The Breakdown - ‘I Didn’t Buy It to Sell It. Ever.’ MicroStrategy’s Michael Saylor on His $425 Million Bitcoin Bet

Episode Date: September 19, 2020

MicroStrategy made waves when it announced in early August it was moving $500,000,000 in treasury reserves out of cash. At least $250 million were to be moved into bitcoin.  Earlier this week, the company announced its final bitcoin purchases totaled $425 million.  In this conversation with NLW, MicroStrategy CEO Michael Saylor explains: Why he’s always treated the company with a long time horizon Why the asset inflation rate is the real inflation rate How he became convinced that bitcoin is the best treasury asset in the world  Why Michael believes some other companies will follow suit, but better do so quick Why the intensity of maximalists is actually part of the reason he grew conviction around the asset  Why he would buy every bitcoin if he could

I watch these crypto Twitter guys and they look at what we just did and they're like, oh, what happens when they dump it? Like they bought all this Bitcoin. That's bearish. They might sell it and that'll be bad for the market. Or when is he going to sell it? If it goes down by 5%, is he going to like lose interest? And I think they don't get it.

I bought it for the next hundred years. I didn't buy it to sell it ever. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by crypto.com, BitStamp, and nexo.io, and produced and distributed by CoinDess. What's going on, guys? It is Friday, September 18th, and I am back with another extremely exciting conversation. This has been a year of very big news for Bitcoin. I think when the storybooks are written, we will view 2020 as a pivotal inflection point moment in the narrative comprehension, the narrative understanding

of where Bitcoin fits in a crazy larger macro context. Earlier in the year, we had Paul Tudor Jones, who announced his Bitcoin thesis around what he was calling the great monetary inflation, and I believe that the announcement that micro strategy made on August 10th of this year will stand alongside Paul Tudor Jones's announcement as one of those key inflection point moments. Micro Strategy is a business intelligence and data technology company that has been around since 1989. For that entire time, it has been run by Michael Saylor, who has a very different approach, a very different time horizon than most tech CEOs that you're going to find out there. This year, Michael started to get nervous that the five,

$500 million or so of cash that the publicly traded micro-strategy had on its balance sheet was just, as he put it, a big ice cube that was melting away. In a world where the real inflation rate is the asset inflation rate, and the value of that $500 million was melting away year by year, what could he do to actually preserve the treasury, to not just give away the gains that his company made by selling products and doing things for customers to this inflation that was sapping his reserves. The answer he came to in a huge way was Bitcoin.

Subsequently, the company has shifted $425 million of that cash balance sheet to Bitcoin, and in this conversation, we get into why. I'm very excited to share this story behind the story of micro-strategy for you, so without any further ado, let's dive in. All right, we are back, and I am so excited for this conversation. Michael, welcome to the breakdown. Thank you, Nathaniel. I'm happy to be here.

So as we were talking about it, just before the recording, it's been quite a week for you. I think it's longer than a week. And I'm sure, you know, for everyone who's listening, I'll have just, you know, introed the context. But what I wanted to start with is not actually Bitcoin, although we're going to spend a lot of time on Bitcoin today. I want to start with micro strategy itself. and the lineage that you have running this company, you've been running micro-strategy since 1989, I believe. Right.

That's, you've been at this through the rise of the consumer internet, through the dot-com bubble, through the advent of mobile, through the great financial crisis, through the rise of social. This is an extraordinarily, like, there's so many different phases of the economy that you've run this company through. What was it like to kind of evolve? this technology company through all those different eras, and how has that shaped the time horizon that you think in terms of when you're actually engaging with your company?

Well, you know, I think that the reason that I'm still here is because I love what I'm doing, but there has to be a certain sort of religious passion if you're going to last more than one market cycle. So the question is, why do you start a company? Some people start a company to make money. It was very clear to me early on that if you start a company to make money, you're going to make money, you're going to make a short time horizon. You're not going to last because every company has its ups and downs. When you get to, and by the way, you have a stock, it's trading in the market.

if your goal is to make 20% more than you have, anybody with a stock in the market any day of the week can sell the entire company for a 20 or 25% premium. That's been the case forever. So the real question is, what are your aspirations? I always love technology, so I wanted to do something cool with technology. I wanted to make a world a better place with technology.

And, you know, I, I have a personal holding company, and the holding company's name is Alcantari. And the origin of Alcantar is if you go to Alcantara, Spain, you'll find that there's a Roman bridge that still stands in Alcantara, Spain, 2,000 years after it was constructed. The engineer's name is Julius Locker, and the reason that we know this is because when that engineer finished that bridge, he inscribed a tablet. underneath the bridge in Latin saying, this bridge will stand for all times, signed his name, and walked away. And I just thought that was always a pretty inspirational thing that an engineer builds something for the people. And a bridge is a great metaphor, right? I mean, it connects this side of, you know, take away the Brooklyn Bridge, take away the, you know, San Francisco Bay Bridge,

is disaster, right? Bridges are really, they're critical, iconic to civilization. You can't do without them. They're a utility. And I just thought that delivering a utilitarian value was the highest calling for a technologist or an engineer, make the world a better place. So it turns out that the people that I admire made the world a better place tend to be industrialists that spent their entire life doing that thing. You know, John D. Rockefeller, love him, or hate him, spent his entire life converting people from kerosene lamps to oil, and he built such a powerful network that 100 years after he was dead, it was still worth a mega amount of money. Carnegie did the same thing. Mellon did the same thing. None of them were quick at what they were doing. So

when I started micro strategy, I wanted to do something useful. And, you know, you know, it was a you know, what do you do? You start by taking the tools at hand and you build the thing. So our first thing we built was computer simulations on Macintosh's to help people make better decisions than a corporation. And then Macintosh just fell out a favor, and we had to change. And so then you got a decision. Do you sell the company for cash and run away,

or do you head toward the future and embrace the challenge and transform yourself? So we transformed from a company that worked on Windows and we couldn't we couldn't do it From scratch so we adopted a platform from informics called wings it was a competitor to Excel and we built cool software on this This cool it was it was it was the first spreadsheet that had hyperscripting language in it you could actually code like a job early JavaScript And you could code something people said well it's not going to be the winner you're crazy But it was the only thing we could do so this is what you can do, you do it.

We built this cool executive information system. We sold it. We tripled. Then eventually, Informic started to drop support for wings. We knew it was going to die. We hopped over to Visual Basic. People said, you know, well, and we built a new thing, we doubled. And then people said, well, Microsoft Visual Basics not as good as C++.

Along comes some new technology. On the back end, we started building systems that ran against relational databases. McDonald's called me once and they wanted me to build an analytical system on top of their database of every transaction in the world. It was a thousand times bigger than anything we'd ever done before. It was on DB2 on a mainframe. We'd never touched it before. We had one person in the company that had taken a course in DB2. I showed up on a Thursday.

The guys at McDonald's said, we need you to do something which is about 10,000 times bigger than you've ever done before. can you do it? It'll be on DB2 on a mainframe. And I looked at them. I looked at the campus. I thought about my future. And I nodded. Yep.

They go, well, you have till tomorrow. It's Thursday at 3 o'clock. This is 1993. And we're a $4 million company. And we're not in the business intelligence space. Okay. So if I don't do this, nothing that's happening right now happens.

So the marketing, guys at McDonald's go, okay, well, you get until Friday at 5 p.m. And you've got to show us that you can analyze all of our data, extract the results from all of our marketing campaigns for any arbitrary selection of stores, any arbitrary selection of products, any arbitrary selection of parts of the day, and then compare that to the previous year. You're going to have to sift through hundreds of millions of rows of data. You know, so to do that, we had to create the sophisticated relational analytical engine. By the way, the relational analytical engine that eventually took a thousand engineers five years to get perfect, but we had to do it by Friday at 5 p.m.

We started, I think I'm hearing this Thursday at 11 a.m. I walked out of the room. I picked up the phone. I called one engineer Georgios Charlambo's. I still remember him vividly. You cannot forget this. Georgeos had a master's degree, and he'd taken one course in DB2. He was in Detroit. I was in Oak Brook, Illinois. I said, Georgeos, I need you to go to the airport, get on a plane and fly here because you and I have a project, you know, and we're going to build a relational analytical toll on top of a mega database for McDonald's. Georgia said, okay, I'll be there. George just gets on a plane. I start sweating, and this is where the marketing kicks in. I thought, maybe I can do something here

to make it easier. So I walked back in the room, actually, and I got them. to actually I started the project. George just arrived about three hours later. We started building this thing. At Friday at 9 in the morning, I knew I wasn't going to be done by 5 p.m. I walked in and the conference room I said to the guys, you know, we're really pretty far along, but we want to make it perfect for the presentation. So if you don't mind, can we schedule the presentation Monday morning at 9 a.m. instead of Friday evening at 5 p.m. I'm like, okay. So, and by the way, just in case, could we have access to the facility over the weekend?

What happened next was we worked for like 96 hours straight, and I think I slept three hours, and Georgia slept two hours, sweating the entire way. At 8 a.m. on Monday, I went home, changed shirts, came in, and we had a working prototype or a working application. They liked it. They bought it. They gave me another six weeks to deliver the production version. It became a multimillion dollar client. Our first relational analytics client,

we went on to sell billions of dollars worth of that software. And it was just a moment in time where I swear to you, if I hadn't delivered it in those two or three days, nothing would have happened. What happened next is, you know, we went from that relational analytics. and then eventually the web came along, and we had to morph and we had to implement on the web.

Then along came, or we had email. We came up with the idea we were going to deliver via email. Then we morphed into mobile intelligence. And along the way, there were always these paradigm shifts in technology. There's always something new coming along. And the challenge in the business is to figure out what you ignore, what you minimize, and what you commit to. What is an existential threat?

if you don't do it, it's going to kill you. What is simply an opportunity? And then what is noise? And so I guess I'll end the entire soliloquy with one observation. Most of my mistakes were never bad ideas I pursued. They were good ideas I pursued in order to just get that one more iota of revenue or one more thing. The bad ideas are easy to throw away.

99% of the ideas are bad. The good ideas are very tantalizing and you want to chase after them. And as we grew the company over time, what we realized was the real critical thing is to figure out the great ideas, the good ideas that either are threats to your existence and if you don't address them, you're going to go bankrupt, or the good ideas that are going to make your company tenets. next better. And if you can properly sift through the noise and figure out what those things are,

then you can grow and prosper. When in this journey did you know that you wanted to be running this company and evolving this company? Because I think if you talk to a lot of young entrepreneurs today, they want to build forever. But they're not necessarily wedded to the building within the same structure or they'll do a company for a couple years. I mean, Silicon Valley is a rotating door of companies people going through. When did you know you wanted to keep building, you know, a kind of a larger framework for yourself? I knew it on the day I started the company.

I kind of, I guess I respect that other people have other values, but this comes down to just a set of values. Like I wouldn't respect myself if I was just building companies to flip them. I can't be that person, right? is just not me. I always thought of myself. Like if someone called me an entrepreneur, I kind of took offense to that.

Like a dilettante, lightweight, dabbling in different stuff. It's like I built it so I could sell it. Well, no, I built it to make the world a better place. That's why I built it. Like I, when I was growing up, there were four honorable professions. Rockstar, fighter pilot astronaut, I linked the two, an astronaut, professor and CEO. I wanted to be a rock star in high school.

Then I realized that rock stars don't make a lot of money. Like 99.99% of them don't make enough. And then I wanted to be an astronaut, fighter pilot went in the Air Force, learned fly. And that didn't work out due to just a random stroke of luck. Then I wanted to be a professor was going back to MIT to get a PhD and talk about things and teach people stuff for the rest of my life and write books. And as I was doing that, my employer, DuPont, begged me to finish a computer simulation because there was a billion dollars at stake.

And like, I'm making $50,000 a year at the time. They had a billion dollars. Obviously, there was an arbitrage opportunity. They needed me. And there's nothing in the world I wanted other than to start a company be CEO, do something useful with my life, build something. So when they asked me to stay, I said, I'll stay, but you're going to have to give me a quarter million dollars up front. I want millions of dollars of contracts. I want free office space.

I want those 10 people at DuPont to come to work for me. I need $100,000 in cash right now. And they said, okay, well, you know, how much equity are you going to give us? And my answer was none. I'm giving you nothing. So that the company was capitalized based upon the first customer because they wanted to buy something. And because when we came public in 1998, it was closely held, we were able to structure the capital structure so that there was a dual class. One thing that I did early on, I can take credit for this now, I guess.

it's out to the fact that's 22 years later, I was the first company, the first tech company, to actually go public with the Class A, Class B, dual-class voting structure in the tech industry. When Microstrategy came public, the Class B shares had 10 votes for share, and I had them, and the Class A shares were one vote a share,

and that meant that even as we diluted down over time, I had a majority of the voting stock, and it was a controlled company. Now, previous us coming public, the only people that had done this were Ralph Lauren or Sumner Redstone, like billion S.D. Lauder, like billionaire Craig McCaw did it. So when we're coming public, I'm a little software company. We're nothing. I've got nothing. I've got no credibility at all. It's my first time coming public. And I'm auditioning these investment bankers. And they started drafting the S-1. And I was. went and I looked at Craig McCall and Sumner Redstone and Ralph Lauren and Esty Lauder and I said, I think I looked at Craig McCall's deals. I want our capital structure like this. It looks like the guy's going to sell the stock, raise the money, and keep a controlling interest. And that allows you to run the company forever. Okay. The initial investment banking team told me, no, that's

not for you. You're going to want common stock because the outside investors like the ability to have a say in the future of the company. And of course, it was clear to me that if we sold common stock, as soon as we had the first dip, the company was going to get sold. You know, we were going to go out of business. And so another critical decision point was where we were going to sell common or we were going to go with a dual class of stock. So I said, look, I want a dual class of stock. I'm in this for the long term. I don't want to, my time horizon, I mean, the dude built a bridge lasts just 2,000 years, right? My time horizon is substantially longer than two years, five years, seven years, or 10 years.

Arguably, right, if you went to anybody you respected in the last 100 years, anybody in business, and you asked them what their career goal was, if they had answered that they want to do something useful until they lose interest in it, would you still respect them? Like didn't, I mean, didn't everybody, like, did anything useful, left something after they were gone? I mean, did not Steve Jobs leave something after he was gone that you still depend upon? So I don't find it all that honorable nor admirable. Like, I wouldn't want to brag about flipping in and out, you know, like people, I know, I know I'm meandering, but I watch these crypto Twitter guys and they look at what we just did. And they're like, oh, what happens when they dump it?

Like they bought all this Bitcoin. That's bearish. They might sell it and that'll be bad for the market. Or, you know, when is he going to sell? If it goes down by 5%, is he going to, like, lose interest? And I think they don't get it. I bought it for the next 100 years. And in 100 years, I expect that maybe we might borrow a little bit of money against it

to buy something else we might want. I didn't buy it to sell it ever. right? I mean, the only time you're going to give up on something you love is when you lose faith, right? When the entire Bitcoin community comes back and says, well, we lost interest in mining and we're, and we've decided to screw with, you know, Bitcoin core so that we can jack up the transaction count by a factor of 50 gazillion million. And we may have to take it down for six months and then turn it back on and we'll transition it through 2.0. when I lose faith, then I sell. Until I lose faith, I'm holding it forever.

So we're coming back to this IPO, and this is the funny story, I looked at it. It was the same situation. I looked and I said, well, it seems pretty obvious to me. I want a dual class of shares. I said, well, you know, there might be a marginal discount on that. I said, well, it doesn't look like Craig McCall or S.E. Lutter or Ralph Lauren got a discount. They just did fine.

they said, well, that's not for you. You're not going to want that. You know, like they Jedi mind-tricked me. You know, that's not for you. I said, well, why not? They said, well, only billionaire families, you know, have, or billionaire families with wealth for 100 years. Only they can do those deals.

I said, well, what do you think I want to be? Like, so they said, well, we can't do that. I said, well, actually, I have 10 of your prospectuses. You just did it 10 times in the past two years for people other than nuts. I go, well, that's not for you. I said, okay, fine. You're fired. And I fired the first bank.

I went to the second bank. The second bank did the deal. We did the road show. I talked to, I did 80 meetings with 80 investors. One investor took me to the back of the room and trashed me out for three minutes saying, I don't really like this class B structure that gives you too much power. I looked. I nod.

I said, yes, sir, I understand. We think it's in the long term best interest of all the shareholders, but I respect your opinion. That was the end of that. The deal went off.

It was a massive success. That class B structure kept me from getting fired about 10 times. It kept the company from getting sold half a dozen times. when you know when Google came public they did it when Facebook came public they did it now it's not uncommon

for a lot of tech companies to do it you could probably find dozens I like to think they copied us there I know for a fact that at least one of those founders running a 500 billion plus company met with me

directly, and my one piece of advice was, create a dual-class capital structure so you don't get bounced out at the point that the going gets tough. So, you know, that was 22 years ago. I contemplated then that over the course of 30 years, if you dilute the company by 3% a year, if you don't have a dual-class structure, you're going to lose control of the business with 95% and probability. And I don't think it's unreasonable for someone that cares about the company that loves it to want to implement a control capital structure so that it doesn't get snatched out of their hands. It's like if you bought Bitcoin and you were leveraged up and you pledged 80% of it or you know, you see these guys that buy and they buy a 20 to one leverage. Like when

the price of Bitcoin trades down 300 bucks, they get liquidated out, and you'll watch this liquidation where 2,000 Bitcoin gets sold in 60 seconds. When it gets sold, they get sold at an 8% or 4% discount, and they lose all their capital, and then the market pops back up. It's because they had too much leverage. If they really wanted to hold the stuff, you would be thinking, I'm going to buy it. If it trades down 10% I'm still holding it. If it trades down 20% I'm still holding it. I'm not going to pledge it. You want to be aggressive.

Pledge it, go up to 50% margin. But really, if you care about it, you don't pledge it at all. And when it goes down by 99%, you'll still be holding it. So, Nathaniel, I'll end with one observation. I'm unique in a couple ways. One, I'm the longest lasting CEO of a public. traded enterprise software company. I live to see 99% of my peers quit or lose their job.

99% mortality rate amongst my competitors. They all sold out over the course of 20 years. That's one interesting thing. The second thing is we did implement a capital structure so that the founders could pursue the mission of the business without volatility impacting. And third, I'm not. proud of this but I'm the only public company officer maybe the only public

company CEO in the history of the world that actually lived to see his stock decline in value by 99.8 percent my stock went from three hundred and thirty three dollars a share to forty two cents a share I kept my job but if you were the If you were on my board of directors, you probably would have fired me if I did not have a controlling stake in the company. I kept my job and I kept the company and I didn't dissolve it and sell it off to a megacorp to become the 167th division of IBM. And that's why I'm here today. So, you know, people, H. Hold on for dear life or whatever it means. right? I get it, right? It's pretty obvious, but I find it's a joke, you know, when people

get on crypto Twitter and they talk about how they might have to sell if Bitcoin trades down 5%. Like, you guys haven't lived through anything, right? I mean, any real entrepreneur? It's not just me. Any real entrepreneur that ever lived through anything will tell you the story of when they were 48 hours from bankruptcy or when they had to mortgage their house or or when they were one customer away from utter destruction, right? And, you know, you give up too soon, right? The world writes you out of the equation. Somebody else steps up and they take on that responsibility.

And so that's my view toward commitment over time. Well, I mean, I think it makes sense that you would find ethos and sort of intellectual alignment with Bitcoin and the way that it's designed. I was going to ask, I mean, I was going to ask, you know, have you found difficulty maintaining that long-term time horizon in the context of the sort of rampant short-termism of public markets? But, I mean, you kind of just answered the mechanism that you created for yourself to overcome that.

I guess that what I wanted to follow up with now is maybe let's talk about how the space or how the question that Bitcoin answered started to come into your mind. Your observations of the macro environment, running micro strategy, you know, what started to get you concerned, or just thinking on this path that led you ultimately to Bitcoin? You know, for the 10 years previous to this year, if you'd asked me my investment philosophy, I would have boiled it down to, I'm a technology investor. I would buy a dominant, digital network wants it achieved domination and I would wait for the rest of the world to figure it out. Like Apple computer became the dominant mobile network, Facebook became the dominant social network,

Twitter became a dominant speech network, you know, Amazon became the dominant retail network. They're all pretty obvious to me, right? I mean, if you use technology, it was pretty, it was pretty obvious in 2010 that Apple was going to eat the world. It's so obvious that I wrote a book and I published the book in 2012, the mobile wave and the mobile wave messages buy Apple stock, right? And if you bought Apple stock, you would have made 20 extra money. It was very obvious. I was not a macro investor, right? Like I didn't, you know, I didn't really have strong opinions on a lot of things other than the fact, the thought that it seemed like the interest rate was too low and it should go up one day. but I didn't really understand how the interest rate was set.

It didn't occur to me that central banks were just directly managing and manipulating all the interest rates. And so I ignored it, didn't really think much about it, and I didn't have to think much about it. Because technology investing works fine from 2010 to 2020, right, and it's rational. And everything you would expect to happen was happening. And then in my core business, my P&L, I'm busy, you know, competing, right? and that takes up all my time. So 2020 was a wake-up call. And what happened in 2020 is, for the first time in my adult life, I felt like technology stocks were overvalued. Right. Like, it was the first time. Like, I would have sworn to you, I was a buyer all the way up

until April 1st of 2020 on technology. And so my worldview gets crushed, right? If Main Street goes like this and Wall Street goes like that and they diverge, that kind of shattered my faith. Like it was a, you know, a real fate-shattering crisis that we went through. Things that I believed that I would have sworn that I would have just fought to the death over, I had to abandon. I believed in working in close proximity with

other people. I didn't believe in remote work and I was forced to invert and open up my mind and I realized that we're now in the virtual wave is a paradigm shift. The mobile wave I was kind of excited about, you know,

the mobile wave was paradigm shift of all the software leaping off of your computer onto your phone. But the mobile wave was not nearly as powerful as the virtual wave. And the virtual wave was a complete dematerialization of products and services. And that happened forcibly for all of us starting in March of this year. So when that happened, my worldview opened up. And with regard to the balance sheet in particular, I had seen the balance sheet as $600 million in cash that should over time earn five or six percent risk-free short-term interest once the world got their act together and started

acting normal again. Like after the great, before the great financial crisis, Nathaniel, I was getting five and a half percent overnight interest on my money in the bank. Five and a half percent. You remember when you used to get five and a half percent on a bank account at no risk from the bank? And then you would get higher interest rates if you took more duration. So before, that and then all the sudden interest rates go to zero and then they started crawling back up and we thought and they crawled back up to 2%. You could get 2% interest short term and we thought, well maybe everybody's going to get back to normal and we'll go back to 5%. And then it went the other way. And, you know, and as of yesterday, you know, the Fed just announced that they're

quite sure and quite comfortable that interest rates will stay zero this year, next year, the year after next year, and the year after the year after next year, which kind of dashes your worldview if you believed that there was anything normal about interest. So I got to then reevaluate what the world is, and that took me down a rabbit hole of macroeconomics, and I realized that I had been somewhat oblivious and naive to some sophisticated ideas. And as I read, you know, I read everything by the Austrian School of Economics and as I read the Bitcoin standard and as I read all the Bitcoin essays, it turns out that, I mean, Bitcoin, you know, is like the commercial manifestation of Austrian economics with technology wrapped around it. And as soon as you start to go one way or the other, your world opens. And so what did I realize? I realized that we're expanding the money supply by 7% a year for the past decade. What I realize is that inflation is not inflation at all.

I mean, there's an all saying, you know, in the ad business or the propaganda business, depending on who you are, it's like, you can't tell people what to think, but we found out that we can tell people what to think about, right? All of our studies proved us. We can't tell people what to think, but we can tell them what to think about. So what are people being told to think about? They're being told to think about CPI. Okay, and most hideous, terrifyingly wrong decisions come about when someone focuses upon the wrong metric.

So, CPI is not even a relevant metric. The entire world is focused on CPI, but CPI is tracking the inflation rate of a market basket of consumer goods that are cherry-picked not to inflate. Right. They're almost by definition, the market basket of goods in CPI are manufactured by robots and by artificially intelligent creatures and they're going to not inflate. If I wanted to look at a true inflation rate, you know, you've got the chapwood index that takes a different view. Look at the things that people really want to buy. I want to buy a house. I want to buy a college education, maybe an Ivy League education. I want to buy beachfront property. I want to buy a nice, in New York City. I want to buy a home in the Hamptons. I want, by the most important thing you want to buy, I want to buy an annuity stream that lets me not work again for the rest of my life. That's what you, I mean, the whole idea of retirement is I want to buy, I want to buy a pension.

So in the year 2008, it cost a million dollars to buy a bond that pays you 50,000 a year. And this year, it would cost you $10 million to buy the same bond. Okay, so let's work out the inflation rate, 100% inflation, right? A thousand percent. It's just so awful obscene, right? A thousand percent inflation over 10 years, but we don't call it inflation. It's asset inflation, right? Can we do that math?

I mean, what does it take of it? It has to double once, twice, three times. So it's 35% inflation a year for 10 years, right? 35% inflation rate if you actually wanted to live well forever. And you could be a bond or it could be if I wanted to buy a stock that yielded 50,000 in dividends. Well, Apple stock yields dividends. It costs twice as much. Apple stock costs twice as much as it did 12 weeks ago or 16 weeks ago.

So if something goes up by 100% in four months, then doesn't that mean you're doing a 250% annualized inflation rate onto something? Okay, so maybe it's not going to go up for the next five years. You can, like, divide it by five, and it's only 20% inflation. But the bottom line there is, I'm oblivious to this. And then all of a sudden, I got to not be oblivious to it. And then what I realized is the real inflation rate is the asset inflation rate. It's 7 or 8% when the economy is run normally.

If you have 0% or 1% CPI, you've got 8% asset inflation. This year, asset inflation is 25 to 40% one time. And the real big question is, what's the asset inflation rate for the next three years? And it can't be less than 10% in my opinion. If you look at what every central bank, the EU, the Fed, everyone else is talking about, a reasonable person would estimate that scarce assets. Scarce assets. By the way, I saw a news story this morning on Snowflake in the Wall Street Journal.

And the Snowflake IPO went to the moon and it's valued it. I don't know if it was 30 times revenue or some god awful huge number of times of revenue. And you know what the justification of the journalist and the Wall Street Journal was for why this thing is trading at like infinity? He goes, well, you know, growth is really hard to find during the pandemic. And investors are willing to pay up for a scarce asset. I just looked at it. They raised $3 billion in that equity issues. And so people act like, well, you know, investing.

$400 million in Bitcoin for a scarce asset is some kind of balzy crazy thing. Some Duda Wall Street is paying good awful amounts of money for a scarce asset. Everybody wants a scarce asset. So coming back to macroeconomic investing, right? The conclusion is the asset inflation rate used to be 7%. The asset inflation rate equates to your cost of capital, if you have a corporate treasury. If you're not actually keeping up with the asset inflation rate,

you're not keeping up with the cost of capital, you're draining the purchasing power from your corporate treasury. You're getting weaker. By the way, it's the same for a family. If you're a dude working for a salary and you're putting your cash in the bank and the cost of the college education for your kids going up by 8% a year.

And by way, I went to MIT 30 years ago. I know what it cost to go to MIT 30 years ago. The cost didn't inflate by 2% a year over 30 years. it went up by 8% a year over 30 years. Okay, that's very clear in my mind. So if the cost is going up by 8% for everything you want to buy in the future, and you're getting paid 0% interest, you're falling 8% behind,

and in fact, you're working for nothing. You're burning your money. You could work for 30 years to stand still. You still won't have what you were working for. So now this year, okay, you could maybe ignore it for two or three years. to be safe. If you're hyper-conservative, if you're afraid to do anything that might rock the boat that might create some volatility in the near term, maybe you can live with the 8%. But it seems to me as a casual observer that you could estimate the asset inflation rate starting in March for the

next five years at 20% a year, 25% a year. year. That's the cost of capital. And you are now, if you're sitting on top of a billion dollars, you're going to take a $200 million hit per year. How many companies can generate $200 million dollars in after-tax income per year to cover the hole that they're digging in the ground? So that's my journey, right? That's, it wasn't important until it was important. And then when it got important, it got really important. And then I, as I said before, I just came to this horrifying realization.

I was sitting on a $500 million ice cube, and it was melting at least 10% a year, but probably 20% a year. 10% of year is magic, by the way, because we're making, you know, We're thinking we're going to generate $50 million in after tax or cash flow, and we're going to put it in the bank. And if you're going to melt $50 million of my treasury while I put $50 million in the bank for the next decade, I'm also just right off the decade as a lost decade. What's going on, guys?

I'm excited to share that one of this month's breakdown sponsors is crypto.com. Crypto.com offers one of the most cost-efficient ways to purchase crypto out there, as they've just waived the 3.5% credit card fee for all crypto purchases. What's more? With crypto.com's MCO Visa card, you can get up to 10% back on things like food and grocery shopping. When you buy gift cards with the crypto.com app, you can get up to 20% back. Download the crypto.com app today and enjoy these offers until the end of September. BitStamp is the original global cryptocurrency exchange.

Since 2011, BitStamp has been the preferred exchange for serious traders and investors. trusted by over 4 million customers, including top financial institutions. BitStamp is built on professional grade trading technology. Their platform is powered by a NASDAQ matching engine, and their APIs are recognized as the best in the industry. Download the BitStamp app from the App Store or Google Play, or visit bitstamp.net slash pro to learn more and start trading today. That's bitstamp.net slash pro. In this crisis, many investors aim to keep and grow their digital assets. Others seek to maximize the yield on their cash.

NXO allows you to achieve exactly these two goals. The company offers instant crypto credit lines against all major cryptocurrencies, with interest rates starting from only 5.9% APR. NXO also lets you earn up to 10% annually on your Fiat and digital assets. What's more, interest is paid out daily, and you can add or withdraw funds at any time. Get started at nexo.io. You're going down this rabbit hole. This is starting to reveal itself to you. It's becoming clear.

what's the process of getting your other stakeholders to think this same way? How does that process work? How do you come out the other side of this with the action plan? And then maybe go into what the action plan actually was and is? You know, I think what I did first is I opened up a, you know, you can't make this stuff up. It's hilarious. Before COVID, we met as a board once. a quarter around a conference room and we had discussions face-to-face intense ones once a quarter.

COVID hit. I opened up an I-Message chat channel for the officers and directors. And the first thing I did was go on YouTube and I pulled the most compelling speech by Andreas on Bitcoin. But it's not that hard on YouTube. go and just type, YouTube figures out the most compelling thing and it serves it up to you. Then I took the most compelling speech by Pomp on Bitcoin or overview. And then I took the most compelling debate, the future of money, Bitcoin or Fiat currency,

Eric Voorhees versus Peter Schiff. And I put that into the chat channel. I sent it to all the officers and directors that said, I'm going to need you go. guys to do some homework. I want you to watch these three things, then we'll talk. And that starts the entire discussion. That's like two and a half hours worth, three hours worth of video content. Then there's a set of meetings, one-on-ones. Then there's some follow-up materials. You know, now I'm going to send you the bullish case for Bitcoin. I'm going to send you Parker Lewis's set of essays. Then I'm going to send you, you know, the next

set of links. You know, by the way, they got a message. You guys want to keep up on Bitcoin, this coin desk thing. This is pretty good. You know, so they get, they get coin desk and like, so you're sitting right there. And, and I suggested this is a nice curation of what's going on. Then we had a set of team meetings. So we had board meeting. And we discussed it, you know, every angle. Then we broke into groups. And then, the general counsel went off to speak with a bunch of our outside council, crypto councils, you know, et cetera. And then the CFO went off to speak with our auditors.

And then we went to speak with finance experts and then speak with investment experts and speak with banking experts. Then we went on a march to audition various institutional grade brokerages and institutional custodians and we did our due diligence on that. Then we scoured every SEC filing of every company that ever invested in crypto. You know, and I mean, the good news is, you know, we get a chance to lead the way. There were no bad precedence. The bad news is there were no good precedence. We saw, you know, we saw some crypto miners and then we saw overstock. And then we went back to first principles. And by the way, a lot of people were afraid of first principles.

They're afraid to start to reason. I have a new problem. How do I solve it in an appropriate, respectful way to all parties involved? And this is where I'm going to digress and I'm going to tell you a quick vignette that sticks in my mind, which is, I think, relevant. I came from a middle class family and I grew up in a small town of Fairborn, Ohio. I was a class valedictorian, and I'd never really met. I'd never met well-educated people from good schools, good families. I'd never been in a competitive environment. I was just always like the smartest guy in my class.

And then I show up on scholarship. And, you know, you go from being the smartest guy in your class to being one, you know, I think like 80% of my class was valedictorian, right? Like you go from one of 500 people, every one of them as smart as you, right? It's very, it's like going from the little leagues to the big leagues and there are no weak players. Anyway, I sit down the first week, the first class in chemistry and the professor walks out, This is the first lecture, and he holds up a tile off the space shuttle, and he says,

welcome to solid state chemistry and materials. This is a tile that fell off the space shuttle on reentry last month. NASA called me down to talk with them. They can't figure out why it burned off on atmospheric reentry. But they know it burned off. There's a problem for them. They want to solve the problem. You know, what do you guys think we should do?

Okay, and it was an iconic moment because everybody looked at everybody. We all knew we were pretty smart, but then the first thing that goes to your mind is this horrifying, horrifying thought, did I miss this in the reading? Like, is there a tech, should I have read something in the textbook with the answer to this? And that lasts for about five seconds. And then the next five seconds, you thought, you know, this is not in a textbook. This is not in any textbook any in the world. There's no person anywhere on earth that knows the answer to this question.

Nobody at NASA, no professor, no one in any lab. This guy asking me doesn't know the answer. He expects me to figure it out from first principles. And that's the way technology moves forward. And at that point, you either run in horror out of the room and go and hide. I want to go to a school where they only ask me questions where the answer is in the back of the book and I can write them down on a cheat sheet or you take the other view which is okay this is what it means to be to be a participant in the technology world you're going to be given problems no one on earth

has ever solved before and you're expected to go back to first principles Newton's laws the laws of thermodynamics the way that math works and if you can't figure it out from that do some research, read the stuff, you know, go back to gap accounting and, and you might use a common dose of ethics and values and communication skills and common sense, figure it out. And, you know, it's like, by way, it's a lot harder to figure out how to keep the tiles from burning off the space shuttle than it is to figure out how to buy Bitcoin as a publicly traded company. It's just something to do. And you have, you know, you have some people. By way, this is, this is the technology again, and this is what irks me.

I'm a little tirade here. It irks me about investors. I meet with them and they say, well, you know, there's the technology companies and then there's the other companies. And like, we don't want to have more than 20% in technology. And if Apple gets too high, we're going to sell it to buy a non-technology company. And my answer to all of them is there's never been a growth company that wasn't a technology company. There's never been a successful company that wasn't a technology company. You go back 2,000 years, the Romans were successful with technology. John D. Rockefeller was a technologist. So was, you ever try to create steel in a factory? The only people that think that steel is not a technology business are ignorant. You're ignorant if you don't understand that craft

and Hershey and aluminum and steel and airplanes and oil. And oil. are not technology. It's only that people that come along a hundred years later that are born with a silver spoon in their mouth think that these guys weren't technologists. And so the quintessential iconic moment in technology is you have a problem. No one solved it before. Either you're going to approach it with the laws of physics and math and first principles and you're going to work through the regulatory, the legal, and the organizational issues and move forward, or you're going to run and hide. And if you choose the one, there's a future. And if you choose the other, you're just waiting for somebody else to define your future. I mean, I couldn't agree more. And I think

the, there is this heuristic of tech and not, which by the way, is being reinforced right now in the, you know, kind of post-COVID recession or recovery as everyone kind of looks at the NASDAQ and looks at quote unquote tech stocks rather than kind of seeing technology as inherent in all these things, right? But I think that your broader point is really salient. And I guess then my question becomes, what has the market's response been? Right. So you have, you've made a decision, you've offered a solution for your company based on these principles. How have other people seen that, viewed that? What was the journey from the first announcement to where you are now? And I guess what comes next?

what's the trajectory for you? You know, with any of these things, there's a lot of uncertainty about what other people will think or do, right? We deal in a world of counterparties. And a public company has to be respectful of all of its counterparties, right? I have to be thinking about the impact on my customers, the impact on my employees, the impact on the regulators,

the impact on my vendors, and the impact on my investors. And the impact on the investors is a very interesting and complicated thing because, you know, you have investors that are invested in the stock for a decade. They're going to sit and hold it. They're hoddlers. And then you've got investors holding it for a year. And you got ones holding it until you print your next quarterly results.

You know, and I remember coming public. This is another interesting vignette. I come public and I was I was complaining to an investor friend of mine that the investment bank was getting a green shoe. A green shoe is when you come public. You say you sell four million shares at 12 bucks and the stock trades up to 18 and the investment bank gets to buy 600,000 more shares at 12 bucks and sell them at 18. And so they make a risk free warrant, right? A free warrant and they make a fortune on that green shoe if they want to or they can give it to whomever. And I complained to my investment friend. I said, this doesn't seem right. And he goes, look it on the bright side. The fact that there's a green shoe for 30 days means that the investors are going to, and the investment bank's going to be in your camp for 30 days instead of 30 minutes. And so there are investors that are in it for 30 minutes. Right. By the way, you see it, the Bitcoin community, there are traders. They're like, they're trying to figure out what direction is going to

go in the next five minutes that I you know I like I I I done a lot of things in my life I can't figure that out like I like you know I can't so the way that we did this was calculated and calculated in order to be respectful to every tranche of investors right first first we announced that we've got we've got we've got an opinion right we've got an outlook on our balance sheet. If you go back to our announcement, we said there's $500 million of cash, we don't think we're going to need it, and we don't think we can keep it in cash. That's the first announcement. We have a opinion that we should use it to either buy some tangible assets or buy our stockback. The next thing we do, and we laid that out for the market, so they all

know, and that gives people the ability to either to act on that information, however they will. The next thing we did was we took action definitively. We said we've bought $250 million worth of Bitcoin, and we're ready to buy $250 million worth of our stock. That's the definitive action, the tender offer, the Bitcoin. The next thing we do is we wait for 20 days because there are very defined regulatory guidelines for how you do a tender offer. right we want to be very transparent at that point people can decide to buy the stock to sell the stock to wait to not wait right it's all up to them the tender offer expires when the tender offer expires

we realize we're going to have excess cash in our treasury then we meet as a board and we and we consider this issue. And then we put out in an AK filing to the marketplace that we have modified our treasury policy so that we were moving the $250 million limit. You know, we had said we might spend up to $250 million. We had not said we might spend more than that on a Bitcoin or another asset. And so to be respectful to the investors, you have to announce that. So that actually hit the wire Monday morning.

And if you're an investor in micro strategy, you can read it. It's disclosed. And what we were telegraphing was at that point, you knew, you knew that we had $65, 65 million of shares tendered. So you can do the math, and you knew that we had excess cash. And you knew that we had an opinion about the value of the cash. you can trade on that you know that comes out in the market and uh Tuesday morning the tender offer is finalized and uh it closes and that the final numbers are slightly different so we put that on the wire and on Tuesday morning we put on on the wire that um that we had acquired a material amount of

Bitcoin. Now the market processes all that information and it trades. It's a it's a multi-step process and at each step, anybody that wants to buy or sell the stock, you know, any investor can come to their own opinion and they can do what they want to do. I can't tell them what to do. I don't know what they will do. Right. And so what happened, Nathaniel? well, you had one tranche of people that sold immediately after we announced. Another tranche of people that tendered. A third tranche of people that bought on the announcement. You know, you could have bought after the tender.

I mean, there's information there, right? And then another tranche that sold. And then another tranche that bought or sold at every other level. And so it's very hard to say what the investor community was doing. The truth is the investor community is quite fluid. There are lots and lots of people doing different things at different times based upon their own interest. I will tell you, I met with a group of our institutional investors in a conference at some point. And when I met them, most of them were very positive on the Bitcoin investment.

And they thought that was a good thing for the company and they understood the rationale because, I mean, you can't find an institutional investor that isn't aware that holding cash is a bad idea. There's not a single instance. If you go to any institution, there's not a single institutional investor who says, we're going to raise a billion dollars from limited partners and our plan is to invest it in cash for them. Well, I mean, that's a money market fund. You know what money market funds yield right now, Nathaniel? 14 basis points, 17, and by that you know what they charge? If you go to a big bank and you put your money on a money market fund, they charge you 30 basis points and they yield 17 basis points net to you.

Who in their right mind wants that trade? So no institutional investor is in favor of holding cash, right? The only issue is do we buy our stock back with all of it, right? Give it all back to us. If you don't, you know, why don't you just take the $500 million and buy $500 million worth of the micro strategy stock back and give it all to us and we'll invest it or not, right? And there's a very logical reason why you wouldn't give it all back, which is if you give it all back, you decapitalize the treasury of the company.

And then if you actually needed the assets for some other unexpected event, you wouldn't have it and you're insolvent. And so if you, it's just like the same reason you wouldn't, drain your entire bank account and live off of one day's earnings from day to day, if you could avoid it because you need the, you need the treasury in order to avoid insolvency. And you cannot make good on your ethical commitments to your employees, your vendors, or your customers, if you don't have a treasury, right? So when someone buys for me, they're expecting I'm going to support the stock for a decade.

I'm sorry, I'm going to support the software for a decade. And when I sign a 10-year contract with a landlord, they're expecting I'm going to pay the rent for a decade. And I believe there's a certain morality that calls for you to keep your promises. And you can't, in good faith, keep your promises if you drain your treasury down to nothing. So it's not an ethical thing to completely drain the treasury, nor is it wise to watch a drain away due to asset inflation. Does that answer your question? Oh, absolutely. So what's next for you guys?

What's next on this path? And what are your observations? I mean, do you think that this is the type of conversation you're going to see more or we're going to see more from other corporations? You know, I'm just interested in kind of your take on both for you guys, what comes next, but also maybe for the markets as a whole. Well, you know, like, as people have pointed out, there's not that much space. companies to come in at this level and buy a $500 worth of the Bitcoin. The $500 or something could do it and it'd be all gone, right? You know, if it and if you see two or three more, the price is going to skyrocket most likely.

And then people will have, they'll be buying it at much higher levels. And eventually you'll see them buying it at dramatically higher levels. So they probably need to hurry it up. Right. of if left to my own devices, I would like to buy it all, Nathaniel. Right? You know, ironically, when you're when you're buying this much, it could take three or four days. It takes 50, it takes a day to accumulate $50 million with the Bitcoin.

If you're buying it every five seconds, 24 hours a day, it takes you a day every five seconds. Every five seconds. So while I'm doing that, I have a lot of time to stare at, the screen and think about this. You know what I'm thinking while I'm actually buying every five seconds for four days in a row? I'm thinking, who are these people that's selling this to me? And I feel sorry for them. Like, why in the, you're right, what are you going to buy with the, with the cash that I'm giving you that's better than what you're selling to me? I hope that they're buying, they're getting married with the money, or they're buying a yacht or a jet or something.

that they really love because if they're trading it in order to buy another asset, I just pity them, right? Like that's all. With regard to other companies, yeah, I think they're going to do it. I just, you know, I think probably the way it works is private companies do it first. Like, there's a lot of private companies our size, and they could do it much quicker than the public companies. and if you're a if you're a private organization and you're not living under a rock for the past six months

then you definitely got to be doing this and then I think public companies take longer right like if you wanted to do things extremely fast like wicked fast execution would be what we did which was 12 weeks kind of start to finish but you would have to have um a founder, you know, like, I'm the principal shareholder of the company that's helpful. I've got a very good relationship with the officers and directors. They're very smart. And but on that chat line, you couldn't do it in board meetings with 25 people once a quarter. You would have to have a hundred interactions very fast and very intensely. So I think most companies will take six months if they really want to do it and it could take up to a year.

I think the clock ticks. The clock starts ticking. For anybody that's visionary, if they're really thinking about it from first principles, if they said this space shuttle is burning up on reentry, I'd like to not die. What am I going to do? Then they were starting to think about this around April or May.

That's what happened to me, right? I felt like I was on fire around April or May. My ice cube is on fire and I'm going to zero. And that's when the clock ticks. And the fastest it could come out is us. But if, if on the other hand, you were waiting to sit for someone else to go first,

you know, it's like they talk about Roger Bannister and he went first and then everybody else runs fast, it's not that Roger Bannister was the best in-shaped person. He was just the one that pointed out that people were suffering under a mental block. They had some kind of prejudicial bias, something and stuck in their head

where they were thinking that they couldn't or they shouldn't. And you just have to go and you have to pull that out. And then you turn sideways. And then stuff happens. You get 20 years worth of stuff done in a few weeks. Once I remove that prejudicial notion from your head, it's stuck there, that ignorance or that prejudice. So once people see that it's possible, then 40 people run the four-minute mile or whatever in the next year. And they all could have done it.

They just were, they were just psyching themselves out. I think that we've shown people starting like August 10th. We kind of shown them that. The news is rippling. It's gradually rippling, but into the mainstream, gradually. Not as fast as you would expect. I'm really kind of surprised that the story doesn't get picked up more by the mainstream media, but it will, I think, in time.

and as that clicks, then the tumblers go off in people's heads. And so maybe the earliest was August 11th. Maybe we're talking about mid-September. Roll forward three to six months. And that's when I think you start to see the shoes dropping. It'll be probably a 2021 thing. And meanwhile, the guys that will move faster, right? If they're rational, the guys that have moved faster,

the hedge fund guys, the institutional investors and the private company guys, like all these guys that like they write down, yeah, I think it's a one percent, a good one percent hedge or I put 1 percent of this. I just kind of smile and laugh, but I just think it's such a silly notion for you to claim that you understand Bitcoin and then to think you're going to invest 1% of your assets in Bitcoin. Right? Nathaniel, here's my metaphor for you. It's like a very rich guy, a billionaire, tells you he understands gambling and he's a really good gambler and he understands casinos and he knows how to make money. So he packs you up with all your friends in the entourage in his jet

and he flies off to Vegas. And when he gets to Vegas, he makes a big deal about how much he knows about casinos and he takes a million dollars out of the cage and chips and he goes and he plays with his million dollars of chips and roulette and blackjack and everybody else is kind of in awe of this whale they're like oh he really knows Vegas so impressive he decided to come to the land of casinos and show all of his knowledge and then after the week ends up he piles back on his jet and goes back to his life and he stares at his point. portfolio generating 7% interest. Okay, that's one view of Vegas.

There's another view of Vegas. Howard Hughes goes to Vegas. He looks around. His brain works, and then he buys Vegas, all of it. He buys the land. He buys the casinos. He buys everything. And he waits.

So the real question to you is, which of the two really understands Vegas? I like it. I think it's a good metaphor. What could scare you off? I mean, this is a question that we started with, but it gets to your mental model of Bitcoin. What would be cause for actual concern? You know, I love the maximalist.

I love the guys. I love to watch Samson Mao get on a debate with Vitalik and get irritated that Ethereum you know, crew wants to meddle with this and do that and complicate that thing and they want to do the other thing and they're going to move forward on a shifty time horizon. And, and Samson,

you know, gets visibly irate, you know, at the bullshit that he's hearing, right? And when you look, what, what inspires me is a bunch of bitcoinsers that,

understand that you have to defend the network to the death. Don't F with the network. Don't screw. It's a beautiful thing. It's probably the most beautiful achievement related to monetary energy or money. In the history of the world, we've invented something which is, which is extraordinary. Don't screw it up, right? And don't, you don't want all the fads, you know, like,

I got to change the transaction rate. I got to increase the block size. I got to do this. It doesn't scale. I need more functionality. I want to port it to the other thing. The thing that would cause me to lose faith would be if the Maxxians lost faith, right? I mean, if people stopped getting angry.

Like, it's, let me just give you another vignette. I bought $175 million worth of Bitcoin in three days, 72 hours. We must have run 90,000 off-chain transactions to do it. One every five seconds, 90,000 trades, off-chain. It only takes about two dozen on-chain transactions to secure the entire amount in a cold storage wallet. Two dozen transactions is what I need to move $175 million. You think I'm concerned about all of the bells and whistles on the Bitcoin network?

No. It's a 3,500 to 1 off-chain transaction rate to on-chain transaction rate. What I want is to see a bunch of Bitcoiners that will lay down in front of the tank, and Tenement Square, fight to the bitter death against every well-intentioned engineer with the good idea that wants to tinker with the thing to make it a little bit better. But this is not, it's not a site on the alt coins or Ethereum or DFI. You know, they're all brilliant people. I deal with that the entire tech world is full of brilliant engineers building beautiful things. Like, you know how many Instagram clones were launched?

There's a million mobile apps that were launched. How many of the million mobile apps are worth $100 billion? It's like we need innovators, we need entrepreneurs, we need them. Maybe they'll invent the cure to something else. I wouldn't shut it down. I don't begrudge them what they're doing. It's just, it's not money, right? I wouldn't put a billion dollars into any other crypto network other than a crypto network

with religious, fanatic, passionate defenders of the faith that understand you don't need to do anything in order for it to scale. I can move $100 trillion onto the Bitcoin network and stole cold storage. And I can do it at the current transaction rate with the current transaction fees. 99.9% of the transactions will be on a secondary chain or a tertiary chain. I just need you not to screw it up. right when and in terms of scaling here's the scale is it going to hold a hundred trillion dollars for a hundred years think think through the bitcoin network and the bitcoin ethos and the maxi ethos

and the first observation is does it have the functionality right now yes right do i need people to improve the bitcoin network over the hundred years yes i do right It's an organic, anti-fragile creature. We're going to need developers to upgrade the software. We're going to need miners to upgrade the hardware. We're going to need people to upgrade their nodes. How? Very carefully.

Very carefully we need to move forward into the future. And I know that 100 years from now, I'm going to need someone to solve a problem that will happen in 57 years. When someone invents a quantum computer, my fear is not, oh, they're going to invent a quantum computer and then they're going to attack the network. I'm expecting that the miners are going to go and buy the goddamn quantum computer, right? Like, they're going to be the richest guys in the world with the biggest incentive. And I expect that whatever you invent, better software, better hardware, better chipsets, whatever's the future ASIC, whatever it is, I'm expecting the network to adopt that. not too fast, not too slow, right, at the prudent level with a long-term conviction that the goal is don't F up the network. And the existential threat to the entire thing is the loss of faith

of the people in the community. And that's why I'm not at all bothered by the fact that the Maxis are passionate and fanatic. Like, I hope they are. I hope that when I'm dead and then when my successor is dead in 90 years and we've got, God knows how much money in the Bitcoin network, I hope that the son of the daughter of the son of Samson Mao is in a bitter fight over somebody that wants to do something crazy, you know, or random to our network because it's a thing of beauty, right? Don't blow up the world with your pretty toys, right?

That's what I think. Well, Michael, I really appreciate you hanging out today and sharing your perspective on all this. I think it's created, you know, to go back to a point that you were making before, I truly believe that people's sense of the possible is shaped by what they've seen around them. And so it may not be tomorrow, but you've created now, a precedent and a template, something for other people to point to, which I think matters. And I thought maybe just to close, I'd share one more vignette that makes that point that, that, that, uh, that, uh, that, uh, that, uh, that you were just making when, uh, Black Thursday was happening. So this is March 12th,

and everything is crashing. That's the night that Bitcoin got down under 4,000 very temporarily. I was actually recording with Preston Pish as that was happening. We were watching it crater. Uh, Coinbase the next day, released their information about who was buying. and who was selling. And Coinbase is usually more buying than selling, but it went astronomical. It was something like 80, 83% of people who were using Coinbase that day were buying all the way down, buying, buying, buying, buying, buying, buying, buying, buying, buying, buying, buying, buying, more.

And it reminds me of the point that you were making before when you were kind of watching those transactions go through asking who you were buying it from. The reality is that this network is full of people who make that foundation stronger over and over and over again. And I don't have any right to speak for the network, but I certainly will extend the welcome. And I'm very excited to have micro strategy as part of that foundation now, too. Nathaniel, I'm happy to be here. I want to come back to one of the things that Michael said almost offhandedly earlier. He said, I didn't buy it to sell it ever. What's clear from that conversation is that Michael has a

vastly different time horizon than not just most public market CEOs, but most people. He's thinking about legacy. He's thinking about generations. And for that, there is nothing out there like Bitcoin. It's a powerful thing to see a public company shift its cash reserves to Bitcoin. That is an affirmation of the idea of its value-preserving potential. It's even more exciting, frankly, though, to see that the CEO behind that company genuinely and truly resonates with and understands what makes Bitcoin unique among assets in the world. I hope that this conversation brought you that behind-the-scenes picture a little bit more, and I appreciate you hanging out and listening. Have a great weekend, guys, and until tomorrow, be safe and take care of each other. Peace.