Prof G Markets - Why MicroStrategy Bought $40 Billion Worth of Bitcoin — ft. Michael Saylor

Episode Date: December 5, 2024

Scott and Ed open the show by discussing the resignation of Intel’s CEO, Trump’s tariff threat to the BRICS nations, and a Delaware judge’s decision to reaffirm her ruling against Elon Musk’s $50 billion pay package. Then Michael Saylor, the founder and executive chairman of MicroStrategy, joins the show to discuss why MicroStrategy went all in on Bitcoin and how the company is securitizing the cryptocurrency. He explains why MicroStrategy pivoted from a business intelligence firm to a Bitcoin treasury company. Finally, he addresses the risk of that strategy, and why he’s confident in Bitcoin’s ability to stay interesting.  Order "The Algebra of Wealth," out now Subscribe to No Mercy / No Malice Follow the podcast across socials @profgpod: Instagram Threads X Reddit Follow Scott on Instagram Follow Ed on Instagram and X Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for the show comes from Grammarly. 231, that's the average number of apps used by many, many companies. This can lead to a lot of context and tab switching that drains employee focus and cost your company money. Grammarly can help. Grammarly's AI works in over 500,000 apps and websites, making it easy for your team to write clearly and on-brand without disrupting workflow.

You can join the 70,000 teams who save Making it easy for your team to write clearly and on brand without disrupting workflow. You can join the 70,000 teams who save an average of $5,000 per employee per year by using Grammarly. Just go to Grammarly.com slash Enterprise to learn more. Support for this show comes from Constant Contact. If you struggle just to get your customers to notice you, Constant Contact has what you need to grab their attention. Constant Contact's award-winning marketing platform offers all the automation, integration, and reporting tools

that get your marketing running seamlessly, all backed by their expert live customer support. It's time to get going and growing with Constant Contact today. Ready, set, grow. Go to constantcontact.ca and start your free trial today. Go to constantcontact.ca for your free trial. Constantcontact.ca. Amazon Q Business is the generative AI assistant from AWS. Because business can be slow, like wading through the mud.

But Amazon Q helps streamline work, so tests like summarizing monthly results can be done in no time. Learn what Amazon Q Business can do for you at aws.com slash learn more. That's aws.com slash learn more. That's aws.com slash learn more. Today's number $6.2 million. That's how much a crypto entrepreneur paid at a Sotheby's auction for a banana taped to a wall. Ed, what did the banana say to the vibrator?

What? Why are you shaking? She's going to eat me. How are you? It's time for banter. I'm doing pretty well. How are you? Where are you? I have never seen this background for you before. I'm in the guest room and our rental in Bellsides Park, which is a suburb of London, which we are moving out of back into our real home in Marlbone, which

I'm hoping will lift my mood from a two to a three, because I'll be near Marlbone high street and I'll get to walk and go to Granger's and go get my coffee and go to Ted's and get cleaned up. But Caroline Chagrin, the producer on our other podcast, said that my room looked very, very sad. It does look a bit sad. It's very plain. Yeah.

I feel like you kind of like that aesthetic though, sort of no, no decorations, sort of muted colors. That's sort of your vibe, right? Yeah. I like severely depressed Northern European architect. That's the look I'm going for. But why are you renting? What's going, are you renovating?

What's going on? Because bitch, you're not making enough money. Why are you in bell-sized houses? Why aren't you at your mall of own place? We, uh, so bought it about, what did we buy? Bought about two and a half, three years ago. And we've been renovating. By the way, just so you know, renovating, it always comes

in under budget and on time. It's just such a really pleasurable experience. Um, and plus the British economy has just boomed. So I'm sure I'm going to make it just a shit ton of money. Now we like buying homes and fixing them up and enjoy furniture and renovations. And it's a good way to make money, mostly in a booming real estate market. You know, you start to believe that it's you and you have some great aesthetic. But anyways, we're moving back and I'm super excited.

And it's across the park cause everything's about the dogs now. But do you know Marlbone? How, how knowledgeable are you on London? Yeah, I know Marlbone. You liked it? I, I like Marlbone. It's sort of the, um, it's sort of become the new, the new sexy borough in London, I would say. Yeah, that's because El Señor Dog Zone is,

that's because his dog house is there right now. Yeah, I like it a lot. I didn't pick it. Jesus, this is fascinating fucking banter. Get to the headlines. It's the chemistry. It's the chemistry that makes this pod. That's right. We're like Joe and Meekup.

They weren't having sex. Yeah, exactly. Let's get to the headlines. Now is the time to cry. I hope you have plenty of the well-as-all. Intel CEO Pat Gelsinger resigned after the board expressed doubts about his ability to turn around the company. The stock rose more than 5% when the news broke, but then it ended the day down 0.5%.

President-elect Trump has threatened the BRICS nations with 100% tariffs unless they commit to the US dollar as their reserve currency. Trump is demanding they abandon efforts to create an alternative currency and pledge not to back any other currency. The dollar strengthened on that news. And finally, you may remember that back in June, we discussed Tesla's shareholder vote on Elon Musk's $50 billion dollar pay package. Well, here's an update on that story. While the shareholders did vote in favor of the package for the second time, a Delaware judge upheld her decision to strike it down.

Scott, your thoughts, starting with Pat Gelsinger's resignation as CEO of Intel. CEOs get unfairly compensated up and down, but after four years, after I think revenue was down 30%, absolutely deserves to be fired. And this would be an interesting time to maybe looking at taking the company private, their largest shareholders Vanguard with 9% Black Rocket 8 and State Street at four and a half. So one of the complaints people have about our economy is it's so concentrated.

Here you have essentially a small group of shareholders that kind of controlled the company or can block it. If 21 and a half% decided to vote together one way or the other, they kind of control it because the way it works in a takeover or a take private is it's like an election. And that is the shares show up and they're supposed to have one vote unless it's a two class voting structure, which I don't think this is. And 20% doesn't show up because it's under some mattress or it's in a custodial relationship and you know people just don't show up or fill out the form and vote. So about 80%

shows up. So to win you need 40% and if you already have 21% of the bag that means you just need to get about 18 and a half of the remaining 60 to win which means you're probably going to win. So essentially these three shareholders control any sort of take private with Intel. I'd be curious what kind of premium someone would need to come up with, but I love this as a take private. Mr. Gelsinger is going to be fine. I'm sure he had some sort of golden parachute or made really good money. To rise to the CEO position at Intel.

He's a very talented guy. So he's going to be, he's going to be just fine. This is a great brand, great relationships. I like this company a lot. I'm actually thinking about buying some shares in it. You have any thoughts? Well, he's done a really terrible job just by the numbers and we can go through them here. I mean, last month Intel reported a $17 billion loss, which is their largest

quarterly loss in the company's history. A few months before that, he suspended the dividend for the first time since 1992. He's cut 15% of the workforce or 130,000 employees. And since he's taken over as CEO, Intel has lost three-fifths of its value, which is just pretty remarkable. And in that same time, the semiconductor industry as a whole, which Intel is a part of, if we look at the semiconductor index, it has almost doubled. So yeah, it's time.

One data point that I found kind of interesting here is that Gelsinger is the 119th American public company CEO to be pushed out of the company this year. And that is an all time record. So 119 CEOs ousted in 2024. That's up three X from 2017. From the time that this has been recorded, this is the biggest year for CEOs being pushed out. And my question to you is why do you think that's happening?

A lot of this is simply the fatalities, if you will, of CEOs or CEOs being ousted is timing because coming into the pandemic with $7 trillion in stimulus, it was a pretty good time to be a CEO. The stock market went crazy and it's hard to fire a CEO or you don't want to fire a CEO when your stock, their stock is up Because everybody's making money so what you had is this unnatural sugar high and some of the underlying revenues or the underlying businesses couldn't support these unnatural artificial sugar high of stock prices the stocks have come down and

When shareholders and board members know somebody or an investor in another company that's like booming. They're like, this fucking sucks. And how do people take out their anger? It's pretty simple. They vote them out of office. So it's not surprising that you're seeing record tone. I think it's a good thing. I think we need more churn.

And I'm especially, I'm especially, this isn't going to get me on any more boards. I think there needs to be pretty harsh review of CEOs because CEOs are I'm especially, this isn't going to get me on any more boards. I think there needs to be pretty harsh review of CEOs because CEOs are traditionally the fraternity or the sorority rush chairman. They're usually really likable people and they're usually very smart at becoming friends with the board members. And I purposely don't play golf with them.

I don't hang out with them. I'm like, I don't want to be your friend. I want to be objective and sober and be a fiduciary for shareholders. And on a rate, every year I said, we need to do a review of the CEO because these, these guys, and it's almost those guys make so much fucking money and they have so much impact on all the other stakeholders that you're really, you're kind of, you only really have two jobs as a, as a board member when, if, and when to sell the company and if, and when, and kind of who you hire and fire the

CEO, um, that's kind of who you hire and fire the CEO. That's kind of really your two things. Now, the chair of the audit committee is there to make sure that nothing funny goes on, but those are really the only two things that the board members should do. And I've always taken myself off of boards after four years because you can't help but be weaponized

once you're on a board for longer than four years by the CEO. Let's move on to Trump and this threat basically against the BRICS nations that he is going to put in a hundred percent tariff on goods that they import. And just to clarify, what are the BRICS nations? It technically stands for Brazil, Russia, India, China and South Africa.

It now also includes Iran, Egypt, Ethiopia, and the UAE. And it's sort of just, it's a coalition of nations who have talked in the past about potentially creating their own currency because they are so dependent on the US dollar. And I think what Trump is really alluding to is a statement that President Lula of Brazil made last year, where he pitched creating a new reserve currency for all of the BRICS nations, a BRICS currency. The thing that I think Trump, this is why I'm a little confused by this, the thing he's not really recognizing is that no one really took that proposal seriously at all. Most of the other BRICS leaders played it down. Putin obviously would love

for a BRICS currency because he hates the fact that the US has this sanction power over Russia. Most of the leaders were like, no, and the markets barely reacted. It is a little strange that he's getting very riled up about this issue specifically. But perhaps you'll see you see something else. What are we? We're only about 5% of the population, but we're almost two-thirds or 58% of global reserve currency. Now, why is that important? Basically, to transact in dollars, you have to come through a US institution or you have to come through one of our networks and we get to track the flows of power. We know where money is going, where it's coming. We can more easily impose sanctions. We can

stop dollars from being transferred. And also when you're doing business in dollars, you're kind of subject to our decisions around interest rates. The dollar is really important, so he has that right. But it's not as if it's under threat. And I would argue that no one likes to be threatened. And it's sort of, I have found generally speaking, when you threaten people, especially powerful people,

they're more inclined to do what it is you don't want them to do. Yeah, it's like, don't push this button. I didn't even know that button existed. Yeah, if you do this, I'm gonna do that. It's just sort of like, the dollar is doing really well on its own. And when you try and tell China,

the second biggest economy, India, I don't know, whatever it is, the fourth or the fifth, Brazil, I don't know where Brazil is, but together, these are a pretty big group. It feels to me all you're doing is creating a reason for them to like go back to the drawing board and actually create another currency. So I don't, I just don't get this. I think this is a dumb move. I think it's all bluster, unnecessary bluster. To your point, the big inconsistency here, what is, if there is a threat to the dollar, I don't think there really is, but if there is one, is it the bricks? Is it the euro? Is it the yuan?

Probably not. The biggest threat, if there is one, is Bitcoin. That is the currency that has been touted as the new global currency. The whole thing is predicated on issues of rising inflation and spiralling debt and ultimately the potential collapse of the dollar. That's sort of the whole point. I mean, inherent to Bitcoin is an assumption that the dollar cannot hold. And so to protect yourself against that collapse, you buy Bitcoin instead. So the entire premise of Bitcoin is very anti-dollar. And if Trump really cares about this issue of de-dollarization, and to be clear, I think

he probably should, then he should really be taking another look at his position on Bitcoin. Because if anything is threatening the dollar right now, or at least trying to threaten the dollar, I think it's that. I mean, there's some weird things about a fiat currency, and Michael will talk about this. Every fiat currency in history has ultimately failed because the short-term political pressure to feed your people and give them back more than you're getting in the short term and print money and and

given to a populist movement and create huge deficits that ultimately become no longer sustainable or result in runaway inflation and Basically the currency you get the Weimar Republic and the currency becomes kind of useless. Every fiat currency has failed. And that's one of the arguments around Bitcoin. They claim that once we get to 21 million coins being mined, we stop. The currency trade wars, we're punching well above our weight class.

And I don't know, do you have any data around whether that 58% number has gone up or down recently? Well, I don't have data in front of me, but what I can tell you is that 60% is actually, I mean, a lot of people say it's come down. You know, it used to be around 75% way, way back in sort of like the early 1900s, but it's also come up from the 80s.

It was around 50% from the 80s. It was around 50% in the 80s. It's now around 60%, the USD as a percentage of global currency reserves. So my issue with that whole argument is people say, you know, the dollar's losing power, it's no longer the world's reserve currency, it's down from 75%. It's like, well, it's well, it's also up from 50%. Let's move on to Elon and this compensation package that was struck down by Chancellor Kathleen McCormick. We've been discussing this story for a long time now. I actually made a prediction about this back in June.

I think what I can say with certainty is that whether or not it's yes or no, this vote is basically meaningless because here's what'll happen if the vote is approved. It'll go back to the Delaware Court of Chancery. It'll go back to Chancellor McCormick who will open up that briefing and she's gonna be like,

hold on, I adjudicated this case before. Actually I looked at this case basically two months ago and I made my decision very clear the answer is no and I feel like what Tesla is forgetting is that if you read her opinion she actually didn't care whether the shareholders were fully informed or not. Granted she said they probably weren't but it had actually no bearing on her actual decision. She believed that the package was inequitable and that as a court of equity, she also believed that she had the power to rescind it. And that was it. And now here we are again, and we've got the same case on her desk. So nothing's going to change here.

You not only got that right. I think I got it wrong. I think I disagreed with you and you're like, listen, listen, you old sad man. What I don't, I'm mixed on this. I think that I don't think any individual, I'm going to send it to Bernie Sanders here. I just don't think any individual should be worth a third of a trillion dollars. I don't see, I don't see how that's healthy.

Power corrupts and absolute power absolutely corrupts. And I would argue that Musk is a case study in absolute corruption. Having said that, I think the way you solve this is through tax policy, not by limiting compensation. And I do think of the shareholders as the owners of an asset, the company. And the owners of this company get to decide what they pay the managers. And it strikes me that the owners have decided here

to pay the manager $100-plus billion, which she is claiming, my understanding is now, is she's saying there was faulty information in the communications to the shareholders before the vote. I think this is important to clarify here. That was a piece of the case. She said, I don't think that the voters were fully informed on what was happening, but that wasn't the main conclusion.

Her main conclusion was that $56 billion just made no sense. That's unfair. Whether or not the shareholders believed it. And that's the part that I think Tesla just, sometimes I think they didn't even read the opinion because that was my point that it's not about, they thought, okay, we'll re-vote and we'll prove to you that the shareholders

were informed. Her point is, I don't care whether they were informed or not. This just doesn't make sense. The word I find is a lack of veracity or usage in a capitalist society as it relates to compensation is fair. And her, you know, I don't know if this is her argument, but basically an argument might be, he's not an entrepreneur. He doesn't own 50% of the company. He doesn't control it. He's management. And there is some, there should be some reasonable kind of fairness or equitability test. But that's for me where I run into trouble. And that is if the owners of the

company have approved this, what's the line in fair? Let me send you come over. I'm going to give you the compensation of a bunch of CEOs and then come over and we'll smoke cigarettes and eat ice cream and talk about the meaning of the word fair. I mean, just to slightly steel man her argument, or I'll just say her argument, which is that he was pressuring the board and the board was a board of sycophants. And that's definitely true. And ultimately the board decided to give him a compensation package, the likes of which no one has ever seen before. They said that the reason they're doing it is because they need to properly incentivize

him and her argument was, you don't need to properly incentivize this guy. He was already incented. It is my opinion as a judge in not a court of law, but a court of equity, as my uncle told us on this podcast, it is my job to discern what is equitable to shareholders. Even if they said, yes, we're okay with this, I do not believe that it is an equitable compensation package. I think the thing that people are struggling with is should the judge of the Delaware Court of Chancery

have that power to determine what is fair and what isn't fair? And there's that word again. And in capitalism, the owner of the asset or the majority of the assets get to nominate directors who get to decide correctly or incorrectly the compensation of the CEO. And the moment someone weighs in and starts using words like fair or unfair and overrides the decisions of the people voted in by the owners of the

company to make these decisions, in my view you have government overreach. Having said that, a key component of a healthy capitalist society is that we have an equitable, fair taxation system to redistribute capital back into the middle class, which is not a naturally occurring organism. It's the greatest innovation in history, but it requires investment to ensure that the one out of three veterans aren't homeless, to ensure that people who do struggle with opiates, single parents, Pell Grants, the Navy, all these wonderful things that we need to pay huge dividends,

investing in DARPA and the internet, which all these huge companies have made billions from, not acknowledging or trillions from that it was middle-class taxpayers that paid for this shit. You need a progressive tax system and now we no longer do. So what would be my suggestion? This isn't about Elon's compensation of 120 billion. It's about the following.

I believe anyone who makes over a billion dollars should pay 60, 70, 80% alternative minimum tax. Because at the end of the day, what do you want to, why do we have all of this shit? Why do we have capitalism, the tax structure, governance, the Delaware court? You want to create a society where people feel happy and rewarded and healthy. So I believe the equity and the fairness part comes in around taxation. But if you start using the word fair and compensation, come over and I'm going to tell you about the CEOs I deal with and you tell me what is fair and not fair.

It just, that's an impossible fucking argument. I've just, a prediction has come to me. I feel like this brings up very, very big questions about our legal system and how our legal system should work. I think what we're going to see now is, I mean, one, we're going to see an appeal. I think we'll maybe see some pretty serious lawsuits. I would bet this makes its way up to the Supreme Court.

And I would bet that we see a Supreme Court decision or a Supreme Court lawsuit with SCOTUS making a decision on these sort of questions. But this is one of those situations where you can begin to make a pretty decent argument that the way our system is set up gives government a little too much power. Yeah. But the mechanism here is, I don't think it's not like the traditional court system. This is- But then they'll take it to the traditional court system.

If they don't, I mean, he's going to get the money. He will find a way. You think eventually, okay, I think that's a good bet. He has to. But just a mechanism here is I believe they can appeal it once to the Delaware Supreme Court. I don't think this specific case won it once to the Delaware Supreme Court. I don't think this specific case won't end up in the Supreme Court. He would have to, I guess, sue the Delaware court.

Yes. He'll file a new suit. I think that is what will happen. He'll file a legal suit, not with the court of equity, but the court of law. And I would bet that this makes its way up to the Supreme Court. Also, I think the way around this actually, Ed, is I think the board could figure out a way. Shareholders have said we're down with a hundred plus billion dollar compensation. I think the board can figure out a way to compensate him differently

that will avoid the Delaware court. I think there's a rational argument, and I don't know if you've picked up on this, but I'm not a huge fan of Elon Musk, think there's a rational argument, and I don't know if you've picked up on this, but I'm not a huge fan of Elon Musk, but there's a rational argument that if you went to Tim Cook right now and said, okay, we're at 3 trillion. If you can grow Apple to 20 trillion,

we'll give you a trillion dollars. I think the shareholders of Apple would say, oh, that's fucking insane, a trillion dollars, but sure, take that deal. If you can increase our stock price six or seven fold, we'll give you a trillion dollars. And that's kind of what Musk and the board said to shareholders.

I just feel it's alien to be supporting more money for Elon Musk, but I think they got it wrong here. I think boards are allowed to make stupid decisions as long as they're approved by the shareholders, which they largely have been here. And I agree with you, I think ultimately he ends up getting his money. We'll be right back after the break

for our conversation with Michael Saylor. If you're enjoying the show so far, hit follow and leave us a review on ProfG Markets. Support for the show comes from Zbiotics. Nothing like cocktails with friends to help you unwind. But now, you don't have to choose between a great night or a great day after thanks to Zbiotic's pre-alcohol probiotic drink. Pre-alcohol is the world's first genetically engineered probiotic. It was invented by PHE scientists to tackle rough mornings after drinking, and according to Z-biotics, here's how it works. When you drink, alcohol gets converted into a toxic byproduct in the gut. It's this byproduct,

not dehydration, that's to blame for your rough next day. Pre-alcohol produces an enzyme to break this byproduct down. Just remember to take Z-biotics before your first drink of the night, drink responsibly, and you'll feel your best tomorrow. So I tried this because daddy loves to drink. I, like Winston Churchill, believe I've gotten more out of alcohol than I've gotten out of me. Anyways, took this thing. I had two, maybe three drinks, and the next day I did feel fine.

And I think the key here is that I'm no longer drinking six to eight, two to three, but I also think ZBiotics is likely helping. Go to zbiotics.com slash ProfG to learn more and get 15% off your first order when you use ProfG at checkout. ZBiotics is backed with 100% money back guarantee, so if you're unsatisfied for any reason, they'll refund your money, no questions asked.

Again, that's zbiotics.com slash ProfG and use the code ProfG at checkout for 15% off. and use the code PROVCHE, a checkout for 15% off. Amazon Q Business is the new generative AI assistant from AWS. Because many tasks can make business slow, like wading through the mud. Help! Luckily, there's a faster, easier, less messy choice. Amazon Q can securely understand your business data and use that knowledge to streamline tasks.

Now you can summarize quarterly results or do complex analyses in no time. Q got this. Learn what Amazon Q business can do for you at aws.com slash learn more. That's aws.com slash learn more. That's AWS.com slash learn more. Support for the show comes from Alex partners. In business disruption brings not only challenges, but opportunities.

As artificial intelligence powers pivotal moments of change. Alex partners is the consulting firm chief executives can rely on. Alex partners is dedicated to making sure your company knows what really matters when it comes to AI. As part of their 2024 tech sector report, Alex Partners spoke with nearly 350 tech executives from across North America and Europe to dig deeper into how tech companies are responding to these changing headwinds. And in their 2024 digital disruption report, Alex Partners found that 88% of executives report seeing

potential for growth from digital disruption, with 37% seeing significant or even extremely high positive impact on revenue growth. You can read both reports and learn how to convert digital disruption into revenue growth at www.alexpartners.com slash box. That's www.alixpartners.com slash box that's www.alix partners.com slash v o x in the face of disruption businesses trust Alex partners to get straight to the point and deliver results when it really matters. Welcome back. Here's our conversation with Michael Saylor, the founder and executive chairman of Microstrategy. Michael, thank you so much for joining us on ProfG Markets.

Yeah, happy to be here. You've been everywhere recently. I mean, you're all over my news feed. I just want to give sort of the Michael Saylor story in 2024 very quickly. So you're the founder and chairman of Microstrategy, which was originally a business intelligence firm, but over the past few years, you've shifted it into this Bitcoin treasury company. So Microstrategy now owns nearly $40 billion worth of Bitcoin. That's roughly 2% of the total global Bitcoin supply. It also makes MicroStrategy the largest corporate holder of Bitcoin in the world.

In the past year, as Bitcoin's price has risen, so too has MicroStrategy. MicroStrategy's stock is up 600% over the past year. It's just remarkable. So I'll start with this and we'll get into it. But what has drawn you to Bitcoin, Michael? And what was sort of the impetus for this very radical pivot at MicroStrategy towards Bitcoin? I think in the middle of 2000, in the summer of 2000, what drew us to Bitcoin was desperation and frustration. So initially we had $500 million in cash. It was worthless. Like it was generating 0% interest.

The company wasn't growing. We were under lockdowns competing against Microsoft. So the only thing that we had in our world that was a bright spot was we had $500 million in cash and we thought maybe it was worth something, but when Jerome Powell said it's worthless for the next four years, we lost that. So we had to do something. Our initial foray into Bitcoin was defensive, it was just frustration, defense. It's either that or sell the company. So if you're not going to sell the company, you can die slowly, you can die quickly, or you can do a transformational acquisition. You can take a risk, and that

was our transformational acquisition. What if you could buy a $500 million company growing 60% a year, which looks like its own digital monopoly, and you could bolt it on to a company that's growing not 0 to 5% a year. So we did that, then Bitcoin surged, and we could opportunistically raise money via the convertible bond market, and we raised $650 million at 75 basis points, and then we raised a billion paying 0% coupon. And that point, I would say that stage is opportunistic. Like someone wants to give you billions of dollars of free money to actually invest in your business. Why wouldn't you?

We got on the roller coaster and went up and down. It surged, it crashed, it surged, it crashed. And I think by the beginning of 2024, it became strategic. And we realized like, hey, we're just doing this because we've got an operating company and we can do it. And between 2021 and 2024, we raised about $10 billion of capital. So we started with 500 million,

we raised another nine and a half to 10 billion more. And now the question is, well, what's gonna happen with crypto We started with 500 million, we raised another nine and a half to 10 billion more. And now the question is, well, what's going to happen with crypto and what's going to happen with Bitcoin? You got the ETFs approved in January. I mean, 2024 is like year zero of institutional adoption. So the ETFs are approved in January. Everybody wrote us off and said, well, micro-strategy is unnecessary now.

What they didn't realize is the ETFs are like overnight deposits, like you put money into BlackRock, but you can take it out of BlackRock the next day. Micro strategy, that 40 billion, that's our money. That's permanent. You can't take it out. We have 40 billion of permanent capital. And so what we realized is our real great strategic, our strategic

franchise here is we can securitize Bitcoin. So I can issue fixed income instruments, bonds, especially bonds and fixed income preferred stocks or, or high volatility equity. And those are all products the capital market wants. They want Bitcoin backed securities. They either want three X to trade, or they want one third of the risk and one third of the volatility to hold in a portfolio. So we announced October 30th, that we were going to basically raise 21 billion of equity and debt. And that was well received by our shareholders. We just kind of said, we're going to be the leader in the industry.

If you want to invest in a company like ours, we're the company. And then a week later, we just had a red sweep and November 5th was pro crypto Congress, pro crypto Senate, pro crypto White House, Bitcoin surged, our stock surged. And I guess I boil it down to it took us four years to get 10 billion. But it took me 30 years to get 500 million. It took me four years to get the next 10 billion. It took us four weeks to raise 13 billion more. And that's because the product you're selling

is capital. I mean, you're selling a security. If a rich person looks at the iPhone, how many do you want? One. You want one Tesla, one iPhone. But if I offer you a security that gives you twice the performance of the S&P, how many of them do you want? Like all, until you hit your risk rail. So, now I would say we're a Bitcoin treasury company, right? Our operation is we take crude crypto capital, Bitcoin, that's commodity, and then we sell you an equity, which is like 2X, 2X Bitcoin. And then we get to 2X by actually selling bonds and selling fixed income

instruments that are half X or half of what we're doing. And we strip the performance and the risk off the bottom of the capital structure. We put it onto the top and that way all the degenerate traders get what they want and all of the risk adverse investors get what they want, and all of the risk-averse investors get what they want. And we're just the institutional gateway sitting in the middle. It sounds like the way that you're describing this stock now, I mean, MicroStrategy was a software company. The way you have described it,

it sounds like MicroStrategy is a financial product. And the way that you describe that you are securitizing Bitcoin, which I would assume you see as maybe a commodity, but it sounds like the business that MicroStrategy is in now is it is selling a financial product. We're a treasury company. We're not a retail bank. We don't have retail deposits. What we do is we issue securities. We borrow billions of dollars from the bond market at 0% interest, and we lend it to the

crypto economy at 60% interest. You see, I raise money, I raise billions by issuing equity to the equity capital markets and I invest it in Bitcoin. And the difference between them is a spread. You know, if I issue a billion dollars of equity, I'm capturing a 65% spread. We make $650 million on the arbitrage in one day. And then when I do the bond market, it's an 80% spread. So what we're doing is we're taking cheap capital from the traditional capital markets,

of which there's 300 trillion of it. There's a lot of money in the capital markets. We're funneling that capital into the crypto economy, into the decentralized economy. It's like I'm lending it to the nation of Bitcoin, but there's no counterparty, right? Because there's no company, there's no individual, but I'm getting back 60% return each year. And so as long as I can borrow the money for less, if you can borrow money for less than the S&P return, and if you can loan it out for more than the S&P return, you can rinse and repeat that trade ad infinitum because there's infinite money that's getting less than the S&P that wants more.

A lot of that is predicated on the fact that you are borrowing money at 0% interest, which is very unusual. Could you take us through for our listeners how that is possible? Okay. Here's the big idea. The S&P volatility is the VIX. It's about 15. The return of the S&P for the past four years is about 15% annually. four years is about 15% annually. So think of the cost of capital for every traditional investor is 15V, 15ARR. Bitcoin is 60ARR, 60V, four times the VIX, four times the S&P. It's been that way for a decade. It's been that way for the past four years. Okay, if you're a convertible arbitrager, there's an entire convertible bond market. What they do is they buy your bond and they sell your equity and they extract the premium. For that trade, there's a $340 billion market that does that. For that trade to work,

they need your vol to be 45 or more. So you need to be 3 or 4x the S&P. And of course, MicroStrategy has got a vol of 100 to 150. And that's because we lever Bitcoin, which is a vol of 60. So if I take 60 and I double it, I'm 120. So we have extremely high volatility. What else do you need? Liquidity. What else do you need? Liquidity.

What else do you need? Durability. Right? Game stops interesting, but it's not durable. You see, sometimes there are meme stocks that are very liquid and volatile, but only for a week. What if I could get volatility is like fire. I'm starting a fire.

I'm burning the fire for a long time. So the way we borrow money for zero is we're selling a convertible bond and the imputed interest rate of the bond, of course, is not zero. The arbitrageurs are getting 20, 30, 40% risk-free yield. They're betting nothing and getting, I mean, they might buy a $50 million bond,

make $10 million in a few minutes risk-free. Why wouldn't you? So we're tapping that market because we have a volatile liquid stock that's transparent. And it doesn't require zero coupon for this to work. We borrowed money at 6%. If you borrow money at 6% and invested it at 60%, you're still scraping 90% of the gain. I'm still making 54% yield on whatever I borrowed. So it works at 6%, it works at 12%, it works at 15%. It just happens that a very easy pool

of capital is convertible bond capital where you can borrow the money at zero and you can do it in size. Can I make one more point, which are bonds are the most lucrative bonds sold in the last decade, right? I mean, the bonds all doubled and tripled. No one ever triples their money on a bond normally. But the other point is,

if a conventional company borrows a billion dollars in the convertible bond market, and they go and buy a bill, and they build a building, or they invest in a product, or they fund an operation, it's a five-year investment cycle. And it's not clear how it will turn out. So after five years of developing a billion dollars of Chicago real estate, you go back to the capital market, borrow another billion, and you got to do it in San Francisco. Another five years goes by. But what we're doing is building a digital building. I borrow a billion dollars, I buy Bitcoin, I announce it two days later. It's immediately profitable because I'm generating a yield to my common stock shareholders. So imagine I could borrow a billion, build a digital building in five days,

announce that I made money on it and borrow another billion. I can do that every week. And that's exactly what's happening in this market. We're basically accelerating the investment cycle from five years to one week. Bitcoin is the unique radical actor here because Bitcoin is the first product that's a commodity. That's a legal definition, an asset without an issuer. And it's economically a scarcity. That is a common sense definition. It's a commodity that you can only make 21 million of for the next billion years. So there is no legal commodity that's also a scarcity other than Bitcoin. And if you don't have a commodity that's a scarcity, you can't do this with 100% of your capital in a public company.

You can't do this with a security. I couldn't do this trade with Nvidia stock. Even though it's a great company, Nvidia stock is a security. So I could never own a hundred percent of my liquid capital or have it invested in Nvidia. So if you wanted to do this before Bitcoin, you had to do it with gold, soybeans, oil, or real estate. And they all underperform the S and P and they all have less vol than the S and P. So if your hurdle rate is 15-15 and you're showing

me real estate which is 10-10, the trade doesn't work. And so what we're doing is totally rational and simple. It's the simplest thing imaginable. If you accept the premise that Bitcoin is a real asset, Bitcoin is a real asset, that it is a commodity, and then it's 21 million, right? And once you get that idea, everything else follows naturally. And until you get that idea, you just think it's crazy magic. So Michael, it's always good to see you.

And I should point out the first time we had you on the pod, you off mic said, Scott just put some of your assets in this, trust me on this. And I think Bitcoin was like at 8,000 bucks. And I'm like, I'm going to wait till it goes down to 4,000. So if, if I understand this correctly, it's sort of this incredibly deft capital markets arbitrage where you're able to issue zero coupon bonds where no, no cash flow leaves your balance sheet. You don't have to pay interest on this. So you get to borrow money not for free, but cashflow free.

No cashflow comes off your balance sheet. And because of Bitcoin's acceleration and the vol you talked about, you're able to issue the convert the price that the bonds convert out at a fairly high price. So you essentially are engaging in this kind of arbitrage where people think your company has the credibility in the space, you have the ability to borrow against this, but there has to be underlying cash flows to support the claim that those bondholders might have should Bitcoin go decline substantially in price. So is that security built on just a pure belief in Bitcoin? Or are the underlying cash flows from your core business important to that?

The performance of the underlying asset is such that the bonds never get paid back other than they just get they get equitized. And if you look at my situation right now, I have about $40 billion of Bitcoin, I have about $7 billion of bonds, 4.2 of them are already equity. I mean, they're already effectively equity because they're trading not just above the strike price,

they're trading above the call price, which is 130% of the strike price. So we could, you know, generally sometime in the future just call them all for equity and equitize them all. So there's about $3 billion of a convertible bond on a $40 billion structure, which is zero coupon, which there's some theoretical risk that there might be more dilutive than the minimum strike. But the other point to make is these are no recourse unsecured notes. There's no lien, there's no claim, there's no EBITDA covenants. I think we pay like 30 million, 30 to 35 million in interest on seven billion in

debt, Scott, a year. But I don't even have to generate the cashflow for the 30 million. I could actually sell equity in order to pay the 30 million. And we have raised 10.5, we've been generating a billion dollars of equity a week. I mean, a billion dollars of income and equity a week. So the real magic of this is you need an asset which is gonna outperform the S&P,

that's also gonna stay more volatile than the S&P. And then you need a company, a public company that's 100% Bitcoin. And when you sell securities back by Bitcoin, you need to buy the Bitcoin with it. And because you're actually feeding back the capital back into the system, it's like a triple amplifier, because it's driving up your assets, it's driving up your volatility, and it's driving up the price of Bitcoin.

My understanding is there's no such thing as risk-free return. And I'm just trying to paint out a doomsday or a downside scenario here. Bitcoin, as you reference, is highly volatile. A year ago, it was 70% lower than it is now. Five years ago, it was 90 or 95% lower. Volatility means it goes way up, it goes way down. Bitcoin goes to $5,000. And the underlying value of your Bitcoin holdings no longer represents the claim or the assets it once did. Your stock goes way down. It is way below the strike.

You have to issue massive amounts of dilutive share price. The stock crashes and you're not able to issue more debt. Isn't that the downside scenario? There may be more upside here, but there is a doomsday, right? Well, the best way to say it is the risk that you're accepting is Bitcoin extinction risk. Like if Bitcoin goes to zero tomorrow, the entire business is a Bitcoin extinction risk. So if you think there's a X percent chance of Bitcoin extinction, then probably you don't put 100% of your portfolio into my stock or into my

bond. Right? But what if it's 10,000? What if it goes to 10,000? What happens? I'm sure your bankers have modeled this out. The answer is Bitcoin goes to 10,000. The bonds are going to pay off at par. You know, you might not get three extra money on the bonds, but you're gonna get your money back because the company has enough assets and enough equity that will just equitize the bonds and it'll be diluted to the common stock.

Just press pause there. The business intelligence side of the business creates enough cashflow to support the bonds, even if Bitcoin declines dramatically. No, the point is you don't need cash. The bonds are free. I mean, you don't need cashflow to pay the interest. If you're talking about the principle, the principle of the bonds converts to equity,

right? You're basically paying out equity. So the risk, the risk if you assume Bitcoin goes down 90% is to the equity. It's the MSTR, right? They're the ones that are taking the risk. The bonds are going to pay off. And so look, Scott, the point is, if you put 100% of all your wealth into our bonds

or into our equity and a Bitcoin goes to zero, then you will lose money. And you're not suggesting anyone does that, yeah. And then if you ask the question, well, how does micro strategy look at it? My answer is I'm selling the volatility. So for example, if I sell a billion dollar bond, I'm capturing an 80% spread upfront.

So I'm making $800 million in Bitcoin. If Bitcoin crashes by 80%, then I was neutral. So if Bitcoin went to 20,000 tomorrow, you could say, ha, you didn't make any money on that. But if Bitcoin doesn't crash 80%, I made 800 million. Now if Bitcoin goes down 20 or 30 or 40%, Bitcoin's volatile. My stock is twice as volatile. I'm going to refinance it and sell the volatility and the theoretical value of having a billion

dollars of volatile asset is like a hundred million a year. Like for example, all I have to do is hold the billion dollars and then sell the vol and we probably make another 500 million to a billion dollars, even if Bitcoin doesn't go up, even if it goes down. So, right. So it's a no brainer for us as a corporation because we're getting the float and we're getting the volatility and then we can equitize or refinance the volatility between now and when it comes due. If you want me to say what's the doomsday scenario, well it's the same scenario you have Scott, which is if you walk out your door and you get hit by a truck or a meteor, you're dead. So it is possible you could get hit by a

meteorite and then you're dead. And it is possible for an extinction level event to happen to Bitcoin, a meteor. And if it does, everything is definitely levered to that. But for example, if Bitcoin goes to zero tomorrow forever, without, incontrovertibly, right, that's not good for our business. But if Bitcoin simply trades down and stays volatile, if Bitcoin was cut in half and stayed as volatile, well, there's a lot of people that will want to buy micro strategy stock and micro strategy bonds and they'll want to buy if Bitcoin was 50,000, there would be a massive demand for people for a convertible bond struck at 50,000 for people to ride the upside and avoid the downside of that. And we would sell that one, you see. So our business kind of works no matter what happens as long as Bitcoin continues to be interesting, volatile, etc.

Stay with us. This is Advertiser Content from Zelle. When you picture an online scammer, what do you see? For the longest time, we'd have these images of somebody sitting crouched over their computer with a hoodie on, just kind of typing away in the middle of the night. And honestly, that's not what it is anymore. That's Ian Mitchell, a banker turned fraud fighter. These days, online scams look more like crime syndicates than individual con artists. And they're making bank.

Last year, scammers made off with more than $10 billion. It's mind blowing to see the kind of infrastructure that's been built to facilitate scamming at scale. There are hundreds, if not thousands, of scam centers all around the world. These are very savvy business people. These are organized criminal rings. And so once we understand the magnitude of this problem,

we can protect people better. One challenge that fraud fighters like Ian face is that scam victims sometimes feel too ashamed to discuss what happened to them. But Ian says one of our best defenses is simple. We need to talk to each other. We need to have those awkward conversations around what do you do if you have text messages you don't recognize? What do you do if you start getting asked to send information that's more sensitive?

Even my own father fell victim to a, thank goodness, a smaller dollar scam, but he fell victim and we have these conversations all the time. So we are all at risk and we all need to work together to protect each other. Learn more about how to protect yourself at vox.com slash zelle. And when using digital payment platforms, remember to only send money to people you know and trust. Thumbtack presents the ins and outs of caring for your home. Out. Uncertainty. Self-doubt.

Stressing about not knowing where to start. In. Plans and guides that make it easy to get home projects done. Out, word art. Sorry, live laugh lovers. In, knowing what to do, when to do it, and who to hire. Start caring for your home with confidence. Download Thumbtack today. Why do we like sports? Is it for the jerseys the players wear? confidence. Download Thumbtack today. and XPRIZE wants to use that competitive drive and motivation to tackle some of the world's biggest problems. What sort of problems? Climate change, accessible clean water, and healthy aging.

These existential challenges affect our planet, and we urgently need to find solutions for them. XPRIZE is a non-profit organization that designs and hosts global incentivized competitions that drive scientific discovery, cutting-edge innovation, and groundbreaking solutions for the benefit of humanity. XPRIZE has launched 30 prizes in 30 years. In doing so, they've driven the improvement of oil capture technology, catalyzed tools to detect Alzheimer's, influenza, and RSV, helped educate 10 million children in 74 countries, accelerated carbon removal technology, and kick-started the commercial space industry. And XPRIZE is just getting started. The future is still ours to create. Head to XPRIZE.org to learn how you could help architect a brighter future for everyone. We're back with Profit.G Markets.

Michael, I just want to rewind to something you said earlier. You said, it's great for us if the price of Bitcoin goes up. But the thing that more importantly you said is that this all hinges on Bitcoin remaining interesting. The idea that people are interested by this asset and want to be exposed to it in some way. And I think that is the statement that I understand your position on, but I'm not fully bought in because I think that that statement is quite a speculative statement

to say, you know, with the level of conviction that you have that this asset will remain interesting and then to build this giant trade off of that premise. And I think that that's what some people would have, would take issue is like, well, why is this thing going to remain interesting? You know, what, we can talk about the volatility, we can talk about the financial dynamics

and the technicals of Bitcoin, but why do I care about Bitcoin? What's actually interesting about it other than the price going up? It's a good question, but I actually think that if you wanna spend a few hours or studying it or researching it, you'll find that it is the most interesting thing

in the world. I mean, I don't even think it's debatable. I don't think there is a second most interesting thing. The most interesting financial asset, the most interesting asset in the world by far is Bitcoin. So why is it so interesting to you personally? From a personal level, when you learned about Bitcoin and started studying it.

Wasn't the more important question, why is it interesting to everybody else on the earth? Sure. Right? There's 650 million crypto people. It's the center of 650 million crypto people, it's the center of the 650 million crypto people, there's 1500 crypto exchanges you can trade it on. Any company on earth can trade with any other company with Bitcoin. On Saturday afternoon, if you wanted a billion dollars of credit, it's the only place to get a billion dollars of credit. If you wanted to panic sell or take a billion dollar short position because of an Israeli missile crisis, it's the only thing you can sell a billion dollars of. And on Sunday morning, if you want to reverse the trade, it's the

only way to reverse the trade. Nvidia is not trading on Saturday. I mean, think about the app. By the way, Bitcoin is the seventh biggest asset in the world by market cap It's two trillion, but think about the ones above it Microsoft Apple right Nvidia These are these are not these are not useful or interesting to most of the world No Chinese company is going to capitalize on Nvidia stock

most of the world. No Chinese company is going to capitalize on Nvidia stock. Gold's at the top. You can't move $10 billion of gold from New York to Tokyo or short it or go long. So literally what I do is turn it around to you and say, if you don't think it's the most interesting, tell me what asset in the world is more interesting right now to more people.

Cause I don't think you can name one. Well, I think it's interesting because of all of the conversations that it sparked and the way that it's become very political and it really brings out the emotions of everyone involved, either positive or negative. But the things that you mentioned there about why it's interesting, like again, a lot of

it has to do, I mean, you mentioned the fact that it trades on weekends, which other assets don't, but the idea that it is- Okay, Ed, come on. First of all, the number one performing stock in the S&P 500, mine. We're up 30X. That's three times more than Nvidia. That's interesting. How about the number one options market in the SP 500? Mine. We have the most intense options, like 130% of market

cap. The most profitable convertible bond, the number one convertible bonds in the marketplace, micro strategies, right? It's interesting because people are making money off of it. Everybody in the two trillion dollars of market cap or of wealth has been created in 48 months for hundreds of millions of people. It's changing every minute of the day. But in that sense, isn't what's interesting that the price is going up? Because you said, it's nice when the price goes up, But what I'm also hearing is the interesting part is the price going up, the fact that it has become such a valuable asset class.

And I guess my point would be if there comes a time when the price starts going down, suddenly it's not so interesting anymore. And then I feel that it could all, all of that fire that you described can sort of poof a lot more quickly. By the way, it was pretty interesting when it went down to it's it's I give you the crypto winner. It's it's interesting because it's useful. It's useful because it's the hardest money in the

history of the human race. Right? It's interesting and useful because it represents property rights and monetary security or economic security for 8 billion people. It's interesting in the same way the electricity and clean water and steel and airplanes and fire and nuclear power are interesting because it's the single biggest way to improve your quality of life, right? And otherwise it's interesting because it is a global real time. It's changing all the time, every second.

It's literally changing. Now think about all the other financial assets. Conventional wisdom says, I create diversified portfolios of bundles of 20th century things, like 187 real estate apartments, or a bundle of preferred stocks, or a bundle of corporate bonds. preferred stocks or a bundle of corporate bonds, they have no volatility because they're engineered literally to be uninteresting. They're literally engineered so that on Saturday afternoon, there is nothing that could happen that would change their value to you. So you see that the fact that Bitcoin is engineered so that it does change value. Someone is doing something. That's actually what creates all the volatility.

But let me make one more point. Do you know the call rate? If you hold a dollar or hold a million dollars and you're wanting to hold it for 30 days, you're getting SOFR, the 30-day SOFR, you're getting about 4.8% interest. If you actually hold a million dollars of the S&P index and you sell the call 30 days out at the market, you're getting like 15% interest. If you're holding a million dollars of Bitcoin, iBit, and you sell the 30-day call you're getting a hundred percent interest and when you're holding a million of micro strategy and you sell the call you're

getting 220 interest so when i say interesting i'm using the classic sense people are financially invested in it and therefore when it changes, there's hundreds of millions of people that all of a sudden feel it up or down. I'm also pointing out, you can literally generate more interest on this thing. And so, and there are more ways to actually make money on it.

And that's why the tickers on CNBC. CNBC is not showing you things that aren't interesting. They're not showing you the soybean price every day. They're not showing you, they're not going to show you the price of a diversified portfolio of real estate assets that are maturely and scientifically constructed because the construction of the portfolio was to make it boring. And Bitcoin is... and by when you make it boring, you strip the performance out of it. And so the point is, let's come back to fire. Volatility is fire. If you're a normie, you run away from fire. If you're Henry Ford, you put the fire into an engine, you put it in a horseless carriage

and you create an automobile and now people can go. And then you put it into a plane and a train. That's good. So engineers are putting volatile, you know, you're a nuclear reactor in the spaceship. It's scary in the submarine. But Bitcoin is like the financial fuel. These things are crypto reactors. It's a technically better way to do this. And it's the volatility that's actually the motor that's driving the portfolio or the treasury forward. If you were advising the administration, as far as I know you are, there's a

tension between, so Trump's threatening the BRIC nation saying, if you de-dollarize and the dollar is no longer the default currency, I'm going to raise tariffs because there's an advantage to being the reserve currency. We control 58% of reserves are in the dollar. We get to see flows. We get to have more teeth in our sanctions. And if Bitcoin goes to a million dollars, $21 trillion asset class, it's hard for me to see how it wouldn't at least bring reserve currency percentage from the dollar way down. How would you be advising the government to think about the advantages of dollars reserve

currency versus Bitcoin increasing in value and subsequently playing a larger role in perhaps replacing the dollar as a reserve currency. There's some simple, straightforward things that are good for the United States and probably good for the world too. First of all, just to observe that money decomposes into currency and capital.

Currency is the medium of exchange that we use to price everything in the world. The US dollar is definitely the reserve currency. The US dollar is also used as reserve capital, but in the form of treasury bills. Bitcoin is capital. Bitcoin is not currency. Gold has been used as capital. It's not currency anymore. The very simple thing that the US ought to do is they ought to sell the gold and buy Bitcoin with it and buy 20% of the Bitcoin network. It's very simple. Just swap the gold for Bitcoin. If anybody actually swaps out their treasury bills for Bitcoin, then the US is going to

own it all. It's kind of like just getting Alaska or the Louisiana purchase for free. They could pretty much have 20% of the network for free overnight just with a swap. They could even print the money. They could buy it for next to nothing. The only alternative to the treasury bill for anybody is Bitcoin. And so just buy, do that and Bitcoin becomes the world reserve capital network and the US will own both sides of the equation. They'll own the currency and the capital. But the

second observation is the US ought to just standardize stablecoin legislation and let people issue digital currency backed by US treasuries like Tether, like Circle. If the United States created a digital assets framework and they just let corporations and banks issue digital currency, and you just say, if you want to issue digital currency, you have to back it with US dollar equivalents, which means T-bills, right? And a US custodian, if they did that, the digital currency market would grow from 150 billion to 10 trillion,

and that would create $10 trillion worth of demand for US treasury assets. What will happen is we'll collapse every other currency in the world, Scott. We'll collapse the ruble, the CNY, everything in South America, everything in Africa, even the euro. 99% of the demand for stablecoin in Europe is the dollar, not the euro. So if the US really wants to make sure that the dollar remains the reserve currency, the real crippling defect right now is it's not easy to send digital

dollars at the speed of light on a mobile phone. And people want to do it. So they ought to actually normalize that. And if they want to make sure that the United States owns the capital of the world, they just ought to buy 20% or 30% of Bitcoin. They'll have it all. And then when the Chinese and the Russians dump all their real estate and all their gold, and if they dump their treasury bills

or whatever they dump, they'll buy Bitcoin. The price of Bitcoin will go through the roof. The US will make $80 trillion. So just as we wrap up here, Michael, I want to pivot to something a little bit more existential or personal. I've known you for the better part of 20 years, we're about the exact same age. What's left for you? You're obviously economically secure.

You've obviously built a company that's performed, as you said, best performing stock in the S&P. In five years or 10 years from now, you look back and think, okay, that's a box I wanted to check that I hadn't checked. What's left for you? What are you hoping to accomplish over the next decade? Well, you know, Scott, when in 2020, I was very frustrated and a bit depressed. I don't think I was alone. A lot of people were frustrated and depressed

during that time period. And I was, you know, my company was worth $600 million enterprise value and I'd worked 30 years and I could not break through against the Microsoft, you know, juggernaut. And I couldn't figure out how to grow it. And after 10 years of trying, I figured, maybe I should just retire and go gracefully off

and call it a day. And I think, as I said, I discovered Bitcoin out of frustration and desperation. And first it was just something to do. And then I realized it was a good technology. I went from, I'll buy it because I don't have a choice to do anything else to, I'm an investor. And I started thinking Bitcoin is like Facebook for money, or it's like, it's like a dominant digital monitoring network. And I started becoming

a tech believer in it. But then I emerged as a maximalist, Scott, which is, you wrote your book about the four, and at the end of the book, you basically are a little bit jaded. You're like, these guys got too much power and they abused their power and the world's not a better place for that. That's because they're companies.

And if Bitcoin was a company, if it was a big digital banking network, it probably also gets corrupted. What I realized is Bitcoin is a decentralized protocol. It's a commodity. It's ethically superior to a company. It's ethically superior to these big tech companies because it represents a protocol

of economic empowerment for 8 billion people and everybody on earth, regardless of your views. And so I basically went from opportunist to investor to maximalist. And now I'm of the opinion that the human race moves forward through clean energy, clean food, clean money. And human misery was our water was dirty, our food was dirty, we didn't have energy, we had dirty clothes, we had doctors with dirty hands and dirty instruments and the like. And we had dirty money. And for the last 500,000 years, all of our economics have been broken and human misery

has taken place because copper tokens and giant stone coins and glass beads and silver coins and gold, none of these things were perfect capital assets. They were never a settlement network and they were never a non-deflationary asset. Bitcoin represents clean money. It represents economic energy and economic empowerment. So my mission at this point is I would just like to spread it to 8 billion people. I actually think you can, Bitcoin is hope. I think you can fix a company, fix a country, fix a family. It won't solve the other problems. It doesn't cure cancer

and it doesn't make you a good basketball player. And it doesn't, you know, resolve political differences and religious differences. I'm not, I get that. What it does is it gives people a working economic fluid that doesn't drain 10% of their economic energy per year out the back door. And so I'm a big advocate for digital capital in the same way that 150 years ago, maybe I could get really excited about spreading electricity to the world. But if you found fire,

you would want people to know about fire. And Henry Ford, as I said, he put the fire in an engine and he gave us wings. He let us fly. And so the world's a better place with the automobile or the plane or aluminum or steel or computers or AI or whatever it is, I just think the world is a better place with digital capital or clean store of value money. You could say it's a fair and equitable way for us to settle our differences.

And there's something nice about that. Michael Saylor is the founder and executive chairman of MicroStrategy, a publicly traded business intelligence firm and holder of Bitcoin. He's also the founder of Alarm.com, named investor on 48 plus patents and author of the book, The Mobile Way. If he founded the Saylor Academy, a nonprofit that has provided free education to more than two million

students, he holds dual degrees from MIT in aerospace engineering and history of science. I've known you for 20 years, Michael. One of the things I think this space has unfortunately suffered from is a lack of, I don't know, thoughtful, nice people. And whether people disagree with you or not on this specific asset class, I've known you for 20 years. You've never not been willing to meet with me, provide me advice. People don't know this about you. You are a nice, generous person. And that's good for the asset class because I think it's like that. Really appreciate your time and congrats on all your success.

Thanks, Michael. Yeah, thanks for having me. It's always a delight to talk. So, Ed, what do you think? What do you think? I think you got worried a little bit that we were getting a bit too combative at the end there? No? Maybe just because-

For my sake. I appreciate you wanting to keep it real in the pushback. I have a bias towards Michael because I know him personally and I like him. He's generally a good, decent man. And the thing I like about what he's bringing to this conversation, he's definitely a cheerleader. There's definitely a lot of rah rah there. But at the same time, he will also say, he's not gonna tell anyone to put all their money in this.

He doesn't tell them to do that. He tells them to be a little bit more measured. He told people to mortgage their houses and use the money to buy Bitcoin. Oh, there's that. I like him for a lot of reasons. To me, that's not one of them. Well, let me go to the optimistic tone then.

If you compare him against the other figures in this asset class, one, he's not in jail, and two, he doesn't go on Twitter and start insulting and attacking people who don't support his narrative. And early in my business career, not early, early in my reinvention of my business career, I would go down to his place and I would outline my business and he would like, like a fucking AI

before AI go, these are the three problems of your business. This is what you should focus on. Do you want to have lunch now? You know, he would summarize my business in about 30 seconds and tell me what I should be doing. Look, I really enjoyed that conversation with him.

I do respect him. I don't think that he gave me a great answer to the value of Bitcoin and what makes it interesting beyond the fact that the price goes up. I share a lot of your skepticism about the asset class. It's always made me, quite frankly, it's just always made me uncomfortable. fact that the price goes up. I share a lot of your skepticism about the asset class. It's always made me quite frankly, it's just always made me uncomfortable. I've never been able to wrap my head around it.

I think there's a lot of negative externalities to a currency that doesn't, I mean, there's positive externalities about no government oversight or a lot about not being able to track its flows and bad actors that might be able to transact. I mean, I guess. Yeah. If the US lost its ability to do that, we'd be so fucked in so many ways we can imagine. So I'm like you. I share some of that skepticism.

The reason I really respect Michael is that if the institutional market had said, this guy's fucking crazy and fled the stock and the stock crash and he'd been fired. He would have gone down as like this cautionary CEO tale, right? That what happens when your CEO loses their shit, literally. And 499, I think of the S and P 500 CEOs, maybe 498, if you include Musk, would take that kind of risk reputationally. And he took it. Yeah, he certainly has balls of steel and he certainly, as you mentioned, he loves risk and he loves volatility.

I mean, we spent the first 20 minutes talking about how the most volatile asset class in the world is Bitcoin and that's what makes it so great. I mean, he loves it. It's fire. You can either run from it or put it in a car. That was good. That was good. I'm gonna use that.

It's great. That was good. I just, I can see, you know, he's a maverick and he's addicted to that. And he, as you said, he said he was depressed and didn't know what to do when his company was stuck at a valuation of $600 million. I mean, stuck. Stuck at $600 million.

What do I do now? I have to do something. I have to run into the fire. And here I am in this sad room where it gets dark at 430 talking to you. Exactly. But he was stuck. That's right. So he ran into the entire eternal fire that is Bitcoin.

Do you have any ending advice for us, Scott, after all that? I'm a big believer in diversification. I can see this going to a million. I can also see this going to a thousand. I think it's probably more likely it goes to a million than a thousand, but it's definitely a legitimate asset class. Now I would just say if you're under the age of 30, don't put more than in my view, 20 or 25% of your, you know, net worth

in any one asset. And if you're over the age of, you know, 40 or 45, don't put more than 10%. And a lot of people are very wealthy will tell me that that's being lame and that, you know, Bill Ackman says that You know Diversification is a lack of conviction My attitude is get rich slowly and when you get there, it's gonna be very rewarding and along the way it's fun

And it has less heartburn and anxiety This episode was produced by Claire Miller and engineered by Benjamin Spencer. Our associate producer is Alison Weiss, Mia Silverio is our research lead, Jessica Lang is our research associate, Drew Burrows is our technical director, and Catherine Dillon is our executive producer. Thank you for listening to ProfG Markets from the Vox Media Podcast Network. If you liked what you heard, give us a follow and join us for a fresh take on Markets on Monday. Amazon Q Business is the generative AI assistant from AWS.

Because business can be slow, like wading through the mud. But Amazon Q helps streamline work, so tests like summarizing monthly results can be done in no time. Learn what Amazon Q Business can do for you at aws.com slash learn more. That's aws.com slash learn more.