You're The Voice | by Efrat Fenigson - Ep. 32: Michael Saylor - The Virtuous Network

Starting point is 00:00:00 I think it's going to take about 100 hours to understand Bitcoin. They're like, 100 hours? That's too much. There must be something wrong with Bitcoin. I don't have 100 hours. My stockbroker doesn't make me spend 100 hours to take any other investment decision. I can't be bothered. You have 10 minutes. You have 20 minutes. 90,000 hours to make your money.

Starting point is 00:00:23 Spend 100 hours. Figure out how to keep your money. Here's the problem. too much money, too much power, too much technology, too many people thinking that they were put on this earth to help. Large ego, large power, large capability. You're triggering the dysfunction. That's one of the artifacts of modern technology that we've created systems that are so powerful and so intertwined. We could all do with some humility and some respect. And appreciation for classic Austrian economics. Let the market decide. And then also just

Starting point is 00:01:07 decentralization. It's good for no one to have too much power. It's good for it to be hard to do things and slow. Too many people doing too many things. Maybe the human race is a lot better if we just did less and slower. Hello, and welcome to another episode of You're the Voice. I'm in Prague, last day of BTC Prague, and I have the greatest honor of sitting here with Michael Saylor. Thank you for having this conversation with me, Michael. Yeah, thanks for having me. Okay, so for those who have been living under a rock, just a quick intro of who Michael Saylor is.

Starting point is 00:01:57 Michael Saylor is an American entrepreneur and business executive. He's the executive chairman and co-founder of MicroStrategy, a public software and services company that recently announced it is also a Bitcoin development company. MicroStrategy is undoubtedly the pioneer in holding the company's reserves in Bitcoin. Till recently, he was MicroStrategy's CEO for about 33 years. and Michael is considered to be one of Bitcoin's biggest advocates and I'm sure that like me many other people are grateful that you are able to carry so many deep insightful conversations which for me have been a huge part of my learning curve and journey into Bitcoin so thank you so much for

Starting point is 00:02:43 that. Yeah thanks for having me. Okay so my first question we live in a world that everything is big you said recently big pharma big tech big everything can you talk a bit about that and about the trend of centralizing powers in the hands of a few i think that um technology has enabled us to create systems of unprecedented reach and power and we can see that in say google that streams billions and billions of hours of video we can see that we can see a company that answers everyone's questions we have microsoft that runs everyone's corporate information systems we have apple that enables a billion people to take photos and send messages and these big technology systems, they're both good and bad.

Starting point is 00:03:45 The good is Apple can ship a product over the weekend to a billion people for the cost of electricity. And never in the history of the world could a company ship a product, a new camera, a new recorder, a new communication device to a billion people over the weekend and that's why it became the world's most valuable company but you know when you consider all these things global networks global companies like they all have a management team which consists of a ceo a cfo and a general counsel and so at the at the top of the pyramid is five people on a board of directors that have to run a business that

Starting point is 00:04:33 provides the communications maybe at meta for two and a half or three billion people so in that particular world if a government decides it's dangerous to mention a word they will go to the general council and say this is dangerous to mention that word and the general council will say to a head of technology write a software program that scrubs out the mention of that word and then a billion people will no longer be able to pronounce a word a hundred years ago there wasn't any company that could let a billion people take photographs there wasn't another company that would deliver instantaneously the messages between a billion people so you know the the good and the bad of the modern age is in the modern era we have

Starting point is 00:05:25 pharmaceutical companies that give us antibiotics, but maybe they give you a vaccine that doesn't work the way you expect it. In the modern era, you know, you have technology companies that give free education to billions of people, but maybe they don't give certain information to a billion people. And so that's the good and the bad. On the margin, life expectancy was 50 in 1900. It became 70 in 1950 with the advent of antibiotics. Modern medicine clearly has had, you know, if you look at the plight of a woman in childbirth in the 1700s, or if you look at infant mortality rate in the 18th century, it was tremendous and hideous. And we have conquered so many of these awful things while driving life expectancy from 30 all the way up to 80 but the price we paid is

Starting point is 00:06:24 big government big education big technology big pharma big defense and uh and we're just able to you know now big retail yes a company that can actually provide you with whatever you want in two hours. That's the positive. The negative is the general counsel of that company can decide not to offer you something that you might want anywhere in the world. And you've lost the 800,000 little retailers that used to do the job. So we take the good with the bad. in technology it brings us these beautiful amazing things everybody's telepathically connected to everybody but that's you know that telepathic thing if you ever watch one of those x-men movies the teenage girl is a telepath and when her telepathy starts working she starts

Starting point is 00:07:27 hearing the thoughts of everybody around her and then she starts hearing the thoughts of the serial killers and the criminals and if she doesn't figure out how to tune out those thoughts she goes insane right and it's an apt metaphor in a world where everybody can talk to everyone instantly via one platform what happens if the person running the platform goes insane what happens if they get angry what happens if we all listen too much to each other and and you know it falls in the category you know of uh be careful what you wish for there's a dark side to it but technology is pandora's box you know you've opened it you can't put it back in the box you have to live in a new world and you have to find the good and then you have to find a way

Starting point is 00:08:22 to manage you know the toxic tendencies of that technology capability a hundred percent and it's like the tool in the wrong hands is being used in the wrong way the challenge with big systems is is they're systemically unstable sometimes we we think oh well there's an evil person that has control of this system and it's very easy when we look at this system going astray in a foreign nation to think that was big brother and that was a bad person or you know and we they were an evil dictator and i could name a bunch of them in the 20th century but the observation or the example i give people oftentimes is is you could see things going awry before covid two years before covid the dress rehearsal was something i call the twitter cane with great pleasure i'd like

Starting point is 00:09:20 to introduce my sponsors they helped me fulfill my mission of spreading truth freedom and sovereignty you're the voice is brought to you by trezor the original bitcoin hardware wallet company pioneering the development of self-custody for crypto assets since 2013 empowering individuals with an open source device, enabling beginners and experts to easily and securely hold their coins. I find my Trezor super easy to use and recommend it to my friends and family. Enjoy my 5% discount on Trezor product by clicking the link in the show notes and using the code AFLAT. Next up is Bitcoin Nashville. If you're like me, sick of the globalists and central banks robbing you blind through excessive money printing,

Starting point is 00:10:05 you need to be at bitcoin 2024 in nashville this july the largest bitcoin conference in the world will shed light on monetary freedom with a glimmer of hope among a darkening reality of centralized power and control top speakers and companies will gather in nashville to take part in building a new reality i'll be there too speaking and interviewing head over to my link in the notes for a 10 discount using the code PC il okay have you heard of the Twitter King no the world was wired in Twitter we had 24 7 cable weather channels there was a hurricane forming over the Caribbean hurricane Irma I believe like any other hurricane that it they formed for hundreds of thousands of years since humans have

Starting point is 00:10:55 lived in North America hurricanes have been forming they form over the Caribbean and a certain season and then they meander this way and that and maybe they hit land and if they hit land they probably dissipate and occasionally they hit every hundred years and they do a lot of destruction in this case though the hurricane spun up and somebody on twitter started covering it and they said this looks like the big one this is going to strike miami and maybe it will actually flood miami and wipe out the city well if you actually said on twitter there's a storm in the caribbean but it's of no consequence statistically it doesn't matter no one's going to like that tweet but if you say there's a storm in the caribbean this one's going to wipe out florida

Starting point is 00:11:44 everybody likes that tweet they retweet some people quote tweet and say this is stupid this won't happen some people comment this is stupid this won't happen some people agree yeah when this happens you should you know go to my hotel everybody jumps on board it doesn't matter the algorithm amplifies up the message so pretty soon the weather forecaster on 24 7 cable weather see the little tweet and they say well looks like there's a massive one over the caribbean it's going to hit florida it's loving it on miami ratings triple everybody starts tuning in non-stop now the mayor of miami watches it now the governor of florida watches it now the head of fema watches it pretty soon you know maybe the president of the states is commenting on it everybody comments on

Starting point is 00:12:37 the big hurricane that's headed for miami now people start to have meetings now the advertisers start advertising on the weather channel now the twitter people start posting the weather channel it's all very colorful it builds it builds it builds well so it builds enough that it'd be everybody's talking about it pretty soon national news picks up you know it goes beyond the weather channel it's on national cnn they're covering it people are buying advertising people are commenting and blah blah is this going to happen this is not going to happen blah blah blah massive twitter came so the politicians get together and you know the mayor of miami says well you know maybe it's going to hit miami we think we're going to have to make safety precautions or take

Starting point is 00:13:23 precautions well the next politician says i'm not going to be out done we're shutting down miami beach miami beach is shut down man because we can't allow our citizens to be destroyed by the tsunami that's going to hit miami beach police get called up now all of a sudden we have to declare martial law well the governor can't overlook this so the governor calls a press conference and the governor declares that there's a big hurricane coming to florida and we want to protect our citizens and florida cares i demand support from the national government we want to declare an emergency get fema involved the government's not paying attention to us the government well you know the government cares more pretty soon the national government's involved

Starting point is 00:14:09 the state government's involved, the city government's involved, Miami Beach is involved. I live in Miami Beach. I have a house in Miami Beach. It's been there for 100 years. There's been 10,000 hurricanes, never knocked down Miami Beach. But at this point, the politicians decide, we need to evacuate Miami Beach. What if you want to stay? You can't stay. We're declaring martial law. What if I don't leave? You're going to jail. You're going to jail? call the police knock on the doors evict everybody what if someone robs our house doesn't matter you gotta go everybody gets kicked out of miami where do you go everybody floods every hotel in the middle of the state the hotels are all booked you have to shut down your business miss you have to

Starting point is 00:14:58 shut down your hair salon your yoga studio all the hotels are forcibly closed the nightclubs are closed the restaurants are closed the supermarkets are closed we're running out of toilet paper oh my there's a massive crisis where have you seen this before do you recall this crisis massive crisis so i happen to have a family um you know that live across the state and so the the people that work for me in my house they flee and they go to sarasota because all the state authorities say you need to go to sarasota or tampa to avoid the hurricane that's going to hit miami beach you'll be safe and if you don't go we're arresting you everybody goes to the other side of miami and they go to the hotels and the entire economy shuts down and 20 30 40 billion

Starting point is 00:15:45 dollars of damage is done the hurricane meanders this way and that way and as you know no one can tell the future and weather is very unpredictable and so the hurricane's coming and in the last 48 hours the hurricane shifts and then the hurricane goes the opposite direction and goes to the west coast of florida spins around and slams into sarasota and and in naples florida where everybody was evacuated to well this is a ground zero hit disaster the hurricane struck the place that we didn't think it would strike and we sent all the citizens there and they're all in hotels in the place the hurricane struck the hurricane misses miami and miami beach which is empty the economy's destroyed the city is empty people have lost their minds it strikes naples it strikes sarasota

Starting point is 00:16:38 there is no damage everybody's fine except for the damage the politicians and the media and the system did now who's to blame it's the twitter cane uh-huh i watched it in 2018 i said there's something wrong here twitter plugged into into cable news plugged in the politicians the politicians just want to help out of an abundance of caution we're just trying to keep you safe they destroyed billions and billions of dollars of private property they deprive people and their civil liberties they force people into the eye of the storm yes but doesn't it feel like a dress rehearsal for something that maybe came later and then again it wasn't a red thing or a blue thing that's a red state but you know whether you're a blue politician or a red politician

Starting point is 00:17:36 It didn't matter. I think here's the problem. Too much money, too much power, too much technology, too many people thinking that they were put on this earth to help. right right large ego large power large capability and when a random storm like any other storm for the past hundred thousand years occurs in that environment it's like a powder keg and it goes unstable it's like an autoimmune disease or some anaphylactic shock that manifests itself in a complex vertebrate it's like i put a peanut under your nose and your body shut down and you died did the peanut kill you no you killed yourself but why did you kill yourself something is systemically unstable and in our society technology has threaded in such a way that everybody is telepathically connected to everybody and everything is inflammatory

Starting point is 00:18:43 and the inflammation ripples, amplifies, resonates. You ever see a guy with an electric guitar and a microphone and an amplifier and he puts the microphone in front of an electric guitar and it feeds back into the system and it blows out of his eardrums? Yes. You have to have some respect when you're around power because you get feedback. And we're just getting a lot more feedback in our systems today because all these things are looping into each other and you know i pick up my phone and you

Starting point is 00:19:18 know and and the phone provider can actually put a public service warning on the phone for 400 1422 days in a row it'll tell you you ought to be panicked in order to protect you sure but the point is if i poke you 1400 times in a row if you were healthy you won't be when i finish that's right you'll trigger that we're triggering right you're triggering the dysfunction and i think that that's one of the artifacts of modern technology that we've created systems that are so powerful and so intertwined that you trigger these things and it's a reason why we could all do with some humility and some respect and appreciation for for classic uh austrian economics let the market decide and then also just decentralization it's good for no one to have too much power it's good

Starting point is 00:20:20 for everything to be sometimes it's good for it to be hard to do things and slow because the modern in society is i want to do things fast and quickly and easily the lesson of bitcoin is it's okay to do things with great difficulty deliberately and slowly and sometimes the lack of doing things is the feature and you know in the dow of steve the famous quote is doing stuff is highly overrated right people try to too many too many people doing too many things and maybe the human race is a lot better if we just did less and slowly and slower love that message and that takes me a little bit into bitcoin so can you share your view about bitcoin as a digital asset or property and not currency and what's the differentiation for you yeah i think that uh that bitcoin adoption

Starting point is 00:21:21 has been held back by misunderstanding of its true nature because the industry has been collectively and colloquially called the cryptocurrency industry. So people's immediate reaction is it must therefore be a currency, and a currency is a medium of exchange, and they think of the euro and the dollar and the yen and the shekel and the whatever, and they think it's a currency,

Starting point is 00:21:48 and their immediate reaction is, Well, I know it's not legal tender, so it's tax inefficient to trade it, and I know it's not my government's favorite currency, and so it must be against the government, and it seems silly, and it's not stable, and it's volatile, and nothing's priced in it, so therefore I think it's stupid or it's threatening. now if you simply if you step back and ask more deeply what is bitcoin well bitcoin is digital money what is money money could be a store of value a medium exchange or unit of account but the aspect of money that's a medium of exchange is currency and the aspect of money that's a store of value is capital more like property but especially capital most people don't really think about a form of money in capital because we haven't really had a strong money as capital since the gold standard the

Starting point is 00:22:55 closest thing would be when you could hold gold as your capital asset, and then you used notes or paper currency that was pegged to gold or some other currency as a medium of exchange. But if you think about Bitcoin as digital capital, and you think about the dollar as currency, Once you understand that, you see, well, currencies are medium exchanges, and the thing you need in a medium exchange is it needs to be legal tender because you need to be able to transfer it tax-free. And, of course, the dollar is the world reserve currency, and then other countries will have their own currencies.

Starting point is 00:23:38 They'll be the euro, the CNY, the peso, et cetera. Any country that's an effective nation state will have their own currency, And when the nation state is failing after a war, it may dollarize. It may, you know, nation states will adopt the euro in lieu of their own currency when they can't support one. Or they'll adopt the dollar or they'll adopt CNY. And so there's like whatever, 120 currencies, but there's 180 or more countries, right? So that's there's nothing exciting going on there right now with the with the exception that people are creating digital currency in the form of stable coins like Tether or Circle and in a country with a collapsing fiat currency like Argentina or Turkey or Lebanon, you would prefer the digital currency stable coin because that dollar looks like a store of value to you. Right. If you actually converted a million pesos to a million dollars 25 years ago, you now have a billion pesos.

Starting point is 00:24:44 So it's perfectly fine as a capital asset and as a medium of exchange when your existing economy is collapsing. If your existing economy is not collapsing and you're in the European Union or the United States or a country where the currency is pegged to the dollar. In that case, you can just use your local currency as a medium of exchange, and then the issue is what's your store of value. And if you talk to any wealthy person in any of those places, none of them will tell you the euro is the store of value, and they won't tell you the dollar is the store of value. Every rich person you meet is going to tell you that they own a portfolio of real estate or property assets or they own company stocks or perhaps they own scarce desirable art or collectibles or a sports team. They will own something which is probably scarce desirable appreciated. It will not be pure currency, and the majority of the money probably isn't in credit instruments or bonds either. They might occasionally sit in them, but most of their capital is invested in property assets or super high-quality collectibles or equities that they believe in or their own private companies, alternative assets even.

Starting point is 00:26:06 Yes. so if you understand bitcoin is digital currency your reaction is immediate and negative and ignorant and inflammatory um if you simply turn the narrative and say hey it's digital property you're going to buy it instead of buying a building you know and that's a very simple thing you know it's like you have 10 million dollars you live in africa you can buy anything in africa for 10 million dollars any company any building any land any set of commodities any bonds but the catch is you have to keep it there for 100 years right or you can buy bitcoin what would you buy in africa that you would prefer to owning global digital property that

Starting point is 00:26:53 you could take with you and the answer is nothing of course there's nothing you would buy and there's no country you would buy it in nothing you wouldn't buy a diversified portfolio of anything right and and so that illustrates a point and the point is bitcoin is digital capital it's global capital and it conveys the same property rights to a business person or an individual in africa an individual with a hundred dollars a business person with a million dollars a billionaire with a billion dollars they all have the government they all have the same property right the same opportunity as a billionaire in manhattan as the king of england as the royal family in dubai right now if i took bitcoin away from you and i put you back into africa and i said

Starting point is 00:27:56 okay now you can't buy bitcoin now i can buy the best hotel i can find in nigeria hold that for 100 years good luck with that but there's nobody in their right mind would say that investment seems as as high quality as buying you know the best portfolio of stocks and holding them in the upper east side of new york city right just not as good right so so bitcoin is digital capital it's global capital it's i i would call it digital property because it's easier for people to get their head around the idea of property with the only caveat being if i buy a billion dollar building in london um it takes me a year to buy it takes me a year to sell it i can't move it i may be property taxed on it but otherwise it'll probably appreciate in value faster than

Starting point is 00:28:51 the monetary inflation rate or at the rate of monetary inflation because it's scarce desirable as long as people want to live in london and do business in london if i buy a billion dollars of bitcoin while living in london i can buy that with no transaction cost in a minute a few hours probably uh i can sell it in a few hours when i want 24 7 365 i can move it to any jurisdiction and i can place it in the custody of any custodian it is globally desirable by anybody with money anywhere in the world so bitcoin is digital property but it's got a lot of characteristics that are better than physical property and it's kind of difficult to break up the building into a hundred pieces and then recombine

Starting point is 00:29:47 them together next week but bitcoin is fungible it's liquid it's global right i can move it at high frequency and you know the building you bought in london well okay you bought a billion dollar building can you buy a hundred can you buy 99 more buildings that are equally valuable also in london can you do that this year well they're not fungible right no right every building is different than every other building people will say well that building is on the end of the street corner and this other building that looks exactly the same is only worth half as much Right. And if I'm the mayor and I change the traffic pattern, I can devalue your building. Correct. You know, so Bitcoin is universal, global fund, fungible, standardized property and it's digital.

Starting point is 00:30:38 A computer can move it around. And that's why it holds such a global appeal to everybody on the planet. No matter, you know, you want to buy twenty dollars worth of a building. Good luck with that. Yeah. You can buy twenty dollars Bitcoin. You know, you can work your way up to a million dollars of Bitcoin, 20 and 20 dollar increments. And when you get to a million, it's it's not devalued. Try buying a building. Twenty dollars at a time. Right. You're not you're not going to buy a million dollar building. Twenty dollars at a time. So Bitcoin offers property rights and offers this digital capital to eight billion people. So at scale, they can buy with their weekly paycheck, and it works whether or not you're working class, middle class, upper class, a pension fund, megacorp, little corp, nation state. Everybody has the same exact asset.

Starting point is 00:31:40 They all have the same benefit. And one more point I'll make, a very powerful, important point. If you're a rich person and you live in Alabama and you buy $27 million of property in Alabama, there's nothing anybody in Israel is doing to increase the value of your property in Alabama. That's right. There's nothing going on in Moscow or Dubai or Abu Dhabi or Singapore or London to increase the value of your property in Alabama. That's right. You're making a local investment. When you are that same person and you buy $27 million of Bitcoin in Alabama, there's a person in Singapore that comes up with an idea for a trade that's illegal in Alabama that you couldn't do if you want to.

Starting point is 00:32:32 That guy builds $10 million of equipment, borrows $10 billion worth of Bitcoin, does the trade, and triples the value of Bitcoin, and you triple your money. Because somebody somewhere else in the world came up with an idea you didn't know about, you weren't capable of, and legally you couldn't have done. But that's the power of being connected into the global economy. And it works the other way. The guy in Singapore benefits from what's going on in Paris and London and Dubai and Abu Dhabi and what's going on here in Prague right now. Everybody's working for everyone in a network that's mutually beneficial to all participants. I call it the mycelium because it's just like with mushrooms in nature. The trees are benefiting from the other flowers next to them thanks to this mycelium that connects all of them together.

Starting point is 00:33:33 Call it a virtuous network. Absolutely. Absolutely. absolutely and you know when i knew i got it when i sold my apartment this year and i bought bitcoin with it that was when i okay i should not have that real estate anymore and i'm not rich a rich person i just said my assets are way better in bitcoin than in this real estate so let's talk about ETFs a little bit. It feels the domino effect had started after US. We now see other countries following suit with issuing their own ETFs. We see Brazil, Australia, and there are

Starting point is 00:34:13 other examples. What is the role of ETFs in Bitcoin's reality, in your view? The ETFs are applications on the Bitcoin network. So they're securitizing Bitcoin. And they play an important and roll because they add value to bitcoin and and they solve the following problems they make it more convenient to buy if you're a 70 year old retiree you can pick up the phone and say i want 10 of my assets to be in bitcoin buy it over the next week at the average price click Yep, absolutely. Seven seconds, one phone call, done. And the person that took the phone call, they get compensated.

Starting point is 00:35:02 The accounting systems work. The risk controls work. The compliance controls work. You don't have to wire any money. You might even be able to borrow the money to buy it. You can buy it without putting any cash down. You could have a million dollars of Apple stock. pick up the phone and say buy a hundred thousand dollars of bitcoin and then your broker would loan

Starting point is 00:35:21 you the hundred thousand dollars from the apple to buy the bitcoin and you end up paying five percent interest to buy something that's generating a fifty percent yield right now so it solves the credit problem the convenience problem it also solves the custody problem you know you you don't have to worry about who the custodian is you don't have to negotiate a crypto exchange agreement you You don't have to negotiate a custody agreement. You don't have to figure out how to move the Bitcoin. You don't have to master the Bitcoin network. You don't have to worry about all that.

Starting point is 00:35:54 So it's much simpler. And then the other thing it solves is accounting and reporting because all of your financial statements are all integrated. And people oftentimes have been doing business with the same bank for 30 years. And so everything is in one line and it's all properly calculated. And if I buy Bitcoin in 18 different days, I've got 18 different bases and they keep track of the bases. And at the end of the year, if I have to sell something or if I gift it to my children and they get the tax accounting, right? So it solves all the accounting and all of the reporting issues. And those are all really critical.

Starting point is 00:36:34 But the other thing it solves is the compliance issue, compliance and capital control. when uh when the etfs were approved in the u.s there was a whole set of institutional investors like pension funds and hedge funds with 50 billion dollars 100 billion dollars 200 billion dollars they have a lot of capital but they could only buy through the etf right even if they wanted to work for a year to set up all these other systems they're not allowed to their charters prohibit them so they've got a compliance problem and then um what happened is an etf launched in hong kong well you can imagine if you buy bitcoin in that etf in hong kong that bitcoin is not being custodied in the united states the hong kong financial system prefers the assets to be

Starting point is 00:37:30 custodied at a regulated bank in hong kong so if i'm a hong kong investor or a hong kong institution or Hong Kong company, I could funnel money into Bitcoin by the Hong Kong ETF. Now the rumor is that there'll be ETFs in mainland China. Those ETFs will come to you via a Shanghai-based financial institution, and the Bitcoin will be custodied in a Chinese mainland bank, maybe in Shanghai. There's 1.5 billion people in China that want to buy Bitcoin. The Chinese government doesn't have an objection to them getting rich it doesn't have objection to china getting rich they all like money yep they all like wealth their objection is they don't want people to take more than fifty thousand dollars a year in capital outside of china yeah so if you buy ten

Starting point is 00:38:28 million dollars of bitcoin put it in a hardware wallet and leave the country you violated the controls. But if you buy $10 million of Bitcoin via an ETF in Shanghai, and the Bitcoin is then purchased by the exchange and custody in China, the Chinese banking system benefits, the Chinese currency benefits, the Chinese culture benefits, the Chinese government gets their taxes, the Chinese investors get Bitcoin. And so the real significance of the ETFs is they're solving the problem of credit access, compliance, accounting, convenience, reporting. And presumably, there's going to be a different one in every city in the world or every country in the world. You know, if whatever nation, if the Saudis want Bitcoin to stay in Saudi Arabia, they'll have an

Starting point is 00:39:24 etf and riyadh the emiratis will think well maybe we'll keep one in dubai so you're going to see that avalanche continue there's already 34 34 holding more than you know more than a million bitcoin so i think we'll keep seeing a spread i think you'll see an etf in every country you know like in argentina they don't want you to take capital out of the country So the logical solution for them is an ETF where the Bitcoin is custodied in an Argentine bank. But as that happens, you see what's going on is when the Chinese buy billions of dollars of Bitcoin, they'll drive up the price of Bitcoin in New York. That's the network effect. And in Argentina.

Starting point is 00:40:12 That's right. Well, so they're just one more application. You know, ETFs are an application, companies on the Bitcoin standard are an application, like MicroStrategy, you know, and Cash App and Strike and other mobile apps, they're an application. And the crypto exchanges like Coinbase and Binance, they're an application. You know, eventually people will build it into their mutual funds, build it into their pension funds, build it into their insurance plans. more applications each application wants bitcoin each application slurps the bitcoin because they want capital because we call it capitalism because these are the capital markets every company needs capital we build a civilization on capital how much 400 trillion dollars of capital

Starting point is 00:41:07 there's 900 trillion dollars of wealth in the world at least half of it has to be pure economic energy or monetary premium the world wants capital everybody needs it every government every school every institution you know every charity every religion every family every company they all need capital right so bitcoin will just spread as an asset to capitalize on it is kind of the ultimate monetary union it's a cooperative bank in cyberspace everybody that joins makes the network more powerful drives up the value of their assets and the more people that join the more power they all have just like you have a union if every worker in the country joins the union the union is pretty powerful if nobody joins the union

Starting point is 00:42:02 There's no point in being in a union. It's like, here's the big idea. What if we created a union, but we put our money in it instead of our labor? It's not a labor union. It's a monetary union. Very powerful. Okay. My next question.

Starting point is 00:42:24 How does MicroStrategy decide which strategies to take to raise capital? senior debt bonds convertible debt we've seen different tools that you're using for that we use them all from time to time um when we had extra cash on our balance sheet our first strategy was to buy with cash then we had some uh some cash we'd earmarked for a dutch auction and to buy back stock and when we had excess cash afterwards we took the excess cash we bought bitcoin then the stock exploded in value and some of our employees exercised stock options and we had cash from that we took that cash we bought bitcoin then we sold our software and we made cash in the software business and we had extra at the end of the year so we bought bitcoin then we

Starting point is 00:43:14 had an opportunity to sell a convertible bond to the market and the market wanted to buy a bigger one and we upsized it we had a lot of cash so we bought it then uh we went back to the market and did another bond offering because bitcoin price went through the all-time high and we were able to raise a billion dollars for zero percent interest and like why wouldn't you if someone wanted to give you a billion dollars for free for six years would you take the money sure yeah so we had that opportunity so we availed ourselves of it and we did that then bitcoin price went down and we had not taken out any kind of mortgage on the company and so we went and we mortgaged the company with a 500 million dollar senior secured note we pledged the cash flows of the business

Starting point is 00:43:58 and the future that was about a six percent six and a quarter percent loan and we bought bitcoin with that and then the price of bitcoin went up again and the stock skyrocketed and so we thought we'll go do an equity offering and we did an at the market equity offering we sold about a billion dollars worth of stock and we sold it at a premium to the underlying Bitcoin and so we sold the stock bought the Bitcoin and you know along the way the price of this Bitcoin went down and and then it went up again and eventually went back to the market we sold a bit more stock and then we sold another convertible bond and then another one another one so our strategy is a function of the

Starting point is 00:44:46 capital markets it's a function of uh of the debt markets and are they open and closed the equity markets the bitcoin markets the bitcoin volatility we have bought bitcoin every quarter so the real short answer is we just buy bitcoin every quarter and we buy it with whatever cash equity or debt we we feel is most appropriate and um and the market is always offering you opportunities so you just have to be uh paying attention to them the advantage we have is we're on a bitcoin standard and we're laser-like focused on bitcoin so our strategy is to buy bitcoin and hold bitcoin and because we are laser-like focused and everybody understands our strategy we're transparent we're committed we're reliable that means that all of the all of the equity holders the investors

Starting point is 00:45:47 in the market that want to buy levered bitcoin equity they can buy our stock and that and because we don't hedge that means our stock is more volatile than bitcoin so the s&p volatility is about 10 bitcoins more like 50 our stock can be 90 to 100 if you're an options trader and you plug a volatility of 90 into the black shoals equation the option value is up through the roof and if you plug volatility of 10 the option has no value so because we pursue a very laser-like focus bitcoin strategy of leverage and because we because our investors know we're not going to hedge that makes it possible for them to hedge right we don't deprive our investors of the opportunity to sell the volatility hedge the volatility buy the debt sell the debt short the stock go long

Starting point is 00:46:45 if you hate bitcoin and you want to short the stock you need to know that we're not going to sell the bitcoin right because that would blow up your trade yeah so we've created a very reliable company. And it doesn't matter whether you like Bitcoin, hate Bitcoin, like MicroStrategy, hate our strategy. It doesn't matter. You don't even need to know what Bitcoin is. There's actually an ETF called MSTY. What they do is they just sell the volatility of MicroStrategy call options. Last I checked, they were generating 150% annual interest. and so there are people that don't know what bitcoin is but they just think i guess it's not going to go to zero in the next six months and so i might as well just go ahead and sell that

Starting point is 00:47:37 volatility if it doesn't go to zero in six months my break even is nine months right if it goes to zero in nine months i probably made money right if it doesn't go to zero i make a lot of money And so our ability to buy Bitcoin has been enhanced by us embracing volatility, by embracing Bitcoin, by being simple and consistent. And because we don't try to hedge Bitcoin and don't try to pick something else to invest in, we can spend all of our time in the capital markets just figuring out how we're going to raise more money. Yep, yep, yep. Right? And do you get other companies coming to you to try and mimic your model, to look at how MicroStrategy is doing it? More and more recently, I get approached by public company officers and CEOs that have noticed what we're doing.

Starting point is 00:48:32 And, you know, we're starting to see more public companies. I think there's four or five public companies in the past month that have started to embrace a Bitcoin standard. And there are a thousand that are good candidates for it. I think 2024 is like the first year of institutional adoption of Bitcoin. Like 1994 was the year of institutional adoption of the Internet. And you wouldn't have done it before this year. But like, so we're six months into year one. Yeah.

Starting point is 00:49:02 Wow. Where is it going to go? So there's massive opportunity for everyone right now. if they if they open their eyes if they do the work you know one thing i say to people is the average person is going to work 20 years at least so you're going to work 40 000 hours to make money if you're going to invest 40 000 hours of your life to make money you probably ought to invest 100 hours of your life to keep it yes to figure out how to keep it and the great irony is it is not controversial to every single conventional thinker will say son you're

Starting point is 00:49:43 going to have to work hard for 30 years to make what i have and they all send their kids off to school for 16 years and then they send in the workplace for 30 years so you got to work 45 years 2 000 hours a year 90 000 hours if you're going to be successful and if i say well sir you know i think it's going to take about 100 hours to understand bitcoin they're like 100 hours that's too much that's you know there must be something wrong with bitcoin i don't have 100 hours my stockbroker doesn't make me spend 100 hours to take any other investment decision i can't be bothered you have 10 minutes the irony you have 20 minutes yeah yeah 90 000 hours to make your money spend a hundred hours figure out how to keep your money i would have gone

Starting point is 00:50:34 further with you on that well we have to finish so my last question is you ended your presentation yesterday here at btc prague with spreading bitcoin with love can you say a bit more about that bitcoin's a paradigm shift it's the world's first perfect money it's digital capital it's the digital transformation of everything that's capital asset it's energy flowing into cyberspace these are all profound complicated scary topics it it converts all the economics you learned from an art to a science. Everything you learn, you have to unlearn. All of your monetary theory, you know, all of your bromides, you know, I have to have a diversified portfolio. Well, no, you don't. Diversification is selling the winner to buy the losers. But that's not what

Starting point is 00:51:33 I've been taught for 30 years. Everything you're talking about is the opposite of everything I've been taught. You know, every rich old person that I know, every rich old powerful person says that it's a scam well every rich old powerful person doesn't need it they're rich and they're old what there's nothing left for them in life to do the people that need it are the 20-somethings you know starting their career it's like i don't have any money i don't have any power i don't have any respect how am i going to get ahead so what you have is this new thing it's moving faster than the speed of sound it's creating a shock wave it's going through the economy it's creating a lot of noise a lot of sound a lot of fury it's scary the human

Starting point is 00:52:25 conventional reaction to any of that is to push back right human nature is uh to fear that that we don't understand and to react with anger or irritation why are you pitching this What is this scam? Why are you bothering me? I don't want to talk about this. Why are you telling me? Right? So that being the case, you're selling a new idea, a new ideology, a new protocol, a new philosophy of economics, a new philosophy of money.

Starting point is 00:52:58 You're selling a new idea of money to people that have never in their life thought about what money is. And you're questioning fundamental premises. And they're successful. And they're comfortable. Correct. And they're probably wealthier than you. So the natural reaction of them is to treat you skeptically or rudely or reject you. And I think the right response is to think like a salesperson.

Starting point is 00:53:32 The customer is always right. You're selling them a new product. This is a new product. It's better than the old product. It's an electric car, it's an electric refrigerator, it's an electric hairdryer, it's a mobile phone, it's a new jet, it's a new kind of something. The customer's never seen it before, the customer's afraid of it, the customer doesn't get it, the customer tells you to get lost. The right response is, well, sir, I can understand why you would say this, but you know that your wife might like it. I can see why you'd say this, but you know it'll make your company rich.

Starting point is 00:54:12 I can see why you would say this, but you know it'll help you win the election. I can see why you don't understand it, but if you spend a bit more time, you'd realize it'll make your bank successful. I, you know, well, I guess you don't understand it, but if your circumstance changes, we're here as a solution. Call me. Right? The customer is right. Keep the door open. Be polite.

Starting point is 00:54:36 they hate you or they're rude or they're rejecting you because they don't understand or they're afraid right and you can't take it personally you know and the wrong response is you're just too stupid to buy my jet you know are you too stupid you don't deserve my computer anyway yeah i've got a cure for cancer but i hope you die of cancer because you don't appreciate you know right i you know i hope that gets stuck in your throat and i won't be here right i mean that's a juvenile reaction but everybody's got their own talents in business you have 100 people apply for a job the people you put in sales are the ones that are agreeable have a good self-image and they're willing to get beat up and keep a smile on their face and they'll keep coming back and

Starting point is 00:55:28 they don't take it personally. Right. The people that you don't put in sales are the people that are impatient, want you to understand it immediately and take it personally and get angry if you don't buy their thing. That's right. These are probably people that are better working in a cubicle as an engineer or in a machine shop with a machine or something. Right. There's probably another thing they can do, but they should not be in sales. So I say spread Bitcoin with love, not hate. When you actually react negatively, violence invites

Starting point is 00:56:02 violence. Hate invites inflammation. And you just slow down adoption. You close off communication paths. And people, most people don't really understand what you're saying, but they understand if you were mean to

Starting point is 00:56:18 them. And so when you pitch them the new idea, when you introduce digital capital and they don't get it, If you react negatively, they'll remember that you yelled at them. And then three years later, when they need it, out of spite, they won't go back to you because people just don't want to do business with someone they don't like. That's right.

Starting point is 00:56:38 And they won't even remember that they were rude to you. Yeah. You know, I've been in business my entire life. I'll go see a customer. Hey, we've got this software. This is going to make you millions. They're like, get the heck out of my office, you stupid. I'll never buy from you.

Starting point is 00:56:53 10 years later i'm like you know you're my customer you give me millions a year it's made you hundreds of millions of dollars like yeah it's been a great partnership i'm like you remember when we first met like no no what did i say like nobody remembers when they were mean to you right except you remember and if you remember and take it personally you never make the sale and if you um if you don't take it personally you're like here's an idea it's good for the world you don't know you don't appreciate it it's because you don't understand it that's okay i'll keep i'll be here eventually you'll understand it i have confidence yep right i'll be here nicely waiting for you i'll be here when you change your mind meanwhile meanwhile i'll go talk to other

Starting point is 00:57:37 people you know and i'll just keep knocking on doors and at some point their competitor will decide to adopt bitcoin and they'll go whoa and then they'll call you back they'll be like what will you tell me about the bitcoin thing and you'll go oh yeah yeah um this like well my competitor is doing yeah i'm like i told them well why didn't you tell me well well sir i actually came to see you two years ago you told me to pound sand and and die i did i'm sorry about that i remember that one i mean really everybody's like that i mean people that introduce bitcoin to me and say you know what i told you about bitcoin i'm like no they're like well you told me to shut up it was stupid i'm like did i really i'm sorry about that yeah so we need to spread bitcoin

Starting point is 00:58:27 just do it with love just don't don't uh we don't need to attack people and attack their institutions and and attack them personally eventually every institution will come around eventually every person will come around everybody benefits from technology that makes them more powerful who doesn't who wants to be less powerful and less capable i don't know such people no one's got that in their charter they just don't understand how we can help them so with that i want to say that the work you're doing and who you are i think is real real Expression of love to the world and I thank you for for that and a heartfelt. Thank you and for this conversation Thank you so much for being with me. Thanks for having given me the chance. It's been a joy

You're The Voice | by Efrat Fenigson - Ep. 32: Michael Saylor - The Virtuous Network

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