The Pomp Podcast - #385: Michael Saylor On Buying Bitcoin With His Balance Sheet

Episode Date: September 16, 2020

Michael Saylor is an entrepreneur and business executive, who co-founded and leads MicroStrategy, a company which provides business intelligence, mobile software, and cloud-based services. He has become well known in the Bitcoin community for using the company's balance sheet to purchase more than $400 million of Bitcoin. In this conversation, we discuss how Michael built MicroStrategy, what his $500 million dilemma earlier this year was, and why he choose to put more than $400 million into Bitcoin with the company's balance sheet. ============================== Crypto.com is the only all-in-one platform that allows you to BUY / SELL / STORE / EARN / LOAN / INVEST crypto all from one place. Join over 1 million users currently using the Crypto.com app. Download and earn $50 USD using my code ‘pomp2020’, or use the link https://platinum.crypto.com/r/pomp2020 when you sign up for one of their metal cards today. ============================== Coinbase Wallets are adding support for .crypto and .zil domains through their partnership with Unstoppable Domains. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can send money using these new domains instead of long Bitcoin wallet addresses, while also storing your domain in Coinbase's collectibles section. Go to unstoppabledomains.com in the dapp browser to register and manage your domains.  ============================== Pomp writes a daily letter to over 50,000 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://www.pompletter.com

What's up, everyone? This is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Michael Saylor is an entrepreneur and business executive who co-founded and leads MicroStrategy, a company which provides business intelligence, mobile software, and cloud-based services. He has become well-known in the Bitcoin community for using the company's balance sheet to purchase more than $400 million of Bitcoin. In this conversation, we discuss how Michael built MicroStrategy, what his $500 million dilemma earlier this year was, and why he chose to put more than $400 million into Bitcoin with the company's balance sheet. I really enjoyed this

conversation with Michael, and I hope you do as well. Before we get into the episode though, I want to quickly talk about our sponsors. First up is Crypto.com. They're an all-in-one platform that allows you to buy, sell, store, earn, loan, or invest crypto all from one place. They've got over 1 million users currently using the Crypto.com app, and their whole goal is to drive mass adoption. So go check out Crypto.com, the all-in-one platform that allows you to buy, sell, store, earn, loan, or invest crypto all from one place. Crypto.com. Go check them out. Next up is Unstoppable Domains. Coinbase wallets have finally added support for .crypto and .zil domains through their partnership with Unstoppable Domains. Previously, you had to

send these really long Bitcoin wallet addresses of random letters and numbers. No longer do you have to do that. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can now send money to pomp.crypto rather than the long Bitcoin wallet address. So go check them out at unstoppabledomains.com. Again, unstoppabledomains.com. It's like any other URL service. Once the name is gone, so pomp.crypto, I got that one. You can't get it. There's plenty of others. Go get the ones you want before somebody else grabs them. Unstoppabledomains.com. Lastly, don't forget that I write a daily letter to over 50,000 investors about business technology and finance. I break down complex topics into easy to understand language while sharing my

personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. All right, let's get in this episode with Michael. I hope you guys enjoy it. Anthony Pompliano is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy but only as an expression of his opinion this podcast is for informational purposes only all right guys bang bang i have mr michael saylor here uh you're an absolute legend my friend uh thank you so much

for uh for doing this happy to be here uh let's start uh you are bitcoin famous now uh for being the CEO of the first publicly traded company to convert a material amount of your balance sheet into Bitcoin and use it as a reserve asset. We will get to all of that fun stuff in a minute, but let's just start with your background and kind of how you got to running MicroStrategy, what that business does, and kind of that background that really led you to this. Okay. I grew up in an Air Force family, lived on military bases my entire life. I went to MIT on an Air Force scholarship. I got a degree in astronautical engineering, studied spaceship

design. While I was there, I got another degree in the history of science. I studied the structure of scientific revolutions and paradigm shifts and became very fascinated with how new technologies get introduced. Learned to fly in the Air Force, but I never went active duty because just as I I was about to graduate. The Cold War ended. The Reagan-Star Wars buildup won it. And one day, my commanding officer walked into the room and said, you know, we paid for education. You're on the hook for five years, active duty. But if you want to join the reserve, you can do that. If you want to go active duty, then you're going to wait two years before you get called up. So, you know, the choice would get paid three times as much in the civilian world,

you know and serve in the reserve or um wait so um this was an easier choice for me because i was going to be a pilot and in my final semester i was diagnosed mistakenly with a benign heart murmur and it disqualified me from flying combat jets and so my hopes dashed to being a fighter pilot I decided I did not want to wait around and so I joined the Air Force Reserve and I became a civilian unexpectedly in the final month of my undergraduate career. I thought I wanted to be a professor. I got into a PhD program but I had no money and so I decided I would go work for a year, and then I would apply for a fellowship, and then I would go back and get my PhD. I worked for the first six months. The company I worked for blew up,

you know, and I ended up working at DuPont, and I was building computer simulations for DuPont, and around the 18-month point, I tendered my resignation to go back to MIT, and I was building computer simulations to predict the return on billion-dollar capital investments in the petrochemical industry. And a computer model is going to be used to justify a $1.5 billion investment. And the executive that wanted the money, you know, I'm sure he said to his staffers, hey, tell the kid we need him to finish the job. And I was 24 and living in an apartment with milk crates for bookshelves, spending 700 bucks a month. And I knew I didn't want to stay and be a corporate bureaucrat so i was like no i'm not staying and the executive

said well give him whatever he wants and i said well you want to raise i was like no i don't want to raise it well what do you want i said well when i was in high school i wanted to be a rock and roll star and that was dash and when i was in college i wanted to be a fighter pilot astronaut and those hopes were dashed and my third idea was be a professor and that's what i'm going to go do and there's only one last thing on my checklist which is I'd like to be a CEO of my own company and I said okay so if you want me to stay you're gonna have to let me start my company I want I think I got a quarter million dollars in cash two and a half million dollars in contracts they let me hire 10 people from DuPont get me free off the space and computer equipment for the first two

or three years I took the you know they said we can't give you the money up front you're just a 24 year old i said you got to because this is the only time this negotiating strategy ever works i said you got to give me the money because i have no money like i had um you know they said well but and they went back to their boss and they did this deal that you would never ever ever do but i just happened to be the one guy on the east coast that could make their computer program work and the guy was 12 weeks from getting a billion dollar check from a mega corporation and it was all irrelevant. So they gave me the money. I thought, holy crap, I have $250,000. This is enough capital to last me for seven years. So I figure seven years, good, let's start. And so age

24, I started MicroStrategy with the thought that I didn't want to work for anybody else. And when it failed, I would go back to college. And it never failed. In the first year, we did, you know 10 people and then 20 and then we were 5 million then we were 10 million then we were 20 million then we were 40 million and at some point we were 80 million and then we kind of came to the market in the you know 96 97 time frame and the dot-com revolution's going crazy everybody's clamoring you got to go public so we came public in 1998 and uh then there was no going back you No, I got on the roller coaster. And so that's how I started MicroStrategy.

I didn't mean to. I kind of fell off the turnip truck and hit my head on a pot of gold and I'll keep it. So when you decided to go public, this was like right in the heart or at the start really of like kind of this mania phase. Talk a little bit about going through as a public company leader, kind of the multiple market cycles, right? Because if you went public in 98, you get 99, this big boom, you have to get the crash, you kind of then see, you know, another rise, 08, 09 happens, right, then you kind of get this incredible decade in the equity markets. And then you get COVID. It's like, how have you kind of navigated every single one of these? Because I don't think a lot of people realize like, you start a company at 24 years old, you're still running that company today. Right? And so it's been a journey. You know, like, here's an irony. You know, I never got that PhD. I'm just like a silly MIT undergraduate. I remember I was competing in my early years with this guy, this professor from MIT, who had like umpteen degrees and was so much more educated.

and uh you know i would be running a million dollar company he's got a million dollar company and he said what are you doing i said well i'm building these computer simulations on a macintosh he said you know well all the experts say the macintosh is going to die that's a bad idea so well eventually i you know eventually i ported it to windows and the next time i saw him the company's five million dollars and we're working on windows and he goes what are you doing i said well, I'm building executive information systems on Windows machines using this thing called Wings, this new spreadsheet with a programming language. He said, oh, well, experts say that Wings will never work. Excel is going to dominate the spreadsheet market. And that's a bad idea.

He was still running the million-dollar consulting company giving advice. I said, OK. Well, it turns out he was right. And in a year, we flipped the company, and we rebuilt the product on Visual basic and we doubled again and he said what are you doing i said well now we're doing this like executive information decision support system and he goes well that you know that won't work on visual basic you're gonna get your c plus plus and and he stayed 1 million and we were like 20 million and then the next thing you know we uh started building decision support systems on relational databases and everybody said well that'll never work that's too slow right and and it kind of worked until we got to 40 million and then along came the web and we flipped it again

and we put a web interface on it and that got us to 80 million and and every single two or three years there's something new that was simultaneously an existential threat like it's going to kill us or an opportunity if we embrace it and we're always inventing the next thing so eventually we found ourself into the business intelligence business and and we created business intelligence web intelligence relational intelligence and uh i had uh three big competitors they're business objects cognos you know crystal reports and uh we got to like 2007 2008 and conventional wisdom wise well they all had to sell out so all three of them sold one sold oracle one sold sap one sold ibm and we're still standing right and then we accrued some some more some more customers and

we kept motoring on and then along came the iPhone, you know, and the iPhone, the first iPhone in 2007 was kind of a toy. It had no cut and paste, no app store. 2009, the iPhone actually started looking pretty interesting. And, and I just, I became very enamored with, with the mobile wave. This, what happens when software leaps off of a PC out from under your desk? Because that's what they were i mean the computers were rocks under your desk and they were ugly and they had lots of cables coming out of them i thought what if the software is running in your hand and what if that phone's in your pocket it's like software going from solid state block of ice it gets the liquid a laptop and then it goes to vapor state and a vapor state was on the phone

and then i thought well man all of a sudden instead of going to the office to sit down at a desk and run your software maybe you have the software your kid's soccer game on a saturday afternoon and then maybe rethink how the software works so we we started uh doing mobile stuff and we implemented mobile intelligence and uh that took us to the next level now along the way i kind of i i took one path but i was always kind of um a tech inventor at heart entrepreneur so back in uh 96 when the internet hit you needed an email domain so we bought microstrategy.com but i was too lazy so i thought why am i going to type microstrategy.com why don't we buy strategy.com so we went we bought back when no one cared we bought strategy.com for like

50 grand and then i and then i thought why don't we just start buying words so we bought wisdom.com and then we bought usher.com and by the way do you know who owns hope in the world no i own hope hope.com hope emma i bought speaker i bought alert i bought angel i bought alarm i bought voice i mean and and here's my thinking you know there are all these search engines and if you go online and you search for voice you get like two billion hits on google okay if you want to launch a company named voice and you own voice.com you go to the top of the list of the billionth and so my thinking was if 10 billion 5 billion people go to school and they learn how to spell alert or emma right emma e-m-m-a if they know how to spell that then isn't that good for

a brand and so i started thinking about branding and and uh i launched a business alarm.com we eventually spun it off it's a multi-billion dollar publicly traded company on the nasdaq today uh and uh you know we made some money we didn't make the billions but we made a lot of money off it like 30 40 million and then we launched another company but an alarm was all about integrating your home alarm system with the internet yeah and then we launched another a company called Angel. And Angel was like an earlier version of Siri. It was an interactive voice response from any telephone, like an angel on your shoulder, talk to it and they respond. We eventually sold that for about 100, 120 million. And so, you know, what I learned was

it's easier to invent things. And it's easy, you know, you can invent something, you can even get it to scale um can you can you maintain it and can you commercialize it right a lot of people find like you can buy that boat can you afford to maintain that boat that's harder now you maintain that boat are you really going to enjoy that boat are you going to use that thing that's harder the analogy in business is just because you can buy it doesn't mean you can uh may make it uh competitive and even if it's competitive doesn't mean you can make profit from it so eventually i learn that you can't keep inventing stuff and we streamlined we sold those off but i got i got to 2020 or 2019 where uh i sold voice.com i tell you that story in a bit but i got to 2020 and we had

a portfolio domain names are sitting there i appreciated digital scarcity i thought these are unique in the universe only one person can own the work by the way you know who owns michael.com please tell me it's you yeah by the way and and you know who's lazy i thought well what if someone just wants to type in mike bought that too i'm waiting for michael jordan to call me up like why wouldn't you own michael.com how much money do you think you spent on domains over the years acquiring all of these two million bucks million bucks Okay, so let's call it low single digit seven figures, right? So a million, 2 million, 3 million, whatever it is.

Back in the day, back in the 90s. And I just sat on them because I figured the English language is going to be around for a while. Okay. And before you sold voice.com, how much do you think that you had made from selling the domains? we made like uh 35 million in the alarm transaction and more than 100 million in the angel transaction so so but we had we had uh commercialized businesses with them so we sold the domain and and the business with them as part of it and uh voice was the first uh the first naked domain sale that we did that was material and we did that one for 30 million and

we just sold the domain, nothing else. And when you go to do this, when people hear, wait a second, the same guy who did this Bitcoin thing sold a domain for $30 million. He also has a business that's worth over a billion dollars in the public markets, etc. He's spun off multiple companies that are now worth tens of millions, hundreds of millions of dollars. This guy just keeps hits after hit, after hit, after hit. How does something like voice.com come together do they approach you do you put it up on like a broker site and say hey there's a 30 million dollar domain how does that work you know at some point i i said to my marketing people why don't you make a list of all of our premium domains and my definition of a

premium domain is is a domain where if you hit the google search you will get 500 million hits or a billion or five billion hits when you typed it in the search engine and they're all just you know ideas like wisdom and hope yeah and i said why don't you make a list of them and send them out to every you know everybody we know and see if anybody's interested in them and we sent out the letter and we heard back you know nothing right maybe i got like two venture capitalists called me but nothing ever went anywhere and i was like okay forget that go back running my own business and with voice you know this is how this goes down i'm sitting at my desk one day and uh one of my junior 20 something business development reps walks and he goes hey some

broker you know called us and and they offered us like 150 000 you know for this domain voice and i looked at it i'm like look i've been waiting for 20 stinking years like 150 000 isn't going to do much for me i said tell them no okay so nothing nothing goes on and then they come back they uh they offered us 300 000 now i said well tell them no don't bother me so i waited and then the next day they come back they doubled it 600 000 i said uh nope still not interested um tell them tell them it's gonna have to be something north of you know 10 million bucks I'm just not interested they go well they they offered 1.2 and then it went to three and then it went to six and when it got to 10 or something like that finally that you know I'm starting I've

got all these other people lobbying me salespeople sitting like jackals you know like you're gonna want to you know they're all like you have to sell this you have to sell this and this is where where selling selling intangible assets like anything artwork it all comes down to how much are they worth to you right and so if you needed the 10 million dollars you would have taken the 10 million dollars but at this point you know i have 500 million dollars of cash in the bank if i and by i love my things you know like i i love them tears right maybe you can tell that i'm a little bit passionate about some of this stuff you know so i would rather own it and not have the 10 million then sell it you know for for that so i said don't know they said okay well

they went up to 22 million I said I think when they said 10 I said the numbers I'll sell it for 30 million so the only price I ever put on the table 30 million bucks I didn't like nothing else I was like after it gets to 10 I'm like I will sell it for 30 million because that's enough to I thought by the way it's an I didn't sell it for 30 million because I thought that's what it was worth I think that the word voice in the english language is worth 100 million like i've seen people drop 100 million dollars on an ad campaign and you want to drop 100 million an ad campaign with the with the i voice.net type domain it's like so i thought it was worth more but i thought well i gotta i need to market

to market i need to like create some kind of market comp for it so we'll do 30 million so but tell them 30 million. They said, they'll give you 22. I said, no, but tell them I'll talk to them. And so around 22 million, I agreed to get on the phone. And, you know, so like, I'm talking to a broker and a lawyer. I'm like, I, you know, all through this, we're like, well, who's the buyer? Who's the buyer? Not some, some, somebody, you know, like, and if they'd said, if someone and said yeah we're a startup and we've got like 12 million dollars in the bank and we'll give you all of our cash and this is all we've got maybe they might have swayed me but but i just had a whale on the other end of the line that that wouldn't identify themselves and i thought

okay well that's the case i'm just gonna wait until they hit my bid you know if you had if you had an acre in central park and someone wanted to buy it from you and the price is the price you would wait and then when it's like you don't want it i'll wait i got another decade i'm not going anywhere somebody's going to eventually want to commercialize voice so eventually they got on the phone and i'm talking to a broker but i hear like a click click and there's other people eavesdropping on the line so i'm kind of just talking to myself they said well we're authorized to go to 22 or 23 million i said you know sorry i said go to the google search engine and type in voice right now and then why don't you what you'll notice is that it's more popular than like what's

up with the billion users it's a better brand than you would get you know if you were to get a billion people online it's it's a better brand than than oracle or than sap or than 100 billion dollar plus companies so this is how i value it i'm i said like this is like my daughter i'll marry her off but only to a man that's going to treat her better than i will treat her so if you guys really value this then give me the 30 million otherwise i'm keeping it you know and and so at some point they come up to 30 million right you guys agree at that point they agree to 30 million but did you know who it was before you agreed no yeah no clue who it was really who was okay so you agree i sold it in the blind basically saying no from 150 grand up to 30 million

and then finally they did it i still didn't know who it was until after the transaction closed and then i hear it's some crypto company and that's the end of it for me and that's my introduction to crypto i literally am thinking about the broker who's like okay just you know showing up to work 150 000 trying to buy a domain and next thing they know a couple weeks later they're brokering 30 million dollar deals and probably you know they're peeing in their pants right trying just hoping to god this goes through because they've already thinking about what house they're going to buy based on the commission type situation right it was amusing and so you do this you say that it's your first um kind of foray or experience with crypto but there's this experience with

crypto all right so there's this tweet sold the domain there's this tweet that everyone is begging me to talk to you about which is in uh i think it's 2012 or 2013 you basically put out a tweet so you're early because it's 2012 2013 about bitcoin uh you're also on twitter then which was still pretty early for uh for twitter in general uh and you basically tweet out you know kind of saying what i would consider a pretty uh down the fairway critique of bitcoin which is like it's not going anywhere yeah right fast forward seven online gambling it's days or another yeah So seven, eight years, and now you've got a material part of your balance sheet in Bitcoin. What happens?

How does that happen? Okay, Anthony, can I tell you the truth? Of course. I got an iPhone back in the day. I installed Twitter on it, and it used to be really fun, and I used to really enjoy reading the news and tweeting stuff, right? And it's like, it was like, you know, by the way, there are certain people on Twitter that still seem to enjoy just tweeting out whatever the heck they want. So I was in that stage, and I had a lot of opinions. And so I'm tweeting stuff. And eventually, and by the way, I tweeted 1000 things, I forgot all the things I tweeted. So eventually, I realized that it's probably better for my communication effectiveness if I limit my tweeting to stay on brand.

So, like, I have a company, MicroStrategy. If I have something intelligent to say about MicroStrategy, I say it. And I have a nonprofit foundation, the Saylor Academy, that gives away free education to hundreds of thousands of people. We're just giving away a free college degree. and if i have something that i can do to help them i say it and then whenever anybody else does anything that i might have an opinion i keep my mouth shut now because i've realized it's just an opinion and i've lived long enough to be wrong on a lot of things but now coming back to that specific tweet i really am ashamed to say i didn't know i tweeted it until the day that i

tweeted that i bought 250 million worth of bitcoin and then i discovered the hive mind crypto twitter consciousness where all of a sudden they all went through all my tweets they found it they reminded me of it they compared it and i'm like oh my god i literally forgot i ever said that and i you know but i i took it as kind of like kind ribbing like i didn't get all worked up about i'm like you're right i was wrong what an idiot i was i wish i could go back and do it again well the part to me that was uh so funny about all this is one you're right that the internet never forgets right and and it sounds like you were using twitter early on how i use it which is sometimes i literally tweet things and i tweet them for myself to remember what i'm thinking

right like i just you know throw something out there uh the problem is that uh the internet doesn't forget. And even if that was a thought in the moment, right, you change your mind later, it's a stamp, you know, kind of that never goes away. And so when they found it, and I saw that, I was like, Oh, my God, this is amazing. Like literally in a six, seven year time period. It's not just from a I don't believe it has value to Oh, maybe it has some value, right? I mean, you would you consider the move of taking the 250 million the first investment? Is that a bet the company type move or do you look at that as more uh conservative than a bet the company type decision i wouldn't say i would not say it's a bet the company decision um what i would say is

we looked at it and before i made that that uh decision before the before i was able to convince anybody on the board or the executive team to agree that was the right idea we all needed to collectively be of the opinion that we were going to be generating cash ad infinitum right so so uh like there's a journey that we went through corporately over the past year and there's a journey that bitcoin went through over the last seven years so if we focus upon our journey we had 500 600 million in cash and we were buying our stock back a bit and then we were thinking maybe we'll need to buy another company we need it for a rainy day or maybe something really bad will happen and we'll really need the money you know one of my heroes is steve jobs and steve jobs

you know you know if you had a near bankruptcy experience and he did and i did too by the way by the way i i lived uh i lived to see my stock go from 333 dollars a share to 42 cents okay wait wait wait hold on back up yeah the stock price fell what time period is this you know it's not like i like to brag about this stuff because it's not something you want to be proud of but i will tell you that the two of my bragging rights are i am the pretty much the longest lived public company ceo in my industry because i've been public company ceo for 22 years and the second thing is is i'm pretty sure i'm the only public company ceo that ever presided over a 99.8 percent drop in the stock price and kept his job i mean this okay so when does this happen like 2003 you

know okay i i look it's it's another story i learned a lot of lessons at the short we don't want to get off the subject of Bitcoin and the subject of whatever the short the short lesson there is don't run out of money always have cash on the ballot sheet and don't spend more money than you're taking in and I feel like an idiot to give that advice to anybody but it's still good advice right now for sure let's fast forward back to 2020 um so we had the money we were we were very conservative no debt ready for a rainy day ready to seize the opportunity buying our stock back covid hits the pandemic hits everybody's you know our equities in the tank you know uh we're losing momentum. And the first thing that happens in, in Q1 is it's all kind of shock and

awe. And in Q2, the question is, how does this impact my customers, our business, our product, our value proposition? And, uh, you know, and by the way, everybody gets impacted differently, right? If you're running a cruise line or a theater or whatever, and sometimes counterintuitively. and in our case we sell enterprise software that helps you think better we sell business intelligence and we sell business intelligence to to lots of governments agencies we sell it to massive banks we sell it to in essence global 2000 companies even the ones that get impacted they're like the national airline they can't go out of business right they so that's our customer base so we realized that our software kept working demand was still there everything is

smooth and in fact the great thing about software is software you can ship even you know over the internet all of our services went remote so our value proposition is intact and the the surprise for us is our is our productivity went through the roof and our cost structure compressed all of a sudden, you know, $20 million a year of flying around in airplanes went away. And $10 million worth of trade shows and $20 million worth of marketing things went away. But the customer in demand didn't go away. So we actually found that we were much more efficient. So bottom line is, yeah, we got that black swan event. But that black swan event actually kicked us into a high gear and productivity. And so that was the positive on the P&L side. We realized that we

were going to generate more cash. And there was no real rational business plan where I take $200 million and I spend it to make the business better. I can burn it to make the bit, but I can't spend it to make the business better. So simultaneously, we got a gift from the Fed and the macroeconomic side. So while we're trying to figure out what happens on the P&L, all of a sudden we see, what do we see? The long bond index goes up 22%. If you had asked me, Anthony, what's the investment that you do not want to make? I would never in a million years buy a 30-year bond that yielded 2% interest. Never, ever. And yet, that was a winner this year. If you bought a 30-year bond at 2% interest, when the interest rates go to 1.2, you've actually got

a massive spike. So equity spiked, big tech spiked, bonds spiked. And we looked at our cash, And I had to listen to a litany of talking heads. Ray Dalio on down. You know, if Ray Dalio didn't say cash is trash, every podcaster that trolled Ray Dalio said Ray Dalio says cash is trash. Cash is trash. and you know and then I'm and then I went to school at some point on you this is probably this is after I realized I had a problem and I listened to you describe the plight of the working man I you know I go to work I get paid five okay this is not a workman this is a working lawyer I get paid five hundred thousand dollars a year I save fifty thousand dollars I put it in my piggy bank. I have $500,000 in cash in the bank. I have kids and I have a future. And then all of a sudden I realized that the cost of a college education is going up at 8% a year and

my cash is yielding zero. Now, at that point, you know, we've got the pomp podcast telling me I'm crazy to work for dollars and save my cash. And if you take the $500,000 and the plight of a lawyer with the two kids we're going to send them to Harvard and a $500,000 of cash in the bank yielding zero. And now you multiply everything by a thousand. That's me. I have $500 million company. We're making $50 million a year. I got thousands of people working as hard as they can possibly work. We're sacrificing right and left. We're squiring our pennies away. We're putting it into the bank account. There it is. And, you know, in 2019 and before, we worried about the unknowable and we thought maybe we'll use it for something. And by the way, I'm a bit older than

you. You know, I remember when you got 5% interest overnight on your money. And it wasn't that long ago that the risk-free interest rate was 5% before the great financial crisis. And I'm like, we're going to make 25, $30 million a year on this. And I kept hoping and waiting for those good times to come back. I was the guy that when the interest rates, you know, when the 30-year T-bill interest rates started to go to three and a half percent, I'm like, finally, they're going to go to four, and then they go to five, and they're going to go back to normal, right? Normal interest rates. And then, of course, hope was dashed. It went the other way. And what happens next? Well, asset inflation goes through the roof, right? And you know, this entire conversation

and inflation, it's really twisted, because everybody talks about consumer prices, CPI, CPI inflation, that we're not getting enough inflation, we're not getting enough inflation. Okay? Well, like, you're not getting an you're not getting inflation on YouTube, and Netflix streaming videos and candy bars manufactured by robots and factories and Domino's pizza. you're getting inflation on everything you want if you wanted an ivy league education if you wanted a beachfront house in miami if you wanted the apartment in new york if you wanted anything scarce everything you want is going up seven percent and that's asset inflation but if i want if i want a bond that's going to yield fifty thousand dollars a year you know it used to cost

a million bucks and this year it cost 10 million dollars the cost of the asset going up went up by two percent no i have a i have a house in miami beach it was a nice house built in the 1930s and and i have the deed that of sale for the house a hundred thousand dollars for that house in 1930 it's gone up in price by a factor of 100 it's like you know so no inflation kind of inflation but it's different it's asset inflation so i didn't really think about it until i got slugged in the face with the two by four which kind of happened around march or april when main street shut down the economy shut down and bonds went through the roof when municipal ponds went up while every city is bankrupt, when every when Apple stock and every other public tech equity

went up, while and the multiples blew out, and the economy went to the worst place I've seen in 30 years. At that point, you start having a thought with yourself, which is what is what is the true inflation rate. And and we should probably coin a different term, right? If you if you looked at asset inflation on a good year for the last decade is 7% a year normal, right? This year, you can make an argument it was 25%. I mean, if you look at the long bond index, and if you look at these equities, you can make an argument that the asset inflation rate leaped to 25% and 30%, depending. And now, what does that mean to me metaphorically? Well, here's how I feel. I felt like I had $500 million of cash in the bank safe. And it was yielding two, 3%. And I'm ready for a

rainy day. And then I'm starting to do stuff with it. And then every month, some banker sends me a note saying the interest went down, it went down. Now there is no interest. And then someone took my cash out of the bank, and they put it in the backyard in pallets. And then they opened my back gate and then every month someone comes along and starts burning two percent of the money and then i started thinking well you know in 12 months 25 of the money is going to be gone and then you know then i started thinking what is the point of all this right what am i doing wrong and of course the answer is you can't hold cash and so what do you do with it right well i mean Okay, so hold on a second here. So you realize the macro issues. I think there was a couple of

different things that happened, right? So the macro issues happen, you're sitting there, you're in a very unique situation, because you have so much cash on the company's balance sheet. You run a business that throws off a lot of cash, right? So you kind of have that advantage. It actually improves economically, like you described in terms of your costs are going down, that the structure of your contracts kind of are weathering very well through the storm. And so you remain in a strong business position where you have cash and actually the cash is growing, not through investment, it's growing from kind of your income, and you begin to get worried about that. How do you get to crypto, right? And I'm leaving you a little bit in terms of, you've got a friend who basically kind of hit you over the head a second time. So let me tell that story as to kind of what pushes you to at least go explore crypto. and then we can talk about kind of what you do but but just talk through that process of like

how you actually arrive at okay crypto is a potential solution you know when times are good everybody's busy you know if you're in love with the iphone then the answer to everything is iphone if you're in love with your apple watch when you're in love with twitter the answer is you know that you know um so when times are good everybody focuses on that and there's only limited time. So I think I was closed to the possibility. It's just there's so many other things going on. And when the COVID crisis hit, everybody got sent home and we all had to contemplate ideas that we had previously rejected. And we had to embrace ideas that just were very foreign to us. So how do I discover crypto? Well, first, I have a mega,

mega, mega problem. And the mega problem is I have a lot of cash, and I'm watching it melt away. And I'm helped to realize I have a mega problem by this insane V recovery in the bond market and the equity market and uh you know all of the talking heads so after after that then i have an opportunity which is i've got a cash generating business and then i've got one more problem which is the investors the outside investment community if you go to them and say hey we're a great enterprise software company and we've got all this cash their answer is well we don't really value to cash what i mean because they're smarter than i am right now i'm not being i'm not joking i'm being serious they are smarter than i am they knew before i knew that cash is trash and you're

a fool to sit on the cash you're just if the natural asset inflation rate is 10 it means that every time i generate 50 million in operating income i burn 50 million in purchasing power we're on the cash and we're just running as hard as we can to stand still so we weren't getting any credit for the cash we didn't need the cash ergo we need to do something and so what is the thing you're going to do and we started working through it like what do you do if you have 500 million dollars of cash you don't need well you can buy your own stock back right there's a limit to how fast you can do it if you go into a market and a thinly traded stock and you're buying 20 percent of the float every day you know that's going to take about four years right it's like

you know if if your account if your ice cube is melting 15 or 20 percent a year you don't got four years or at least you know inflation is going to do a better job so that didn't really make sense so we had we got kicked into high gear like everybody got kicked into high gear this year right? If you didn't know how to use Zoom, you know, like we started on a Monday morning with one video conferencing technology. We discarded it. I'm not going to say which one. We discarded it for another one by 11 a.m. By 2 p.m., we're using Zoom. By 4 p.m., the CEO sends out an edict. Zoom is not a corporate standard. Everyone will switch over to Zoom starting tomorrow, right? And by the way, the same CEO that said, I don't believe in remote work, you got to show up to the office or else you're not working for me. And I would have sworn up and down, I hated remote work until COVID crisis hit, flip. And so that same idea happened with the balance sheet.

there are all these strongly held views you got to be conservative you got to invest in cash and short-term t-bills and you don't contemplate anything else and then all of a sudden you contemplate other things so i mean you're an expert you tell me if you had 500 million dollars of cash right now where would you invest it uh i'm cheating because you and i see eye to eye now i'd go buy a lot of bitcoin okay and so if you didn't know what you know but you were an intelligent person and you watched YouTube and you watched everything else, what would be your laundry list of assets to consider investing in? Yeah, it basically be all the inflation hedge assets, right? You'd look at everything from real estate, precious metals, Bitcoin, you kind of just

go down the line, hard assets that have some sort of inflation hedge type qualities that really are more kind of wealth preservation than anything would be the general bucket to at least go start exploring with. Okay, so let's take through them. Commercial real estate. How do you go buy $500 million worth of commercial real estate at a fair price that's not an impaired asset by something happening in the economy right now? How many people want to sell you commercial real estate at a fair price right now that is not impaired? They all think it's still worth what it was worth in January. Okay, so that's kind of difficult. So what's my next thing? Go buy, I'm not so silly as to go buy 20th century stock. Go buy Apple, Amazon, Facebook, Twitter.

Oh, by the way, back in 2012, I wrote the mobile wave. You know what I said in the mobile wave? I said, go buy Facebook, Amazon, Apple, Twitter. It was a good idea in 2012. If you had done it, then you would have made 10 times your money. Very good idea. Not the same idea this week, right? I mean, at this point, you know, is Apple computer going to go up by a factor of 10 from here, right? Maybe it might double, it might be cut in half, but you know, you're with the best equity in the world, you've got a, you've got equal upside downside. You're really just. Yeah, there's no asymmetric. Exactly. And so when you started to look at this, um did you look at real estate precious metals and bitcoin or kind of what was what was the

on the menu if you will for evaluation i went okay and this is where i gotta i gotta give a plug to my friend eric weiss eric weiss running his own bitcoin bitcoin investment you know advisory service you know and he's saying this is what i'm doing and i'm just dismissing him like whatever this bitcoin thing i don't know what it is but it's crazy crypto and slight shell game so he just he keeps mentioning it and i keep thinking about it and then then one day we're sitting around my pool in miami and he starts explaining it and something clicks in my head that maybe this is a pretty good idea you know like i i have been beaten over the head with a two by four and so i'm a bit more open-minded but i started thinking about it and then i realized

i really got to look at precious metal you know you got now you go to the robert kiyosaki silver gold or bitcoin you know choose one and so we get down to choosing are we going to invest in precious metals or bitcoin i am i gonna i already dismissed commercial real estate i dismissed a market basket of equities the spider you know nasdaq 100 that stuff's just not compelling i you know i tell you what i want right what i want is something that that might be cut in half that can go up by a factor of 10 asymmetric payoff by the way that's what any intelligent investor was that's what you want when you bought amazon in 2011 that's what you were getting when you bought apple computer when the iphone came out that's what every every

rational winner is getting you want a 10x upside and then you want yeah i can even live with losing all the money although here's the catch you know like every good investment in my opinion if you're going to put a lot of money at work that the winning formula for the past 10 years or 15 years has been find a digital dominant network that's dematerialized some some fundamental thing the mobile network is apple the information network at google the video network youtube you know the social network facebook uh even twitter speech network dematerialized and amazon the retail network you buy them when they're a hundred billion dollar market cap when something hits a hundred billion dollars and by when they're 10 times bigger than the next biggest thing

and they're a hundred billion dollars they're probably going to crush everything and at that point like you know i remember lecturing wall street guys in 2011 2012 about apple you know And here's what they said. Well, we know you love Apple, and you think it's going to beat the world. But our idea is, if Apple goes up too high, we're going to sell the stock, and we're going to buy HP and Dell so we can diversify your computer portfolio. And then if all your tech names, if Apple and Amazon and Facebook go up too much, we're going to sell those so you don't get too much in technology. Okay, and my answer was, what you know, if you think about it broadly, there's no example of a successful company in the history of the world that wasn't a technology company. Standard Oil was a technology company. If you go to Hershey's factory, you'll find they figured out how to manufacture 50,000 candy bars in a clean room. And it's the most sophisticated piece of technology you will ever see in your life.

You think they're not technology companies, you're just ignorant. There is no winning investment in a company that's not a technology company at their time. General Electric, there was a time when electricity was interesting technology. Boeing, same thing, before we could fly. So the idea you sell too much tech is a foolish idea, in my opinion. The idea that you sell Apple when it gets too big is another foolish idea. Like, well, there's never been a company that was $500 billion in market cap or trillion, right? People say that.

There's never been a company as valuable as Apple because there's never been a company as valuable as Apple. And another way to say that is there's never been a company that could create a software camera, change the way it works, and ship it to a billion people overnight for a nickel. And if you could actually ship a product to a billion people overnight for a nickel, you could create a lot of value with no cost. So obviously, these digital networks, Facebook, Apple, Amazon, you know, you could see them, they're all around us. They're insanely value generating. But there's another dynamic here, which is the network effect, right? Metcalfe's law. It's like, as soon as everybody uses Facebook, you know, you can't, how do I get 257 of my closest friends to switch to the next thing? It's really hard. like twitter you know how do you get all of your followers on twitter to switch to the next speech network you think you know even if you know even if a guy has a massive following on twitter you think he's going to switch you know to another thing probably not he's gonna be the last person to leave so you you know you're buried in concrete there so now we come back to bitcoin

okay the the number one knock on bitcoin uh for the outsider is well it's just software someone else can copy it and i think bitcoiners they don't do themselves justice here i mean sometimes i think the exchanges and and some of the others they over promote the fact that there's 237 different crypto pairs you can trade right and and it's i've done that it's like that it's that long tail where all of a sudden there's one thing and i want to have a list of 47 things but but you know what's an epiphany you know the epiphany is when you're a young ceo and you're like i'm going to put a salesperson in every single state in america there's 50 states 50 salespeople there's an epiphany when you go to new york city and you realize that half of all

the money in the country is in one city and then you realize that maybe you're being captured by orthodoxy so in this entire crypto area it's it's great to have all the innovation and it's good to experiment with this and that and defy and maybe that'll work and maybe that'll work and maybe that'll work but to the outsider the outsider you look at it and you're like well what if everybody moves their money off of bitcoin to the to ether or to whatever or to yo-yo coin and you know and they stop and and then someone puts this language eight pages of language in front of you what happens if there's a hard fork or a soft fork you know how debilitating anxiety inducing that would be to get to deliver eight pages of legal disclaimers on hard fork soft fork risk like

you mean like my crypto can float away and they get all anxiety ridden so you got to get beyond that okay and it's easy to get beyond that the easy way to get beyond it is to say look this is a proof of work crypto network designed to be a store of value and the only thing we're going to do is maintain a constant store of value as a digital gold and we're going to expend huge amounts of energy to protect that network and upgrade that network and you can take your 500 million out of the bank and put it on our network. And everybody in the community is going to spend every iota of their energy to make sure no one Fs with that network. Okay. Okay. All right. So hold on. So when you start to understand this, it sounds like you pretty

astutely Bitcoin, everything else, there was a separation in your mind in terms of understanding that uh and as you were learning about that were you going into this um with an open mind as uh i don't even remember that i tweeted this thing you know in the past i know i've got this problem this is the promise of this thing is a store of value like let me go explore it or do you basically have people who are kind of guiding you and pushing you and saying hey this is the solution this is your solution like is this a self-guided tour or is this a externally guided why i am completely oblivious to any previous opinion i had had that before but i i didn't follow bitcoin all through the 2017 bitcoin cash for any of the fireworks that were very colorful i missed it all right

okay so i you know i show up with a queen slate in 2020 and i'm reading about this as history and i'm looking at you know andreas's you know videos and your videos and dan held's videos and i'm reading the bitcoin standard by safe for dean and i'm reading parker lewis's essays and you got you got indoctrinated by the bitcoin community you got hit with all the content yeah and and all the maximalists and i'm seeing max kaiser and i'm you know and i'm sorry i'm like i'm starting of fear oh there seems to be some interesting drama here but it's more entertaining for me right and here's the thing that really just that just kicks you over the edge though it's just when you go to real bitcoin dominance and you look at bitcoin and then bitcoin cash and then

the next one the next one you realize okay bitcoin is 92 percent of everything and the next competitor is 2%. And then the next competitor is 1.5%. Okay. The number one knock on Bitcoin is, well, maybe it's the MySpace to Facebook. It's like, absolutely not. If you know anything about MySpace, you realize that MySpace was never worth more than a billion dollars. Okay. MySpace was one, was 200 times smaller than Bitcoin is right now. It was never that case, right? There's never an example of a hundred billion dollar monster digital network that was vanquished once it got to that dominant position so all you got to do is see that chart and then you think about the think about the dynamic and the network effect and you're like this is already one right it's one

it's been tested and you know and by the way the hard forks i think are a big advantage the fact that the fact that bitcoin went through it and we saw what happened and we saw that the community would defend Bitcoin, that's what gives a person like me confidence to invest hundreds of millions of dollars in Bitcoin. I don't want to hear that you've got a new idea and you're upset over transaction fees and you would like to implement smart contracts so you got to change everything. I don't want to hear that. I want to hear that you're going to defend the network to the death against someone that's going to break it or compromise it in any way, shape, or form. When you decide personally, this is a good idea. I'm going to take a material amount of the $500

million and I'm going to go buy Bitcoin with it. You've got a board, you've got shareholders, you've got regulators. There's a number of stakeholders, right? That people who either have financial interest in what you're doing or really care about what you're doing from regulatory standpoint what are those conversations like do you just go to the board and say hey there's this thing called bitcoin i'm going to take 250 million dollars i'm going to go buy it do you kind of warm them up with some information first like like what is that conversation at the board level like i started signing them homework and they all know you so they you know they've watched a variety of your podcasts uh they all know andreas they all they all required to watch

the debate between eric borges and peter schiff on gold on fiat versus bitcoin what is better money right and then a non-stop stream of essays you know on macroeconomics and bitcoin theory and You know, you know, the who's who litany of people you've interviewed, when Alden publishes her piece, it goes to my board, you know, the bullish case for Bitcoin goes to the board, all of those things. And, and it's, and between them, and the general counsel and the CFO and myself, we're all basically just going down the rabbit hole. and following that is this you know is a series of discussions one-on-ones with everybody everybody goes off does their own homework we all come together lots of group discussion we all split the cfo goes off to to to uh to organize and start to consult with arrays of accountants the general counsel goes off to consult with a raise of attorneys you know then we go off and consult with a raise of financial advisors then we consult with a raise of bankers then we come

back together again and then we share then we have deliberations then we deliberate some more and then we think very carefully about what is the appropriate and prudent way in order to begin to move forward with or affect this strategy here. All right. So the first purchase is $250 million. You announced today that you did another $175 million. So you're now at $425 million, which is almost all of that $500 million of cash

or a good portion of it. Walk us through, I got a ton of questions around what I'll call operationally investing hundreds of millions of dollars. So how do you think about entering the market and trying not to move price? How do you think about OTC, right? Desks? Obviously, for those who are listening who might be confused, Michael and the team is not going on Coinbase and letting a $400 million market order rip. So there's some very thoughtful things that go into this. Let's talk first just about how do you actually acquire this much Bitcoin without kind of moving price? And before we get there, I'll make one more point. We had $500 million in cash. We wanted to buy our own stock back with it or put it into some asset like Bitcoin. Our first step is to announce that we're thinking that through. our second step is announce a tender offer for our stock, $250 million. That took place the same day we announced that we bought the $250 million in Bitcoin. Then we have a 20-day period where we

wait for our shareholders to decide if they're going to tender and how much. So we had to move through that. When we got done, we actually bought $60 million worth of our stock. That hit the wire in the last few days too. So our real goal was to invest it all. Got it. So it was $250 in Bitcoin. The tender ends up being $60 million or so. So you're at like $310. And then you had kind of another $175 million that you could play with and still keep some cash in the bank. And it's the shareholders decision as to how much of that will be tender. Right. So we wait for them. And then after the tender offer, we had excess cash in our treasury. So the next step is for us is to invest our treasury cash. So that's what we announced today. but we've we've wrapped it all up so substantially 95 of that money is either invested in our stock or in bitcoin and we've accomplished that in short order right like over the course of six weeks or four weeks now uh regarding acquiring that much bitcoin first of all i can't give you like

exact blow-by-blow details because i've got security issues and the world is watching and i i can't but what i can do is is is i can describe to you if you were running a company how you should think about this you know if you were in my position which is you're going to go and you're on you're going to audition a bunch of uh a bunch of institutional grade exchanges you're going to work through and look for institutional grade custodians yeah yeah you're going to look at you know all all of the security issues all the technology issues etc you're gonna you're gonna think about the team you're gonna build a relationship with them and then you're gonna buy if you're gonna buy that much you're going to buy it in thousands or tens of thousands

or 100 000 plus small transactions day and night minute by minute over the like over the course of many many many days so so it's not like we're going in i'll sit and i'll watch this happening and i've got a great team you know a great team that i've worked with and some excellent professionals they are brilliant geniuses at what they do but let me tell you they've got great technology too right it's like and you got to have the right technology you got to have the right team and then you have to be very patient like very very patient you know like i'll watch people walk in on monday morning and you know i was like okay some dude just got up at 9 a.m and decided to buy some bitcoin and the price spikes you know whenever i see that i'm like well that guy won't

be in the market very long because no one that really wanted to buy a lot of bitcoin would be so silly as to spike the price so hard you know i i can tell you this which is we bought 425 million dollars worth of it and we never ran the price not a dollar like you don't know impressive yeah it's pretty impressive i'm in the market you wouldn't know that i'm trading against you ever because that's just, that's not how you get stuff done, right? Let the market come to you. So the good news is if you want to buy hundreds of millions or sell hundreds of millions, you can do it and not be seen

and you can do it without moving the market materially or panicking anybody, but you have to have the right team, the right tools and the right discipline. You can't be in a hurry. Got it. That makes sense. how has the reaction been from other CEOs or people who kind of are outside the company I'm assuming that you've gotten people coming inbound that are peers are they laughing at you are they excited are they asking how did you do this why did you do this like what are those

conversations like well first of all I think this is a year where every CEO is busy like minding his own business right like that that they've either got a business that that that has serious serious solvency issues or or struggle or they've got a business that's being digitally disrupted or twisted one way or the other and and or they got all sorts of of employee care and feeding issues so so this is not the year where a lot of ceos are necessarily sitting around shooting the whatever about you know what's happening this year right everybody's kind of all hands on deck working hard uh the people i do speak to though and i speak to some i would say everybody has uh has had a lot of their assumptions shaken this year assumptions

about you know how the market will behave assumptions about regulations right i mean assumptions about international business assumptions about their balance sheet and things that were inconceivable last year right oracle tick tock you know all sorts of interesting things that you you will see on the paper and people are just like nod and they're like not even a second thought like oh yeah that's happening that's happening all those things are are being considered this year to a much greater degree so i i do have people coming to me and and and they want to know how do we think about it and why do we do it and you know and they're all starting to want to think what's their angle on this now and so i think it's catalyzing people

to be much more open-minded yeah i think that makes a lot of sense do you feel like uh you've kind of broken the dam open and now a bunch of people will follow? Or do you think that this is kind of a slowly but surely it will take a lot of time for more to kind of follow in your footsteps? I think it's like the four minute mile. I think the people told themselves they couldn't do it. And then someone does it. And then in the next year, dozens and dozens of people do it. Right. This particular case, there's a lot of stuff that I've done in my career that was a lot harder than this and i and i will say any entrepreneur that ever successfully launches a business and you know and gets to profitability will have accomplished something much harder than

what we did so it's a it's a uh it's a challenging project but it's not beyond um beyond the capability of any any uh management team i think that a lot of people just kind of had a mental block uh you know or they it's just in this block of i just dismiss it i don't even consider it and then they get focused on something else my own experience is you know on the day from the day that i decided that i wanted to buy bitcoin if if i decided on that day as an individual you go to these you know high-end exchanges it's going to be six weeks to get through the kyc for an individual, if you want to do it. If you're a company, a private company, and if you had your team all around you, from the point that you thought it was interesting, you're 12 weeks to

18 weeks to get through the hoops. If you're a nimble publicly traded company, I think you're looking at six months. And if you're a good company, like just a good rational publicly you put on the docket you would do it in 9 to 12 months and so i i think that um people were kind of oblivious to the uh to the the need slash the role of bitcoin and the bitcoin narrative of digital gold right this is the ultimate inflation hedge this is this is if it's it's not 10x better than gold it's 100x maybe it's a thousand x better we could go on for hours So I could tell you why I think it's 1,000x better than gold. But let's just assume, since we're preaching to the choir, that it's 1,000x better than gold.

Once you realize that it's 1,000x better than gold, from that point, it's minimum 12 weeks if you went like a bat out of hell, and probably six months. And I kind of feel that if people were waiting to see if this was possible, well, they kind of saw our announcement August. So the six-month clock starts in August. If they were super, if they were just perfectly configured, if they had all the same characteristics as us, then they start focusing on this in May or June. nobody's thinking about this in march or april it's just so busy trying to keep the doors open and and their bell's getting rung so take august and say august september october i you know december january february i think that what you're going to see is over the next two three four months something interesting and um you know the the other point right that's not lost upon me is there's 3,500 publicly traded companies. There's $5 trillion in their treasuries and it's all melting. And, and yeah, at some point you have a fiduciary obligation to not lose the

money. Okay. Yeah. Like it's, it used to, it used to be acceptable to be conservative, but that was before the asset inflation rate went from 6% to 30%. You know, when the inflation rate goes to 30%, it's not necessarily something you can ignore. So I think that a lot of people are getting catalyzed right now. I think it has to be kind of CEO, CFO led, right? Because it is an innovative thing. But I think that we've shown people how to do it, you know, and we've shown them that it's possible and straightforward. And once you, it's like anything, if I tell you it's possible, go figure it out on the internet or go figure it out on YouTube. You can figure it out yourself. All you got to know is that it's possible. It's possible to run 52 miles in a

single day. Go figure it out. You're going to go Google 52 miles in a single day, and then all of a sudden, fall down the rabbit hole. I think people now know it's possible, but I don't think you can expect them to move in less than six months reasonably and a year. how are you thinking about and last question before we get into the rapid fire how are you thinking about the volatility right so obviously uh it's one of the most volatile assets that you could have chosen um and when we talk about volatility it's not like hey may go up to two percent or down two percent you can have double digit percentage days uh up or down um does that change your strategy is this just your long-term holding it for you know years and years

just kind of how do you think about that well so first of all i think the volatility is falling and i i think all you gotta do is look at the chart and i there's a narrative like everybody's like everybody wants to say that they know something about crypto wants to jump up and say well you know it's volatile well well it was volatile in 2017 you know when like individuals were trading it on their mobile phone but yeah think about what i just what i just said about how we acquired it. We buy $175 million. I'm in the market every minute of the day for multiple days in a row. I'm damping the volatility. One person like me, right? In every trading day that I'm in the market, I'm damping it to the upside and the downside, and I'm damping it with large

sums of money, right? And, and so how many of how many institutions does it take before they damp it? Right? Like, I'm the, I'm the dude, I'm like, okay, I'll pay an extra whatever, but stop this thing. I'm holding it for 100 freaking years, right? It's like, I'm not really, I'm not the day trader guy that's worried about it. So I think that as the institutions come in, and as they buy bigger amounts, they're damping the volatility. And that's my first observation. My second observation is crypto trades 168 hours a week. Every other asset trades 35 hours a week at best and sometimes less on holidays, right? You're trading, I look at this thing in awe, you know, when I look at these exchanges, Saturday night, 9.30pm, and I'm watching the thing stream and I'm

like, this is the most magical, hardest working security in the history of the world. And, And I would think everybody ought to be in awe that the thing's not going haywire. It's remarkably non-volatile in that regard. Like, in my opinion, you could go into the market and you could liquidate $50 or $100 million worth of this stuff in a matter of an hour, any hour of the day, any day of the week on a holiday, and maybe you take a 3% haircut. but go try to liquidate 100 million dollars of gold on a saturday afternoon in istanbul on the street side you know so by so that my answer is i don't think it's that volatile but my other answer

beyond this let's be honest there's a negative real yield on everything else i can buy okay gold's got a negative three four five percent real yield in my opinion we talk about why Bonds have a negative real yield. It's just a question. We're just going to debate, is it a 7% asset inflation or 15% or 3%? But it doesn't really matter. Every other non-volatile asset is a negative real yield, which means that everything else is lifeblood draining out of my veins. So if my choice would be to accept some volatility and live, or I had non-volatile cash that bought 30% less in a matter of eight weeks, non-volatile that was 30% less, at that rate, you're not going to make it through the decade. and so volatility is just something you got to live with but i but i really think there's there's there's a group of crypto enthusiasts that lived the last 10 years and and they are the result of their experience they lived through a difficult time and they're heroes and i respect them but you live through that you live through volatility i think the next 10 years are not going to look

like that i think the next 10 years as you have people coming in that are that are moving hundreds of millions of dollars in and out of the market, they're going to tend to damp all the volatility and the institutions are going to damp it because in their interest. And so if there is any, it's just going to be to the upside for the good of everybody and otherwise not a big problem for me. I literally think that is the perfect way to look at this is, what is it? $200 billion asset today, market cap wise, go to eight, nine trillion, you're looking at 40 plus X, right? It's a gold market cap. And you're talking about an asset that is superior in almost every single way. And so if you think it's just going to be equal on a market cap basis, you're not a student

of history because we know that they usually tend to have much larger market caps. And so when you start to look at just the numbers, right? You can not only put big numbers to work in the market, but also the upside of this thing is incredible over a long enough time period. You know, gold is a great narrative, but to say that this is much better than gold undersells it, because the truth is, if you look at these treasuries, there's something like $200 trillion worth of debt instruments and other treasury instruments that have a negative real yield. And precious metal is just one of them. So if you're looking at $10 trillion in gold, there's easily $100 trillion of, what is it, shadow money, $75 trillion of that, $75 trillion of sovereign debt, $50 trillion of other stuff.

So you're really looking at $200 trillion or more of negative real yield. The only debate is how negative it is. And Bitcoin is the only thing I could find that's positive. If I could find another thing, we'd be talking about it. No brainer. I ask the same two questions to everybody. to uh finish up what is the most important book you've ever read okay you're gonna hate me for this but it's the moon is a harsh mistress okay and uh you know robert heinlein was my favorite

author growing up i'm a rocket scientist and of course it's it's uh it's about a protagonist antagonist computer whose name is Mike, who saves the moon. So I like that a lot. And I grew up with that. It was very inspirational. So speaking of the moon, aliens, believer or non-believer? I think they're out there. I think that there's so many stars and galaxies and planets. it's statistically, it just seems to be impossible that somewhere there isn't somebody. I tend to agree with you.

The galaxy is very, very big. You get asked me one question to finish up. What's the one question you got for me? Jack Dorsey has a one word Twitter bio and that one word is Bitcoin. and he's also got 10 billion dollars in cash and cash equivalents between twitter and square and to my knowledge none of it is invested in bitcoin either square or twitter you want to help me try to persuade jack to like you know break off a small 500 million or billion dollars

and go buy some Bitcoin? Because I know he loves the community and I know he's doing as much as he can to help. But the single most useful thing he could do to help is lead on the corporate treasury side. If he bought a billion dollars worth of Bitcoin, what do you think happens the next day? I think that he's thought about it would be my guess.

My guess is that there are bigger problems that he perceives in terms of activist investors and kind of, you know, he's always the, I joke and say, show me another entrepreneur who's built two tens of billions of dollar market cap companies and is running them simultaneously. And yet somehow people still have a problem with the guy,

which is insane to me. I don't, he's an amazing guy and he's inspirational, but it's not like he shirks controversy. Oh, no, no, no. Look, I absolutely think that, again, this is me speaking my opinion. Obviously, I've never talked to Jack about this. I don't have any inside information. I would guess that if it was his choice, he would absolutely do it if he kind of had soul

power. I think that, you know, you kind of pick your battles sometimes. And my guess is that when Elliott management is knocking on the door and basically got a target on your back as the CEO, the first thing you don't want to propose in the board meeting is uh hey why don't we take 500 million dollars and go buy bitcoin but at the same time doesn't mean that that wouldn't be the right thing to go do just you got to pick your battle sometimes we can get the crypto community to give them some air cover we're gonna wage a charm offensive what we need is we need uh the bitcoin community to go like meme elliot management to

death and then uh that they'll pack off maybe and leave them alone so i don't know but we'll see Look, I tend to think that there will be many more people who will follow this. I think you're right in terms of it'll just take a little bit of time for them to kind of get geared up and do it. I don't know if people will do as much as you guys did on a percentage basis kind of out of the gate, right? It feels like maybe people start with 5%, 10% just because humans are naturally just – they lack conviction. They want to be conservative. They kind of feel like they're being prudent, you know, whatever. I tend to think actually the argument you laid out is not only conservative because you're actually protecting the cash, but it's also very prudent in the sense of kind of how you did, you know, 50% into Bitcoin, 50% as a tender and then kind of doubled up or, you know, kind of filled up with the rest of Bitcoin.

And so we'll see what happens. But, you know, if no one has said it to you yet, just we're cheering you on. So keep going, because it's pretty incredible that you did this. And I said it when you first put out the very first press release that you guys bought the original Bitcoin purchase. I said to multiple people, I said, look, this isn't somebody who doesn't understand what they're doing. Right. It was very clear in the language you used in the press release, et cetera. This is a Bitcoiner who is running this company and very much understands the macro environment, kind of their asset choices, if you will. And it's chosen Bitcoin for, I think, all of the reasons that the Bitcoin community is attracted to it. And so that, you know, for whatever reason, came through pretty clearly to me in that press release. So it was cool to see. Yeah, well, I guess I would end just by saying that I find the entire Bitcoin community to be inspirational. And I did note in our press release, one of the key drivers of our belief and the success of this is the community ethos.

It's a pretty amazing group of people, and all of the thinking and all of the initiatives I just find to be extraordinary. And I think that we wouldn't be doing what we're doing without everybody that's ever passed through this podcast. That means a lot. How can people find you on the internet or find out more about MicroStrategy? MicroStrategy is MicroStrategy.com. I'm michael underscore sailor at twitter you can probably google me and you'll get every single one of my contacts if you want awesome listen michael thank you so much for doing this this was fantastic and we will absolutely do this again at some point in the future well thanks for having me