This Week in Startups - TWiST News: Bitcoin, Saylor's Microsoft Pitch, and the Delaware-Tesla Fight | E2054

Starting point is 00:00:00 It makes sense for Microsoft to be powered by digital capital. Bitcoin's the best asset you can own. Now, wait, we have to stop there. Jason, you said, you said it's correlated to the stock market. And yet, here we have Michael Saylor saying that it is an uncorrelated asset. Talk to me about that. Remember, during COVID, we had this like spike. Everybody got Stimmy checks.

Starting point is 00:00:23 Everybody was buying NFTs. Everybody's buying stonks, GameStop, you know, all this like Coinbase Robin. hood, all these Stimmy checks, prize picks, you know, people doing betting online, poker, whatever. Everything boomed because there's a lot of cash in the system. And then everything came back down. So, you know, Chimot said this, says this over and over again. Like he thought it was going to be an or correlated asset. Turns out to be a correlated one.

Starting point is 00:00:48 Okay, fine, it's correlated. So this is not true. This week in startups is brought to you by Open Phone. Create business phone numbers for you and your team that work through an app on your smartphone or desktop. Twist listeners can get an extra 20% off any plan for your first six months at openphone.com slash twist. NetSuite. The number one cloud financial system, bringing accounting, financial management, inventory, and HR into one platform, giving you one source of truth. Download the CFO's guide to AI and machine learning for free at netsuite.com slash twist.

Starting point is 00:01:24 And micro one. Micro one is an AI recruitment engine to hire world class engineers fast. Visit micro1.a.ai slash twist to get 10 free AI interviews and two weeks free per hire. All right, everybody. Welcome back to this week in startups. I'm your host, Jason Kalakhanis, with me my new co-host, Alex Wilhelm, and we are here doing this week in startups. We do it live, and we're just talking before we got on the program of how much we love. We love YouTube and music, but we can't share that community now is just telling Alex, Um, how much I love a YouTuber. I just want to give him a shout out here.

Starting point is 00:02:03 And then we're going to talk about the economics in our little banter here at the top of the show. We got a lot to get to a Michael Saylor and Microsoft. There's something going on in South Korea. Apparently martial law. Uh, what else is on the docket really quick before we do our venture? Tesla and the Delaware chance to record. Oh, gosh.

Starting point is 00:02:20 Yes. Twist 500 updates. Service Titans IPO range. Chinese EVs. Ladies and gentlemen, we have 8,000 things to get to. But let's do this first. Let's do this first. This is a fellow YouTuber

Starting point is 00:02:30 Now that I'm getting into YouTube His name is Doug And he does something called The Daily Doug He's a classical composer And you know my favorite band is Dyer Straits Okay And he goes in here

Starting point is 00:02:43 I'll just look for I love this is one of my favorite features in YouTube Is when you hover over the timeline You can see the spikes That's where people went back And played it multiple times So here he's talking about Tunnel of Love

Starting point is 00:02:55 One of my favorite songs by Darius Definitely top five You should listen to it. And here he's reacting to a video of it. There happens to be a video of this version of Tunnel of Love. And he will... So he's talking about the lyrics. Doug will talk about the notes.

Starting point is 00:03:19 Relative minor. And he rocks out and he'll smoke a bowl. Good job. I love it. It's fantastic. And look, he dances a little bit. And at night, I put the girls to bed. Yeah.

Starting point is 00:03:32 And I will. You know, wife goes to bed, whatever. I don't have a scotch anymore. Not in my bag. But I might have a cigar. I chew on a cigar. Might have something else. And just rock out.

Starting point is 00:03:46 I love it. I just was thinking to myself, YouTube and this whole unemployment thing and AI, we worry about AI taking jobs. We worry about YouTube. I kind of think Doug is making $100,000. dollars a year doing these videos at a minimum he's making 10k a month i got a thing now a classical and he's still doing his classical compose he just does like a 10 minute video 20 minute video every day

Starting point is 00:04:10 um absolutely fantastic go look for the daily dug go subscribe to me he's got 419 000 subs the other thing i'll just end on this and i want to get your take on it is i don't like to give charities because i find them inefficient and i read all this stuff maybe i'm wrong people can tell me if i'm wrong, but I like to give money directly to people doing the work. But it's hard to do this tips. I would like a service where I could tip anybody in the world. And this is built into YouTube. So I gave him a hundred bucks when he was doing the live stream because I clicked on subscribe.

Starting point is 00:04:44 And as you can see, I have all of his notifications on. And I have notifications for YouTube on for a couple of channels, next fan TV where I give tips. And then this one where I'll give a tip once in a while. And instead of giving, I still give someone at a charity every, year, but I give thousands of dollars a year in tips on YouTube and I just started doing it on TikTok because I think that this makes the world better and I'm part of the whatever 1% one percenters in the world. And so if everybody gave a dollar and if like the whales like me give a hundred and

Starting point is 00:05:18 you know, there's some stuff in between, I frequently, when I'm in Austin or whatever, my daughters, I'll take a hundred dollar bill. I like, or 50s. I like 50s for some. reason. I'll keep 50s in my wallet. I'll keep it in my pocket. And I'll ask my daughters, like when we see a live musician, if they're really good and we're at like a cafe or something they're playing, say, hey, put the 50 bucks in. And man, people lose their mind. Right, because it's so much more money than they're expecting to get singles, maybe a $5 bill, not a 50. Five, sometimes they get a 10. Sure. I'm sure 20 occasionally. But I'm like a 50 or a hundie. I'm coming over top because instead of giving a $10,000 donation, which I'll do to Kimball

Starting point is 00:05:53 Musk's charity has a really great charity I give to every year, a global, Green. I give to Mark Knoffler's charities every year. I give to a couple of charities every year.

Starting point is 00:06:02 I try to Steve Van Zant has a music charity where he's teaching kids music rock and roll to rock and roll charity.

Starting point is 00:06:11 You know, from the Sopranos and the East Street band anyway, I'm just really bullish on new jobs being created like

Starting point is 00:06:19 this one where people say, oh my God, people in the music industry can't make money. This guy's making at least 10K a month.

Starting point is 00:06:26 I got a thing. Maybe more. or just doing what he loves talking about music. Yeah. It's interesting how much more money there can be inside revenue streams, inside the world of music. I mean, the best example of this is Rihanna and Helme out here, Fenty, I believe is her beauty and clothing band. Enormous. And Rihanna has not dropped an album in 6,000 years.

Starting point is 00:06:48 We're all starving. She's crushing it. Good for her. On the microscale, in YouTube in particular, there's a band called Suicide Silence. and one of the guitar players has a show called the Garza show, I think his name's Garza. And it's just like, it's kind of a Joe Rogan for heavy metal, if you will.

Starting point is 00:07:04 And this is all the time. His bands come through town. They sit down for an interview, talk about touring, economics, music, and so forth. And it's, it's awesome. And I bet you that show does pretty well for him when his band's not touring. So I love the idea of having alternate revenue streams.

Starting point is 00:07:18 And I do love Jason, a low-budget stream of one nerd enjoying themselves. And Doug, as a classical composer, I think it's okay to call him the nerd. Clearly having a blast. And so shout out to him for finding something that he loves. I love it. It's just great.

Starting point is 00:07:32 Give us a thumbs up if you're watching our YouTube. Click the subscribe button. Click on all and you get in here. You're like De Niro and Goodfellas. Somebody's saying to me because of my glasses. Yeah, thank you. I take it as a compliment. Founders know that every missed call is a missed opportunity.

Starting point is 00:07:48 Customers don't want to wait. They will call someone else if you don't pick up. But if you use open phone, you're never going to miss another customer call. And guess what? It's super affordable and easy to use. People used to spend tens of thousands, hundreds of thousands of dollars putting in a corporate phone system. And now for just $15 a month, Open Phone will give you a business phone line and complete control of your destiny. Want to know who's answering customer calls and how they were handled? Open Phone can do incredible things like sync with HubSpot and give you AI powered call summaries, automated responses to ensure you don't miss a single ring. Well, that's all built into open phone. And if you've got an existing phone number, they will let you port it over at no extra charge. Get 20% off your first six months. What an amazing offer at openphone.com slash twist. That's O-P-E-H-O-N-E.com slash twist for 20% off for six months. All right. So, um, so Jason, we have so much. Where do we want to go? Yeah. So, so much. I feel like we should probably start

Starting point is 00:08:52 with the micro strategy stuff, because I saw comments on the YouTube channel before we even started, people wanted us to get into that. So, okay, let's start there. Okay. I wanted to start, and I'll give my general disclaimer here,

Starting point is 00:09:06 whenever I see something that doesn't make sense and I have like questions about it, I ask questions. And I get my hooks into it, and I get a little obsessive. That's true. It is true. It is true.

Starting point is 00:09:21 Uh, guilty as charge. And you know what? Deranos, I was the first person to have, who was the great journalist, John Carrier. I was the first person to have him on, a pod, talking about it, and you can go look it up. And we had a really deep conversation about it. And I just kept going on that.

Starting point is 00:09:39 It's a little bit of like all the presidents men. I got a little investigative journalist in me. I did it with Tether. I did it with XRP. I really got into those stories. Because I'm fascinated when things go awry or there's something weird going on. Now, there's something very peculiar going on with Bitcoin right now.

Starting point is 00:09:59 In that, there's one person, a whale, who has suddenly become the number two holder behind Satoshi out of nowhere buying it on loan. His name is Michael Seller. He has been at this for four years, five years. And he's doing it. He's got a colorful past. He's had some SEC stuff in the past. that we talked about. Micro Strategies is now worth 90 billion.

Starting point is 00:10:25 It owns 40 billion in 400,000, over 400,000 Bitcoin's. And he has become incredibly effervescent in terms of his enthusiasm for Bitcoin. It has gone over the top now. And when I see that, and then I see people saying, have fun being poor or telling me I'm wrong, well, I wasn't wrong about Theranos. I wasn't wrong about Tether or. or XRP. I mean, I saw these things very clearly in the market. I wasn't wrong about NFTs. I wasn't

Starting point is 00:10:57 wrong about ICOs. I mean, I saw these disasters as they happened. And I just said, hey, let's ask questions here. I am not saying that there is any fraud going on here or any malfeasance. I am saying there are very important questions to ask. We asked some yesterday. And today, Michael Saylor started talking about his Microsoft pig. I think that's the best place to start the story. And invited Michael Serlo to come on the pod. He's begging to come on all in. I invited him here. If he wants to come on all in, I'm fine with that too. He's just got to get two other besties to vote yes. I vote yes. If he gets Tchamax or Freiburg to vote yes, he's halfway there. Or he's like two thirds of the way there. Yeah. By the, by the way, Michael, we've emailed you several times, I believe, and DMs, so, you know, we'd love to have you on. That's not an idle offer.

Starting point is 00:11:43 We will. No. And I have no animosity towards him. And we own seven figures in Bitcoin. Now people are going to make fun of me. Your wife, but it's not making fun of me. My wife and I discussed it. She said, I think we should buy something. She also bought our houses and made a killing. My wife is an incredibly astute, smart person who went to an Ivy League school who, truth be told, is smarter than me. I might be more clever. I might be more of a hustler. I might have my own skill set.

Starting point is 00:12:10 When it comes to brains, she's smarter. Very proud of the fact that she makes great trades for us all the time. Sometimes I go into my wife's office at home and I look at her degrees on the wall and I'm like, crap, I should get some of those. I mean, she's better looking and smarter than I. I'm funnier. Okay. That's actually what I bring to my marriage, too.

Starting point is 00:12:31 I just make jokes. I make jokes. Funny. Why did people put up with us? Anyways, it was a good trade, seven figures in Bitcoin in your portfolio. Correct. And I had bought some as well. My thing got hacked.

Starting point is 00:12:43 The one I was part of got hacked. I forgot the name of it. It wasn't Mount Cox. It was another one. BTC-E back in the day? I can't remember. I can't remember so long. I wrote one of the first articles about Bitcoin in 2011.

Starting point is 00:12:54 Not bad. And I had Bitcoin on this podcast, but I wanted to go through the deck and his pitch to Microsoft. Yeah. Because this was fascinating to me, but do you have anything else before I teed this up? And I gave my little disclaimer or questions from you. Or thoughts. No, I think I'm ready to go through the slide deck. I pulled out a couple of my favorite slides, Jason, but I'm going to go ahead and pull up the actual full presentation so we can walk through it.

Starting point is 00:13:20 And all screen share for us, fair enough? Sounds great. Sounds great. And this is a pitch Michael Seller made recently to the board of Microsoft. All right. I don't know when he did this exactly, but he walked through it on Twitter. Yes. And he was on CNBC this morning in the studio saying all of these companies should start moving their treasuries to move their treasuries to Bitcoin.

Starting point is 00:13:48 and he claimed Microsoft would add not one, not two, but $3 trillion in market cap, $3 trillion. He would add in Vida or an Apple to Microsoft if they went all in on Bitcoin. That's his pitch to them. Here's the pitch. And I have to say from the get,

Starting point is 00:14:10 I'm open to hearing the pitch. I love the fact that he is an open book. Let's go through the day. Do you want me to walk us through the deck, Jason, or would you like us to play the Michael Sailor clip of him going through the deck? Two different ways to go about this? That's actually a good idea. If we play him, put it up 1.5 speed, and then I'll just say pause.

Starting point is 00:14:32 Okay. When I think we should pause and discuss it. Microsoft can't afford to miss the next technology wave, and Bitcoin is that wave. Bitcoin represents the greatest digital transformation of the 21st century. Hit pause. Okay. Go back to that. slide for a second. And if you scroll back, what he's doing from the get-go is using fear with Microsoft.

Starting point is 00:14:57 I just want to point out that Microsoft is one of the most amazing success stories. Michael Seller, this is true persuasion here. He's using fear. Now let's scroll back here to that first slide. If you go back just a wee bit, thank you. Now, Microsoft can't afford to miss the next technology wave. Why, Alex, is it so important to start with fear? Well, I mean, people respond to specifically with Microsoft. Oh, because they missed mobile. And so I think they're terrified about missing the next technology wave. That's why they're investing so much in AI. So I think this is aimed directly at the fear that their investors have that they might miss the next generation and therefore fall behind. So from the gecko, Michael,

Starting point is 00:15:45 seller is doing one of the most persuasive things you could ever do. I noticed as a psychology major. I studied persuasion. I started influence. I've read every book on persuasion or influence. Some people might say I have people who follow me. So maybe on the margins, I have been persuasive in my career. Personal computing is the first technology way, if he points out, Microsoft defined it.

Starting point is 00:16:11 Graphical user interface. Microsoft almost missed it, but defined it with Windows. internet. Microsoft did not miss it because of Netscape. They built the Internet Explorer. They almost went too hard at that and got a Justice Department, but they didn't create

Starting point is 00:16:28 Yahoo or Google. So they did miss it. And he didn't put on here social media. He could have added social media. They did miss. So they got person computer. They got graphical user interface. They kind of half got internet. I'll put that in the thing that they didn't get, right? Bing, they didn't get. And social media they didn't get. So two for two, mobile computing, huge miss.

Starting point is 00:16:47 Cloud computing, it was a miss, but they saved it with Azure. So I'm going to give that as one they got. Artificial intelligence, they didn't do it internally, but they saved it with the open AI deal. Yep. And then here we are with digital capital. Interesting way to frame it. It's really Bitcoin, but he's going to say digital capital. And he's saying, hey, you might miss it.

Starting point is 00:17:07 Four to seven, they did not miss. They know. So let's keep going. But to be clear, though, if they had missed cloud computing and hadn't saved it with Azure, Microsoft would be in the absolute dustbin because that means they wouldn't have gotten AI because Open AI's deal came to be because they had Azure. So this stuff can be added in. Anyways, on, shall be playing?

Starting point is 00:17:26 Yeah, please. Afford to miss the next technology wave. Okay. Bitcoin is that wave. Bitcoin represents the greatest digital transformation of the 21st century. He's so good at this. In that next slide, he's taken the market caps. If you just go back a little bit, scrub back just an inch to the list of the list of

Starting point is 00:17:44 all the companies. He's showing a list of the greatest companies in the world or the greatest assets, right? So gold is at what trillion up there? 18.25. He's got gold at 18.25. Then he's got Nvidia, Apple, Microsoft, Amazon, Alphabet, Google, Bitcoin, Saudi Aramco, Silver, and meta. So this is really interesting. What another persuasive technique. He's now done something, which in, um, persuasion and techniques like this would be framing and it would be equivalency. He's now told you that commodities like gold and silver are the same as technology companies and corporations. They are two very different things, aren't?

Starting point is 00:18:35 One is a natural resource. One is a company that provides products or services created by humans, two other humans and corporations. These are very different things. they're very different things. And also I'll just point out before we start going again, it says most useful, which if you are a Bitcoin hoddler,

Starting point is 00:18:52 strikes me as a slightly odd way to frame it because you don't use it, you hold it. And then very subtly on here, he has the annual reoccurring revenue? No. Annual run rate. So I think that's annual rate of return. Annual rate of return for Microsoft at 18%.

Starting point is 00:19:10 Arrrs used many ways. Yes. And then he's got Bitcoin at 62%. And so this. is where Bitcoin people can be really cheeky and clever. They can go from the start of Bitcoin when it was less than a fraction of a penny. I'm not sure actually what the actual first coins went for, but it was it was in the pennies or less. So he can start with that and then have a compounded rate on average of 62%. That may not, that previous 62% number, somebody can check

Starting point is 00:19:41 me in the notes, please. What is the annual rate of return for Bitcoin in the last five years versus the last, I guess it's been around 12 or 14 years, something like that? Or if you wanted to invert the experiment, Jason, you could say, actually what we should do is we should take Microsoft's Market Cap A-R and string it all the way back to when it was just incorporated versus when it went public. Because that value appreciation is lost in this. Oh, yes.

Starting point is 00:20:09 When you start matters, right. Yes, when you start really matters for this. So it's persuasive. Yes. This is persuasive, but to me it's cheeky. I think Jason might be underselling my view about this slightly. Okay. So I'm saying it's cheeky.

Starting point is 00:20:25 What would the most cynical take on this be? Oh, this is blatantly manipulative. And that as you watch this presentation, he goes through it so fast that no one has a chance to actually read the screens. And most people don't do what we do, which is pull up the actual presentation. Go through each slide and think about it. And so you just get. blasted with Bitcoin is the way.

Starting point is 00:20:43 Right. And by the way, this is a hypnosis technique, a stage hypnosis technique. He does it. He may not know he's doing it. I'm assuming he doesn't. But this was Elron Hubbard's, one of his major techniques, which he got from hypnosis. I'm not going to say where he got it from because I don't want it to make the Cibor Wars. But it's called going down the rabbit hole. And down the rabbit hole. He wrote Battlefield Earth, right? Yeah.

Starting point is 00:21:14 I read that before I knew about scientific. So there is a down-the-hypnosis rabbit hole technique, which is you say things very quickly, and you put a bunch of acronyms in. And what happens is if you say a bunch of truths or truisms, so facts or truism, you know, a stitch in time saves nine, two birds. in the hands worth one on the bush, whatever it is, right? Early bird catches the word. And then you put acronyms in there. So the way Elron Hubbard did this is he would say KST, keep Scientology, a KSG, keep Scientology going or whatever.

Starting point is 00:21:54 So you put acronyms in there. And what it does is it just subtly puts the, it implants opinions as facts when they're alongside truisms. Interesting. So if I said to you, Stitch in Time is worth nine. If you had bought Bitcoin early, you would be at 62%. A-R-R. And of course, as you know, a bird in the hand is right two in the bush. You might as well get you're a Bitcoin now rather than wait and get greedy. Yeah. Now, I've said a bunch of truisms

Starting point is 00:22:21 and that 62% might slide in there and you don't question it. But here he says it's the seventh largest asset. Okay. He hasn't included other assets in here. I don't see other assets in here like land. Real estate. Yeah, real estate. Land, commercial real estate. Plotonium. I don't know what else is oil. Yeah. It isn't the seventh largest asset. There's many other assets that aren't included in here. So if you're going to include glow and silver, you would have to include corn.

Starting point is 00:22:49 You'd have to include... I would love to know the value of all corn today. I have no idea what that is, but like... I'm not just picking another commodity. Who knows? Well, on the CNBC clip, which we'll get to, he talks about soybeans. So if we're going to talk about soybeans, I also want to know the whole value of pig bellies, you know, which is another commodity that everyone was to talk about. Seven largest asset.

Starting point is 00:23:05 Fast is growing. Okay. Okay, we can debate that. I don't think that's necessarily the fast growing. most popular? I think the most popular? Microsoft has way more individual holders through index funds.

Starting point is 00:23:17 Uber's more popular, I think. I mean, Airbnb, probably more popular. I don't know. More popular, how? Frequency of use? Most interesting. Is it the most interesting? Most digital?

Starting point is 00:23:33 Can we get that? What does that mean most digital? Dose Eki's ad in here about the most interesting commodity in the world? Most useful. You point. did that out. That's ridiculous. Most global, I would say gold and silver are more global, but okay. I mean, there's, it's definitely not the most global because other assets are allowed

Starting point is 00:23:49 in more countries. And so the block. So we've already pointed out that he is just sending you a bunch of information really fast. Keep going. All right. Let's keep going to that wave. And take two hours. Bitcoin represents the greatest digital transformation of the 21st century. It represents digital capital. The global wealth is. distributed across assets that provide utility and others that preserve capital. But risk is destroying trillions of dollars of that capital every single year. Sorry, I'll go back. There we go.

Starting point is 00:24:24 The risk, I mean, all right, so he's going very fast here, and he's talking about assets, right, that don't go down and that don't get destroyed. So he's now saying Bitcoin could never go down or get destroyed, I think, is what he's implying, right? Is that your takeaway from that slide? I'm just, yes, but also I'm trying to sort out what this is trying to show because these are very different categories of things. Regulation constraints activity, competition theoretically spurs it. I don't know like expert war and crime tenants, traffic, these are all ways to make money. I don't.

Starting point is 00:24:58 So I guess what he's saying with this is all of these things, culture shock, obsolescence, incompetence, catastrophe are risk factors on the previous asset. That's on the previous slide. Okay. But gold or real estate. But these are not, the Bitcoin is magically not taxable? It's not a currency. It doesn't have catastrophes. It doesn't have risks of obsolescence.

Starting point is 00:25:24 It can't be impacted by energy. Politics don't have any impact on it. Of course it does. The whole bump is the Trump bump right now. And the whole dive in cryptocurrency, people were saying, was because of over-regulation. So you can't really have it both ways. You can't say it's immune when it's correlated with the stock market and it's correlated with political activity even when it's even like correlated with future political, you know, implied political activities in the future.

Starting point is 00:25:56 So this is a very weird slide. Let's keep going. Let's keep going. Let's keep going. I have that capital every single year. And investors are turning to digital capital in the form of Bitcoin in order to avoid that risk. digital capital is economically and technically superior to physical capital and it represents a revolutionary advance in capital preservation.

Starting point is 00:26:17 The asset class itself is growing from trillions to hundreds of trillions of dollars and it is backed by digital power along with political and economic power. It makes sense for Microsoft to be... Let's go back one little bit there, the previous slide. Okay, Bitcoin is secured by digital political and economic power. 20 gigawatts, 622 million crypto users, 400 million BTC holders, 850 billion invested, 700 for $700,000,000, okay.

Starting point is 00:26:49 The way that I understand this slide is that people view Bitcoin's security, and we talked about this yesterday, that it's never been hacked and has maintained its independence. So the more power consumed, yeah, the more power consumed, we'll compute the safer. I would say bigger, too big to fail, because the network is so large. Yeah, I agree with that. I kind of like this slide, actually.

Starting point is 00:27:12 I would say differently, but okay, I get it. This slide makes sense to me. This slide is good. The thing that's not good is this bit of stock art here and the preceding that bit of stock art. I just want to go talk to them and be like a skyscraper. Yeah, that's the moon kind of. It's ugly and just gross. All right.

Starting point is 00:27:28 Shall we keep going? Yeah, please. Political and economic power. It makes sense for Microsoft. to be powered by digital capital. Bitcoin's the best asset you can own. Now, wait, we have to stop there. Jason, you said, you said it's correlated to the stock market.

Starting point is 00:27:46 And yet, here we have Michael Saylor saying that it is an uncorrelated asset. Talk to me about that. Well, I mean, if we were to put, remember during COVID, we had this spike. Everybody got Stimmy checks. Everybody was buying NFTs. everybody's buying stonks, game stop, you know, all this like coinbase Robin Hood, all these Stimmy checks, prize picks, you know, people doing betting online, poker, whatever. Everything boomed because there's a lot of cash in the system, and then everything came back down.

Starting point is 00:28:20 So, you know, Chimot said this, says this over and over again. Like he thought it was going to be an or correlated asset. It turns out to be a correlated one. Okay, fine, it's correlated. Well. So this is not true. Yeah. I think the most generous thing you can say is this is completely false and everybody thinks

Starting point is 00:28:36 the opposite. Or history has proven the opposite. It is the ultimate correlated asset because people buy Bitcoin when they feel speculative, when they have excess money, when they have less money and they've got to pay down debt or they lose their job, they sell their Bitcoin. They sell their stocks. They empty their savings account to pay for their life expenses. Yes. You can't eat digital credit. We're still mounting this both ways.

Starting point is 00:29:03 I just said the last slide was brilliant. Yes, the network is too big to fail. I agree with that. That was my big question. That was why I thought Bitcoin could fail, is the network could be compromised and political issues. And it is true. Saylor's right.

Starting point is 00:29:17 I think I was right pointing this out that those were probably the two biggest risk factors were geopolitical, you know, taxation. I'll put that in one bundle, regulation. And then on the other side, hacking, somebody taking control of the network, the network being compromised. The network failing because nobody wants to put servers and energy towards it. That would be another reason, right? I think a lot of crypto projects, people just don't put up servers and spend money maintaining servers to be part of the network.

Starting point is 00:29:46 What does the future hold for business? Well, if you ask nine experts, you're going to get 10 answers. Bull market, bare market, rates go up, rates go down. Can someone please invent a crystal wall? And if you are building one, just email me. I'll fund that startup. But until we get that crystal ball, you need to future-proof your business with NetSuite by Oracle. It's the number one ERP tool out there trusted by over 40,000 businesses. And what does NetSuite do? Well, it blends all your accounting, inventory, financial management, and HR into one single platform. That means you have a single source of truth. And you need real-time insights forecasting and the visibility and control to make quick decisions with your business. In other words, you need NetSuite. So, here's your call to action.

Starting point is 00:30:33 Speaking of opportunity, download the CFO's guide to AI and Machine Learning at NetSuite.com slash Twist. The guide is free to you at netsuite.com slash twist. That's netsuite.com slash twist. Okay, let's go. Best asset you can own, the numbers speak for themselves. it makes a lot more sense to buy Bitcoin than to buy your own stock back or to hold Bitcoin rather than holding bonds. If you're going to outperform, you're going to need Bitcoin.

Starting point is 00:31:05 And those bonds are... Let's go back there. Okay, we got... Okay. So again, all of this is based on this 62 annual return rate. I think we have to question that. So this is the 62 versus the Microsoft 18.

Starting point is 00:31:24 Then he, oh, this is since August 2020, just as a data point. And then... Oh, okay. So this is performance of Bitcoin since then,

Starting point is 00:31:32 not Micro Strategy. Got it. Okay. Great. And then here again... He's picking, like, probably when Bitcoin crashed,

Starting point is 00:31:41 but okay. And this is since Microsstrategy adopted this Bitcoin Strategy, Bitcoin versus Microsoft. And then... Okay. Oh, this is comparative

Starting point is 00:31:51 to the, S&P. This is compared to the S&P. Okay. So that's why this is 48, not 62, and that's why that's four, not 18. Okay. I mean, I get that bonds are down, right? We understand that.

Starting point is 00:32:01 We get why gold is down. There's other opportunities. People don't want to be in gold. But gold has since surge. So if you were to put this in the last year, gold has gone parabolic, I think, in the last year. So anyway, okay. So this is where time horizons matter.

Starting point is 00:32:16 And he's not showing a chart. He's doing selective framing. If you did a chart here, you know, and you zoomed it out to the start of Bitcoin and the start of Microsoft, or you put year zero of Microsoft, year zero of Bitcoin as a starting point, that would be a more intellectually honest exercise here. So it's impossible for us to tell what's reality here. But you should question this and somebody should make a chart that, you know, refutes this. Or it gives a more intellectually honest view of it.

Starting point is 00:32:45 Also, this is through November 27th, just as a dig, point. So this data is not inclusive of this week, in case you, people who are handicapping at home. Here we are comparing micro strategy to various magnificent seven companies. Of course, here is the invidious spike that we've seen recently. Tesla's done quite well. And then over here we see Microsoft. And then Amazon, ooh, kind of the sick horse of the Mag 7.

Starting point is 00:33:07 Okay. All right, let's keep going. If you're going to outperform, you're going to need Bitcoin. And those bonds are undermining your options market and your equity liquidity. Luckily, you have an alternative. We're going to come back to this, Jason, in the C&BC section, but one thing that he talks about is how you can hold commodities as a public company, and the idea is that you shouldn't have anything on your balance sheet but Bitcoin.

Starting point is 00:33:31 And so that's what he's talking about here, and we'll get more into that, everyone, in just a second. So let's keep going. Okay. Public support for Bitcoin is surging, as is political support, as is support for the U.S. Bitcoin Strategic Reserve, as is Wall Street support,

Starting point is 00:33:47 and the president of the United States says never sell your Bitcoin that's why we're entering year one of the crypto renaissance and you have a choice to make cling to the past or embrace the future pause that yeah I was I was literally going to click so Jason why did this slide catch your eye because I have my thoughts okay so this is again you're trying to

Starting point is 00:34:17 scare people. It's a manipulation tactic, right? You're saying Microsoft has to, you're framing this as a binary choice that nobody would say cling to the past. Everybody would say embrace the future. But I could reframe this and say, stick to what got you here,

Starting point is 00:34:39 or follow the crowds. Okay? Stick to what got you here is make great products and services that delight customers and businesses at high margins. That's what got Microsoft. And don't follow friends and manias like tulips. So I just did the same framing with just different words, and I reversed it.

Starting point is 00:35:06 See how easy that is, folks? Super easy. Also, everybody keep in mind that two of the things that are mentioned here, buybacks and dividends are just the two pillars of traditional share. shareholder return apart from share price appreciation. A buyback is when you repurchase your own stock, constrains your overall float, makes each share worth more, and dividends is literally a cash disbursement to equity holders in the company. People like buybacks and dividends, Jason, who doesn't want to have a higher percentage

Starting point is 00:35:34 ownership in a company and income. And I bring that up because I want to talk after this about how the view that Sailor has to me is, it only does. does one thing. And I want to talk about why it matters. Let's keep going for now. We only have a minute left. There's another option here, clinging to the past in his mind.

Starting point is 00:35:53 Where is M&A, R&D, in this as an option? I would make the argument that buybacks and dividends are things people do when R&D and M&A is either, you know, churning, great. You know, it's cranking rather. So if, if you're M&A, is cranking and you're buying YouTube and WhatsApp and there's nothing left to buy.

Starting point is 00:36:23 Got it. Or, and by the way, they did M&A, right? I believe PowerPoint and Excel were M&A back in the day, part of the office suite. And they bought Minecraft. And they made the Xbox. So that would be R&D. HoloLens, Halo Lens. I think that was R&A.

Starting point is 00:36:42 HoloLens, yeah. HoloLens was R&D. Connect, et cetera. But I bought Nokia. I'm trying to think of other things that were purchases that they made in M&A versus R&D. But anyway, if R&D... 49% of OpenAI, pretty good deal. Pretty good deal.

Starting point is 00:36:56 So M&A and R&D are things that created all these new product lines they have, whether it's Xbox or Azure. Yep. Okay. So you notice that that's conveniently left out here as an option for money. Yes. So cash sitting on the balance sheet could go to a... buyback, dividends, Bitcoin, M&A or R&D.

Starting point is 00:37:23 And when you frame it like that, or it could be in making a product or service better, which you could say is R&D, but you could also just say like hiring better, more talented people too. So talent acquisition and professional development is another one, investing in your people in other words. So, okay. But my point was, and you nailed it for me just and you underscore what I was trying to at is that in sailors view, everything else is merely subsidiary or supportive to purchasing more Bitcoin.

Starting point is 00:37:55 And that to me is a relatively narrow approach. And we'll get to that in a slide that's coming up in just a second. Divest billions of dollars and slow your growth rate, invest billions of dollars and accelerate your growth rate. You've surrendered hundreds of billions of dollars of capital over the past five years, and you've just amplified the risks that your own shareholders face. If you want to escape that vicious cycle, you're going to need an asset without counterparty risk. What if you could buy a $100 billion company growing faster than Microsoft for one-time's revenue? What if you could keep doing?

Starting point is 00:38:33 I think you just described micro strategies. Right? They're worth 80, 90 billion? Yeah. He said they're growing in 60%. Their revenue, though, is in the last quarter, their income revenue is not one-time's revenue. So he's-no. talking about Bitcoin as if it was not a distributed project.

Starting point is 00:38:56 Yeah. Open source project with no ownership, no central authority. And that's where this gets a little bit crazy. Is he conflicting market cap with revenue, Jason? I'm confused by this. I think. He's saying revenue is the increase in the value of the Bitcoin. And this is what people have been criticizing about how micro-stratage is doing their accounting.

Starting point is 00:39:17 Yeah. If Bitcoin goes up, they consider that revenue. If it goes down, they consider it a loss, which would be, you know, I'm trying to think if that makes sense, you know, if it's a balance sheet asset or revenue. Yeah, hard to know. Okay. Yeah. Some of this is just, it is just vague enough that you can't really vet it. Yeah.

Starting point is 00:39:40 It's more vibes. Yeah. And what I'm doing now, I would do with him in conversation. You founders, knowing what to build is half the battle. You need the team to build it. And recruiting is so hard when you're a startup. You're competing with all the big players. They have unlimited budgets. Let's face it, you've got a budget. You got a hit. And you got timelines. So if you need help, that's where Micro One comes in. Micro One's going to help you scale your product team in days, not weeks or months. And they handle the search process. They handle all the vetting. And they even do the onboarding and paperwork for you. Imagine you had this like magical AI and you could tell them exactly what your engineering needs are and it could deliver exactly what you need right away while Micro One has built an AI engine that interviews tens of thousands of engineers, designers, and AI trainers every month. They then pick the top 1% and then they help you onboard those developers, those designers and AI trainers for your startup while

Starting point is 00:40:37 handling all the legal and compliance work so you don't have to if your startup needs to accelerate its product development, but you don't have the time to vet all those. resumes in your email box, or you don't have the budget to hire recruiters. Micro 1 has you covered. And all you have to do is tell Micro 1 what you're looking for, and then they help you find an engineer in 48 hours or less. So here's your call to action. Visit micro1.a.i slash twist to instantly ramp up your product team.

Starting point is 00:41:04 And Twist listeners get two weeks of free development per higher, plus 10 free AI interviews. That's micro1.a.ai slash twist. M-I-C-R-O the number 1.a-I-I-S-T-T-T-S-T-T-S-T-M-E. What if you could keep doing it every single year? It's time for Microsoft to evaluate. What if you can make 60% a year forever? Yeah, dude, it doesn't go down.

Starting point is 00:41:29 It only ever goes up. But, okay, we're going to, guys, we're just going to play the rest of this clip. Then we're going to talk about it. Options. We've created an open-source model. You can plug in your own assumptions. Fair enough.

Starting point is 00:41:44 You can convert your cash flows and your dividends and your buybacks and your debt into Bitcoin. If you do that, you'll add hundreds of dollars to the stock price. You can create trillions of dollars of enterprise value. $4.9 trillion in your enterprise. You can strip away risk from your shareholders. And you can prosper. Go back to that side. Okay.

Starting point is 00:42:11 I'm sorry. I just stopped this. I know, it's okay. Bitcoin decreases Microsoft's enterprise value at risk. Microsoft is currently levered to forward earnings expectations to an extremely unhealthy degrade. So the way that I read this, just for everyone who's watching and doesn't see the screen, it shows five bar charts and it shows that Microsoft's current value is predicated on

Starting point is 00:42:34 its earnings versus its assets. Now, he calls those expectations as a way to cast fear on. them, but having a price earnings ratio of Jason isn't a bad thing. And Microsoft being a software company does own things, servers at, you know, buildings and so forth. But most of the value, Jason, is in its cash flows, it's business. And he wants to convert that into a company more predicated on the ownership of commodities. But when they buy bonds, right, if let's say Microsoft's Treasury owns bonds with their cash, right, or they own equity in other businesses, they pass through to some level of ownership.

Starting point is 00:43:13 So I guess in this you could also say Microsoft should, instead of paying dividends, buy gold, buy real estate, and just sit on it. Well, I think, I think there are, I mean, I understand what he's saying here. Yeah. But I don't know that this is necessarily a risk.

Starting point is 00:43:31 What you're talking about is asset heavy versus asset light. Yes. So now you're running an asset light organization. So you're taking all of the profits, instead of giving them to your shareholders, and appealing to shareholders who want dividends, who want cash back from their retirements or their entowments, et cetera,

Starting point is 00:43:49 and you're saying to people with large sums of money, instead of increasing the value of our shares and giving you dividends along the way, by making great products and services and buying back our shares and giving dividends, instead of that deal, here's another deal. We just own Bitcoin.

Starting point is 00:44:06 We own this asset and you own that asset, but we control it. those people have access to just buy Bitcoin themselves. So if you were a giant hedge fund, if you were a giant retirement, if you're calipers, if you're buying an index fund, if you're an index fund buying the index,

Starting point is 00:44:23 and Microsoft is whatever, five, 10% of the index or whatever, wouldn't you have the ability to just buy Bitcoin or real estate directly and not have this intermediary? Yes. And I'm going to go ahead. Why would you blend those? I'm going to start.

Starting point is 00:44:40 Stop sharing, so we can go over to the CNBC quote, because I have his answer to that, Jason. So let me explain that. So we pulled the transcript from his CNBC appearance from this morning, and he explained what a Bitcoin treasury company does, which is what he says his company is. So he says, we're securitizing Bitcoin. Primarily, our job is to bridge the traditional capital markets that want bonds, or they want fixed income, or they want equity, or they want options. and we plug that into the crypto economy

Starting point is 00:45:09 and we use Bitcoin as the vehicle to do that. So the argument, as far as I can tell off, from what he said this morning, is that people want other ways to access Bitcoin who cannot purchase it in the way that you describe. I still do not understand that. That's not true. I mean, you're literally talking about

Starting point is 00:45:28 the most sophisticated players in the world. You don't think the CFO of Microsoft and the people who are investors in Microsoft, have access to Bitcoin or the Bitcoin ETS. Didn't you say you, Alex Wilhelm, have access directly through your Schwab account or your Robin Hood account, whatever you use. I don't know what your jam is.

Starting point is 00:45:51 You try it. You have access to Bitcoin ETFs. Not only do I have access to Bitcoin ETFs, I have access to a plethora of incredibly low-cost Bitcoin ETFs that have enterprise-grade custody via Coinbase, or I can go to Coinbase, or I can go to Cracken or buy. bit or

Starting point is 00:46:08 Gemini. Isn't Gemini the Winkle V? Winkle V. Wynnle V. I apologize. Here's the thing. I don't think anyone, the reason people are so up in arms about us asking these questions. Specifically me obsessing over this. That's okay. For the last week. I'm okay with that. I'm just asking questions, folks. I think the reason people are so upset is that I am being a voice of reason and making a voice of reason and making

Starting point is 00:46:37 completely valid counter argument to his argument that you should just buy it direct instead of participating in micro strategies. It's such a clear argument that the only way to stop it is to insult me personally. And then when presented with the fact

Starting point is 00:46:54 that I'm also along Bitcoin, people will double down and attack me and say, just have him on the show. And I said he can come on the show anytime. Yes. And then they say, well, the other show. My girlfriend always goes to a different high school. Ladies and gentlemen, you...

Starting point is 00:47:08 There's always a different reason here of why the valid observation that we just made, just multiple valid observations, that it's wrong. And I'll tell you why. If you own Bitcoin, which we do,

Starting point is 00:47:24 both of us, not insignificant. So we believe in it. I'm not going to speak for you, but just facts are facts here. We both believe in it, obviously, or we wouldn't own it. The fact that we're taking

Starting point is 00:47:38 the leading hyper, of Bitcoin who is trying to get the third or fourth largest company in the world with some of the largest amount of cash he's trying to goate them and pressure them into buying Bitcoin

Starting point is 00:47:53 and he's rewarding other public companies that are buying Bitcoin by going on CNBC and giving them kudos and then recreating them and giving them kudos people's belief is that what we're doing is limiting the pressure on the sell side. Oh, interesting.

Starting point is 00:48:14 He is the buy side right now. If we say, hey, this doesn't make sense. Don't give him more money to do this outrageous stuff. Just buy it directly if you're so inclined. Then there's nobody in the market with $5 billion or $10 billion like he just did to run the price up. Yep. And then you don't get to liquidate your preference. Now, your position.

Starting point is 00:48:35 Remember, in order for him to buy it, there's some amount being mine. but he has to be buying other people's holdings. Other people have to be clearing their position. Right? There's not, just to be clear, if he's buying a billion dollars a day, which he did the other week, how much Bitcoin, new Bitcoin is produced by miners

Starting point is 00:48:54 and are they willing to sell it anyway? So he's got to be buying, other people are clearing their position. My belief, and what I heard from the back channel is OGs are clearing their position to him and they're delighted by it because they think this is a high water mark it will come back down to 50

Starting point is 00:49:10 and they'll buy in again and it just rinse and repeat. Right. Just ride the waves up and down. And yeah, of course, the wave seems to be higher highs. Yeah, and that does seem to do a lot of that. And Godspeed for everyone who likes to ride the volatility roller coaster.

Starting point is 00:49:25 I want to just say one more thing about this, because I did read the whole, I watched the CNBC clip twice, pull the transcript, and I found one section that was very interesting to me, Jason. I'm going to quote, Mr. Saylor. and I want you to find where I think the ball is being hidden in this particular quote.

Starting point is 00:49:43 By the way, he also said earlier that due to the capped nature of Bitcoin, quote, you can expect it to keep going up. But anyways, here's a sailor. Quote, we sold one and a half billion dollars worth of Bitcoin. We bought back $1.5 billion of Bitcoin. We captured nearly a billion dollar gain in the arbitrage. That we can do with equity day by day. When we do it with debt, we issue $3 billion of,

Starting point is 00:50:08 debt that's backed by $600 million of Bitcoin that comes due in five years. We pay zero interest. We buy $3 billion of Bitcoin. We capture $2.4 billion in the arbitrage gain up front, but then over the course of the five years, we double or we quadruple the investment because we're buying an asset, which is appreciating faster than the asset. I think he means than any other asset. So I figured out, I read this like five times.

Starting point is 00:50:32 When he says, we sold, and we sold $2 billion and got back a, a billion and a half, it's the net asset value thing. Essentially, right now their stock is worth more than their Bitcoin, so they can sell that, and then they can, they can try more, and then they get more rewarded. So the sucker at the table is the person buying MSTR in this case. Because he's saying he's arbing the Mr. shareholders. If you buy MSTR, if he sells you at 80 billion and he's got 40 billion in NAV, the net asset value, the value of the Bitcoin.

Starting point is 00:51:08 Sure. Then you're the sucker because you're buying something at two times the price. And the only way to say you're not a sucker is if Bitcoin doubles and fills that in versus you buying the SMP or the QQQ or whatever other asset you were going to buy that would grow at 7 to 15% a year, 5% to 15% a year. So there's a lot of risk here. All of this is predicated on a 60% growth rate continuing. And so if you trust Michael Seller more than you trust yourself to buy Bitcoin, then bet on Michael Seller. One last-

Starting point is 00:51:46 And I think some people might. I mean, maybe he's so audacious that if you want to go with the most audacious, craziest, all-in-chips person, maybe that's the better bet is to buy, Mr. Maybe. And maybe there's a chance you can appreciate faster than Bitcoin. Maybe. One last thing, though, Sailer wants to take Microsoft and essentially use it, the whole company, according to his pitch,

Starting point is 00:52:07 you know, dividends, cash flows, buyback, all the money to purchase Bitcoin. Why do anything? Why not just buy Bitcoin? And then that was kind of where I thought this hypothesis kind of gisted down to, would have boiled down to.

Starting point is 00:52:23 And then I realized that's what he's doing. He's turned his whole company into simply a vehicle to purchase more Bitcoin. Well, I don't know, man. There's other stuff I like to do. I like to work. work with other people, like to build things, like to make shows. I like to, when I was at Crunchbase, it was great to do that stuff. Like, I don't know, there's more to life than just

Starting point is 00:52:42 buying one asset and holding onto it. Yeah, I mean, there's, and just to put everything in perspective, this is all going to come to a head in the coming years because there's going to be 21 million bitcoins created eventually, right? That's always been the plan. There's 900 or so created a day. I heard somebody in the, there's two different numbers in the chat room of people saying how many bitcoins are getting mined every day, but let's say it's under a thousand. So there's a hundred million being made a day. If he's buying a billion in a day,

Starting point is 00:53:11 he's got to get 900 million that are not, we're not mine that day, at least. So there are like over two million coins left to be mine. He's going to buy up more than that. I mean, this is, yeah, I'm trying to sort out that number for you. The last, the really interesting comments,

Starting point is 00:53:32 I'll just go to the comments here. I think a really interesting, comment here is why wasn't he doing this, Bradley Anderson from X says, why wasn't he buying at this volume when it was a 30K or 40K or 50K? Yeah, that's a good point. I wonder why he wasn't going all in at that point. Maybe there wasn't enough hype mania to do the convertible notes at that time. I don't know. Well, I think there's been, as the share price of micro strategy has risen quite a lot in the last year, he's had more access to more capital, right? The sums are getting larger. So there's, there's a, there's a, there's a, There's an amplification effect going on. And you know what's really nice about this, Jason? It is a free market. And so if people wish to buy into the micro strategy effort, Godspeed. I don't think you and I are going to stop holding or buying Bitcoin and instead

Starting point is 00:54:18 buy micro strategy. But it appears, according to lots of folks on the internet, that they are. So may our concerns be overblown, may their bags be large and may everyone make a lot of money. That's where I kind of leave this. I don't get it. But hey, you know what? Free country. Free world.

Starting point is 00:54:34 Yeah, and come on the pot anytime. Saylor, if we got something wrong, by all means, tweet it. We'll retweet it. We'll engage you on X. He's at Alex. I'm at Jason. The show is AT at TWA startup. So we're totally fine being wrong and asking questions.

Starting point is 00:54:52 Yeah, and I'm reading the chat in real time now. So we have said, just so we're clear, we're both on Bitcoin. We're not using him a fraud or anything like that. Nope. We do think the pitch is. I think the pitch is crazy, and it's incredibly high risk. And I think you should own your Bitcoin yourself.

Starting point is 00:55:12 That's all. Yeah. And also, I just, I would love to get, Amy Hood is the CFO of Microsoft, right? Uh-huh.

Starting point is 00:55:19 Memory serves. I would love to get Amy's take on this, because I have to say, she's been really solid at Microsoft in my view. So I would be legitimately, not kidding. Like, I would love to know,

Starting point is 00:55:31 like, what does the CFO of a multi-trillion dollar company think or something like this. Because we're only getting one side. Mike Roche is saying this is like watching your brother-in-law, everything is wrong with Bitcoin and they know how to fix it. It's insufferable. No, I'm not saying I'm the expert on Bitcoin.

Starting point is 00:55:47 I mean, I've been covering it since 2011. I've owned it since $100. I am in no way saying I'm an expert on it. I obviously have bought it, set it, and forget it. And I don't spend my time doing this, you know, all day long. I think it's good to have one, two, three, four percent. Maybe. Every time I see one of these Bitcoin podcast, Jason.

Starting point is 00:56:10 2%, yeah. They're saying the same things. They're like, Bitcoin is great. And then the other host is like, yeah, Bitcoin's great. And I'm like, dope. What else you got? Like, what do you do at a Bitcoin conference other than the walk around going, total?

Starting point is 00:56:21 I don't know. I mean, that's, Jesus Christ. Yeah, I mean, I think the thing that would have broken Bitcoin out is if it actually had use cases other than, you know, this store of value and, you know, digital gold kind of situation and the scarcity wasn't the main feature. But apparently that's the main feature. It would have been really cool if you could like build more on it. But I guess the other protocols are much better at that Salana Ethereum.

Starting point is 00:56:43 Yeah, especially if you look at like base from Coinbase and so forth and all the L2s. All right. Anyways, Jason, so possible ways to go next. South Korean martial law and the denouement thereup, the brouhaha in Delaware. Or we can riff into the service tight and IPO price range. Where does your heart desire? What do you think? What is the audience?

Starting point is 00:57:01 What do you think is the most important story here where we can add the most value, yeah? Well, I kind of have a somewhat contrary view of the Delaware court situation, so maybe we should go there. All right. We have memes from Jason. We have recaps, but why don't we start Jason with your description of what the court said in January that Doth? No, no, you tee up the story because you got the facts right there. It would be easier, and I'll just give the color of comment. All right.

Starting point is 00:57:28 So, Jason, Elon Musk, Tesla. well-known relationship, long-term founder, had a relatively aggressive compensation package that was set up to be hit with certain milestones. As Tesla grew

Starting point is 00:57:40 and appreciated in value, he would make more money. This was the largest pay package in corporate history, that is that I'm aware of, and was controversial for its size. Two of these schools of thought here.

Starting point is 00:57:52 Well, also controversial because people thought it was unobtainable. That was the key thing. People thought it was stupid. I mean, there's multiple

Starting point is 00:58:00 CNBC clips of everybody sort of describing and saying, like, this is not tied to reality. A car company has never been this big. Therefore, giving somebody billions of dollars in award compensation, he has to make everybody

Starting point is 00:58:18 who owns a share in this company, give them 95% of the value and he retains 5% or whatever the percentage was. So I, Bill Gurley, many other people said, if only compensation, Uber, CEO compensation, Microsoft, Google, Sundar, Satya, if only everybody's comp was this way, it would be the best possible shareholder alignment on

Starting point is 00:58:44 the planet. No cash. You only get your options if the market cap hits a certain number, the revenue hits a certain number. This way, the incentives are perfectly aligned. How many times do we see a stock go sideways? Mm-hmm. and the CEO just keeps getting more and more options dumped on their head and more and more

Starting point is 00:59:04 calm, 30, 40, 50 million dollars in salary, billions of dollars in stock awards, and they don't make the stock go up. So from Jim Kramer to Bill Gurley, myself, everybody, it's just like, this is the perfect award. This should be the gold standards in rewards. And it's pretty obvious here that there are political things that play in my mind. Hold on. Hold on. Do you want me to see this up or do when I see it up. Sure. Okay. Yeah.

Starting point is 00:59:29 So, so, I think there's a little bit of political stuff here. And I think there's a lot of like law firms. Because the person who brought this case owned nine shares of Tesla. The person who brought the case was not a major material shareholder. But, nine shares.

Starting point is 00:59:43 As far as I know, maybe it made a ton of money. Maybe that's all the shares he could afford to buy. Um, sued over the compensation, essentially saying that it wasn't fair. And that as far as I can understand, Jason, correct me here if I'm wrong. The idea.

Starting point is 00:59:57 was that when Elon negotiated the compensation package, he was not doing so with a equivalent of a third party, but was instead essentially negotiating with himself. And so there was concerns that that was a form of self-dealing. Now, I know you don't agree with that. I understand. The judge earlier did. And this was a explosive moment. Then Tesla put it to its shareholder again and said, please vote for this. Then they went back to court and said, our shareholders approved it. Then the judge said, no,

Starting point is 01:00:34 and there were four fatal defects in their approach. And then after this, everyone has gotten very, very mad. So Elon and Tesla have lost again and will say that they will appeal, and we presume this is going to go to the Delaware Supreme Court.

Starting point is 01:00:49 Okay, over to you. How many times the shareholders have to vote in favor of the greatest CEO of all time, you know, up there with Steve Jobs, Bill Gates, I mean, this is rarefied air.

Starting point is 01:01:03 How many ways do the shareholders have to tell a bunch of judges and, you know, the courts, we want this guy to get a pay package that is commensurate

Starting point is 01:01:17 with the acceleration of the value of the company and the value it's providing to humanity. And if you don't want the shares, you don't have to own them. You could own any other company. If you don't like the comp package, you could say, I don't like the comp.

Starting point is 01:01:33 And you know what? People do look at stock-based comp. Bill Gurley, Brad Gerstner, they've been on top of this for a long time saying, hey, the stock-based comp at Uber, at Microsoft, Google is out of control meta. It's got to get brought back into reality because you're diluting

Starting point is 01:01:48 sermons, etc. Yes. Yeah, and they I think make a compelling case, but there's also the case that if you don't like it, you as a shareholder get to vote or you get to buy another share where they don't have stock-based comp that you don't agree with. And so I think the problem, the big problem I have with this is, we all pick Delaware so that it wasn't partisan or vindictive and it listened

Starting point is 01:02:17 to the shareholders. The goal of corporate law is to be predictable. So people know in entrepreneurship and capitalism, these are the rules. If you, you shoot the ball behind the three point line and it goes in, you get three points. Not if you shoot the ball behind the three point line and it goes in, you get zero points. That's essentially what they're doing here. And then they're like, but we talk to everybody who owns the team and who plays in the NBA and they still want the three-pointed account. And they're like, nope, it can't count. And you know what? My feeling on this is if Delaware is going to suddenly be, and the reason we all do Delaware is because they were predictable and there's case law. What this has done is now, it is

Starting point is 01:02:56 rocked everybody's belief and trust in the Delaware system. Okay. And I think we have to leave Delaware. And, you know, I think startups and big companies just need to reincorporate their companies in Nevada, Texas, other places that will listen to shareholders. And that's actually what needs to happen here. And then they just need to do a full-on investigation and figure out if there is any bias here.

Starting point is 01:03:21 Because if you flip a coin in the judicial system, you'll get a Republican or a Democrat, right? And if you flip a coin of a Republican and Democrat, of countries 50, 50 approximately, you know, it could be biased or it could just be not correlated, right? It could be correlated, but not causation. So I don't know the judge. I don't know enough about it to know it's biased,

Starting point is 01:03:40 but I think we have to look into it. And it does need to go to the Supreme Court and get adjudicated because this just spruce capitalism forever. Well, geez, geez, take the pot off the stove. We don't need to boil. this is going to be okay everyone let's breathe Elon Musk is going to make rent

Starting point is 01:03:59 It's not about Elon's personal wealth He's a richest guy with this or without I know it's just about How do we regulate the game A person with nine shares or something crazy Can hire a law firm That's paid 350 million The lawyers here are doing this for a payday

Starting point is 01:04:15 And so it reminds me of drive-bys Go ahead, you tell me Everyone does things for a payday You're using You're going back to the Michael Cyan thing. The way you're framing this is really a little bit. Tell me why it's wrong. I'm not saying you're wrong. I'm just saying

Starting point is 01:04:29 it strikes me as a relatively imbalanced presentation. So I read the ruling that came out and it struck me as a piece of serious legal work. I may disagree with the conclusion

Starting point is 01:04:46 but I don't think that this is something that was whole clock, you know, whole clock drafted as a you. to Elon and Musk. And I think that there's been a whole bunch of people who are so politically pilled now that they can't disentangle the possibility of politics from something to the point to which they go, here's a judge who interpreting the law, the case law, as she understands it,

Starting point is 01:05:09 in Delaware, with all the history that you mentioned, the predictability thereof, and said, I think this actually is an abrogation of those norms that have held for so long. We can disagree with that, but I think it's pretty shrapy of a lot. us to be so mean to the person who's just doing the best job she can with the law that was behind the president that she had to work with. And if you don't think that compensation committees and boards should be independent, then I don't think there's an issue here. But I think that her perspective here is at least sufficiently serious as to warrant serious complaint versus what I think I'm seeing a lot of, which is just people saying, oh, this is politics. Oh,

Starting point is 01:05:52 fuck Delaware. You know, it strikes me as a childish response to the legal system, especially when Elon is currently throwing as much sand as he can and open AI's gears out of pure pick and using the legal system to do so. And when a lot of folks that are on the Tesla side of this thing liked it when people used money and the legal system to kill certain media properties. So to me, there's a lot of hypocrisy here about the law should always correspond. to what I think because I have more money. I think this is going to go to appeal. It's probably going to lose and Tesla will pay Elon,

Starting point is 01:06:30 but I just think that we can all be a little bit more adult. You know, the reason I think entrepreneurs do not give, or the capital allocators do not give the benefit of the doubt to this court is because shareholders are supposed to make these decisions, not the courts. And the shareholders, if there was one vote, you can maybe make an argument. But when there's a second vote, everybody's like,

Starting point is 01:06:57 no, no, give him this. We want this CEO to be in this position for a court, representing somebody with nine shares to do this, it makes it feel like you're going to break capitalism. Just like the patent trolls,

Starting point is 01:07:14 you know, if you don't stand up to them, could break capitalism where they troll people. And so the law, and if you think, that Elon's doing lawfare against, you know, Sam Altman. I mean, he's taking a non-profit and flipping it to a for profit. This is when we run into our different set of personal allegiances. And I know Elon is your friend.

Starting point is 01:07:36 And you're not going to do it. I'm also friends with, or a friend I was from Sam. I don't know if I am anymore. Do you think that Elon Musk's lawsuit against Open AI is because of his charitable views towards the world or because of personal pick due to how his relationship with Sam Alden fell out. Because I know what I think. It's because it feels unfair

Starting point is 01:07:54 to take a 50 million, to take all these 50, 100 million dollars in emissions and then flip it into doing the opposite and giving half the company to Microsoft. Why does Elon get to complain

Starting point is 01:08:05 when he thinks things are unfair but the shareholder that sued Tesla doesn't get to complain when he thinks things from. The shareholder does. The shareholder does. And then the shareholders voted a second time.

Starting point is 01:08:16 Right. And they're holding it up, which is like, that's the problem I think everybody has. And it's like, there's no damage to the shareholder. The shareholder made a massive profit on it. So if there was damages, I'd be like, yeah, sure, if the stock collapsed and you gave a job, if you gave, if we take Elon's name out of it, we just put in Satya Nadella or whatever. We all love Satya.

Starting point is 01:08:38 Yeah. And if he got a huge compensation package and then somebody sued because their shares and they lost money, then it would be like easier. You're like, okay, sure. This person gained, this person lost feels unfit. fair. Yeah. You know, in this case, the person gained. And so that's where I really have a problem with it, because then it's like, well, I didn't gain enough. And it's like that last 5% of the gain, like, it's so obvious that Elon, you know, basically gave up everything to have Tesla survive. I watched him do it. Yeah, yeah. He almost went bankrupt funding that company. He did go bankrupt,

Starting point is 01:09:13 but actually funding the company. He was on loans from his friends. He talked publicly about that. Yeah. And getting the Model 3 out was a Hercule. you know, amazing effort. And the company almost went out of business a second time. I see. And so when you see, in my case by friend or just appreciate an entrepreneur, risk it all. And then somebody with nine shares who made a ton of money comes in and is so ungrateful, they sued the company to do this. So the lawyers can make a bunch of money.

Starting point is 01:09:41 That's where it tweaks entrepreneurs. That's what, that's why you're seeing consensus amongst the Bill Gurley's, the CNBC anchors, me. anybody who's in capitalism or capital allocation. Why did the CNBC anchors make the cut there? That's funny. Because they cover it every day. Yeah. And that's why I do include them in it because they also were like,

Starting point is 01:10:07 at the time of the compensation package, there's that famous clip of them saying like Andrew Rossorca and everybody had thrown the table being like, this is ridiculous. Like he never hit this. It's a big package, but he'll never hit it. And they study and they comment on, all day long executive compensation in this issue.

Starting point is 01:10:23 So that's why I think they make the cut. So, and then I put Bill Gurley in because he's been at this for a long time, and I'll put other CEOs and myself and other investors because they also have seen this. I think that's why this is so tweaking for everybody. It's like, what is the guy got to do to get his package? Well, you want CEOs to be comp,

Starting point is 01:10:40 and also we want CEOs to be compensated this way. We want their success tied to the share price. That is the ultimate alignment. And it's infuriating when people break. that alignment and now we got the system breaking. I think the reason why I've been slightly irked by this is there is the, there is the what is reasonable standard person with the nine shares versus person who went bankrupt building the company and made it worth more money.

Starting point is 01:11:05 That's a very, very reasonable point. And I think that that nests well into your point that this is why people are tweaked. My point is if we want to let that be the standard for how decisions are made versus what is the law, I think that we get into a sticky place. So I think the best thing to do here is to run this up to the Delaware Supreme Court, sort out if they agree with what the judge said, because we should take her opinion seriously, because she obviously put a lot of work into it.

Starting point is 01:11:35 I read it. I'm sure you've read it. We can all access it and go through it. And there are lots of interesting things in there. People can learn about, like, conflict-to-control or transactions and how compensation committees work and how independence is supposed to work on a board and normal corporate governance,

Starting point is 01:11:51 and then we can decide what's best to move forward. But I just think that we should not start throwing invective at people who are doing their job inside of the legal system when we don't get a judgment that we like, especially if we are a lawsuit happy group. Yeah, okay, I mean, fair enough. Everybody looking at it from the business side just looks at it as profoundly unfair. and anybody who's in the capital allocation business is infuriated by this because

Starting point is 01:12:20 this is how capitalism is supposed to work. And if you look at comp committees, if you're on the board of a company and you're spending your time on it and you have equity in that company, there's no independence in that regard because you are getting compensated by the company, right? So your job is to represent all shareholders

Starting point is 01:12:45 and make sure all shareholders have the best chance at success. And that's exactly what happened here. And so this idea that like, the board isn't independent, like, was Steve Jobs' board, like, 10 independent people like a jury? Boards of companies are not like juries

Starting point is 01:13:03 in their independents randomly selected. They're selected. They accept. They're compensated. So there's alignment there as well. And the alignment is, like, when I'm on the board of a company, and sometimes I'll join,

Starting point is 01:13:15 a board where I'm not already an investor. I've done that twice, I think, Lashify and Kulo. And they will give me an equity grant. So in those cases, as not an investor in those two cases of boards, and I'm on one nonprofit board. I don't get any compensation there.

Starting point is 01:13:33 But you can get compensated, actually, on a nonprofit board. I get paid in equity. So I am incented to make the equity go up for all shareholders, and what I'm looking for as conflicts of interest. And in this case, It's not like Elon voted issuers or Kimball voted to shares.

Starting point is 01:13:48 They were not in. And everybody else is the other directors. So yeah, I think this is. We've built up a lot of law around how to run corporations. And then I do think that there are certain times in which companies grow very quickly. People become very, very powerful. And then those norms get tested and they get pushed on. And then you end up with situations like this.

Starting point is 01:14:11 This gets us to clarity. So this disagreement. will, I believe, helps that president, not just in Delaware, probably around the nation, for how this sort of thing should go. And I think we'll end up with Elon getting his money, Tesla getting what they want. So you think it's a bad ruling, even though what you're objecting to. I don't agree with the ruling, because on a moral basis, on a Elon built it, Elon took a risk, pay the man. But she's making a legal argument, which seemed very serious and reasonable when I read it. I am not a lawyer, but I do read a lot.

Starting point is 01:14:44 I read a lot more court documents than I wish I did. And so I think we should just let the process play forward, not be so mean. Fair enough. Let the process play forward, I think is what we're seeing here. I just, every time I watch it, I'm just like, oh, my God, this is so frustrating. To make you feel better, though, we've pulled some tweets. I'm not a shareholder in Tesla, by the way. Not a shareholder in Tesla, so I don't have an angel in Tesla.

Starting point is 01:15:05 So I don't have a horse in this race. But we do have some tweets. Here's Paul Graham, pointing out that everyone's going to leave Delaware. if quote activist judges start overruling shareholders. That is, again... So Paul Graham has invested in more startups than any human on the planet, more than me. I'm invested in 400. I think he's invested in 3,000.

Starting point is 01:15:23 Three. Can you imagine doing his... Actually, if they're doing 500 a year for 10 years. Can you imagine his taxes? 400 a year for 10 years, 4,000 maybe even. Yeah. And then here's Jason Limkin, one of my favorite people in the technology world, saying that it's interesting how a default don't think about a choice since we started

Starting point is 01:15:38 in tech, i.e. incorporate in Delaware, is now upended. So this is the business sentiment. Past my point. This is what people are saying, underscore what Jason has been saying this whole time, which is the folks who are out there are piss. And. Yeah. Yeah.

Starting point is 01:15:54 And then just because I love you, here's the meme. Oh, this is me. Oh, yeah. I only have the one memes. Yeah. No, there's a second one I did, which is wake up, honey, or can I get a wake up call? You see that one? I thought I went through all your tweets.

Starting point is 01:16:09 I missed that one. Sorry. There's another one where it says, can I get a wake up call? And then somebody just does this holding like the Delaware court is biased or whatever, you know, the thing you're objecting to, which, you know, listen, and I got to admit, you know, when all the fair law, lawfare debate over Trump's six different cases, when I looked at those six, I objectively looked at the six and I was like, these two would not have occurred if Trump wasn't, if it wasn't like New York and it wasn't Trump.

Starting point is 01:16:38 And even like the governor of New York said that probably wouldn't happen. and then those ones felt biased. And then, like, three or four of them, I was like, those seem kind of legitimate to me, January 6th and the documents case. Like, they do ask for documents back all the time and you give them back and then it's over. And then if you don't give them back and you obstruct justice, then they say you're obstructing justice and we got to take it to court to get them back. Like, you know, just objectively, there is, there are prosecutors who are overzealous and who do it for gain.

Starting point is 01:17:11 right? We've both seen that. So. Prosecutors, though, versus judges. Because the way, the, the thing that I think here is that people are saying, because the moral argument is so strong in this case, the judge should have ruled in opposition of her reading of the law. And that to me is a dangerous thing to say. If the law sucks, change the law.

Starting point is 01:17:33 But don't shoot the, you know? Actually, I'll see. We'll see. Yeah, you mean, I'm going to retire, shoot the messenger quotes. because it's not your fault that there are crazy people on the planet. Alex, I will not, we can disagree about this one, but I'm not going to make you responsible for crazy people.

Starting point is 01:17:49 We agree on 98% of it. I'm just saying if the law is wrong, let's change the law, let's not bash the judge who's trying to interpret. Yeah, and I understand the Trump people's lawfare arguments and why they're upset about it. Because when I saw like the case in which Trump was actually guilty,

Starting point is 01:18:08 I was like, oh, they upgraded those misdemeanors to felonies with the hush money case. I was like, this feels like a speeding ticket that should have been settled. And when Letitia James was going out saying, like, we have to hold this guy accountable, vote for me and we'll get him accountable. I was like, and then she was like tweeting how much he owes every day. I'm like, this is makes it seem, even if you weren't biased, you're making yourself seen biased.

Starting point is 01:18:34 You're making it seem like law. She was an AG, right? She was an attorney general. And she was like, I'm going to go after Trump and put it and lock him up. And she was like, tweeting the amount of the judgment against him every day. And what the fine was if he didn't pay it,

Starting point is 01:18:49 like the additional interest. Yeah. And I'm like, oh my God, you're just feeding into the lawfare argument here. Just played straight like Jack Smith was, I think. Is that the guy's name Jack Smith? Yeah, I think he was like, yeah, yeah, yeah.

Starting point is 01:19:00 Like, he was like very procedural. Like, if it, you know, like Mueller was actually very procedural. It's like, I don't think there's enough here to say Trump colluded, but there was a bunch of smoke and obstruction of justice, we're done. Well, ladies and gentlemen, just to wrap this up, people are moving to Texas, Nevada, and other states are going to vie for their incorporation. And you know what?

Starting point is 01:19:22 Great. Okay. You know? There it is. Hell yeah. Democracy Labs. Let's do them. Okay.

Starting point is 01:19:28 How long have we been going for? I have no idea. An hour, I think. An hour? All right. Give me a startup. Give me a startup. We added to Twist 100.

Starting point is 01:19:35 Maybe that's a good way to end on a positive startup note. I'm going to do watch this. Okay, Twist 500. Jason and I are building a list top 1% private market companies. Which companies are going to have the biggest financial outcome?

Starting point is 01:19:48 We freaking love this. It's been a lot of fun. Jason. News. Tens Torrent, a company on the Twist 500 that's building specialized chips for AI just raised $693 million this week.

Starting point is 01:19:59 Huge round. Very interesting. And we added Vatten systems to the Twist 500 as you requested yesterday. The Rhode Island-based company building underwater drones. Yeah, we had them on the show.

Starting point is 01:20:11 I think that's like an interesting one for military. Yeah. Keep up. And then we also added the browser company because they are building a new thing called DIA, which combines AI agents, computer use from Anthropic, and a new browser all into one into a package that I think is absolutely incredible, announced it this week. And it's the first time since chat GPT came out that I have been super excited about a next-gen technology products. So on the startup front,

Starting point is 01:20:38 the browser company is my startup of the week. Oh, okay. And they're doing, just so everybody knows, they're doing ARC. So the browser company is producing ARC. I just saw. I don't know what ARC's value proposition is here. But I guess it has something to do with AI now. Yes. So they build a new version called Dia, which is, remember how I've said on the show,

Starting point is 01:21:06 that I want to have an AI agent that follows me around and knows my personal context across my devices and is intelligent and can help me do my things. They're building that at the browser level versus the operating system level, which is probably a faster way to do it. And their vision seems quite large.

Starting point is 01:21:23 So to me, someone's taking the big bet to make something incredibly difficult. It looks like, yeah, it looks like this browser is doing a bunch of UI stuff. but now that AI's happened. Yeah. They're going to go after.

Starting point is 01:21:40 Pull up Diabrowser.com. This is the thing. They made an 11-minute faux recruiting video and then used Dia as their pitch that come help us build this thing. And it looks awesome. I'm really excited about this. I put out of the newsletter yesterday,

Starting point is 01:21:57 added them to Twist 500. Awesome. All right. Go to Twist500.com. You can see them there. You can nominate a company at Twist500. com. you all tomorrow. Bye-bye. Bye-bye.

This Week in Startups - TWiST News: Bitcoin, Saylor's Microsoft Pitch, and the Delaware-Tesla Fight | E2054

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.