Odd Lots - Michael Saylor, the CEO Who Turned a Software Company Into a Bitcoin Company

Episode Date: December 24, 2020

This past summer, the business intelligence software company MicroStrategy made waves when it put some of its extra cash into Bitcoin. Then, as Bitcoin ran up, it bought more, and the stock has now soared thanks to the bet. But what's the reasoning behind the move? We speak with MicroStrategy’s CEO, Michael Saylor, on why he thinks Bitcoin is the best reserve asset for any company.See omnystudio.com/listener for privacy information.

Thanks for listening to Oddlots. Follow the show on Amazon Music for more future episodes or just ask, Alexa, play the Oddlots podcast on Amazon Music. Hello and welcome to another episode of the Odd Lots podcast. I'm Joe Wisenthal. And I'm Tracy Allaway. So, Tracy, you know, there's still no Bitcoin ETF, as you know. I mean, for years, people have been trying to float one, still not one. But there are various publicly. listed instruments that have exposure to Bitcoin that in the meantime, people are buying and selling to, yeah, basically find a way to get exposure to the asset class or whatever you want to call it through a listed equity. Yeah, that's right. And I know we've been talking about the possibility of a Bitcoin ETF for many, many years now. It's kind of surprising that that hasn't happened just

yet. But you're right. There are a number of public companies that are now a play on Bitcoin, and they kind of range from the more, I guess you could say, outrageous or unusual to the more traditional. So at one end of the spectrum, you have a grayscale Bitcoin trust, which is sort of trying to replicate the ETF structure without explicitly being an ETF. And then at the other And you have, remember all those companies like Long Island iced tea that changed their name to include blockchain and just sort of jumped on the bandwagon. And those have been going up this year along with the Bitcoin price as well. And then of course you have everything in between. Right. It's exactly right. So some companies are very tangentially related to crypto or they're like, oh, we're suddenly a blockchain company, even though we used to sell iced tea. Or some companies, they're like, oh, we're like, oh, we're suddenly a blockchain company, even though we used to sell iced tea. Or some companies, they're like, oh, We bought some Bitcoin mining rigs and we're going to do something like that. So there is a range of exposures. But over the last several months, really since this summer, I'd say one company has sort of really jumped out from the rest of the pack in the degree to which people view it as kind of a Bitcoin play or a real sort of direct exposure to fluctuations in the coin itself.

Yeah, I think that's fair to say. And that company is, of course, micro strategy. We've seen them buy up a bunch of Bitcoin. So basically using their cash reserves to buy Bitcoin. So instead of holding a bunch of government bonds in their sort of corporate treasury function, they hold something like Bitcoin. Or instead of holding bonds and stocks and gold, they hold Bitcoin. And it's been a really interesting development because it's actually meant that the company's share price is basically tracking the

of crypto now. Yeah, exactly right. And it was a really well-time buy. I mean, I think it was like the middle of the summer. Maybe it was August, I think. They announced that they were going to buy some Bitcoin, a pretty good chunk of it. And then they announced that they're going to buy some more. They recently even sold a convertible note to buy more Bitcoin.

At the same time, the price of Bitcoin has skyrocketed over the last two or three months. shares of micro strategy have skyrocketed in a concert. And so they've really become the sort of the publicly listed Bitcoin exposed company, I guess you could say that people are talking about this year. And the company has already also become like legendary. All the Bitcoin, hardcore Bitcoin maximalist and fanboys love this company now because they see it as sort of paving the way and maybe leading to more companies having Bitcoin exposure. in their treasury. Yeah.

And we should note that micro strategy is also led by Michael Saylor, and he's become a big, big name in the Bitcoin community. I think Barron's called him Bitcoin's most important proselytizer. So that gives you some indication of the regard that he has within cryptocurrency. Exactly right. Every, all the Bitcoin people I follow on Twitter, absolutely love it. They love him, and I'm excited that Michael Saylor, the CEO and founder of Micro Strategy, is joining us today. So Michael, thank you very much for joining us.

Tracy, Joe, thanks for having me. Happy to be here. So what is Micro Strategy? I mean, I feel like a lot of people probably first heard about the company this summer when you announced that you were going to be putting some of your holdings into Bitcoin, but you've been around a long time. What is micro strategy? What does it do? What's the story? MicroStrategy is the world's largest publicly traded business intelligence software company.

We got started in 1989, and in the early 90s, we invented an approach for doing analytics against large relational databases. So if you had billions of rows of data, you're McDonald's or your target, and you needed to extract insight like market basket analysis or marketing uplift, or if you're a big bank and you wanted to do credit analytics against a portfolio of hundreds of millions of accounts, you needed to do complicated analytics on a large relational database. Nobody in the world knew how to do it. And we invented an approach and created this software platform to build those apps. And that was our early breakthrough. And we grew on that platform. We came public in 98.

We competed against reporting companies like Crystal and business objects and OLAP companies like Hyperion and S-Base. There are probably 100 different business intelligence companies that came and went. Some went out of business. Many of them merged. Many were amalgamated. Eventually, our largest competitors were merged into or bought up by IBM, SAP, Salesforce, Oracle. And today, we're the Pure Play Business Intelligence Company, and we compete against business intelligence divisions at IBM and Oracle and SAP and the like. And so it's enterprise software.

We sell it everywhere in the world. We have about 4,000 very large customers, big hotel chains, airlines, governments, retailers, big tech companies, most of the major banks. and we're about 2,000 people in 27 countries. That's what we do. So unlike many of your competitors, you came through the tech bubble intact. And as you mentioned, you've grown since then. What inspired you to buy Bitcoin rather suddenly? Like what was the thought process that went into it?

Because as Joe and I mentioned, it is quite unusual to see a company buying. Bitcoin in this way? Well, I mean, we ran a very responsible business. We were profitable. We generate a lot of cash. We spent hundreds of millions of dollars over the past few years buying our stock back. And we came into the year 2020 with about $500 million in excess cash in our treasury. And we kept it for a rainy day. We thought, let's have no debt. Let's save the cash. let's run the business. And we were running a business where we were hiring people and spending heavily on sales and marketing and services activities. And then March hit. And when the pandemic, and by way, we didn't think much about my view of cash was I invested in short-term treasuries.

And by way, those short-term treasuries yielded 5% interest in 2010. And then they took out of 4% Ancient history. I'm old enough to remember when you could get five and a half percent interest on overnight money, Joe. Right? You know, so I watched that interest rate whittled down until it became nearly nothing, you know, down to like 20 basis points or something. And I kind of steeled myself just to accept that.

And then we started thinking, well, what are we going to do with the money? But then March came and COVID hit. And there were lockdowns. And you couldn't fly. go to hotel and all of our marketing events got canceled and all the traditional ways of doing things changed. And we encountered what I'll call a virtual wave. In essence, all of our sales and marketing and services that could be virtualized over Zoom or turned into streaming videos became virtualized. And first, you know, first we were, you know, unhappy and mortified, right? Because

everybody's mortified in March, what's going to happen? And then we realized that our value proposition was intact. Everybody wanted our software. We only do business with, you know, mega corporations and mega governments. So they're all fine. They wanted the software more than ever. But the cost of doing business decreased because now, even if we wanted to spend millions of dollars on marketing events, we couldn't. And at that point, we realized that, A, we didn't really need the $500 million to sell and market and grow the business because you couldn't throw money at the problem anymore. You were just going to post videos and you're going to zoom everywhere at the speed of light. And then B, we realized that we were going to generate a lot more cash in the future than we had

in the past because we had $30 or $40 million of costs fall out of our business. And so all of a sudden we go from thinking, well, we've got a good treasury. It's responsible to keep the cash and save it for a rainy day in case we need to spend it. We have more money than we need. Our stock is in the tank. Our investors don't value the cash. At one point, we were valued at one times revenue plus the cash or two times revenue and the cash was worth nothing.

And the investors literally told me to my face. They said, we don't value the money. money is worth anything. And so that's one dilemma. And the other dilemma is we're going to generate 500 million more dollars than we thought we were going to generate. And then there's a third, and that's not a dilemma. That's a, that's a development because of the virtual wave. And then we watched as the Federal Reserve and the EU Central Bank started printing money, and we realized that there was massive, rampant hyperinflation in assets. There's no inflation in consumer goods that do not include food and energy and assets.

But like, there's no inflation in YouTube streaming videos and Netflix. You're never going to get inflation in that. You got inflation in the 10-year bond, the 30-year bond, Hampton's real estate, Apple shares doubled, even though the EPS was constant. And all the assets and the energy rich products inflated at a rapid rate. And there was a case-shaped recovery. And that's when I started looking at the world differently. And what I realized was the money supply, the M2 money supply that had been expanding at about 5% a year for the past decade, was now expanding 24% a year.

and any reasonable person would expect that the money supply is going to expand by 10 to 15% a year every year for the next four to five years. And then I realize we have rampant asset inflation. And another way to say that is the purchasing power of the cash is being degraded. The Federal Reserve is devaluing the currency at 15% a year. And so what that means is if you're sitting, on cash, you can expect to lose half your purchasing power in 36 to 48 months, guaranteed. And so I went from thinking, I needed the cash, and I might get a yield, and maybe there's a 2% inflation rate to, the real inflation rate is like been running 6%, but now it's about to run 15%.

And so my cash is a melting ice cube, and it's a really a violation of my fiduciary duties to watch the cash burn away. Like if someone came into your backyard and started stealing 15% of your money every year, I mean, how many years would you wait before you took cash out of the backyard? So that's the dilemma. And that's where we were at in March when we went down this journey. Well, yeah. So you made the decision to put a big chunk of that into Bitcoin. why not do another possibility of, you know, like a special one-time dividend or something like that so that the shareholders could, in theory, allocate the cash however they want it? That is a good question.

First of all, our choices were we could just give it all back to the shareholders, right? We could dividend it out or do a massive stock buyback. Or the second choice is we could do a big acquisition of another company. which a lot of times people do to try to grow our top line. And the third choice is we could invest it in something liquid as a treasury asset, which was going to appreciate in price faster than the rate at which the central bank printed money. So those are the three logical choices. So what did we do?

Well, we actually went right down the middle. What's the problem with just giving all the money back? Well, Joe, if I give all the money back, I decapitalized the company. and then if we have a negative event, we're insolvent. Right. Like, why doesn't Harvard give all the money back of the endowment, right? And why don't you take all the money in your bank account and give it to the needy, right? The answer is because Harvard wants an endowment and because you want to have money in case your family needs it. And why doesn't a company like give all of its money back to its shareholders? Because they might

actually have to make good on a contract with a vendor or pay an employee. Or like if I, you know, all my customers are expecting me to be in business for the next 20 years. So if I drain my treasury, they might lose confidence in me. So, you know, giving it all back is decapitalizing the business and you might as well drain the endowment of every institution on earth. It doesn't make a lot of sense to do that completely. Having said that, what we actually decided to do was embark on a program where we agreed to buy back, to spend half of it to buy back stock and the other half to invest in alternative assets. And we decided we would go look for some kind of inflation hedge. And we put this out on the wire. We announced it to our shareholders because we wanted them to be

able to digest that news. And then we went on a pretty intense search. And we considered everything we might invest in, our endowment in, our treasury in, and we considered buying real estate, and we considered buying bonds, and we considered buying stocks. And the problem is, you can't buy any other currency because they're all debasing as fast as the dollar or faster against hard assets. You can't buy bonds because no bond is going to yield a coupon of more than 15% a year. and the only way your bond's going to hold its value is if it's not yielding 15% interest, is if the interest rates keep clicking down to go negative. And so if you don't believe interest rates are going negative, bonds absolutely won't hold their value.

And it looks like bonds got to the end of the line when the 30 year got the 72 basis points or the 10 years got the 50 basis points or whatever they got to. So bonds don't work. Then real estate doesn't work because commercial real estate doesn't work because commercial real estate trades like a bond and how are you going to grow your rents by 15%. The cost of capital literally went from 5% to 15%. So real estate's not going to hold his value, nor is it going to have a cash yield of 15%. And by way, half of it's impaired. And I mean, how do you pick unimpaired real estate, you know, going through the time of COVID? So now you've got to go to stocks. You've got to buy a

portfolio of stocks. Well, stocks are fiat instruments that are valued based upon the discounted value of the cash flows over time. If the monetary supply is expanding at 5% a year, then Google and Facebook and Amazon work because they're growing 20% a year. But if you've got a business that's only growing 5% a year, you have to leverage up. You have to borrow money, short the dollar, buy your stock back to leverage up your cash flow per share in order to beat the hurdle rate. That's almost possible at 5% hurdle rate. It's impossible at 15% hurdle rate for just about anybody. And again, the problem is the, you know, I can leverage up a corporation and they've been leveraging up, but with interest rates pegged at zero or near zero, you can't go negative.

So it's the end of the line for leverage equity. So we dismissed all three of those. Then we went to gold. And the problem with gold is that gold miners produce 2% more gold every year. And gold is centrally controlled and corruptible. And then people print gold derivatives that aren't fully backed by the gold. And so you can expect a 2 to 4% degradation of gold over time. Over 100 years, that means you're going to lose 90% of your value if you invest in gold.

Over 100 years, you're going to lose 99% of your value if you invest in the U.S. dollar increasing at 5% or expanding at 5% a year. And, of course, the real likelihood is you'll lose 99.9% of your value because most fiat currencies collapse over 100 years. So that took us to crypto. And when we got to crypto, we looked at 6,500 cryptos, and we found that Bitcoin is the dominant crypto asset network. It's 25 times bigger than the next closest thing that looks like it.

And it had more than $200 billion of monetary energy in it. Bitcoin is in essence, Facebook for money or Google for money. And this is the nuance most people haven't realized. yet? What you have is a dominant digital network that's been engineered to host a safe haven treasury reserve asset superior to gold in all respects. It's pharmaceutical grade gold. If God defined gold as a treasury reserve asset to hold for a hundred years, he would create 21 million gold coins. He'd make it impossible to make any more. He would make it possible to audit it anywhere on earth from any node every 10 minutes. He would make it unhackable and he would make it an open

architecture that's programmable so you could build it into an iPhone or Square or PayPal or any other exchange without permission. And he would distribute it everywhere on earth with these with these crypto-Shaw-256 miners so that no company controls it, no CEO controls it, no country controls it, no regulator controls it. So that's kind of the perfect synthetic safe haven asset, and that's what we found in our search. On April 4, 23, around 2 in the morning, a man was found stabbed multiple times on a sidewalk in downtown San Francisco.

Hey, who did this to you? What happened next turned the story into a political firestorm. Reports have identified the victim as Bob Lee, the founder of Cash App. From Bloomberg Podcasts, this is Foundering, The Killing of Bob Lee, beginning April 16. So you touched on this earlier, but corporate treasuries are generally supposed to be full of liquid assets, because as you mentioned, you don't know when the company might experience some sort of emergency event where it actually needs cash on hand. How liquid is Bitcoin, and also how liquid is Bitcoin and also,

how did you go about buying it? Because, again, as we mentioned, you built up a pretty big position. So I'm curious, like buying it up, what was that like? And then in your mind, what would selling it all in an emergency scenario be like? Well, I mean, it's a good point. Bitcoin is the best Treasury Reserve asset on Earth for anybody at our scale. It might not be the ideal asset for someone that needs to store $100 billion at a shot, like Apple or maybe a nation state. But for a billion dollar company or a multi-billion dollar company where you're going to move 10 to 100 million to hundreds of millions at a time, it's ideal. How liquid is it? It trades 24-7, 365 every minute in every country and every language and nearly every currency pair. Over Thanksgiving, Apple stock, Amazon stock, most, all the U.S. capital markets shut down at 4 p.m. on Wednesday.

They traded 9.30 a.m. to 1 p.m. on Friday. They didn't reopen again until 9.30 a.m. the following Monday. That means over 113.5 hours, U.S. capital markets functioned three and a half hours. 3.1% of the time was the banking and the capital market system working for treasury. Bitcoin was functioning all 113.5 hours trading mark to market, every country, every currency. It's really, it is a global asset of choice if what you wanted was transparency, mark to market, and liquidity. On average, it normally trades about $2 billion a day. Sometimes it trades a bit harder than that, $3 billion.

You could reasonably liquidate $100 million over a few hours on a Saturday afternoon. During weekdays, the volume increases, and you could probably do it faster. So in that size or scale, it's fine. I mean, again, if you wanted to liquidate 50 billion, billion worth of stuff. It's a little bit too small because the network is about $350 billion right now liquidity. But you put your finger on an important point, which is the value of Bitcoin is to serve up liquidity. As the price goes up, the liquidity goes up, the value, the use case goes up, the value and use goes up. When Bitcoin goes up by a factor of 10,

it'll be 10 times better. And when it goes up by 100, it'll be 100 times better. And so you have a positive feedback loop as a treasury asset. And what you see right now is people are starting to adopt it and plug their treasuries into this network. It starts with small mid-sized, then high-net worth individuals, small mid-sized companies, and it will roll to larger and larger institutions over time as people start to discover it and as the network is bigger. Let me ask you a question. I want to sort of seg to the sort of bigger strategy in a second, but I want to press you on one thing. And you're talking about 15% inflation or 15% degradation of the dollar value.

But just to be clear, I mean, your costs, I mean, you run a business. And so you have salary and computer, you know, technological infrastructure spend and rent for your offices, travel when travel exists, those costs haven't been surging 15% a year. So when you say that it's not actually consumption, right? You're talking about financial assets rising, not actually purchasing power of day-to-day business needs. You know, I'm going to be fairly brutal about this. I'm going to say that everybody on earth, all $300 trillion worth of investors, are going to

lose half their wealth in the next 48 months due to the cost. currency collapse. And that's in the, that's in the Western world and U.S. and Europe. It's much worse. It's 90% loss if you go to Argentina, Brazil, Venezuela, Nigeria, South Africa, Turkey, Lebanon, and the like. There's a billion people where the currency is literally collapsing. Everybody in the Western world is just going to lose half their wealth if they don't start paying attention. Now, let me come. I just want to say now to our producer, we are definitely rebooking Michael, for December 15th, the year 2022 to talk about that. All right, so keep going, keep going. But I just want to make sure that we follow up in 48 in a couple of years. Okay. I'm going to make another important point.

Inflation is an irrelevant metric as defined by the central banks. Central banks in the Fed and most of the mainstream media refers to inflation incessantly and laments the lack of inflation. And their definition of inflation is a market basket of goods and services that do not include the highly volatile food and energy. And then nobody ever questions that in mainstream media, or at least they don't really think hard about it. But first of all, there is no planet where anybody can live without food and energy. And so tracking a metric that does not track food and energy is entertainment, but irrelevant when you're contemplating the future of the economy or an investment. My second point, If you added food and energy such that you did not starve to death, it still wouldn't be the

proper metric to track if you're actually an investor. The appropriate metric to track would be cost to capital or asset inflation, which is the rate at which a market basket of assets that are desirable by rational people, or the rate at which goods and services that are desirable by rational people go up in price. And if you were to actually put into that basket, things like early retirement or Social Security, how about a stipend to live, you know, for the rest of your life on 50,000 a year? That used to cost a million dollars when bonds yielded 5%. And then it cost $2 million when bonds yielded 2.5%. And today, that would cost you $4 or $5 million when bonds are yielding. It would cost you $6 million dollars with the 10-year bond yielding 90 basis points.

So there's definitely rampant hyperinflation in annuities, and there's hyperinflation in other assets. If you look over the last decade, the cost of capital is about 5.5%. That's the M2 money supply expansion. And it turns out that, you know, the S&P was appreciating at about 7 to 8%. And you will look and see the cost. of the cost of buying labor-intensive, highly desirable things people want is going up faster than one or two percent. For example, none of my employees are willing to keep working for me

if their salaries increase by 1% a year. On average, it's about a 7% increase in cost to keep talented people from quitting your company. And so if you're tracking technical labor, that's about the rate at which the prices go up. If you look at the Chapwood Index, prices go up 10% across the board on desirable things. Real estate in the Hamptons went up 49% in 16 weeks this year, 16 weeks. Look at any desirable real estate, look at any scarce asset that the Fed can't print. Anything that is not, if it's energy intensive, if it's labor intensive, or if it's a true financial instrument, it's inflating somewhere in the last decade easily at 7% a year or so. And the problem is it's just doubled or tripled because the Fed is pumping so much more

currency into the economy. If you double the amount of currency and you keep the goods and services constant, ergo it goes to reason that things that are scarce and desirable will double in price. The things that won't double in price are YouTube streaming videos, information rich things with the variable cost of electricity, or one to five percent variable cost. or maybe if you've got a high fixed cost, like I spend $2 billion to design the iPhone 12 and I stamp out, you know, 100 million of them. The fixed costs are high, the variable cost are low. You typically don't track inflation on those things. You're going to track inflation on energy-intensive goods and services.

And where you're going to see the real inflation is you're going to see it on scarce assets. For example, Bitcoin is up 170. percent in 12 months. Okay, let that sink in. It's the ultimate scarce asset. Gold is up 25%. The S&P is up 16%. Apple stock is doubled, and yet EPS of Apple is not doubled.

The P to E ratios are blowing out. If you calculate the number of hours, you have to work, the amount of labor you have to actually perform in order to buy a share of the S&P 500, it's doubling. If you calculate the number of hours, you have to work to buy real estate or residential real estate in Tokyo since the central bank started printing money, very rapidly you realize that ordinary people can't ever make enough to buy these things. So you won't get any inflation on low variable cost, information-rich items.

In fact, you will get deflation. you're going to get inflation and assets, and that's the basis of the K-shaped recovery. So let's come back to my fiduciary responsibility as a CEO. The answer is, I have $500 million. It'll go to zero and be worth nothing and buy nothing, or I can find a way to invest it in something that's going to appreciate against the dollar. And if it appreciates more than 15% against the dollar, then my purchasing power will stay at parity. If it appreciates faster than that, then my purchasing power will outstrip the

dollar and I will appreciate and therefore I will create shareholder value. So this entire exercise is how do I actually grow my balance sheet or grow my cash flows faster than the rate at which the money supply is expanding? Amazon, Facebook, and Google, this is why all those stocks perform so well in the last decade. Their top lines growing 20%. Their cash flows are growing 20%. The Fed is printing money at 5% a year. They're accreting at 15% more than the risk-free cost to capital and they're effectively monopolies. And so if you're holding something like that, you're good. The problem is that, you know, by the Fed, if they triple the cost to capital, 95% of the companies can't beat that. And if you want to say, you want to say, you know, the Fed, if they triple the cost to capital, you can't beat that.

And if you want to see it illustrated in a more brutal fashion, go imagine yourself starting a company in Argentina where the peso traded a dollar to a peso. Then it went 10 pesos to the dollar. Then it went 20 pesos to the dollar. We rolled into this year, it slid to 40 pesos to the dollar. Now it's 80 pesos to the dollar. And by the way, the black market rate is 140 pesos to the dollar. You know, there's no way you can grow a company fast enough. And by the way, it's 140 pesos to the dollar and the dollar is only worth half as much against scarce assets.

The same story is true in Mexico. You can't, Mexico went from 10 pesos to the dollar to 20 pesos to the dollar. The dollar lost half of its asset value against scarce assets. So you lost 75% of your wealth. I want to jump in here because you mentioned fiduciary due to. and you were going to get to it earlier, and I think this is an important point. But what did your discussions with investors actually look like? Because I imagine for the vast majority of them, they put their money in a business intelligence

firm, a software firm. They're not necessarily expecting that firm to go out and buy Bitcoin in this way. That's true. So let's put the dilemma here. I have a company that may be able to grow 5% a year, its cash flow. it can generate $50 to $75 million in cash flow. It's got $500 million in cash. The U.S. Federal Reserve is debasing my treasury at the same rate as my company is accreting cash flow.

So in essence, all of the work of the company is for naught. And then they triple the cost of capital. So it's impossible, reasonably speaking, to grow the cash flow. 20% a year without taking excessive risk in a competitive marketplace. So we're struck with a dilemma. What are my choices? Well, I can attempt to grow faster than the rate at which the Fed prints money, and I will probably fail, and they'll suffocate me to death or choke me to death.

Or I can simply invest in a monetary network that's appreciating it 100% or more against the dollar, and go about my business. And so those are the two choices. One of them, and by this is the choice that every business faces, and this is the choice that every individual faces. And you can see one of them is like you continue to do your work in Venezuela, working harder as the currency collapses or in Argentina. The other choice is you invest in a treasury asset that's going to go up 100% a year.

It's easy to say, well, why don't you just get? give the money back to the investors. Well, the answer is we're still going to suffocate. We're still going to choke to death. You've got to consider everybody on the planet is going to freeze to death or suffocate if we keep sucking the oxygen out of the room. As we suck the monetary value out of the currency, it's creating a life or death situation for everybody. Now, let me come back to your point, though, because you asked me a question, I want to answer it. What I did was I went to the investors and I said, we believe we have to have a treasury. We're going to invest it in some asset that will actually appreciate faster than the rate of the currency collapse, the rate of collapse of the dollar inflation rate, the asset inflation rate.

And then I also said, and we're going to start buying the stock back. One week later, we tendered for $250 million worth of stock. Our stock was trading about 120. And we did a Dutch auction and we offered to buy back $250 million worth of the stock at a premium up to 140. And so we also then announced we bought $250 million worth of Bitcoin. Why? Because it's the best performing asset of the decade, the last five years, the last two years, the last one year, the last three months. It's up 4,100 percent in five years.

It's up 174% in one year because it's the best Treasury Reserve asset that you could buy. So that's why we did that. We tendered. We waited 20 days. The stock traded up first below the tender, then above the tender price. Anybody that didn't like Bitcoin was able to sell their stock between 140 and 150 or 155. They all got a premium if they didn't want to take that risk. then some people tendered their stock. We had $60 million, or $60 million tendered.

We bought all that stock. And then the stock of the company started trading north of the tender price because we had rotated our shareholder base from people that had invested in an enterprise software company to people that understood that it was wise for us to invest our treasury in an asset like Bitcoin. And they were comfortable with it. And from their The stock traded to 160, 180, 200, 220, 250, 250, 280, 300, and above 300, because there are a lot of people that agree with me. And they like the idea of investing, by way, would you rather invest in a company that's growing its cash flows 100% a year or growing its cash flows 5% a year? because what we did was invest a bunch of cash in an asset that has traditionally over the last decade grown faster than 100% a year. You can see that's what we did and that was the investor

base we had when we finished that exercise. You know, absolutely. So looking at your chart, I mean, obviously the stock has done phenomenally well, you know, as you mentioned, you know, going back to this in July, it was just over $100 a share, $120 a share. It recently peaked around 340 a share. It's come back a little bit. But how does your, you have over 2,000 employees who up until a few months ago were working in for a business intelligence company, a sort of standard cloud software company, who now have in some sense their fate, the fates of these over 2,000 people tied in what is kind of a sort of a levered play on Bitcoin. And so I'm curious, you know, it's worked out well because Bitcoin has really rallied over the last few months.

What are the internal communications like, A, sort of all the employees sort of realizing that the fortunes of their company is A tied to Bitcoin. And two, you know, you obviously, as the CEO, you spend a lot of time focus on Bitcoin. You talk about it on Twitter. You have some amazing sort of analogies that you use, I think called it the hive or something like that, the electric hive. of how do the, what's the internal feeling like all these people suddenly their careers associated with a levered Bitcoin play all of a sudden? Let's start with one observation. It's not a levered Bitcoin play until last week. Last week we did a convertible debt offering, which added some leverage to it. It was an unleveraged treasury decision until last week. And by the way, it's the same reaction your family would have. have if they were all going bankrupt and going to starve to death because the currency was collapsing and then used in Argentina or Nigeria or Brazil, or even in the U.S., if your family said,

we're going to lose half our stuff and be bankrupt. And if you said, I invested it in Bitcoin, and by the way, we just doubled our money and now we're rich. Like, how would your family react? It's like, we had $500 million that was going to zero. And now we have 800 million worth of Bitcoin, which has been appreciating 100% a year. So first of all, there's a collective sigh of relief. Now we have an endowment, which is actually appreciating faster than the rate of currency collapse. So that's a good thing.

Second, the stock's up. A lot of them are shareholders. A lot of them have options. Of course, they're delighted about that. Third, you know, the company had a massive jolt of electricity. shot into it. Bitcoin is hope. If you're living in a country, Nigeria, Argentina, Brazil, wherever, and the currency is collapsing and you're going bankrupt and you're going to starve to death, you're hopeless. And so the ability to actually buy a liquid asset, which is going to

appreciate and protect you against a currency collapse, it's like getting on an arc, right? We say Bitcoin is like an arc against, you know, to avoid. drowning in a currency flood, right? It's like, wouldn't you like a life raft? I mean, it's pretty motivational to know you're not going to drown when the macro economy is collapsing, you know, and by you might, you know, there's a certain set of people that own stocks in this country and they think it's all fine, but there's a lot of people that aren't really owning all those assets that have bounced into K-shaped recovery, and it's not fine for them, right? There's a quite a macroeconomic dilemma right now around the world. And 7.8 billion people have collapsing currencies.

The best are collapsing at 10 to 15% a year. The worst are collapsing faster. Every investor has a problem. So my employees, the employees are happy. Stocks up. The awareness of the company is up by a factor of 10,000, right? I mean, everybody's aware of what we're doing. We've had a million, a million, millions of hours of a video on YouTube. People know the company. They know about micro-strategy business intelligence. Our customers like it. By the way, every company with the treasury has the same problem, guys.

Like, you can paint me as like this crazy guy taking a risk. But on the other hand, it's not a risk. If I told you you're going to freeze the death in 48 months, it's not a risk. to step out of your house and try something new. And so every company that we do business with is thinking about these things. So we've actually taken a leadership position with our customers, our partners, our vendors, our employees. The brand has been accreted.

Everybody knows more about the brand. They know more about the stock. They know more about the product. And everybody, you know, how do you think employees at Tesla feel? They like working at Tesla. They like working on a, you know, you know, for a company that's doing progressive things that are going to improve the planet, everybody likes the mission.

And so micro strategy was a very focused business intelligence company in February. We were faced with a challenge. Our challenge is we could either basically decapitalize the company and struggle against a currency collapse, or we could craft ourselves a Bitcoin sale, turn our ship into the wind, catch the wind, and start sailing. And so what we did is a transformation on the balance sheet of the company in order to, instead of suffering from the devaluation of the currency, we wanted to benefit from the devaluation of the currency. And that's been very motivational for everybody. it's providing us with lots of opportunities on the business side too. So I think it's generally

been quite positively received. I'm June Grasso, inviting you to join me for the Bloomberg Law podcast. Every weekday, we help you make sense of the legal stories that shape the nation and the world. Listen for complete analysis of the biggest court cases, the latest actions from Congress and regulators, and the legal moves driving the markets. From corporate law to constitutional law and from state courts to the Supreme Court. At Bloomberg Law, we go beyond the day's headlines. We speak with top attorneys, judges, scholars, and policy experts to break down what the rulings really mean. We do this every weekday, then bring you the best conversations in our daily podcast. Search for Bloomberg Law on YouTube, Apple, Spotify, or anywhere else you

listen. On the East Coast, listen as you start your day. And on the West Coast, catch up in the evening. That's the Bloomberg Law podcast with me, June Grosso. Subscribe today wherever you get your podcast. So we mentioned at the outset of this conversation that somewhat surprisingly there isn't a Bitcoin ETF in existence just yet. Some people have been saying that your company now, given the Bitcoin holding, resembles an ETF on Bitcoin, or at least a play on on Bitcoin. What do you say in response? Because I saw you tweeting a little bit about this recently, but what's your response to people who say that Microstrategie is now just a Bitcoin ETF? We're not a Bitcoin ETF. An ETF is an investment company per the 40 Securities Act.

And that means it has to hold securities. And it's a company that's fashioned to hold securities like stocks or bonds. First of all, we're not an investment company. We're an operating company. Second of all, Bitcoin is not a security. I mean, Jay Clayton just went on TV two weeks ago and was very emphatic about that. Bitcoin is property. It's like owning land in Texas. It's property. You can own land without being an ETF. So we have a treasury. We could own cash. We chose to actually invest our treasury and in some property that we thought was scarce, that would appreciate faster than the rate of monetary inflation. So that does mean that if you invest in micro strategy, you have some exposure to Bitcoin.

But again, we're not an ETF, right? I mean, those are very special purpose vehicles. People are, you know, you're buying gold shares of IAU and you're hoping that the company will balance, you know, the assets under management to the share account. And we're not engaged at anything like that. Is there any regulatory limit like to how much you could lever up do sort of, does there get to be a point where the company lawyers get concerned that maybe a regulator could view you as an ETP or an ETN or an ETF that's not filed properly? Like, does that potentially create any risks? No, I tweeted this out and you can see my tweets. I wanted to

clarify it. It's quite clear, you know, an ETP and an ETF are investment companies. They're very special vehicles defined precisely by the Securities Act of 40. Bitcoin is not a security, nor is it a commodity under the definition of the ETP. It's just property. And you can own as much of property as you want as an operating company. You know, you don't trip these things until you're owning securities. Security is a share of stock or a bond or something. So that's a different thing. If you wanted to, if you wanted to review all the literature on it, you know, I could send you some stuff. But I think if you do the digging, you'll find it's quite black and white, right? we're not an ETF, we're not an ETP.

There's no limit, right? I mean, people seem to think like I'm getting away with something because what? Because I'm not losing money? Like, because I happen to own a lot of assets, right? I mean, it's a company that owns assets. You know, presumably, if we owned a million acres of land in Texas, that wouldn't make us an ETF or an ATP either, right? We would just have assets on the balance sheet.

This is a piece of property that our treasury is invested in. So one thing I'm really curious about, and I remember there was a lot of discussion about this among retail investors in Bitcoin when we had some of the earlier pops in price. But how do you actually go about paying taxes on Bitcoin gains? because I imagine for a company, it might be different or it might be even more difficult to calculate that tax rate. Bitcoin is property. So you buy it. There is no tax on it until you sell it.

And if you sell it, you pay the short term or long term capital gains tax depending upon the holding period. So for a treasury asset like this, our use case is we simply buy it. We put it in cold storage and we hold it. Likely forever, right? I mean, highly likely we never sell it. This is the ultimate long duration safe haven treasury reserve asset. Why are you buying it?

You're buying it to hold for 100 years. Now, under what circumstances would you sell it? Probably never because you don't want to generate a taxable event. I mean, people hold a block of real estate in New York City for 100 years in their family and they never sell it, right? What if you needed cash? If you needed cash, you borrow against it, right? I mean, it's just like if I have a billion dollars of assets and I needed $20 million, I would go and borrow against the asset, you know, at the best rate that I could get like any other asset.

And there's no tax on a borrowing. It's just a loan, right? So if you were to sell it, you would pay capital gains tax based on the period, just like another asset. but otherwise, you know, it just sits on your balance sheet. So you referenced this already, but you recently went to market with a convertible debt offering explicitly to raise cash and to buy more Bitcoin. So A, I'm curious what that conversation was like actually getting people to lend you money to buy Bitcoin. But more importantly, can you just talk a little bit about the mechanics of the trade? because how smooth it was to buy several hundred million dollars of Bitcoin without front-running

yourself by making the announcement without creating too much of a ripple in the price. How sophisticated is the trading aspect of it or the acquisition so that you're not driving the price up like crazy as you move cash into Bitcoin? Okay, so if you want to buy Bitcoin and if you want to buy it in size like $20, $20, $30 million, And you would line up an institutional broker, and there are a bunch of good institutional brokerages that you could go to. And you would do your diligence and pick the one you like. Generally, they all have trading algorithms, and you can have a computer sit there and trade every three seconds for you for two days in a row. You'll just put a time-weighted algorithm out there, and it'll just sit, and it'll run across every market 24-7, 365.

subject to your order. So it's programmatic acquisition. There are other ways to buy and sell it, but the logical way, the way that Square did it, the way that we did it, is just on a T-WAP algorithm over time. And that's not that hard. You just have to choose your broker that you're going to use. By the way, Square and PayPal are using something similar to that to sell Bitcoin to people to use Square Cash or PayPal's mobile wallet, and they're buying billions of dollars of it, I think square about $1.7 billion in the last quarter, so they're buying $100 million a week or $200 million a week of this stuff, and they're just running it via computer algorithms. So that's not terribly difficult. With regard to the second question, there are different pools of capital. So one

pool of capital are progressive, forward-thinking companies and high-net-worth individuals, and family offices and hedge funds that want to buy Bitcoin directly. And so they would go and set up those custodian and institutional relationships, you know, with Nighting or Coinbase or Genesis or gray scale, and they would buy it. They would either buy the underlying asset or they would buy a fund like grayscale and buy into the fund. And they have those choices. The second pool of capital are people.

that have just, you know, raise money to invest in, in U.S. equities or equities in general, right? They can buy a NASDAQ or a nice listed stock. They can't buy Bitcoin. It's not in their charter. Their limited partners would never allow them. They can't buy bonds. They can buy stocks. Sometimes they can only buy tech stocks, right? I mean, or whatever. So there's a lot of pool of capital there. For those people, they can buy MSTR, right? So our company is one thing they can buy. They, you know, in theory, they could also buy GBTC, right? They could buy the gray scale thing. They might buy as other PayPal and Square, people have been buying them.

PayPal stock traded up after they announced their Bitcoin strategy, for example. So there are some companies that are on the Bitcoin network, right? Bitcoin is a monetary network. You can plug into it. We plugged in our treasury to it. But Square and PayPal plugged in their mobile apps to it. and then Square plugged in 50 million of their treasury to it. Guggenheim, you know, they plugged in their, you know, part of their asset fund to it.

So that's one way you can plug into it. And there are a few publicly traded companies that are plugging in the network right now. And I think that'll grow over time. Now let's go to converts and the bond market. Well, there's a lot of funds that raise convert bonds. They're either convertible arbitrage. and they exist to arbitrage convertible debt versus equity, and that's their strategy. And that's all they do. And they're good at it, and they have models. And there are other people

that have convert long funds. It's like, we will invest in a company, but we want to buy the convert. We don't buy the underlying common. Three types of volatility, right, and risk. I can buy the Bitcoin, but that's hard to buy, and I've got to change my charter. And I can. I can, got security issues. How do I secure it in the custodian? And I got to work through that issue. We figured all that out. There's another set of companies. They're going to buy the equity, but the equity might go up. The equity might go down. That's another risk-reward idea. And then convert. Well, maybe I go convert long and like I buy the convertible bond. like if you were to buy the micro strategy convertible bond, you have a bond with the security

of an enterprise software company with reliable cash flows, okay, and a long 10-year history. So we, in essence, borrowed against an enterprise software company that's stable, has good cash flow, that's low growth. And we then also had $800 million of extra liquidity in the form of big. coin and cash. So someone wants to loan us $400 million and we've got $800 million liquidity, that would be a loan to value of 33% against our liquid assets, plus we're going to generate $400 million in cash flow over time. So that's the second credit benefit. And then the third is you have first lien against an entire software company with no other debt on it. Right. So if you're

a bondholder, you're thinking, okay, that's three forms of downside protection. And then you're upside is the company makes an accretive investment. If I borrow money at 1% and I invest in something that yields 100% or 10% or 20% right is accretive, that's good. Or maybe I get benefit in MSTR stock because people like the stock better because we become even more prominent in the Bitcoin world because we have more exposure. If you liked Bitcoin before, now we're going to have double that exposure or 70% more, whatever the number is, depending on what we buy. And then the third is we're carving a channel between the convertible debt market and the Bitcoin market. This is a Bitcoin convert, which means that's accretive to Bitcoin.

We're making Bitcoin an investment-grade asset. If you liked Bitcoin, by the way, you could buy a convertible bond where the downside is protected by an enterprise software company and just have the upside. Right? Like, you know, under certain circumstances, I joked. I said, you know, guys, if I was on the other side of the table, I'd buy the entire thing. I would club everybody over the head and take it because where do you get to buy Bitcoin and have downside protection at the same time? Now, that's the convert longs. If you're a convertible arbitrage player, what they're doing is they simply want to buy the convert and then they want to short the common. And as long as the common stock has volatility and it goes up and down, they make money. That's their strategy. They're not expressing a short or a long sentiment. They're just arbitraging the volatility against the bond. So they need a bond to arbitrage against the stock. And now guess what?

How do arbitrageters make the most money? They need volatility. What creates volatility, Bitcoin? Okay, so if you plug a high volatility asset, and if you're going to say, we hate Bitcoin, it's highly volatile, well, tell me who in the world wants volatility more than an, a bond arbitrager, right? That's actually a volatility engine for them.

So what we did was we went to the market and we offered, we offered investors in common stock, a company which had Bitcoin exposure, you know, after going through our tender offer and after all these announcements. And we were able to attract new capital that believed in Bitcoin and liked that idea. And then we went to the debt market and we offered the debt markets an instrument and convertible debt that offered them exposure to Bitcoin and the creditworthiness of a responsibly run enterprise software company. And we were rewarded with an oversubscription. We were going to raise 400 million. We had massive demand.

And so we upsized the deal to 550 million and we had a green shoe. And then we executed the green shoe the next day. and it became a $650 million deal because this is the only convertible debt instrument in the market, in the world, where you could actually have the upside of Bitcoin, the volatility of Bitcoin, and the downside protection of a credit-worthy company

that's got like double or triple collateral coverage. And so, like, why wouldn't you like that deal? I mean, people say, they're like, well, who would loan your money at $75? basis points because that was the coupon. And the answer is, well, it's got great volatility. It's got a, it's got warrants with great upside opportunity. It's got good downside protection. And what are their choices? Can I jump in here and ask, because we've been talking for, I think, a little over an hour now, and we've been entirely focused on Bitcoin.

I'm curious, how do you feel about other cryptocurrencies and would you consider an investment in non-Bitcoin, something else? Look, I think Bitcoin is the investment-grade, long-duration, safe haven asset. It's the best purest synthetic treasury asset invented in the history of the world. Now, what does it take for it to be that good? Well, it needs to be the dominant network. So it needs to be 50 times bigger than the next thing. And it is.

It's 50 times bigger than Bitcoin Cash or Bitcoin Satoshi Vision. It needs to go through 10 years without changing the architecture to be lindy secure. And it is. It needs to have a history of not being hacked. It needs to be adopted with a political contingent, a senator, a congressional caucus. It needs the endorsement of the IRS, the SEC. Right. For example, when Jay Clayton was on television, he said Bitcoin and Ethereum are property.

They're not securities. He was silent on every other crypto. So you understand where I'm coming here. Every other crypto may or may not be a security. And I don't know. I'm not an expert. But what I would say is if you wanted to segment the market of crypto, you have one asset, which is $350 billion, gorilla, juggernaut, dominant digital network, the monetary network,

the most powerful thing that I've ever seen, 100 times more valuable than that. than Facebook, 100 times more valuable than Google. It's the money network, right? That's Bitcoin. 99% of the world doesn't understand it. Everybody needs it. It's the solution to everybody's problem on Earth. Everybody needs to not lose their wealth and not have the economic energy sucked out of

their currency and all their investments. That's Bitcoin. There is no comparable asset. You have another category, call it unicorns. I put Ethereum in there. It's a unicorn like an Airbnb or, you know, or an Uber. It's a big. It's like 50, 60 billion in market cap.

People are excited about it. It's complicated. It's compelling. There are a lot of people enthusiastic about it. And then after that, you've got a bunch of venture capital investments, a bunch of crypto networks doing different things, very exciting. There's going to be a high failure rate. There's like 10,000 crypto.

launched, right? So it's like, who's going to be Instagram, who's going to be WhatsApp, who's going to be Facebook, and then what are the other 10,000? And maybe one of them will become Snapchat, and then maybe 9,700 of them will go away. I don't know. I would bucket your money into, this is my Treasury Reserve asset. Massachusetts Mutual will put $100 million into Bitcoin. It's a Treasury Reserve asset. It's an institutional grade asset. I would bet $500 million on this. The next thing, you know, SoftBank may buy a big piece of Ethereum. They buy a big piece of Uber Airbnb, you know, that's, you know, we work, right? That's a soft bank play.

And the last is venture capital. You know, you bet venture capital. You expect massive gains. You accept risk. It's all uncertain and complicated. That's how I feel about the crypto space. Let me, you know, wrap up soon. But let me ask you, you know, I mentioned you tweet a lot about Bitcoin.

extremely compelling case for it. How much of your sort of like mental sort of like capacity is focused on it? And are you still active in the sort of day-to-day business intelligence business of micro strategy? Because Bitcoin, I mean, it definitely takes over people's minds. And I see it. I know a lot of people who are into it. It becomes their thing. It becomes like the main focus of their energy. It becomes their obsession. You're clearly very into it. Are you also running the sort of the software company? I'm kind of at the Larry Ellison stage where Larry was responsible for technology,

but he delegated sales and services and marketing to the president. So Fong Lee is the president of the company, and sales and services and marketing, he's running the day-to-day operations of the business. I'm the CEO and the chairman. About half of my time is spent on business matters, technology initiatives, corporate initiatives, other business things. Probably half of my time is spent on corporate marketing, corporate balance sheet, and communication around Bitcoin and the like. So I'd say 50% of it is balance sheet stuff, which is increasingly macroeconomics and Bitcoin.

The other 50% is, you know, being. the CEO, but I'm not day-to-day running every deal and running every operation. Fong does that, and he does it very well. Got it. Could you see yourself, could you see micro strategy starting a Bitcoin-related or Bitcoin-specific business in the future? Are there, for instance, software opportunities that you could provide for crypto? Bitcoin's a monetary network, and everybody figures out how to plug into it, right? So in our case, All of our assets are around business intelligence. So we've been exploring how we might bring Bitcoin intelligence to the Bitcoin space and

blockchain intelligence. And we're looking at different options. And if we find a way to plug the blockchain and Bitcoin related things into micro strategy, then we will release that. we're going to release some coal analytics to the community to help them evaluate alternative investments and to make treasury decisions. But I think it's more of a marketing benefit to us. So we'll get marketing benefits.

We get some QA benefits. We might release some software that does blockchain analytics, but we haven't really determined that yet. we're really kicking the tires in an R&D stage there. Like, we're not going to go into Bitcoin mining. I mean, just people think because you buy Bitcoin, that means you're going to love everything, Bitcoin. But, you know, if you run data centers and you have free electricity and you own

electricity, then maybe you should think about mining. But if you don't have free electricity and if you don't own data centers, then that's not your thing. You know, for PayPal and Square to plug their mobile payment apps into Bitcoin, totally rational. They have mobile payment businesses, right? I don't. I won't go into that business. If you run an investment fund, it makes sense for you to create a Bitcoin investment fund and market it to institutions because that's your business.

So everybody finds their part of the economy. It's very competitive. It's the most competitive economy I can imagine because anybody can compete in cyberspace from anywhere on earth. And so you better be the best in the world at whatever you decide to bring to market. So I would say we're looking at it, but you don't have to change your product offering or your service offering to plug into the network. You can plug your treasury. If you're a dentist, you can still be a dentist, but what I would tell you is the value of your cash flows for being a dentist, you're going to go down 10% a year every year for the next decade. And so you might want to sweep those cash flows into treasury, put that in Bitcoin so they go up 100% a year so that you are a wealthy dentist

in a decade instead of being a poor starving dentist in a decade. So the easiest way for most people to plug into Bitcoin is to plug their treasuries into Bitcoin. It's a monetary network. It's a straightforward thing. Before we go, I mean, you say you're never, the goal is never have to sell it. Could be something that micro strategy holds for 100 years. But if Bitcoin goes to 100,000, are you going to throw a wild party or what?

I will throw a while party. I agreed to do that for John Valis. You know, he hit me up. He said, The Hornets won a party at $100,000. Will you host? Yeah. So I feel like I have that obligation that I've committed to. And so, yeah.

Okay. And you're invited. I was just going to say, Tracy and I are very excited about joining you at your party. I'd love to have you. And I appreciate somebody on your show today. Yeah. No, it's great. We appreciate you joining us and a fantastic conversation. And we wish you the best of luck. Thanks. Same to you. Bye, Tracy. Bye, Joe. Thanks, Michael. Thank you. Really appreciated that. Cheers.

Thanks, Michael. That was great. Yeah, that was a lot of fun. Take care. Well, he is a very energetic proselytizer, Bitcoin, I would say. I think that's a fair characterization. I'm trying to figure out exactly the right way to put it. I'm kind of thinking what the party would be like, but, you know, a lot of fun, I imagine, and a lot of talking as well about Bitcoin. Okay, here's one thing that I was thinking at the beginning of the conversation, which is I hadn't necessarily thought about, well, so I've been thinking a long time about low economic growth and, you know, what that means for companies and this idea that in an environment of sluggish economic growth, you kind of have to engineer profit growth in one way or another. So lots of companies have done that through M&A deals. Others have done that through buybacks and dividends. But the theme overall is that a lot of companies have a lot of cash.

I hadn't really considered that that problem has grown more stark in the COVID era. And Michael laid out a really interesting description of it, this idea that, you know, sales are still going through the roof for a software company. But at the same time, expenses are down quite a lot. And so they're swimming in cash at the moment and you get back to the age old problem of what to do with all that corporate cash. Yeah. I mean, you know, some companies obviously will reinvest it and their businesses are just going so strong. I mean, if you're like, you know, some of these really hot, you know, if you're like a snowflake or one of these like really hot enterprise software companies that people are crazy about, there's probably all kinds of reinvestment opportunities, fast growth.

know, a business intelligence company, it's been around like, what I say, like almost 30 years, maybe not as many opportunities to do that. You know, I would just say, like, I disagree a little bit. I would say with maybe some of Michael's characterization of the macro economy and the Fed or measuring inflation or the value of the dollar. But, you know, who knows, we'll be back here in four years and 48 months to see if the dollar has collapsed. But on the other hand, I think he is, unironically, genuinely a very good articulator of many of the bull cases for Bitcoin, the characterization as property, the network effects, the always oneness of it, the increasing liquidity, the flywheel such that the more the market value grows, the easier it is to transact in it. there were a lot of like sort of like big ideas that when he puts it sort of some of the macro and fed stuff aside, I found compelling. Well, in my mind, it gets back to that growth point, which is one of the ways to achieve

growth in the current environment is to try to select the asset that's not going to, I guess he would say be debased in the future, right? But I guess what I'm getting at is like there's a lot of money out there at the moment and they're all chasing a pool of assets. And to some extent, the value of those assets is being driven by flows, right? So identifying the asset with the most flows and the most potential for upside makes some sense in the current environment, although I think a lot of people in the traditional investment community are still wrapping their heads around Bitcoin. And they don't necessarily see Bitcoin as the asset that's going to be the most successful. But for sure,

you can see it getting those flows at the moment. And you know what I'll just say that it's like there's people like me and other people that are not technically the definition of inflation or, you know, it's like whatever. But it's like to some extent the future crypto aside, Bitcoin aside, the future belongs to people that are really excited about a story. And the people who say like, well, that's technically not how inflation are measured. They're like, you know, they do podcasts and tweet. stuff and they're journalists for a living. So I risk even if I like would poke some holes in his

view, I actually think probably like the long term winners are more people like that than people like me. Does that make sense? Do you get what I'm saying? No, it does. I think the story about hopes and dreams and fixing the world is definitely more compelling than the story about actually, you should think about inflation in this way. And and here's how we construct an inflation. Surely, that's not technically debate. Yeah, yeah. Yeah. The future does not belong to people who nitpick about inflation index construction.

All right. So we leave it there. All right. Yeah, let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Allo. You can follow me on Twitter at Tracy Allo. I'm Jill Wisenthall.

You can follow me on Twitter at the stalwart. Follow our guest Michael Saylor on Twitter. He's at Michael underscore. or Sailor. Follow our producer Laura Carlson. She's at Laura M. Carlson. Follow the Bloomberg head of podcast, Francesca Levy at Francesca Today. And check out all of our podcasts at Bloomberg under the handle at podcasts. Thanks for listening. April 29th and 30th, Bloomberg House arrives in Miami at the Formula One Grand Prix. Set against one of the world's most electrifying sporting events, Bloomberg House brings business, investment, and culture together, powered by Bloomberg Journalism,

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