The Pomp Podcast - #1440 Anthony Pompliano & Phil Rosen | MicroStrategy's Bitcoin Strategy Is INSANE

Episode Date: November 20, 2024

Phil Rosen, the Co-Founder of Opening Bell Daily, and Anthony Pompliano, Author of ‘How To Live An Extraordinary Life’ and CEO of Professional Capital Management, discuss bitcoin treasuries, how it works, why MicroStrategy has bought some much bitcoin, why their stock trades at a premium, how Michael Saylor continues to raise money, why other companies are starting to copy, what that means for you as an investor, prediction markets, Howard Lutnick named commerce secretary, and Trump’s transition to stepping in office.  ======================= Polkadot is a scalable, secure, and decentralized blockchain technology aimed at creating Web3. Created by Gavin Wood, co-founder of Ethereum, Polkadot empowers users to build decentralized applications with ease. Backed by industry leaders, making it a preferred choice for big names, Polkadot stands out as a leading choice for investors seeking a reliable, future-proof solution in the growing world of Web3 technology. Learn more at ⁠⁠⁠https://polkadot.com/.⁠⁠⁠ ======================= The Pomp Podcast is powered by BetOnline.ag, the premier crypto-friendly place to gamble on politics and sports, casino, poker and horse racing. BetOnline.ag gives you the ability to use Bitcoin and more than a dozen altcoins to make deposits and withdraw your winnings. There are no crypto transaction fees, and processing is instantaneous and secure. Visit ⁠⁠⁠⁠⁠⁠⁠⁠https://promotions.betonline.ag/pomp⁠⁠⁠⁠⁠⁠⁠⁠ and use PROMO CODE: POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline.ag is available in nearly every country around the world, making it the top global gaming destination for crypto users. ======================= Buy book: https://www.amazon.com/Live-Extraordinary-Life-Anthony-Pompliano/dp/0857199927/ ======================= Pomp writes a daily letter to over 265,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/ ======================= View 10k+ open startup jobs: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

What's up everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. What's up, guys? Today, I've got a fantastic episode with Phil Rosen. Phil is the co-founder and editor-in-chief of Opening Bell Daily. In this conversation, we put on an absolute

masterclass on Bitcoin treasuries. We explain how it works, why MicroStrategy has bought so much Bitcoin, why their stock trades at such a premium, how Michael Saylor continues to raise money through debt and equity, why other companies are starting to copy this, how I evaluate the good, the bad, and the indifferent. And then we discuss why so many other companies are going to do this in the future, and what you as an investor should consider as you evaluate these different companies. On top of that, we look at a number of other current events, including prediction markets and why they've been so accurate.

How come schools hate both prediction markets, self-driving cars, and chat GPT? On top of that, we get into Howard Lutnick being named as the Commerce Secretary, and then we even get into a little bit of talk about why Donald Trump's stepping into office, how he's approaching it, and what you should expect in financial markets. Today's episode is brought to you by Polkadot. Polkadot offers secure, scalable, and decentralized blockchain technology that perfectly aligns with the needs of innovative projects. It was developed by Gavin Wood, one of the co-founders of Ethereum and the creator of Solidity.

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Polkadot seems to be the top choice for industry players. Go check them out today at polkadot.com. This episode is brought to you by BetOnline. Do you like making a profit from sports betting? Well, set yourself up to take home the most profit possible using crypto to fund your sports betting, casino, and poker account at betonline.ag. You can avoid costly transaction fees, get your payouts lightning fast, and do it all securely and anonymously with the highest deposit and withdrawal limits in the industry. If you want to get in on the action, do it the smart way with crypto at betonline.ag. Head to the website, sign up with promo code POMP100 to get a 100% bonus on your crypto deposit today.

If you go and you deposit, they'll give you 100% bonus if you use promo code POMP100. BetOnline. The game starts here. BetOnline.ag. Go check them out today. All right, Phil, what's the first topic you got? So Bitcoin just hit another record high, 94,000, just under 94,000. And from a week ago to today, almost nothing has changed in the macro landscape. I think the biggest catalyst was NASDAQ listed Bitcoin options, Bitcoin ETF options. Do you see anything that is driving this yet again a record high? Bitcoin doesn't care about the macro environment right now. Bitcoin cares about what Bitcoiners care about, which is yes, the ETF options, but also micro strategy is

accumulating Bitcoin at a rate we've never seen before. He bought $4.6 billion of Bitcoin last week in one week. The guy's a maniac. He's just buying as much Bitcoin as he possibly can. Now we have similar scientific meta planet. They're all announcing every single day. Somebody's out there announcing I'm buying more Bitcoin. And I think that there's people who are starting to say to themselves, wait, this thing may catch on. This may change corporate finance. We may have more and more companies saying this is a balance sheet strategy puts me on offense. On top of that, I think that there's a bigger and bigger drumbeat about this Bitcoin strategic reserve. We obviously saw Senator Cynthia Lummis come out. I've publicly now said, well, I think we should print $250

billion immediately and buy Bitcoin. We can get into that. But I really do think that this is going from a contrarian idea to now it is a consensus idea. And when that happens, capital flows. When capital flows to a finite asset, price goes up. And I expect us to see a lot more all-time highs in the coming weeks and months. How much of this surge in Bitcoin is driven by FOMO for businesses wanting to be like MicroStrategy? Well, I think every business has the same goal, which is how do you create value for shareholders? And historically, that's been two levers. You can either increase your revenue or you can decrease your cost. If you're a really good business, you do both at the same time. But now we've introduced a third lever into the equation,

which you can use your balance sheet either for offensive or defensive purposes. And Bitcoin being put onto that balance sheet is really, really powerful. In a way, if you plug your balance sheet into the Bitcoin network, the Bitcoin network goes to work for you. And so MicroStrategy is a great example of doing that. There's two things that I'd pay attention to when it comes to microstrategy. The first is that he's able to continue to dilute shareholders, yet the price of the stock keeps going up. That is usually backwards. That's not how it works. But people understand he's going to use that to buy more Bitcoin. More Bitcoin means more Bitcoin yield. More Bitcoin yield means that the price is going to go higher. And so they're

excited about that. The second thing that becomes pretty important is that microstrategy is not just doing this, but they're actively trying to convince others to do it. And so results are the best resume. If you show up and you say, hey, I think you should buy Bitcoin. People say, well, who are you? What do you know? Michael Saylor in MicroStrategy shows up and says, I think you should put Bitcoin in your balance sheet. They say, who are you? What do you know? He says, well, I did it. I got billions of dollars, $30 billion on my balance sheet, and it seems to be going pretty well. And so naturally, there's a lot of other CEOs that say, well, if it works for you, why wouldn't it work for me? And so in a weird way, buying Bitcoin and putting it on your balance

sheet means that your core business probably isn't super successful, but it's the classic innovator's dilemma. Because the businesses that have the most free cash flow, the most assets on their balance sheet, they think they're big and successful. But actually, imagine if they were able to disrupt themselves, and they were able to go do this as well. So if you had an amazing cash flow driving business, and you were doing the Bitcoin strategy, that'd be one plus one equals four or five. But instead, what people are doing is they are saying to themselves, my business isn't working, I need something else out of desperation, they're actually going in, they're buying Bitcoin, putting it on their balance sheet. You can see this with

a lot of these businesses, it's not something to be ashamed of. These entrepreneurs are being entrepreneurial, they're figuring out a way to create value for shareholders. And so they say, look, if my business isn't going to do it, then let my balance sheet go and do that. And I think that that is what's eye-opening to so many people. It's because of the 4,000 publicly traded companies in the United States. A lot of them don't work. A lot of zombie companies out there. And so they're saying, wait, hold on. Michael Saylor just invented a new magic trick. He gave me the escape hatch. Let me just hit that emergency button and let's go and let's see what happens. Yeah. It's crazy to think about MicroStrategy being up 500% this year,

the stock. And that's more than double what NVIDIA is doing. And a lot of people point to MicroStrategy as saying, I don't even know what they do as a business other than buy Bitcoin. I know they borrow billions of dollars to buy more Bitcoin and they raise money to buy Bitcoin. Do you think that we will get to a point where it's a disadvantage to not own Bitcoin on your balance sheet for businesses? Well, if Bitcoin keeps going up, Obviously, people are just going to look at the past and say, well, I should have bought it. The question is, what is the risk reward for you buying Bitcoin? And then in public markets, one thing that a lot of folks not in public markets discount is a clean story.

And so MicroStrategy actually benefits from being the company that is buying Bitcoin. If they had a great business analytics company and were buying Bitcoin, that wouldn't be as clean of a story. And so people kind of know that the business analytics kind of product is not necessarily this big, gigantic thing that's amazing. The bulk of the value in the market cap is coming from buying Bitcoin. And so people say, well, this is basically just a levered bet on Bitcoin. And I think that is kind of a core component here is if you choose to plug your balance sheet into the Bitcoin network, then people start to ask, are you a business that's building a product or a service for customers? Or are you a business buying Bitcoin? And I think that that's where people are still trying to figure it out. Can you do both? How do you talk about that? How do investors, from a receptivity standpoint, kind of treat you? Do they buy your stock or they say, hey, this is a confusing story.

I can't tell what you are. Instead, I'm going to go buy somewhere else. And so storytelling is really important in public markets, more so than the private market. And I think that's kind of the phase that we're at now. People know this works. Can I do it? Should I do it? How do I tell the story?

Those are the questions people start to ask. so when i look at micro strategy i think that they have a clear advantage because they've been buying bitcoin at such high volumes for so long but when i think about other smaller companies that are just getting into it it seems like they are they'll always be behind micro strategy so they won't be able to become the bitcoin company and for micro strategy i think they've been able to... No one knows what they do, which I think no one else can fall back into that spot. Well, I think there's a couple of things that are important. The beauty of Bitcoin is that it's not about what everyone else has got. It's about what you got. There's no competition here. You buy as

much Bitcoin as you can and Bitcoin works for you just as much as it works for the next person, whether they got zero Bitcoin, 0.1 Bitcoin, or they got 10 Bitcoin. Bitcoin still works. And so on the public company standpoint, how much MicroStrategy buys shouldn't affect you. Just go buy as much as you can. And that'll work for you. Now, the other thing that I think is pretty interesting is that all of these different companies are coming up with different novel ways of pulling off this strategy. What MicroStrategy does is they issue debt and they sell equity and they're going and doing this. They have a very large ATM that they're going and tapping the market and they're able to raise billions of dollars because they have a lot of investor

interest. They're also issuing these convertible notes at a premium with a very low to 0% interest rate. Very interesting strategy. If you go and you look at MetaPlanet as an example, not only are they issuing debt and doing equity, but I believe they're also selling covered call strategies. And so they're able to generate some yield from that and use that yield to then go and buy Bitcoin. And so ultimately what these companies are realizing is I want to get capital. If I get capital, I want to convert it to the hardest form of money. And so that means that I want Bitcoin. And so whether it is coming from your product and service driving profits, whether it is from issuing equity, whether it is issuing debt, whether it is issuing some sort of

options and covered call strategy, or some other novel thing that people haven't even thought about yet. If you get capital by Bitcoin, that's these companies strategy, and it seems to be working very, very well so far. So when you're talking to investors who are trying to decide, how can I gain exposure to Bitcoin? Why would they pick a company like MicroStrategy, which is the company buying Bitcoin as opposed to just getting their own Bitcoin? Well, I think there's pros and cons, right? On one hand, if you go and you buy Bitcoin, what you're getting is you're getting the return of Bitcoin. So if Bitcoin goes up 20%, you get 20% return. The promise of MicroStrategy is if you buy MicroStrategy, you're going to basically get a levered bet on it. There's also

the idea of Bitcoin yield. So if your 10 shares are equivalent to holding one Bitcoin on the balance sheet, he's going to continue to buy Bitcoin in a way that's going to be accretive. So your 10 shares in the future may be worth 1.2 Bitcoin on the balance sheet. So there's this idea of this yield that is generated. That's the positive story. And so far, that's played out. That's why people are excited. And they're kind of going full on with that excitement to allocate to the stock.

One of the questions is, will that premium close? And so the numbers as of earlier this week was he had about $30 billion of Bitcoin on the balance sheet. And the company was trading in an $85 billion market cap. If you have 30 billion of Bitcoin, 85, I'm not a mathematician, that's a pretty big gap, about a $55 billion gap. And now he's got his other business, that business isn't really worth that much on the grand scheme of things, but let's just give him credit and say it's worth a billion dollars. Probably not, but let's say it is. That means there's a $54 billion premium

that's being placed on this company's assets. And so why are investors giving it that premium? Well, they believe Bitcoin is going to go up. They believe he's going to buy more Bitcoin in the future. And so they're basically giving him credit for future appreciation and future Bitcoin yield. Makes sense. Companies do that all the time. Investors say, hey, I'm going to look at what is your 2025 revenue. I'm going to put a multiple on that. And so this idea of kind of looking into the future and trying to understand what is it valued today based on those expectations is not a new concept. The question is, are they going to be right? And so on one hand, they could be underestimating it. Maybe there's more Bitcoin yield than they thought. And actually

the price of Bitcoin goes much higher than they thought. And so whatever the value is today would be undervaluing that future growth. On the other hand, though, they could be overestimating it. in that situation, that premium is going to collapse. And therefore, if you're buying MicroStrategy at that level and the premium collapses, then you're not keeping up with the kind of appreciation of the Bitcoin. And so when I look at that, I say to myself, well, what most people are probably going to do is they're going to do both. They're going to buy a little bit of Bitcoin. They're going to buy a little bit of MicroStrategy. Maybe they might buy a little bit of the ETF, right? And maybe they go and they buy something else. I tend to

think most people are not going to make highly concentrated 100% bets by allocating to this. Instead, they kind of say to themselves, well, I know I want Bitcoin. Maybe I even want to take some Bitcoin into self-custody. Maybe I'll kind of make sure I have that exposure directly to the asset. But you know, this micro strategy thing is interesting or this similar scientific thing or this meta planet thing or this DeFi technologies or all these companies that have Bitcoin on their balance sheet. I might put 5% into this thing. And I think that's really where people are trying to figure out, you know, what is the right allocation? And there's plenty of people debating it on Twitter. I don't have the answers, but it definitely seems to be working

so far. And so humans are great at looking at the past to try to predict the future. And that would suggest that it's going to continue to work if it does, or if it doesn't, we're going to find out together. I think that's a great breakdown. Something that I'm wondering is, is there something that investors can buy to hedge against Bitcoin if it doesn't prove to be this, you know, never depreciating store value? Well, there's all kinds of assets. And I don't know necessarily if you want to hedge against Bitcoin not working. You could bet against it, right? If you think of it from that standpoint, you can go short Bitcoin. I don't suggest that. A lot of people have lost a lot of money shorting it, but you can do that. The financial instruments are available.

Instead, if you don't believe in the Bitcoin story, then there's other assets you can buy. And so there are some people in the world, although they're slowly becoming fewer and fewer that believe that the dollar is going to be debased at an aggressive rate moving forward. And so they want some sort of store of value to provide that economic protection. If they get that economic protection, they say, well, which asset should I buy? I can buy real estate. I can buy gold. I can buy Bitcoin. I can buy, name your favorite store of value or inflation hedge asset. And they say, well, I don't think the Bitcoin thing is real. That's fine. Buy real estate, buy gold, buy whatever asset, but you're still benefiting from that dollar devaluation that

that investor is believing in. And so when you look at it, I think Bitcoiners are saying, look, we agree the dollar is going to be devalued. We agree real estate is going to go up. We agree that gold is going to go up. We agree that name all these assets. We just think that Bitcoin is the one that's going to outperform them all. And if you go back, this isn't just me saying it. In 2020, Paul Tudor Jones famously went on CNBC and he said, I think inflation is coming. And it was, oh my God, PTJ, one of the greats. He says inflation is coming. He sounds a lot like the Bitcoiners. And then he said the famous lines, he said, Bitcoin is going to be the fastest horse. And so when he said that, what he basically was saying was, hey, I got a bunch of inflation heads

assets, precious metals, etc. I just think this Bitcoin thing is going to appreciate faster than everything else. He was right. And so I think that's really where Bitcoiners may be in gold bugs or real estate investors, etc. kind of start to diverge is they agree that the dollar is going to be devalued, how they express that what is the risk that they perceive they're taking? What is the return that they are targeting differs between those assets and investors will kind of allocate accordingly. I think, yeah, I keep coming back to this micro strategy thing. And I agree with your explanation. But when I look at a company like MicroStrategy, no one knows what they do other than buy Bitcoin. And I'm not sure what they're... I think that is what they do.

Yeah, exactly. And how is that? Where's the longevity in that other than people buying them to get exposure to Bitcoin? Well, I think people are not just buying it for Bitcoin exposure. They can go buy the ETFs, etc. Right. I think what they're doing is they're buying Bitcoin with the explicit understanding that Michael Saylor is going to continue to buy more of it. And it is going to be accretive to their Bitcoin per share. So this concept of Bitcoin per share was never really thought of before. But maybe one of the best ways to think about this is, let's say we had a pile of 10 Bitcoin and we had a company that owned those 10 Bitcoin

that had 10 shares. So one share is equivalent to one Bitcoin on the balance sheet. If I told you that there was a way for me to go and buy five more Bitcoin, but I'm not going to issue more shares, right now, all of a sudden, what I'm going to do is I'm going to have one share is equivalent to 1.5 Bitcoin on the balance sheet. I don't do public math, but I think that was right. And so if you think of it from that perspective, you'll be willing to pay more than the equivalent of one Bitcoin for that one share, because you're expecting it to go from one Bitcoin per share to 1.5 Bitcoin per share. And so that appreciation of the assets on the balance sheet is accretive to the stock price, because once it gets to 1.5

Bitcoin per share, then you would expect people to be willing to pay at least 1.5 Bitcoin for the share. And so that is what people ultimately are trying to figure out here. Now, what's pretty crazy is he's done a good job of doing this. These convertible notes, they all have different terms, but he's basically borrowing money at or near 0% interest. They're converting at 50% or more premium to the current stock price. And then he's able to tap these ATMs and he's doing it with the stock trading way above the net asset value on the balance sheet. And so all of that is accretive. Basically, he's selling a stock when he thinks it's overvalued compared to the assets that are on the balance sheet, or he's issuing debt at incredibly attractive returns, or excuse

me, terms. And so if he's able to get capital that is essentially very non dilutive, right, or on very attractive terms, and then he can buy Bitcoin and Bitcoin goes up, play that game over and over and over again. And the beauty of it is no one can stop them. Right? Because there's insatiable demand coming from the debt market. What Michael Saylor did was he innovated on the ability for the debt market to get exposure to Bitcoin. If you're sitting there and you're a fixed income fund, how the hell do you buy Bitcoin? Your LPs didn't give you money to do that, but you know what I can do? I can give money to MicroStrategy. Let me lend them a billion dollars and I don't care. Don't pay me any interest. That's fine. And sure, you don't have to pay

me back. Just convert me into equity later. Now I get exposure to Bitcoin. As a debt investor, that's pretty good. If you go and you look at the performance of those corporate bonds, they're some of the best in all of Wall Street this year. And so if you are able to create these financial instruments, Wall Street, it's gamblers. They're going to the casino. And so whether you think it's super risky or not, if you go into a casino,

there's some games that got really good odds. There's some games that don't got good odds, but people want to play. And MicroStrategy has created a new table at the casino. And there's a lot of people with a lot of money who say, that's interesting. That's a shiny wheel. Let me go over there and give that one a spin

and see what happens. Yeah, Michael Saylor's made this unlimited money printer with that cycle he's created. Well, you can issue as much debt as you want. You can issue as much equity as you want. The question is, why would someone give you the money? Why would someone buy the stock? And I think it's very clear why people are doing it.

Are they right? We're going to find out. Ultimately, you know, kind of history is going to be written by the victor. And the victor is either going to be the critics or sailor. We're going to find out. But I do think that this ability to essentially create unlimited value in shares or debt, take that and convert it into hard money. It's a pretty good plan.

yeah it's uh i'm gonna have to take some time to come around on it but i i think it's uh working so what's your biggest concern like what what do you uh you think is like the most outrageous part of the whole thing i just think that no one knows what they actually do as a business and i think they've built a fantastic brand and they're obviously worth billions and billions of dollars and they have the most bitcoin all this stuff but i do wonder um i don't think it's something anyone else could replicate. I think that's, so it's less a concern about micro strategy. I just don't know how good of a model that they've set or, you know, no one else can do what they're doing. I think this is going to become ubiquitous. So if you look at MetaPlanet,

here's a good example. So why would MetaPlanet, why would people go buy that? MetaPlanet operates in Japan. They have two things that is pretty interesting. My understanding is that they had a bunch of hotels. They sold a bunch of them off. They have about an 80-ish million dollar loss on their books that they would be able to write off the first $80 million of profit. And they said, look, we're going to hold one hotel. We got a little bit of operating profit coming from that. And then we're going to basically go run the micro strategy playbook, but we're going to do it in Japan. And so why is Japan interesting? Japan's got a very, very attractive lending market. And so they're able to borrow at super low rates. And then because they're doing things in yen,

now all of a sudden you introduce this FX ARB between the dollar and yen, the yen and Bitcoin. And so you start to play this game of like high finance where everyone starts to try to get smart. And so the real secret of Wall Street is for the average investor, they just throw their hands up and say, hey, you know, whatever, I'm not going to try to outperform a hedge fund. But there are a lot of hedge funds that make a lot of money, right? And so now what we're seeing is that type of financial engineering is coming to the balance sheets of public companies. Some of them will work, some of them won't. But the nice thing is that if you can just issue equity or issue debt, you can also participate and do the same thing MicroStrategy is doing.

And what are a lot of people going to do as investors in the public market? MicroStrategy went up X percent. Oh, you're a random company. You're going to start doing this? I'm going to throw it in here. Maybe I could get that same percentage return. Now, the question is, does the higher premium go to you as a younger company, smaller company, et cetera, with a lesser known brand? Or does the higher premium go to a MicroStrategy? There's debate on both sides. Maybe the premium is the same. We just don't know yet. But I do think that it's not that no one else can do it. I think everyone is thinking, should I do this? I just saw the CEO of Rumble, publicly traded company. He tweeted out, he said, should we put Bitcoin on our balance

sheet? Right? And guess what? Bitcoiners are going to Bitcoin. They immediately got in the comments. Hell yeah. Michael Saylor responded, right? It's just, let's go. And so again, could this strategy backfire? I'm sure there's critics out there with many different arguments as to how it could backfire. Anytime that an asset trades at a high premium to its net asset value, there are a lot of people, value investors saying, hey, hold on a second here, this could be dangerous. But I do think that there are probably much cleaner kind of things going on when it's just Bitcoin on the balance sheet than many, many companies that are zombie companies or doing all kinds of crazy stuff on their balance sheet. This is basically I issue something that I think is going to, you know,

that I can create around the equity and the debt, and I'm going to buy something that no one can create. So if you think of it that way, I'm going to issue something that's abundant to buy something that's scarce. You ain't got to be Albert Einstein to figure out that's a pretty good trade. Yeah. And when you put it that way, it makes a great story for sure. And I don't think MicroStrategy is going to lose its books or value anytime soon. I did see an interview with Michael Saylor and he was telling Patrick Bet-David that if he was in a room with Warren Buffett for an hour, he could convince him to put some of his $300 billion in cash into Bitcoin, even though Buffett's been a long time, you know, pretty much anti-crypto guy.

And I thought that was pretty, it was funny. That's what I would say too. But I don't know, Buffett doesn't really seem that interested. So, you know, there's probably a lot of people that all these different Bitcoiners have been in the room with for an hour and they didn't buy Bitcoin. So let's see. Hopefully somebody gets that audience and see if they can convince Buffett. That would be the trophy, right? There's a lot of things that Bitcoiners have accomplished that people point to and say, oh, this person did this, this person did that. But the person that orange pills Warren Buffett's going to be pretty well known. Be the legend. So something I read this week, there was a article in The Atlantic by Annie Lowry, and she described crypto, sports

betting, betting markets, meme trading, all this together. She called it the bro economy. and uh this you know the bro economy takes many uh forms there's low barriers to entry risky and frequent trades and a gamification of investing and this is uh her words she said crypto companies and betting sites do not generate value they take cash from their users reshuffle it and redistribute it while keeping a cut for themselves what do you think of that i think that is disgusting. She would use slurs like that to describe a group of people. Imagine if the people she's calling bros use similar language to describe another group of people. They'd be writing hit pieces about those individuals. And so I think that first, the fact that society has normalized

something like that is not something that we should be proud of. The second thing is, it's pretty hard to say that companies that are trading at $80 billion, like Coinbase, created no value. They create a lot of jobs. They pay a lot of tax revenue. They've helped people really make a material amount of wealth. It's estimated at something like 15% to 20% of Americans own some form of cryptocurrency. Coinbase, I think, supports over 100 million users. These are monster numbers.

And so it's always funny to me because the people who level critiques, my question always to them is, okay, what have you done? And so it brings up this whole idea of usually we have people who are not in the market critiquing people in the market. And although it's become somewhat of a meme, like the people in the arena are much better at critiquing themselves or their counterparts, their colleagues, their competitors than people outside of the arena. And so I don't know this person. I'm sure that she's a very lovely person. But I do think that when you come into a story and you have a preconceived notion, then you're going to write the story. Right. And so at the same time, people say, oh, the lottery, the lottery, the lottery is funding public education. So isn't that a public good? Or isn't that amazing that these people are helping to fund public education? Something like 50% of all lottery ticket buying goes to public education. So are we going to make fun of the people who are helping to fund public education? Now, of course, the opposite argument is, no, they're just buying lottery tickets and

they don't even know where the money's going, right? And so the point is that it's not black and white. There's a lot of gray. And so just because you're doing one thing, but your funds are going somewhere else, it's a pretty big difference. right? What about the fact that all these crypto companies donated quite a bit of money and they were able to support the constitution, free speech, various candidates all around the country that were unanimously, or I'm sorry, majority voted into office by the American

people. That's the type of stuff that all of a sudden people will say, oh, it gets a little bit more gray than black and white. Now, in terms of what she's trying to get at, maybe the better language to use rather than the hyperbole of the bro economy is I like to call it, we are in the volatility generation, right? Or we are in something that I would even call the stimulant economy. So the same people who are putting zins in their mouth are also benefiting from stimulus in the economy, who are also benefiting from the fact that somebody is going and they're tweeting or posting on Reddit to stimulate a stock moving. And so this idea of this like stimulus economy is something that is only possible because of the internet. And so really, if you pull back

curtain, all we're talking about is the internet age. Information moves faster, money moves faster, ideas move faster, right? Jokes move faster, everything moves faster. And so if everything moves faster, naturally, people will be more short term oriented, people will be looking for bigger and bigger returns. And you get this kind of magnification of human nature. So to critique culture is to critique humans. Because ultimately, culture is just made up by humans being human. And so I think it's this really fascinating thing where everyone wants to point at the people, but maybe it's the tools. Maybe it's a sign of the times rather than the people. Because ultimately, these people have always, humans have always gambled. People have always had vices. People have always looked for get-rich-quick schemes. There's always been people who have done nefarious or malicious things. or you can go all the way back. There's some very famous entrepreneurs in history

where literally, I think even John D. Rockefeller, right, his father, not exactly the type of guy that a lot of people would have been proud of. And so when you go and you look at a lot of these stories, you say to yourself, well, hold on a second. It's actually just human history just being repeated now in a digital age where speed and tools and things are available to you.

Imagine going back to the 1700s and telling someone, what if I put a supercomputer in your pocket and you had access to all this information? you could literally bet millions of dollars on your phone. They would tell you the richest man in the world doesn't even have that much information right now. And so the fact that now you have more information than the richest man in the world, 300, 400 years ago,

the fact that you have better banking services than anyone in history in the 1800s, the fact that we now can whip information and money around the world instantaneously, nearly for free, of course things are gonna change, but it's no different. We didn't invent sports gambling in my generation. We didn't invent the idea of speculating on stocks. We didn't invent any of this stuff. It's just now that we're magnifying it because

it's all done transparently. And so is it better that it was being done in back rooms that is being done in secret parlors? Or is it better that it's being done transparently where there can be rules and regulations? Sports gambling is legal in the United States, in many states. And so is that better? Or should we just have it be done in the shadows of society? A lot of people are arguing, well, it's better that it's being done transparently. Now, there's also concerns that, wait a minute, maybe there is an issue if you let anyone go and gamble or you're watching a football game and they have the odds scrolling across

it, right? Throwing it in people's faces may lead to problems. And so again, I think that when you unpack these things and you start to think of the second, third, fourth order effects, it's not as clear as everyone wants it to be. And so you got to be able to say to yourself, okay, what's happening? I think there's an agreement. I actually probably agree with this woman that there's a lot of things happening in society that you could call all kinds of different names. Why is it happening? Maybe we agree, maybe we don't. I don't know. I never talked to her. But then you ask yourself, okay,

if we unpack it a step further, how do you reverse it? And my conclusion is a lot of these things you can't reverse because they're built into human nature. If you build a speculation tool, speculators will show up. They showed up in the West to dig for gold. They showed up to Las Vegas to gamble at the casino. And now they're showing up to Robin hood to go and buy their favorite meme stock. What's the difference. They're all speculating. They all have a dream and they're going to go risk capital to try to go and figure out, can they actually make it? And so to critique that I think is ultimately just a reflection of us not being students of history. Yeah. That's a great assessment and i think your assessment is actually much less uh uh there are far fewer

political undertones to your assessment than maybe the the atlantic is writing about because the the sense i got from the story was um i don't know a piece of it was directed at like betting markets and i imagine anything directed at betting markets now is a you know a call out from the election because betting markets called the election for trump's presidency which none of the pollsters none of the media was uh at least they weren't talking about it maybe they knew it but maybe they just didn't want to talk about it but they weren't allowed to talk about it if you hate betting markets you hate the truth that's the best way to look at it a free market will tell you the truth more so than anything else and so if you hate betting

markets you hate the truth and i don't think that the people critiquing these hate them i think people are asking a lot of questions and that's the job of a journalist right it's very important that journalists exist, that journalists do their job, that they actually ask the hard questions, that they critique things. I'm not somebody who thinks like we should have no journalists, right? I think it's a very important job. I'm a merited journalist, but I also think that there's a lot of people who are not being journalists, they're activists. And so there's a delicate difference between those two things. And they're hard to tell sometimes because they all write under a big brand, right? But I do think that journalists are important, but when you start

to play the activist game, then you're going to get critiqued like an activist, right? And that's a whole different game. And so I do think that betting markets in particular, I think really showed people that, wait, maybe there is wisdom in the crowd. Maybe there is something, right? Like, and if you even take it a step further and make it like very concrete example, the guy in France who bet $40 million on Trump winning in the betting market, it's not like he like licked his finger and stuck it in the air. It was like, I think Trump's going to win. He was running his own polls and his innovation was you all are running polls that are asking people who are you voting for. And they're lying to you. I'm running polls that ask people, who is your

neighbor going to vote for? That sounds like better science. That sounds like he innovated. That sounds like he got closer to the truth than the pollsters did. And he got paid for it. That's the beauty of free markets. That's the beauty of economic incentives is this guy was able to figure out a better way to tell the truth than everyone else. And frankly, a lot of courage to bet on it. And he won. Good for him. That's how the system is supposed to work. Am I remembering correctly that the French guy that bet big was investigated or something after he won all that money? I don't know if that happened or not, but I'm sure there's a lot of people who said, hey, who is this guy?

That wouldn't surprise me. It was maybe that. And then also, I think Polymarket's CEO was either raided or investigated by authorities. Yeah, look, and there's always this weird thing, right, of we want to live in a society where everything is done the right way. There's a lot of debate about what the right way is and things that are new, right? So, you know, take self-driving cars. I recently tweeted out that I think self-driving car policy is literally just an intelligence test. The machines are obviously better drivers than humans. And so if you're preventing self-driving cars from getting onto the road, then you literally are probably contributing to killing people. the machines are better if i told you hey uh we have a way to keep unsafe drivers off the road and we have a way to ensure that safe drivers are on the road wouldn't you be interested in doing that of course and so why are we not allowing self-driving cars on the road and yes is there going to be a hundred percent perfection no but there sure as hell ain't that with people either and so we've seen technology save lives in this category we see when uber goes into a city drunk

driving, deaths go down. Uber saves people's lives. Again, people point out that's one example. Well, there's a lot of other examples that are similar to that. Self-driving cars are the same thing. Self-driving cars get in much fewer accidents than humans. So why are we preventing it? We're simply trying to slow progress. And so if you go and you look at many of these other markets, you see the same thing. Prediction markets is a great example. Prediction markets tell the truth better than these other kind of mechanisms. Why are we trying to slow it down? It doesn't mean that there should be an unregulated, you know, kind of like a completely lawless area, but it does mean that let's create clear rules. Let's implement them and let's get

betting markets in every single place. There's a difference between people critiquing betting markets and us also going into the schools and teaching kids, Hey, this is the wisdom of the crowd. This is why free markets work. Look at how the internet, how powerful it is in order to help us figure out the answers to questions. You can go to Google and you can go to prediction markets. Look at this. How much better suited would those individual kids be if they understood how prediction markets work for the future? But instead, what do we do? Woo, prediction markets, that's new. We don't like new. Pull out your textbook, kids. Let's go. Let's get the encyclopedia. What's going on? We're like teaching kids for dinosaur land. And so instead, I think these

new tools are really important. And you saw this with ChatGPT. ChatGPT came out and schools banned it. One of the most powerful tools in the history of humans came out, an answer system. That's what schools are built for, help people find the answer. And they banned it. They said, this is too good. The machines are better than the humans. We can't have this here. But it doesn't matter. The kids are still going to use it. They're going to find a way. And so again, it always goes back to technology wins in the end. People try to slow it down. They hated candle or the candle makers hated electricity, the horse owners, they hated cars, but ultimately the best solution ends up finding a market. And so it's funny to me to watch this stuff. It's sad to a degree. But I do think

that the technologists, the optimists, they're on the right side of history. I agree with you. And I want to touch on one thing related to sort of this innovation boom that a lot of investors are expecting right now. And that is Trump just announced Howard Lutnick for Commerce Secretary. And I know Lutnick was in the running for Treasury Secretary. And you recently sat down with him for an interview. What do you make of this nomination? Well, one of the big things I took away from my conversation with Howard was he's very pro-tariff. He really understands global trade. And he had a lot of really interesting ideas on what the United States could be doing in those fronts. The Commerce Secretary, that is one of the big things that they focus on,

is he's going to be heavily involved in tariff and trade. And so I think that it's a great position. Frankly, I think that when a lot of these people get put in these positions, we tend to think, oh, wow, so-and-so got this role or this job or whatever. One of the things I think gets lost in the conversation is, Howard's a pretty successful guy. He don't got to be working. He doesn't need to go do this. He doesn't need to go serve his country. And sure, are there benefits to doing this? Is there intellectual stimulation? Is there the possibility that he can actually help and make an improvement? Of course. But I also think that we should be thanking these people. There are a lot of smart people who have been nominated in cabinets, not only in this administration,

but in Biden's, in Trump's previous one, in Obama, in Bush, in Clinton, et cetera. These people are serving their country. And so sure, they don't have necessarily a uniform, I'm not carrying guns in the military, but it's a act of service to the country that I think is really important and commendable. And so the more that I think we can commend these people, make it something that is a high status thing. Tell people, look at this man. This guy is rich. He doesn't need to do this, but he wants to do it. He's serving the country, regardless of Republican, Democrat, independent, anything. More smart people will want to go and do it. And so I joke all the time that I used to say, are any of your smartest friends trying to go

to the government. I can now emphatically say, yes, I have had multiple people text me after that interview with Howard. And they said, if he's looking for somebody that can do X, tell him I'm interested. And these are people I was blown away by, not political at all. And I said, really? And a couple of asked, I said, why? And they said, because it's the right thing to do. Because I believe in the energy of where this is going. And it said, hey, you know what? You're really smart. That's pretty cool. All of a sudden, are we upgrading the people who want to take on these roles? That's good for America. That's good for long-term health of the country. Yeah. We need more smart people going from privates public, probably. It's very

hard to line up those incentives because I'm sure a billionaire lives a great life without the headaches of being in the government. When you spoke to Howard, what were the things that surprised you about him um surprised uh maybe the idea of using the balance sheet you know in an interesting way howard is very pro bitcoin um but he never explicitly uh said hey take the micro strategy type you know approach the offensive balance sheet um and bring it to the united states but he talked about a similar idea probably and i don't even know if he connected the two but his general idea was that the United States allegedly has $500 trillion on its balance sheet, buildings, land, mineral rights, et cetera. And he thinks that we can generate at least 25 basis points

of revenue off of that $500 trillion. Well, that's a lot of money. That would help us close that kind of annual deficit. And so anytime that you can think outside the box, use these smart people who have a lot of experience to come up with those ideas. I was surprised I'd never heard it before because it sounded like a pretty good idea. Now, how you implement it is pretty important. and you got to be able to do it in a way that isn't super disruptive. But I do think that stuff like that is, you know, it's surprising because you're like, hey, I pay attention to this stuff. I never heard this idea before. And it's a good one. Usually the good ideas persist and the bad ones kind of go away. But lately in society, it's been the opposite. The good idea has been kind of

swept under the rug and bad ideas like taxing unrealized capital gains. It's like the most resilient, dumb idea in the world. And so now hopefully that's switching and these good ideas will become the persistent ones. Um, but that was probably my biggest takeaway. And then, you know, things that I think are noteworthy, uh, obviously his experience at nine 11, uh, for those that didn't listen to the episode, um, he was taking his kid to school, nine 11 happens. His employees are on the, I think, 101st, 105th floor of a world series, uh, um, tower and, uh, it collapses and he loses over 650 employees. They die. And so he basically has to rebuild his firm and he dedicates quite a bit of money, about $180 million. He ends up over the years paying to the families

to take care of his former employees, doing right by other humans. And so he, I believe, put personal money into that, the company profits, all this kind of stuff, which is pretty cool to see. And then I think the last thing is, man, he's a good storyteller, right? And so he's got a lot of good ideas. I like to think that I didn't ask stupid questions. I didn't get in his way, but at the end of the day, it was really engaging conversation because he's a good storyteller. And so communication usually is one of these skills that people kind of forget about. But the better communicator you are,

the more likely you are to be successful in life. And I think that he's a perfect example of that. It was a great episode, by the way. And on that note, I think, thanks for your time. Thanks for doing this.