to work through and walk for institutional grade custodians. Yeah, you're going to look at you know, all of the security issues all the technology issues ETC you're going to even think about the team you're going to build a relationship with them and then you're going to buy if you're going to buy that much you're going to buy it in thousands or tens of thousands or hundred.
And plus small transactions day and night minute by minute over that like over the course of many many many days. So so it's not like we're going in all sit and I'll watch this happening and I've got a great team, you know a great team that I work with and some excellent professionals. They are brilliant Geniuses at what they do, but let me tell you they've got great technology to
Right. It's like and you got to have the right technology. You got to have the right team and then you have to be very patient. Like very very patient that I go. I'll watch people walk in on Monday morning and it was like, okay some do just got up at 9 a.m. And decided to buy some Bitcoin and the price spikes, you know, whenever I see that I'm like, well that guy won't be in the market very long because no one that really wanted to buy a lot of bit.
Coin would be so silly as to spike the price so hard, you know, I can tell you this which is we bought 425 million dollars worth of it, and we never ran the price not a dollar.
Like you don't need impressive. Yeah, it's pretty impressive. I'm in the market. You wouldn't know that I'm trading against you ever because that's just that's not how you get stuff done. Right? Let the market come to you. So the good news is if you want to buy hundreds of millions or sell hundreds of millions, you can do it and not be seen and and you can do it without moving the market materially or Panic anybody, but you have to have the right team.
Team the right tools and the right discipline. You can't be in a
hurry got it that makes sense. How has the reaction been from other CEOs or people who kind of are outside the company? I'm assuming that you've got people coming in bounds that our peers are they laughing at you? Are they excited? Are they asking? How did you do this? Why did you do this? Like, what are those conversations like
Well, first of all, I think this is the year where every CEO is busy like minding his own business right like that that they've either got a business that has serious serious solvency issues or struggle or they've got a business. It's being digitally disrupted or Twisted one way or the other and or they've got all sorts of
employee care and feeding issues. So this is not the year where a lot of CEOs are necessarily sitting around shooting the whatever about you know, what's happening this year, right? Everybody's kind of all hands on deck working hard the people I do speak to though and I speak to some I would say
Everybody has has had a lot of their assumptions shaken this year assumptions about you know, how the market will behave as sumption is about regulations, right? I mean assumptions about international business assumptions about their balance sheet and things that were inconceivable last year.
Oracle Tick-Tock, you know all sorts of interesting things that you you will see on the paper and people are just like nod and they're like not even a second thought like oh, yeah that's happening that's happening. All those things are being considered this year to a much greater degree. So I do have people coming to me and and that and they want to know how do we think about it? And why do we do it and you know, and they're all starting to look too.
What's their angle on this now? And so I think it's catalyzing people to be much more
open-minded?
Yeah, that makes a lot of sense. Do you feel like you've kind of broken the damn open and now a bunch of people will follow or do you think that this is kind of a slowly but surely it will take a lot of time for more to kind of follow in your footsteps.
I think it's like the four-minute mile. I think the people tell themselves they couldn't do it and then someone does it and then in the next year dozens and dozens of people do it right this particular case. There's a lot of stuff that
I've done in my career that was a lot harder than this and I will say any entrepreneur that ever successfully launches a business and you know and gets to profitability. Well of accomplished something much harder than what we did. So it's a it's a challenging project, but it's not beyond beyond the capability of any any management team. I think that a lot of people just kind of had a mental block.
You know or they it's just in this block of I just dismiss it. I don't even consider it and then they get focused on something else. My own experience is you know on the day from the day that I decided that I wanted to buy Bitcoin if I decided on that day as an individual you go to these, you know, hi and exchanges it's going to be six weeks to get through the kyc for an individual if you want to do it if you're a
Opening a private company and if you had your team all around you from the point that that you thought it was interesting. You're 12 weeks to 18 weeks to get through the hopes. If you're a Nimble publicly traded company. I think you're looking at six months. And if you are a good company, like just a good rationale publicly traded company put on the docket. You would do it in nine to 12 months. And so I think that
People were kind of oblivious to the to the need / the role of Bitcoin and the Bitcoin Narrative of digital gold, right? This is the ultimate inflation hedge. This is this is if it's not 10x better than gold. It's a hundred X. Maybe it's a thousand X medical we could go on for hours. I could tell you why I think it's a thousand X better than gold. But let's just assume since we're preaching to the choir that
Mm
X better than gold once you realize that it's a thousand times better than gold from that point. It's minimum 12 weeks. If you went like a bat out of hell and probably six months and I kind of feel that if people are waiting to see if this was possible. Well, they kind of saw our announcement August so the six month clock starts in August if they were
super they were just perfectly configured if they had all the same characteristics as us then they start focusing on this in May or June. Nobody's thinking about this in March or April and was just so busy trying to keep the doors open and their Bells getting wrong. So take August and say August September October, you know, December January February. I think that what you're going to see is over the next two three four
- something interesting and there are the the other point, right? That's not not lost upon me is there's 3,500 publicly traded companies this five trillion dollars in their treasuries and it's all melting and and yeah at some point you have a fiduciary obligation to not lose the money.
Okay. Yeah, like it's used about a used to be acceptable to be conservative. But that was before the asset inflation rate went from 6% to 30% You know, when the inflation rate goes to 30% It's not necessarily something you can ignore. So I think that a lot of people are getting catalyzed right now. I think I think it has to be kind of CEO CFO lead, right because it is an Innovative thing, but
I think that that we've shown people how to do it, you know, and we've shown them that it's possible and straightforward and and once it's like anything if I tell you what's possible go figure it out on the Internet or go figure on YouTube. You can figure it out yourself, right? All you got to know is that it's possible, you know, it's possible to run 52 miles in a single day. Go figure it out. You're going to go Google 52 miles in a single day and then all of a sudden fall down the rabbit hole.
So I think people now know it's possible but I don't think you can expect them to move in less than six months reasonably and a year.
How are you thinking about last question before we get to the rapid fire? How are you thinking about the volatility? Right? So obviously it's one of the most volatile assets that you could have chosen and when we talk about volatility, it's not like hey make up to 2% or down 2% You can have double digit percentage days up or down.
Does that change your strategy is this just your long-term holding it for you know years and years kind of how do you think
about that? Well, so first of all, I think the volatility is falling and I think I got it is look at the chart and there's a narrative like everybody's like every wants to say that they know something about crypto wants to jump up and say well, you know, it's volatile. Well, what was volatile in 2017, you know when like individuals are trading in on their mobile.
Phone but think about what I just what I just said about how we acquired it. We buy a hundred and seventy five million dollars. I'm in the market every minute of the day for multiple days in a row. I'm damping the volatility one person like me right in every every trading day that I'm in the market. I'm damping into the upside and the downside and I'm damping it with large sums of money right in
And so how many how many institutions does it take before they damp it? Right? Like I'm the I'm the dude. I'm like, okay, I'll pay an extra whatever but stop this thing. I'm holding it for a hundred freaking ears right? It's like I'm not really I'm not the day trader guy that's worried about it. So I think that is the institutions come in and as they buy bigger amounts their damping the volatility. That's my first observation. My second observation is crypto trades Hunter 6.
E 8 hours a week every other asset trades 35 hours a week at best and sometimes less on holidays, right you're trading I look at this thing in. Awe, you know, when I look at these exchanges Saturday night 9:30 p.m. And I'm watching the thing stream and I'm like, this is the most magical hardest-working Security in the history of the world and I would think everybody ought to be in all the things not
Going haywire. It's remarkably non-volatile in that regard like in my opinion you could go and you could go into the market and you could liquidate fifty or a hundred million dollars worth of this stuff in the matter of an hour any hour of the day any day of the week on a holiday and maybe you take a 3% haircut.
But go trying to liquidate a hundred million dollars of gold on a Saturday afternoon in Istanbul on the street side, you know, so by it so that my answer is I don't think it's that volatile but my other answer be honest, let's be honest. There's a negative real yield on everything else. I can buy. Okay, Gold's got a negative three four five percent real yield in my opinion. We talk about why bonds have a negative real, you know, it's just a question. We're just going to debate.
Said a seven percent acid inflation or 15 percent or 3 percent, but it doesn't really matter. Every other non volatile asset is a negative real yo, which means that everything else is life blood draining out of my veins. So if my choice would be to accept some volatility and live or I had non-volatile cash.
That bought 30 percent less in a matter of eight weeks non-volatile. That was 30% last at that rate. You're not going to make it through the decade. And so the volatility is just something you got to live with but I but I really think there's there's there's a group of crypto enthusiasts to live the last 10 years and and they are the result of their experience. They lived through a difficult time and they're here.
Was I respect them, but you live through that you look through volatility. I think the next 10 years are not going to look like that. I think the next 10 years as you have people coming in that are that are moving hundreds of millions of dollars in and out of the market. They're going to tend to damp all the volatility and and and the institutions are going to dampen because in their interest and so if there is any it's just going to be to the upside for the good of everybody and
Otherwise not a big problem for me.
I literally think that is the perfect way to look at this is what is it? 200 billion dollar asset today market cap wise good eight nine trillion. You're looking at 40 plus X, right the gold market cap and you're talking about an asset that is Superior in almost every single way. And so if you think it's just going to be equal on a market cap basis, you're not a student of History because we know that they usually tend to
Have much larger market caps. And so when you start to look at just the numbers, right you can now I put big numbers to work in the market. But also the upside of this thing is incredible over a long enough time
period, you know, the crazy gold is a great narrative, but to say that this is much better than gold under sells it because the truth is if you look at these treasuries, there's something like 200 trillion dollars worth of debt instruments and other
Treasury instruments that have a negative real yield and precious metal is just one of them. So if you looking to 10 trillion dollars in gold, there's easily a hundred trillion dollars of you know, what is this Shadow money 75 trillion of that 75 trillion of sovereign dead 50 trillion of other stuff. So you're really looking at 200 trillion or more of negative real yield. The only debate is how negative it is. And Bitcoin is the only thing I could find this positive.
You know, like a brand-new thing would be talking about it.
No brainer. I seem to questions to everybody to finish up. What is the most important book you've
ever read?
Okay, you're gonna hate me for this but it's the Moon is a Harsh Mistress. Okay, and you know Robert Heinlein was my favorite author growing up. I'm a rocket scientist. And of course, it's it's it's about a protagonist computer whose name is Mike who saves the Moon?
So I like that a lot and I liked and I grew up with that is very inspirational.
So speaking of the Moon aliens believer or
non-believer.
I think they're out there. I think that I think that there's so many stars and galaxies and planets. Statistically. It just seems to be impossible that somewhere there isn't somebody
I tend to agree with you. The Galaxy is very very big you get asked me one question to finish up. What's the one question you got for me
Jack Dorsey.
Has a one-word Twitter bio.
And that one word is Bitcoin.
And he's also got ten billion dollars in cash and cash equivalents between Twitter and square.
And to my knowledge, none of it is invested in Bitcoin either square or Twitter. You want to help me try to persuade Jack to like, you know break off a small 500 million or billion dollars and go buy some Bitcoin because I know he loves the community and I know he's doing as much as he can to help but the single most useful thing he could do to hell is lead on the corporate treasury side.
He bought a billion dollars worth of bitcoin. What do you think happens the next day?
I think that he's thought about it would be my guess. My guess is that there are bigger problems that he perceives in terms of activist investors and kind of you know, he's always the joke and say show me another entrepreneur he's built to tens of billions of dollar market cap companies and is running them simultaneously.
Lee and yet somehow people still have a problem with the guy which is insane to
me at all he's an amazing guy and he's inspirational but it's not like he shirks controversy owner.
Look I absolutely think that again this is me speaking my opinion obviously. I've never talked to Jack about this. I don't have any inside information. I would guess that if it was his choice, he would absolutely do it if he kind of had Soul power. I think that
You know, you kind of pick your battles sometimes and my guess is that when Elliott management is a knocking on the door and basically got a Target on your back as the CEO the first thing you don't want to propose in the board meeting is hey, why don't we take five hundred million dollars and go buy Bitcoin, but at the same time doesn't mean that that wouldn't be the right thing to go do just you gotta pick your battles.
Sometimes it rain get the crypto Community to give him some air cover for go waging a charm offensive.
What we need is we need the Bitcoin Community to go like meme Elliott management to death and then they'll pack off maybe and leave them alone. So I don't know what we'll see. Look. It's I tend to think that there will be many more people who will follow this. I think you're right terms. It'll just take a little bit of time for them to kind of get geared up and do it. I don't know if people will do as much as you guys did on a percentage basis kind of out of the gate, right it feels like maybe people start with five ten percent just because humans are naturally
Just they lack conviction. They want to be conservative. They kind of feel like they're being prudent, you know, whatever. I tend to think actually the argument you laid out is not only conservative because you're actually protecting the cash, but it's also very prudent in the sense of kind of how you did, you know, 50% into Bitcoin 50% as a tender and kind of doubled up or kind of filled up with the rest of Bitcoin. And so we'll see what happens, but you know, if
No one has said it to you yet just were cheering yards to keep going because it's pretty incredible that they did this and I said it when we first put out the very first press release you guys bought the original Bitcoin purchase. I said to multiple people I said look this isn't somebody who doesn't understand what they're doing right is very clear in the language. You used in the press release excetera. This is a Bitcoin ER who is running this company and very much understands the macro-environment kind of there.
Your asset choices if you will and it's chosen Bitcoin for I think all of the reasons that Bitcoin Community is attracted to it. And so that you know for whatever reason came through pretty clearly to me in that and that press release so it was cool to see.
Yeah. Well I got I guess I would end just by saying that that I find the entire Bitcoin Community to be inspirational and I did note in our press release one of one of the key drivers of our belief and the success of this is the community
Those it's a pretty amazing group of people and and all of the thinking and all of the initiatives. I just find to be extraordinary and I think I think that we wouldn't be doing what we're doing without everybody that's ever passed through this podcast.
That means a lot. How can people find you on the internet or find out more about microstrategy.
Microstrategy is microstrategy.com Michael underscore sailor at Twitter.
You can probably Google me and you'll get every single one of my contacts if you want.
This is Michael. Thank you so much for doing this. This was fantastic and we will absolutely do this again at some point in the
future. Well, thanks for having me.
