MFM #161: Why Michael Saylor Believes Bitcoin is Hope

Michael Saylor

For everyone, 7,800,000,000 people, for 100,000,000 companies, for everyone with money on Earth or everyone that earns a salary on Earth, this is the big idea of the podcast: you have to... yeah.

Shaan Puri

What's up, everybody? We have a special guest in the house: Michael Saylor. Have you heard the nickname they give you on YouTube? The "Gigachad." Have you seen this one?

Michael Saylor

I might have heard it once or

Shaan Puri

twice so michael go

Sam Parr

ahead chuck

Michael Saylor

so I

Shaan Puri

Was gonna ask you, Sam, have you heard this nickname that they gave Michael Saylor? The crypto community is like, "No, but that's awesome!" They sort of give it and take it away. They are extremely passionate and devoted, but they are also, you know, just nuts online. My Twitter mentions are unusable now; I'm sure Michael's are the same, just because of that group. But they are funny also. So, they nicknamed him the "Gigachad" because he is sort of like, you know, probably the most credible established person and company, MicroStrategy, to adopt Bitcoin in a major, major way. He really is driving the kind of institutional pickup of it. So, if you're listening to this and you've never heard of Michael Saylor, the reason to listen to this is that he's a pretty interesting guy with a really interesting career. But most notably, he is now known for basically using his company, MicroStrategy, to buy about $2 billion worth of Bitcoin. They own $2 billion worth of Bitcoin. I don't know how much you guys put in—half a billion or a billion?

Michael Saylor

No, we bought **$2,200,000,000** worth of Bitcoin. We own about **$5,000,000,000**, a bit more than that, depending upon the day. Wow, more than **$5,000,000,000** in Bitcoin!

Sam Parr

Okay, alright. So, you have a ship behind you. Not everyone is going to be able to see this, but you have a ship behind you.

Michael Saylor

right

Sam Parr

like like a huge what what is that

Michael Saylor

It's an antique handmade model, a 19th-century model of a 17th-century galleon. I think it's a model of a galleon that sailed out of Amsterdam in the 17th century, and it was made in the 19th century. So, it's a very interesting piece.

Sam Parr

are you are you a car guy

Michael Saylor

I have a bunch of cars but no I'm not a car guy

Sam Parr

what's the coolest one you have

Michael Saylor

I lean toward SUVs. I have a bunch of SUVs. I had a Lexus convertible that I used to love and drove a lot, but I don't really drive much anymore.

Shaan Puri

So, you can give Sam a grade. Sam just sold his company, came into a bunch of money, and he bought... what? What did you buy, Sam?

Sam Parr

Okay, so I was driving all this weekend, and I've been getting made fun of. I can't believe people are making fun of me! Do you know what an AMG station wagon is? It's like a Mercedes AMG.

Michael Saylor

I can imagine

Sam Parr

Okay, so basically there's Mercedes, which everyone knows, and then there's AMG, which is like a subsidiary. They basically put race car engines into cars. I bought this, but the problem with fast cars and cool cars is that they're super impractical, mostly. I wanted something that was kind of fast and fun to drive, but I also wanted it to be more practical. There's this thing called an AMG E 63 wagon. It's a station wagon that looks like a mom car, except you can put your dog in the back. It has five seats and still goes from 0 to 60 in 3 seconds. So, I bought a souped-up station wagon—one of the fastest cars on the road—but it's a station wagon. That's currently what I'm driving right now.

Michael Saylor

works for you

Sam Parr

Well, I was looking for someone to geek out on it, but yeah, I guess that you're... I would've, for some reason, pegged you as a car guy, but I guess I'm wrong.

Michael Saylor

I'm more into boats and planes than cars

Sam Parr

what do you what what what what does that mean if you're into planes

Michael Saylor

Well, I like aircraft because if an aircraft can go Mach 8.9 or Mach 8.5, you're allowed to legally fly it that fast. Where...

Sam Parr

what is mach 8 like 2,000 miles an hour

Michael Saylor

No, Mach 85 would be like 500 knots or something like that. Airplanes can fly at their full speed, and yachts or boats can go at their full speed over the water. However, an automobile that could go 160 miles an hour is not something you can often do legally. So, I like vehicles that you can operate at their design speed legally and safely.

Sam Parr

well what planes do you have

Michael Saylor

Feeling as an engineer, I have a Global Express XRS.

Sam Parr

Before we get into Bitcoin stuff, I want to mention that Sean has been talking about you for like a year now. He was following MicroStrategy and all that. But you own a ton of domain names, right?

Michael Saylor

yeah I bought a bunch

Sam Parr

like how many do you own now or how many have you owned

Michael Saylor

I won't count all the... I mean, I own 100 domain names, but the ones that are top-level primary domain names are about 16. These are words in the English language that everybody understands. For example, I own "Emma," "Frank," and my own name, "Michael.com." I also own my nickname, "Mike.com." So, like, my personal website is on "Michael.com." If you just type "Michael.com," you'll see all the stuff about me.

Shaan Puri

hope yes sam go go to hope.com see where that takes you

Michael Saylor

Go to **hope.com**. Yeah, well actually, **Bitcoin is hope**. So if you type **hope.com**, you'll get everything there is to know about Bitcoin. Oh my gosh! Because I actually repath hope to all of our Bitcoin resources and materials. So, speaking of domains, I owned **voice.com** and I sold it for **$30,000,000** a couple of years ago. That's the largest naked domain sale in the history of domain sales.

Shaan Puri

Tell the short version of that story. The story is kind of crazy. I've heard it once before, but I would assume Sam and most people have not heard the story of selling Voice.com. You bought all these early on in the web. You kind of recognized, "Oh, these are probably going to be valuable to own." There’s only one owner of each of these names. You own it and you hold it for a really long time, like over a decade. At some point, you decide, "Okay, maybe we should see if somebody wants to buy some of these." So, tell the story of selling Voice.com real quick.

Michael Saylor

Well, you know, I bought all these domains because I thought, "Wouldn't it be great to own a part of the English language?" I mean, owning "hope" or owning "voice." Eventually, there'll be a Google Voice or some telco company that will want to launch some service, and what a great domain to launch on a word like voice.com. So, we held them for a long time. At some point, we were looking for joint ventures; we were looking to commercialize them. We did commercialize a bunch. For example, I created a company called Alarm.com, and Alarm.com is now publicly traded on NASDAQ. It's like a $4 or $5 billion market cap company. You can guess what it does—it actually integrates your home alarm into the internet. I created another company called Angel.com, and we sold that for a bit more than $100 million. That was actually a speech interactive voice response system, like Siri or Alexa, before Siri and Alexa came on the scene. So, I had "voice," and I was holding it, looking for some kind of good commercialization. Then, out of the blue, one of the domain brokers contacted us and said, "Well, you know, do you want to sell it? We'll give you $150,000." I was like, "Someone came to me and said they offer $150,000," and I said no. I thought nothing of it because I just couldn't see the potential.

Michael Saylor

A week later, they came back and said, "Well, they doubled it to $300,000." I said, "Tell them no." A couple of days later, they said, "Well, the broker's really insistent," and so they went to $600,000. I said, "No." They asked, "Well, what should you say?" I said, "Don't tell anything. Just tell them we're not interested. It's gotta be something serious." So they went to $1,200,000. I said, "Tell them no." They wanted to know what I wanted for it. I said, "Well, send him a note or something and just tell him I said it's like the word 'voice' in the English language, right? So it's gonna have to be something, you know, north of... I don't know. I don't think I said 7 or 8 figures, but I just said a lot of money." So it went on, and they doubled again to $2.5 million, and then to $5,000,000, and then around $10,000,000. Then I had like 18 people in my office—well, not 18, but 8 people—looking at me like, "Aren't you going to take the money? It's a lot of money now." I said, "No, send them back at this."

Michael Saylor

Send them back a note pointing out that this is like the word "voice" in the English language. It's worth **$1,000,000,000** to the right company. They said, "Well, you're going to give him a response?" I said, "Okay, tell him **$30,000,000**. Tell him I'll take **$30,000,000** for it." I thought that if I didn't give them some number, they would stop negotiating after, you know, five "no's." So I said, "Tell them **$30,000,000**. I don't want to sell it for **$30,000,000**; I want to sell it for **$100,000,000** or more, but I guess I'll say **$30,000,000**." At that point, they said, "Well, you know, they offered you..." I think they upped their offer to like **$12,000,000**. I said, "Tell them no, but if you want, I'll take a meeting with them." So when it got to **$12,000,000**, I said I'd get on the phone for half an hour. Then we got on the phone, and the call started with someone saying, "Well, how about **$22,000,000**?" I said, "Let me explain. This is like my daughter. I'm willing to marry her off, but only to a man that values her more than I value her. I value this domain, you know, at **$30,000,000**. So if you don't want to give me the **$30,000,000**, I'm going to regret selling it anyway. I'll have seller's remorse. But I would do it just to make the market. If you don't want to value it at **$30,000,000**, I'll just keep it." And I'm like, "Okay, we'll give you **$30,000,000**." I said, "Okay."

Sam Parr

so 30 you went you got a 30 from a 100 k

Michael Saylor

So, they did like double 7 or 8 times, and eventually, they started at $150,000, I think. We ended it at $30,000. But the thing was, I didn't really need the money. It was a matter of... if I had, at the time, maybe $600 million in cash in the bank, and the company, MicroStrategy, is a multibillion-dollar company. So, I was like, a million is not going to move the needle for me. $100,000 is not going to move the needle for me. $5 million or $10 million is not going to move the needle one way or the other. So, there's no point in doing it unless it was something material.

Sam Parr

Were you, like, you know, the 8 people in your office? Were they like your coworkers or... that's it?

Michael Saylor

business development the people that wanted the commission on the deal you know

Sam Parr

so like any any most

Michael Saylor

It's a big deal, right? They want to do the deal, and the only way you get $30,000,000 is to say no to $22,000,000, right? And everything.

Sam Parr

Any reasonable... most reasonable people, which is the reason you are where you are, would probably consider you not reasonable, right? I mean, you have... you're an extreme personality type, and that's why you're very successful. But any reasonable person would say, "What are you, an idiot? Like, you paid nothing for this." Were you always that way?

Michael Saylor

My view on it is that the English language is going to be important to the human race for a thousand years. In a thousand years from now, voice will probably still have value, just like a lot of words. "Hope" is a valuable word forever. I mean, until you murder everyone that speaks the English language, if you think about how valuable it is. My real view is that I think people are crazy for spending hundreds of millions of dollars on ad campaigns to market a brand that's a misspelling of a normal word. It's like, "I gotta convince you how to spell it with like two Y's and a Z." You know, and I'm like, "Why would you do that?" Because in the modern era of spell checkers, when you try to type these brands that are misspelled, your iPhone corrects it for you or properly spells it. So, try going to a website that's a misspelling of a name. Most brands and most brand consultants, I just disagree with them all. They charge you a lot of money to come up with a misspelling of a common word, and then you spend half a billion dollars marketing the brand. A much better idea would be to buy the word "hope," "angel," "alarm," "alert," or "voice." Even if you have to pay $100 million, $200 million, or $500 million, because if I see your ad and you tell me that your brand is alert.com, I can remember it in one second. I can spell it in one second. You leap immediately to the top of the Google search engine. So, I always view domains as being undervalued. Then, people spend hundreds of millions of dollars on crappy marketing to send someone to a place they can't spell or remember. I think the world will gradually come around to that.

Michael Saylor

Of view, but they're not there yet. So that was my view. I didn't want to sell it, to tell you the truth. If you owned the word "angel," or the word "alarm," or the word "hope," or "voice," the truth is Google should have paid $1,000,000,000 for the word "voice." I mean, if they're going to try to launch a voice service, it's worth it to them. Eventually, you know what you're going to see? Apple, Amazon, Facebook, and Google are just going to keep generating more money. But the word "voice," or the word "hope," or you know, fill in the blank—any kind of positive, easy-to-spell, short word in the English language is going to be an awesome place to build a brand.

Sam Parr

and so right now it looks like you own are you owned or or you currently own I

Michael Saylor

own a lot

Sam Parr

Strategy, Wisdom.com, Alarm.com, Angel.com, Alert, Courage, Mike.com, Voice.com, Usher.com, Hope, Speaker.com, Michael, Mike, Sailor.org. So, you own a bunch of them.

Michael Saylor

Yeah, and so my view is like trying to sell the... I got 20 Picassos, and I wanted the world market to value Picassos. So I sell the first one for $30,000,000, but the next one I want $100,000,000 for. Or I really want someone to create a $1,000,000,000 business with me on that, right? That's the right way to think of it. I mean, I look at it this way: how many people have learned to speak English on Earth? What is that number? 2,000,000,000 maybe?

Shaan Puri

yep

Michael Saylor

How many years of your life do you spend learning English? I mean, a typical person spends about 10 years learning English, from kindergarten through 12th grade. But let's say we shorten it. Two billion people spend 4 years of their life learning English, which totals 8 billion years of time spent figuring out how to spell and type. If you value those 8 billion years at $20 an hour, that's $160 billion worth of money spent teaching people that "hope" is a good thing. What's it worth to have a brand that is universally understood and easy to spell? A brand that is burned into the heads of a billion people? You couldn't just go and buy advertising to convince them that "h-o-o-p-e" is a good thing. I think that these brands are good investments. They are scarce real estate in cyberspace, and they'll always be valuable. The world undervalues them, but in time, when I tell you "alarm.com," you can remember "alarm." You can go type "alarm" when you get off this podcast. Anyone who wants to check out what alarm.com does doesn't have to look it up and sort through 197,000 Google search pages to figure out which one is the one that Sailor was talking about.

Shaan Puri

Yep, my friend started Calm.com, the meditation app. The first thing he did was secure the domain. He decided early on, "Alright, I'm going to build a brand around the feeling of being calm." It took the form of a meditation app, but he sort of decided upfront what it was going to be. He had to negotiate to get that domain, and you know, these domain negotiations can be prolonged. But it's definitely another, I don't know, success story of that path.

Michael Saylor

And I'll remember it too, by the way. Like what you just said, you just pitched me on an idea. I'll get off this podcast, and if four weeks from now someone asks me, "So what was that meditation business thing?" I'll be like, "Calm.com."

Shaan Puri

right

Michael Saylor

hopefully they got the right spelling of it right

Shaan Puri

Yeah, no, there are three L's. No, I'm just joking. It's the right one. Alright, so let's talk about it. Let's talk about something else. You've been in the game for a while. I think you might be... how long have you been the CEO of MicroStrategy? For what, 30 years almost?

Michael Saylor

Since 1989, so for 31 years, I've been a public company CEO. Since 1998, I've held that position.

Shaan Puri

I think sam was born

Michael Saylor

in 1989 publicly come public company yeah ceo

Sam Parr

you've been the you've been a publicly traded company or a public ceo longer than I've been a lot

Shaan Puri

And so, you've kind of had some ups and downs. I saw an interview of you on Charlie Rose. You know, you were looking like Tom Cruise. You go on Charlie Rose, and you're flying high. You're a 34-year-old guy who took the company public. I think MicroStrategy was worth $11 billion or something at that time. And best of all, I think you owned half of it, or maybe a little bit more than half of the company. So, you're a 34-year-old billionaire. A few years later, the stock price crashed pretty dramatically. But I think there are two kind of remarkable things. A) I want to hear what it was like to be in that position and then face that crash. B) How the hell did you keep your job? Was it because you owned the controlling stake of the company? Most CEOs cannot survive a stock price crash from $300 a share to under $0.50 a share. How did that happen?

Michael Saylor

You know, I think if you're in business long enough, you're going to have setbacks. You can't let the setbacks crush your spirit or cause you to stop thinking, stop innovating, and stop growing. I mean, they're humbling. Well, we...

Shaan Puri

All kind of know that's the right answer, but like when... Sorry, we all kind of know that's the right answer. Like, "Hey, setbacks happen. You gotta pick yourself up." And that's true; everybody sort of agrees. But when it does happen, what... like, do you remember what that felt like? What was the day like when you were experiencing this crash? What were you thinking as it was happening?

Michael Saylor

It's not pleasant, but you know you have to move on, right? You have to focus. You have responsibilities.

Sam Parr

And you were talking about at one point, "Alright, when I was selling this domain." When did you sell that domain name? How many years ago was it?

Michael Saylor

2 years ago maybe

Sam Parr

Okay, so not that long ago, actually, you were saying, "Well, I had $600,000,000 in cash. The company was doing great." Why continue staying as the CEO when it seems like you're incredibly... I mean, Bitcoin seems like one of your main top two focuses next to MicroStrategy. Why not just focus entirely on that as opposed to continuing to run this business?

Michael Saylor

Well, first of all, the business has two strategies. The first strategy is we sell business intelligence software to our customers. The second strategy is we acquire and hold Bitcoin. That is the business.

Sam Parr

got it

Michael Saylor

and and and if you look at what we've done we we bought $250,000,000 worth of bitcoin that we had generated as a publicly traded company so without the business we couldn't have bought the first 250,000,000 of bitcoin and that required you know an intricate set of of due diligence and disclosures then we did a dutch tender offer basically it's an an equity offering of sorts you could think of it that way we did a we did a reverse dutch auction and with the at the end of that. We bought another 175,000,000 worth of bitcoin and so that's another thing you have to have to be a public company to do then we swept our cash flows as a public company into bitcoin we bought 50,000,000 more bitcoin and without the company couldn't have done it then we did a convertible debt offering for $650,000,000 of debt at 75 basis points and without being a public company we couldn't have done that one either when we bought bitcoin and then it went up again and then we did we bought some more with cash flow and then we did a $1,000,000,000 debt offering and we did that $1,000,000,000 convert offering at 0% interest you couldn't have done that without being a public company so there are benefits to being a public company public companies are credible they're really the gold standard as a counterparty right I mean there's a 100,000,000 companies in the world there's only about 4,000 publicly traded companies on us listed exchanges so it's a very very rare thing you have to go through a huge amount of of compliance you know we're we're filing 10 q's 10 k's we've got a lot of a lot of compliance architecture security architecture I'm signing sarbanes oxley statements you know every quarter right we're responsible for fcpa you know etcetera responsibility so that gives that gives investors comfort with a publicly traded company so probably the most important thing to to take away from the podcast is bitcoin is an exploding asset class it's it's really it's it's the greatest treasury reserve asset of our lifetimes and it's the solution to every company's treasury problem so if you have a corporation that has capital or generates cash flow you can immediately double or or improve the value of the company or dramatically enhance the value of the company simply by changing your treasury policy

Shaan Puri

so if you if you take a company

Michael Saylor

With cash, if you invest in Bitcoin, you have converted a liability to an asset. So, I was enhancing the value of the company by pursuing the Bitcoin strategy. They go together; they're synergistic.

Shaan Puri

So, let's lay out the context for people who don't know exactly how it all played out. I would say in our audience, right, we're going to get about 300,000 to 400,000 listeners this month. In that audience, probably 5% are as crazy about Bitcoin as I am and have put a huge chunk of their net worth into Bitcoin. Then, you know, 50% are curious, and 50% are novices, let's say, just roughly rounding things out. To put it into context, MicroStrategy is this couple billion-dollar public company. It's been around for a while, has a good track record, and has a business selling enterprise software. You generate a ton of cash; your business spits off cash. You have about $500 million to $600 million—I'm just using fuzzy numbers; specifics don't matter. You have about $500 million to $600 million of cash; that's your treasury for your company. You're looking for something to do with it, and at some point, you realize you have this treasury problem. You're not alone; actually, all companies have this treasury problem, whether they are aware of it or not. So, can you describe the treasury problem that you experienced? You experienced it at a $500 million level, but anybody, including an individual with $500,000 or even $100,000 in the bank, has the same fundamental problem. Explain the treasury problem as you saw it a few years ago, or about a year ago.

Michael Saylor

the the treasury problem is that subsequent to march 2020 the cost of capital exploded from 8% to 25% and you can see that in the performance of the s and p 500 index which went from about 8% a year for a decade to more than 25% in that next year that means that anybody investing money on behalf of a of a limited partner or any other investor has to generate that cost to capital in order to avoid destroying wealth if you if you generated less than a 8% yield for the decade from 2010 to 2020 as a financial advisor you destroyed wealth because the alternative was just to buy the spy index if you generated less than 25% from march of 2020 onward you destroyed wealth because you could have made 25% actually a bit more depending on what day of the week you measure it or what day of the year you measure it you could have generated that much just by owning the index now the pro the treasury problem is that when the cost of capital is 0 if by the way the cost of capital is being driven by the expansion of the money supply the federal reserve is expanding the m two money supply by about 5 to 6% a year for that decade and when you tackle on the risk premium you get to your 8% s and p return when the when the federal reserve expands the m two money supply by 20 to 25% that's where you get that explosion in the cost of capital the inflation doesn't show up in consumer goods the inflation immediately shows up in assets we have asset inflation within minutes of when the central bank decides to stimulate the economy the price of all the assets explodes and so the problem for every company all 100,000,000 companies in the world every private company every public company the problem is you have capital in your treasury and that capital has to yield the cost of capital and if it doesn't you're destroying shareholder value another way to say it is if you generate cash and you put it into the bank account to pay zero interest and if if the cost of everything you wanna buy goes up by 10% a year in 7 years you'll only be able to buy half as much you've lost half of the value of your savings when that discount rate or that cost of capital doubles well then in 3 and a half years you've lost half your money at a 25% cost of capital in 3 years you've lost half your wealth so the treasury problem is the cost of capital has exploded and the cost of capital as it goes through the roof puts every company in a quandary they either have to decapitalize and give all of their assets back to their shareholders because they can't if sam is controlling an investment company that invest in dollars and you are running an investment company that invest in the s and p 5 index and I gave each of you a1000000 and sam proudly tells me how he didn't lose my money and you tell me you made 25% return I'm pulling all my money out of sam's fund and I'm putting it into your fund so ultimately the the problem is the company sitting on capital if it can't meet the cost of capital it has to give the money back to the shareholders or at least it's under extreme political pressure from the share everybody's beating you up as ceo ceo saying what are you doing with all that cash you should just pay a dividend or you should buy the stock back and and the second pressure you have is if you run a company and your cash flows are growing at 8% a year but the cost of capital is 25% a year that means that I'm discounting you at a rate that's higher than your growth rate in essence the value of your stock is gonna be forecast to go to 0 you can't hold value when a company growing at 5% a year when the cost of capital is 25% a year that's why the only thing that you can buy is gonna be a high-tech stock that's growing you you need to buy a tech monopoly that can grow 20 or 25% a year and if you come to me with a business idea for a company which makes a lot of cash or or is makes a lot of money but is growing 2% a year or 1% a year I'm just not interested in a high cost to capital environment so the problem we faced in march is what do we do give all the money back to the shareholders or can we find something to invest in that you know that's going to actually generate more than 25% return and that puts us to a question so what we did in essence was split the difference you know if if I was in a sit in the ideal situation you would just buy 500,000,000 worth of bitcoin and put out a press release and do it but if you did that that would be such a shock to the outside shareholders that the fear would be well is someone gonna sue us or dump the stock because you were so aggressive because they'll claim that you took a risk that you didn't disclose so our response is let's disclose everybody we're about to take a risk and after that let's go ahead and take a risk but at the same time let's give everybody an insurance policy so we we offered to buy back $250,000,000 worth of the stock in this dutch auction so if you disagree with the decision to buy bitcoin you can sell the stock back at a at a profit our stock was 120 we offered to buy the stock back at up to 1.40 and so we cushioned the blow of the investment strategy by giving people an exit strategy from the equity that rotates the shareholder base and then we began to pursue the bitcoin strategy as a primary treasury reserve asset with with a different shareholder base so let me ask you

Shaan Puri

A question now? Yeah, I like the analogy or the kind of awareness that, "Hey, we have this giant bowl of ice cream that's melting." That's your cash pile that's melting, and the heat is basically the money printer that is causing asset inflation.

Michael Saylor

ice cube that's melting

Sam Parr

and ice cube

Michael Saylor

We have a $500,000,000 ice cube, and it's melting at 20% a year. Right? So, it'll be gone in a full year.

Shaan Puri

So, you needed to do something with that. You didn't want it to all melt away, so you decided to do this. Now, a couple of quick questions. One is, this is sort of rapid fire. I've got a couple of rapid fire questions for you.

Michael Saylor

you

Shaan Puri

Yeah, in 20 years from now, what do you think has generated more value or more income to the company, MicroStrategy? Is it the operating income of MicroStrategy or the investment income from the Bitcoin it holds?

Michael Saylor

the investment income for sure

Shaan Puri

okay

Michael Saylor

And then, you know, to be very clear, what happened in March of 2020 is that when the cost of capital goes to 25%, that means that every investor and all investment income generated 25% more by doing nothing, right? And every Main Street company that worked 25% harder got nothing, right? You literally tilt the playing field so that if you own assets, you're having the best year of the last 30 years. If you don't own assets, it's impossible to have a good year.

Shaan Puri

Right, and so the second question is, as you acquire more and more Bitcoin, is MicroStrategy's bet to position the company as a Bitcoin ETF? It's like, "Buy this, buy this," Bitcoin buying and holding companies.

Michael Saylor

Not a Bitcoin ETF. Everybody's sloppy with those words. An ETF is a company that invests in securities and tries to keep its assets under management equal to the amount of shares of the ETF that it sold. It's a financial company. An ETP is a similar type of company that invests in commodities. If you create this Bitcoin entity that equalizes assets under management to the shares you sell, you have created a Bitcoin ETP. We're neither of those things. We're not a finance company, we're not an ETF, we're not an ETP. We're not buying or selling Bitcoin to equalize assets under management. We're an operating company that owns property. Bitcoin is property. In that way, you should think of it as a company that, like, I bought a million acres of land in Texas, or I bought a million gallons of fill in the blank, or a million bushels of soybeans. You can buy any kind of property, right? And you're holding it on your balance sheet as a company. Right? That's what we are. Now, what's your question?

Shaan Puri

You are talking about, let's say, the cost of capital being 25%, right? Since March, that's what the S&P 500 has done. But the stock market goes up and down. In years where the market dips and goes up, the average, you know, over time, the geometric mean is whatever, 7 or 8%, something like that. So some would argue, "Okay, yes, this year assets inflated by that much. That doesn't mean next year it's going to remain at 25% a year." And so you have to make some prediction, right? Are you basically forecasting it at 25%, 15%, 10%, or 8%? And does the decision change at a certain number there?

Michael Saylor

so so general first of all for the decade from 2010 to 2020 it was generally about 8% like it was it was pretty consistent and the single biggest driver of cost to capital is the rate at which the broad money supply expands and if you look at if you go Google m two money supply fed you'll get a chart and you'll see the chart by the way the chart's not all over the place the chart is very consistent 7% slope for a decade it's not jerking around so it's not that volatile it was very consistent monetary policy for a decade then that chart goes like this straight up 24% so if you if you if you're going to make a decision as an investor and this is any investor what this this has to do this applies to all $400,000,000,000,000 worth of investors and applies to every company on earth they all have the same exact thing they have to calculate which is you have to estimate the rate at which the money supply will expand each year for the next 8 years and so that's the if you wanna figure out the signal or or the single most important thing in the world for everyone but for everyone 7,800,000,000 people for a 100,000,000 companies for everyone with money on earth or everyone that earns a salary on earth this is the big idea of the podcast you have to estimate the rate at which the currency is going to expand and if you believe the currency is going to continue to expand at 15% a year for the next 8 years you come to one conclusion if you plug in 10% it's a different conclusion if it's 25% it's a different conclusion so what do I think I think that 15% is 15% for the next 8 years is reasonable if you're a pessimist you could say 20 if you're an optimist you could say 10 but the money supply is expanding because the federal reserve and the eu central bank are buying a $1,000,000,000,000 worth of bonds every year each and it's also expanding because the the government of the eu and the us are running a multitrillion dollar deficit and it is also expanding because of $1,000,000,000,000 + stimulus and there's no reason to think that's gonna change in the next 4 years and I don't think in the next 8 years I think I think that at the.

Michael Saylor

That the democrats took control of the senate and the house you saw that you have if you could've you could've forecasted 12% inflation if it was a it was a split government but I think that in a in a in a a a non split government there seems to be remarkable consensus that we should run deficits continue to keep interest rates low and continue to stimulate the economy so what does that mean if you plug in a number 15% it means that the risk free interest rate or the the risk free return is 15% it means you have to generate an excess of 15% on your money every year for the next 4 years in order to stay ahead of the rate of asset inflation a reasonable person would say the assets are going to inflate at that rate that's that's pretty much what they do that means that if your company is not growing its cash flows you know at a 20% rate then it's not gonna hold value as a stock it means that if your bond is paying you an interest rate of less than 15% you're destroying value in the bond if your rent yield is less than 15% your commercial real estate's destroying value and if you're holding cash you're losing 15% of it a year that's that's the negative real yield so once you actually embrace the idea of asset inflation and asset inflation equals cost of capital equals the rate of the money supply expansion once you have that rate then you realize that there's a negative real real yield on everything except for bitcoin for the most part the negative real yield on gold is 3% that's the rate at which we mine it or hypothecate it the negative real yield on sovereign debt is about 12% 13% the negative real yield on corporate debt is 10% every company that's got a growth rate of less than 15% has got a negative real yield on it so you know once you do that then you can then what you realize is you can't really have a business strategy as a company unless you find a way to solve the treasury problem so the big idea here is you wanna fix any company sweep all the cash flows into bitcoin convert the treasury into bitcoin borrow against your future cash flows in dollars convert that into bitcoin finance all your fixed assets in dollars convert that into bitcoin and issue equity as much as you can now at the highest valuation you can now in dollars and invest in bitcoin right and and you might say why bitcoin well because bitcoin is the apex property it's the most scarce monetary asset in the universe you can't make any more of it it's encrypted money and and what that means is it's least likely to be impaired by a property tax and execution issue money printing dilution counterparty risk and corruption so we have we have engineered a superior asset a thermodynamically sound technically superior asset it's placed on a global digital monetary network which is open an open protocol and the combination of this the the apex asset on the open monetary system makes it the the most disruptive technology in the world

Sam Parr

When you were first starting MicroStrategy, you were in the weeds. You were thinking, "I have to make a product that solves a problem, and I have to make money off of it." Right now, you've gone way up the hierarchy of...

Michael Saylor

now we can do whatever we want

Sam Parr

Now you could do whatever you want. Did you notice a shift, like, "Oh my gosh, this business is stable. It's working. It's working pretty well"? Yep, it's quite predictable. At what point did that shift happen? Because what you're talking about now is quite foreign to what it was before.

Michael Saylor

I think we solved our problem when we actually embraced Bitcoin. I could say to you, "Oh yeah, well, not when I had $500,000,000 in cash in the bank." We were focused, but the problem with that is that if you have a bunch of cash generating zero interest, the cost of capital goes up by 25%. Then all the public company investors forsake the company. If the stock market forsakes the company, the mainstream media forsakes the company, right? Then the employees become dejected because eventually, you're going to have Facebook, Amazon, Apple, or Google steal every one of your employees if you can't drive the stock up. Nobody wants to invest in a company that makes a lot of money growing at 5% a year. I mean, it seems brutal to say that, but it wouldn't be true if the cost of capital was 0. If we had a sound money policy in this country, then you could hold your head up high and say, "I run this great restaurant, and we made a lot of money last year. We're going to make a lot of money this year, and our plan is to keep doing what we've been doing." I would pat you on the back and say, "That's good, that's honorable." But if I tell you I'm going to devalue the cash by 25% a year or 20% a year at some...

Michael Saylor

You're driven into this cycle where I have to either do a big acquisition to keep my revenues growing I I have to take extreme risk and do dilutive acquisitions or I have to go borrow 1,000,000,000 of dollars to buy the stock back to leverage up the cash flow per share and if I don't do either of those things the investors dump the stock and if they dump the stock the employees start feeling like you know why don't they go work someplace cool and hot and you're gonna get all your engineers stripped away by facebook or or amazon or something so the truth is when we actually fix the balance sheet we fix the stock and we fix the you know at this. The company has 5 $1,000,000,000 more than $5,000,000,000 in assets if the if the cost of capital remains at let let's say it goes up 20% if if we print 20% more money next year I can reasonably expect to generate a $1,000,000,000 in investment income which would be a you know 20% increase in bitcoin right but the truth is I can reasonably expect better than that if the cost of capital is 10 I can reasonably expect 500,000,000 investment income well all 2,000 people doing a 100,000 things right perfectly for the entire year competing against Microsoft that has more money than god they can generate 75,000,000 a year okay so so the truth is the company its future became secure when we actually converted the balance sheet to bitcoin because now we don't have to struggle let me say it a different way I don't think any company could be successful without a financial strategy in the year 2021 like I wouldn't have said it 3 4 years ago if you have a sound money macroeconomic environment where the money supply is expanding at 2 or 3% a year you can go out and make things and create things and market things and sell things and service things and generate cash with that and then and that makes sense but if the money supply is expanding at 20% a year you need to own assets because because what's happening is no one's going to invest in any project that doesn't generate more than the 20% hurdle rate and so what who can generate consistently risk free 20% returns you have to be a monopoly yeah you have to have a digital monopoly or some kind of monopoly so it becomes exponentially harder to grow and what and so what happens next all these other companies could get squeezed out of the ecosystem right they're they get decapitalized and rendered insolvent by by the monetary policy so I I would say that you know if I can get my my stock was a $120 a share what is it right now like I haven't checked in the market but

Shaan Puri

768

Michael Saylor

Okay, so if I get my stock up, then I can actually make my shareholders happy. I can change the narrative. I can recruit, I can retain talent, and I can inspire the confidence of my customers. I can drive momentum, and then we can do what we want to do. I guess it's similar to if you're a university and you had no endowment versus a university with a $1,000,000,000 endowment or a university with a $100,000,000,000 endowment. If you're a professor, which university do you want to work for? If you're a student, where do you want to go? Do you have a shiny building coming or not, right? At the end of the day, money is a measure of energy. If you have monetary assets, you have energy. And if you have high energy, you can pursue your vision, you know, with integrity.

Sam Parr

And what percentage of your time now are you spending on investing the income versus on the day-to-day of MicroStrategy? Just the business as usual, making the products that make business intelligence products versus investing the income?

Michael Saylor

I'm the CEO, but we have a president. The president of the company is Phong Li, and he actually has day-to-day operational responsibility for sales, marketing, and even technology development. So, I'm the chairman and the CEO. I oversee the company strategy, financial strategies, long-term direction, and technology strategy. However, I'm not in the weeds of the day-to-day running of the business. That's really left for the operating executive team.

Shaan Puri

So, about a year ago, I tweeted out that I had moved 25% of my net worth into Bitcoin, which has now become like, I don't know, 50% or more. A friend called me—our friend who comes on this podcast, named Andrew Wilkinson. He’s a very successful business guy; he has a public company in Canada and owns businesses that are worth over $1 billion. He called me and was just like, "Hey, I just want to make sure you know what you're doing here," you know, like a concerned friend. He comes from the Warren Buffett school of thought. Famously, Buffett and Munger—Charlie Munger—called Bitcoin "rat poison," and then Buffett called it "rat poison squared." So, you get really intelligent people who are well-respected for what they've done talking about Bitcoin. First, what's your reaction to the Buffett opinion on Bitcoin?

Michael Saylor

I think everybody's captured by their frame of reference. Warren Buffett, would you agree that Warren Buffett, for the most part, made money investing in stocks?

Shaan Puri

yeah in nontechnology stocks primarily

Michael Saylor

and and maybe and maybe overseeing operating companies how successful would he have been if he did that in nigeria or let's say zimbabwe or argentina for the past 15 years or venezuela not not very well strategy wouldn't have worked right for example there is no strategy that would work if you were a businessperson in zimbabwe when the currency collapsed and if you look at the argentine blue dollar the argentine dollar the argentine peso actually used to be worth a dollar and then it was worth and then it was 3 pesos to the dollar today it's on the black market they call it the blue market it's worth about a 150 pesos to the dollar there's you know if you live in a world where you just let's just start by assuming the currency is strong and we have no problem with that and that stocks are going to work and then let's talk about our investment strategy well if if you if you live in that world and you and you can make those assumptions great but what if the currency weakens at 15% a year for the next decade then then your strategy doesn't work so I I think that for the most part the world's full of successful people but there's 2 things they're missing 1 they're they're assuming optimistically that that in the united states and western europe whatever currency challenges we have whatever weakness of the currency we have will be rapidly rec rectified they're either in denial like for here's how you'll know ask someone that's an investor how they did last year if they're honest they'll say oh all my you know the dollar crashed and all my stocks are up 20 to 50% because the dollar's weaker and and if they tell you oh I had a great year all my my portfolio is up 37% or 50% because I'm a genius stock picker right that's how you interpret the world is the dollar weakening or is the market getting better right and so there's a lot of people that that have been successful in their frame of reference and so they just attribute the virtuous activity of you know their virtuous stock picking or their virtuous business strategy for their success right and then they wonder why everybody else can't be like them right right and then I think the second part of this is bitcoin is paradigm shift it's the first time in the history of the human race that we managed to put first layer money on a digital network yeah I mean there is no there is nothing to study someone is telling you they've studied this how could you have studied it it's like we invented fire or we invented electricity it's such a new invention that if if your friend said I spent 47 hours studying bitcoin right and I have the following you know detailed concerns about how it's going to evolve as a dominant digital asset network and these are the things I'm worried about maybe would be constructive conversation but I I think that most people don't they don't even understand yet that it's a digital monetary network they don't even know there's a class of such a thing it's the first such thing in the history of the ray of the human race so so I've created the ability to manifest property in cyberspace using strong encryption and I have decentralized that network such that no company or no ceo or no country can be a.

Michael Saylor

Of failure, right? This is a first in the human race. This is a fire in cyberspace that's burning with **$1,000,000,000,000** of energy. It's the fastest growth to **$1,000,000,000,000** of any digital network in the history of the world—12 years. So, if you embrace that and you say, "Okay, I've got two things going on here." I have a macro situation. This is the first time in 30 years that the money supply, the broad money supply in the U.S. and Europe, is all linked and collapsing at a rate north of 20%. We didn't have this in your lifetime or mine. The last time we saw something similar was in 1980, but before that, in the seventies, you had a bunch of different central banks: the German bank, the French bank, the U.S. bank. The U.S. was not the world currency; it was like 30% of the currency trades in the 1980s. It wasn't 90%. So, we had the formation of the EU. The EU tied all of European currency to the dollar, which became 90% of all the currency. Every other central bank tied into the dollar, so we arrive in a...

Michael Saylor

In the last 12 months where where the behavior of the us fed and the expansion of the m two money supply is in essence weakening every currency on earth at the same time you've only got 3 sets of currencies you've got the strong currencies weakening at the same rate as the dollar you've and that's like 20 rich countries then you've got you've got most currencies weakening 20 to 40% more against the dollar and then you've got the last basket of currencies weakening 80% or more against the dollar they're utterly collapsing and so you have a macroeconomic circumstance we've never seen in our lifetime and then you have a technology the most disruptive technology of our life more disruptive than Google than facebook more disruptive than youtube more disruptive than zoom more disruptive than than the iphone it took Google 22 years to get to a trillion it took amazon 24 years to get to a trillion it took apple 42 years to get to a trillion it took Microsoft 44 years to get to a trillion it took bitcoin 12 it's a it's it's a monetary fire it's burning in cyberspace and these two things together you know by the way how do you feed a monetary fire with money how more money than ever the money is feeding the fire right and anybody living in a comfortable environment with a business strategy that worked last year right they're they're going to be late to understand this because they haven't had this jarring realization that there's something fundamentally different but if you lived in argentina or you lived in lebanon and your currency like let's take lebanon it collapses overnight by 80% and if someone handed you an iphone and said you can put bitcoin on this and you won't be broke and starving tomorrow you would have an incentive to learn about this new technology because your entire world crashed around your head but if you're living in a world where you think you just made 30% return on your portfolio you don't quite have the same appreciation of the problem yeah go ahead sam

Sam Parr

So, it's almost like... it's almost like rooted in the decision to do all of this is definitely shareholder stuff, shareholder value, but a lot of it was rooted in "Well, I just want to attract great talent." Or that was definitely a factor. How has... how many people work there now? 2000?

Michael Saylor

about 2,000

Sam Parr

how how has this impacted your ability to recruit and retain people

Michael Saylor

It's been great for retention and it's been great for recruiting. We can get... we get people. First of all, the company's brand has been amped up by a factor of 1,000. I mean, a lot more people know us.

Sam Parr

now and like what's the culture like now is it different

Michael Saylor

Just more... just happy. Bitcoin is hope. Okay, so let me say it a different way. If your family has $100,000 and you showed up today and I told you it was in a bank in Lebanon, and now it's $20,000 but you can't spend it and it's going to $0, what's your family's morale, right?

Sam Parr

well I mean I

Michael Saylor

I mean, if your family had $100,000 in Bitcoin in the same year, and I told you, "Oh, by the way, Bitcoin's up by 1,000%," now you have $1,000,000. It's probably going to keep going up forever, and you don't have to worry about it.

Sam Parr

the whole. Of view it's not black and white

Michael Saylor

like it

Sam Parr

is black and

Michael Saylor

white like no

Sam Parr

It's not... I'm looking at your Glassdoor reviews. I'm looking at the Glassdoor reviews, and not everyone agrees. Surely, there's a downside to this. I mean, not everyone agrees. I see a lot of bad reviews, and every great company has a lot of bad reviews. But it's not black and white; not everyone agrees. I mean, you have a 43% rating on Glassdoor. I know that Glassdoor isn't the full picture, but it's clear that not everyone agrees with your opinion. I want to know... is...?

Michael Saylor

is that is that only stats for the past 6 months

Sam Parr

because I think that's there's a there's a thousand reviews and it's been been up there

Michael Saylor

isn't it for the past decade

Sam Parr

But I can sort by date, so I can tell you a number by any constraint. Right now, it's all about 1,000 reviews, and it's a low review. It doesn't seem that everybody agrees with you.

Michael Saylor

You're looking at the past 10 years. If you go back over the past 10 years, we had one year where the company was contracting and we laid off employees. So, there's that.

Sam Parr

I'm looking at reviews all from 2020 there's I think

Shaan Puri

truth truth be told no nobody gives a shit about glassdoor reviews right like you know that's I do I don't know

Sam Parr

I I

Shaan Puri

think that I think that

Sam Parr

There are two sides to every story. No matter how thin the pancake, there's always two sides. But there are bits of truth in all of it, right? You could... you could.

Michael Saylor

Gauge trends. What is the... what would you like to make and what shall we discuss?

Sam Parr

What I want to know is, what's been the downside of this? Because it's not black and white. Not everyone agrees with you, and it's not black and white that this has been perfect.

Shaan Puri

Sam, can I ask your question in a slightly different way? I think I get what you're trying to say. So, it's not necessarily about whether people have disagreed with you. Right now, you look like a genius. You bought the thing, the brand is up, the stock is up, and the Bitcoin price is up. If you really disagree, now this is your own personal problem at this point. Your strategy has clearly worked up until now. The question is more about the fact that we've had periods of time where I've been holding Bitcoin since 2013-2014, and I've seen Bitcoin go down, you know, 70-80% drawdowns. You have basically taken out a bunch of debt, you bought Bitcoin, and you own $5 billion of Bitcoin. The majority of the company's value is the Bitcoin that it owns. If we do see... I think we kind of agree that volatility will dampen over time, but that doesn't mean we can't see a drawdown like that again. What happens when the Bitcoin price drops by 50% again? What's your reaction to that? How does that affect your strategy, or what's your overall viewpoint on this possibility?

Sam Parr

that that

Shaan Puri

that that's not a good question strategy right

Sam Parr

Yeah, yeah, yeah. On a day-to-day level at the company, I imagine there's a ton of people that love this. But what have been any of the downsides of this? Because with every great decision, there's always going to be downsides as well as upsides.

Michael Saylor

I can't see any downside for the employees. They've all benefited. I can't see any downside for the investors that stayed with us; they've all benefited, right? I mean, there are critics out there that don't like Bitcoin. By the way, there are people that will say, "You're a CEO; you shouldn't invest." You know, there are people that will say operating companies shouldn't have assets. Right? There's criticism. People say, "Well, you're a CEO; you should go back to your cubicle and write software and leave the investing to the professionals." But I think that the fundamental elephant in the room here is that the macroeconomic environment is so incredibly unfair to people without assets. Like, literally, if you're an operating company or a Main Street company, you have to work 30% harder to stand still. If you're a Wall Street company, you can stand still and get 30% more. The playing field is so tilted in favor of property owners or asset holders against manufacturers and companies that do things. You can't really be successful in business unless you have assets as part of your strategy.

Shaan Puri

And so, okay, so Sam and I were asking different questions. Sam wanted to know more about the morale. I want to know if we see another Bitcoin crash, you know, a drawdown of 50% or 60%. What happens to your position and what happens to your point of view?

Michael Saylor

Well, we have permanent capital, so it doesn't make a difference to us. Right now, for example, we have a $3,000,000,000 investment gain. So if you cut Bitcoin in half, we would still have an investment gain. Our basis is $24,000, so if it goes down to less than $24,000 and stays there forever, then it will not have been a good investment, I suppose. But otherwise, we have a long-term strategy, which is to buy and hold. I think a lot of people live in fear of volatility, but many people live in fear of a lot of things. If you have enough fear, you won't leave your house; you won't do anything. So, you have to have a bit of courage and conviction. I can give you a thousand reasons why I think it makes sense to invest in Bitcoin. I can't give you any reason why I should be afraid to do a rational thing. It doesn't really bother me. This is a rational strategy. If I had to do it all over again, would I? Of course, I would. Ask all the investors that made $1,000,000,000 over the time frame. Of course, you would do it again.

Shaan Puri

And I think we're going to have to wrap up based on time. So, I appreciate you coming on. Do you want to leave anybody with a way to find you? A place to follow or a next step if they, you know, liked what they heard?

Michael Saylor

Sure, if you're interested in Bitcoin, Bitcoin is hope. So go to **hope.com** (H-O-P-E). We have lots of information on it. If you want to follow me, I'm **@michael_saylor** on Twitter.

Shaan Puri

how how much do you think bitcoin dot com is worth roger verra owns it now how much would you be paying for bitcoin.com

Michael Saylor

I don't know I I wouldn't speculate I wouldn't speculate

Shaan Puri

You know, I think for most people, a lot of what you're saying is going to be over their heads. To be perfectly honest with you, I think I could distill it down into a very simple way of looking at it for anybody who listens to this and is intrigued but hasn't, you know, sort of gone down the rabbit hole yet. Very simply, if guys like Michael Saylor, who own public companies that have a ton of money, are worried about what they're going to do because their money is melting, and they're looking for investment-grade, you know, sort of the most powerful treasury asset, and he's decided it's Bitcoin. You know, Square has put some money in, PayPal has put money in, and Tesla has put $1.5 billion into Bitcoin. It's likely that there are more companies out there, and it'll take them 6 months to a year to make this move. But they will take a portion of their treasury reserves and move it into Bitcoin. These are long-term holders; these are not retail day traders who are going to be, you know, buying and selling the thing like crazy. So the real simple thing is you can sort of invest into the network. You can buy Bitcoin yourself and front-run the institutions that are coming. That’s a very simple thesis and takeaway for somebody who's listening to this. If you're a company, you better be thinking about what you're going to do with the cash. If you're an individual person, you should also be thinking about what you're going to do with your cash. The easy move is that, for once, you get to front-run the institutions and get in before they all get in, whereas typically the retail investor is last.

Michael Saylor

I think that's a reasonable thing to say; I agree with it. Another big picture way to say it is that there are **$100 trillion** of treasury assets that have a negative real yield of **-10% to -15%** a year. That means they're destroying **$10 trillion** a year of value. The solution is to convert all of that money into Bitcoin. Bitcoin is a **$1 trillion** asset. People who understand Bitcoin think it's going to grow to become the **$10 trillion** asset that gold is. Then, it's going to replace negative-yielding sovereign debt and corporate debt. Ultimately, it will become the primary treasury reserve network and treasury reserve asset. So, if you have a company or if you're an investor, it makes sense to buy it because it has a brilliant future and it solves a problem that everybody on Earth has. If you're a company, it makes sense to plug your treasury into Bitcoin because the road to serfdom is working exponentially harder for a currency that is growing exponentially weaker. You're just going to work yourself to death. Put yourself in the position of working as hard as you can in Venezuela, Argentina, or Zimbabwe. Roll the clock forward a decade and ask yourself the question: "What do you wish you did?" The answer is to protect your assets, protect your monetary energy, your treasury, by putting it into a scarce asset in a bank in cyberspace where no one can steal it, debase it, or destroy it. That's the Bitcoin ethos. We're simply trying to make it worthwhile to do the other stuff. There's no...

Michael Saylor

In doing a hundred million other things, if at the end of the journey you've got nothing to show for it...

Shaan Puri

yeah why why create all the value if you cannot store it so here's a better store of value oh you're

Michael Saylor

Right, yeah, that's the big idea. And that's a business strategy for everybody—small, medium, large; it doesn't matter.

Shaan Puri

And you know, I'm just kind of anticipating that somebody hears this and says, "But we're not Argentina, we're not Venezuela. Do I really need to worry about this?" What's your answer to that?

Michael Saylor

My answer is that the single most important thing for you to have in your life is a forecast for the money supply expansion in your country for the next eight years. I would say that before you invest the next decade of your life doing whatever, stop and study up on macroeconomics. Form an opinion about the rate at which your currency is going to lose economic energy, and then you can act accordingly. If you think that the currency is going to hold... by the way, the currency has never held. It's lost 6% of its value every year, forever. It's always losing 6% of its value. You just have to decide for the next decade whether or not the cost of capital is going to be 8%, 12%, 16%, or 20%. Once you make that decision, it will inform you regarding the degree of enthusiasm with which you will pursue a hard asset strategy. If you think that the currency is going to weaken rapidly, then you would shift and prioritize hard asset acquisition aggressively. If you think that the currency is not going to weaken that rapidly, you would prioritize other strategies. Everybody's going to make that decision for themselves. But when Zimbabwe started to crash, normal companies, management consulting companies, started buying lumber, coal, oil, and anything they could buy because at least you'll still have it tomorrow. Whereas the cash, the currency, the receivables will be worth nothing. So you just have to make that decision. There's plenty of information in the world for you to form your own opinion. Once you've formed your opinion, then you can act accordingly.

Shaan Puri

cool alright michael thank you

Michael Saylor

for coming on me gentlemen

Sam Parr

Yeah, we appreciate this. This is great, thank you. Yep, we just did this interview with Michael's... what's this? Sailor? Or, yeah, the L? Right? And no, I mean, I wasn't sure if it's "sailor" or "sailor" without an L.

Shaan Puri

recap it and then explain your opinion but first objectively try to recap it

Sam Parr

Objectively, we had this guy on who is **objectively** successful financially and **objectively** a wonderful businessman. He came on for... he said ahead of time that his objective for this interview was to promote Bitcoin. That's cool; we could talk about that for a bit. I'm down with that. I wanted to ask him a little bit more beyond that, but we didn't get to it. He talked for 60+ minutes all about this topic. I personally pressed him on a few topics, and he disagreed with me. My vibe from this was... I don't trust his opinion.

Shaan Puri

Okay, so I'll give you my two cents, and then we'll just talk about it real quick. I thought he came on kind of low energy, maybe a little arrogant or smug—not in a bad way, but at the beginning, we were clearly trying to warm him up and talk to him about something. He had zero interest in chatting about anything besides the virtues of Bitcoin. That was a little off-putting for me. I find it more fun when a guest comes on, and you leave the podcast thinking, "Man, I'd love to hang out with that person more." I think that's a great sign for the guest, and in this case, I didn't walk away with that feeling. I agree with all the things you said; objectively, he's super smart. He’s literally a rocket scientist who built a $10 billion company by the time he was 34. From 24 to 34, he built that company and has been running it for 30 years as a public company CEO. He went into Bitcoin heavily and has made $3 billion in Bitcoin. The guy is definitely smart and ahead of the curve in many ways. I've read his book, *The Mobile Wave*, which he wrote in 2012, basically saying that mobile is going to destroy everything. In 2012, that was a sort of safe prediction, but still a good prediction nonetheless. I don't agree with you that he was, like, what did you say, "not trustworthy" or something? So explain...

Sam Parr

And let me just say, this is a **knee-jerk reaction**, so I don't want my opinion to be evolving as it's going. I've seen you've talked about them all the time, so that was my experience on my various Wikipedia page. I probably watched the top 2 or 3 interviews, so that's my experience. I don't want to say **distrusting**, but there was something about it. In the interview, I questioned him about something that might seem silly. Not silly, I don't think it's silly; Sean thinks it's silly, and that's okay. I understand why someone might think that. I said, "Your Glassdoor reviews are pretty **shitty** lately."

Shaan Puri

Well, no, you're asking a more reasonable question. You said, "It's all been okay, great, Bitcoin's up, your stock price is up," but like, what have been the downsides? I think that's a perfectly reasonable question to ask.

Sam Parr

And he was just like, "Well, there are no downsides." I was like, "Well, that's objectively false." There are some people that could be anonymous, and it's Glassdoor, so that doesn't hold a ton of weight. But there are a lot of people in the reviews that say this is crazy, that your products are failing, and that you're doing this to distract from that. So, I asked, "What are the downsides?" He kind of dodged the question, and I couldn't get the truth out of him. Because of that, I'm like, if I can't trust something so obvious, or if someone can't give me a straight answer on something I feel is so obvious—saying, "Yeah, look, there's a ton of upside, which I've discussed, but here are some of the downsides"—then in my head, I'm like, "Well, can I believe anything you're saying?"

Shaan Puri

Right. Once you are not reasonable or rational about one thing, I can't fully think you're reasonable and rational about this other thing that you're telling me about. That's kind of what you're saying, yeah? How you do anything is how you do everything.

Sam Parr

And I also think that anyone who brags about how rational they are is one of the least rational people. I don't... which by...

Shaan Puri

The way I don't think he bragged about it. I think it's like when you ask him, you know, this person says this bad thing about it. He's like, "Well, I just think it's clear because of this." This is true; that's a rational thing in my opinion. I don't think he was saying it.

Sam Parr

He... he never claimed it. He never said that, correct? But he said, "Well, this is an incredibly rational decision. I don't see downsides." And I'm like, well, we're naturally not rational.

Shaan Puri

I'll defend his position. By the way, I spent most of the podcast, even though I'm a huge Bitcoin bull, bringing up things that a critic of his strategy and a critic of Bitcoin would say. I did this because I wanted to hear his answers. In general, I get what he's saying. Look, we bought $2,000,000,000 worth of Bitcoin. It's gained $3,000,000,000 more. Our stock price is up, I don't know, 4x since we made this strategy change. And you're asking me how my employees feel? They feel great! Our brand just went up a thousand times. People know what MicroStrategy is now; they didn't know what the hell it was before. Our stock price is up, and our assets have gained a lot more value. So, what are you talking about? He was basically saying there's no downside; it's all upside. I get that, but he didn't give you the inch that I think most reasonably people would do, which is to say that everything has its trade-offs. Maybe he could have said it was really complicated to go through the process of being the first public company to make this huge Bitcoin purchase. That was a huge regulatory and legal mess we had to work through, but I'm glad we did. Or, you know, there are always some people in the company that disagree with the decision. They haven't been with us anymore, or they've had to get on board with something that they didn't see as the right decision. That's always tough whenever you have strong-minded people; you're not all going to 100% agree with a radical strategy. He could have said any of those things. He didn't, but that doesn't make me personally distrust him. I think for you, that was a turnoff.

Sam Parr

I don't want to... like I said before, this is an odd knee-jerk reaction. It just happened. I want to be careful with my words. If I said "distrust," I actually take that back. I don't entirely mean distrust, but I mean that there's something going on. I have this gut feeling that I can't just believe what you're saying. I want to go and... this should be the case all the time. I want to go learn on my own.

Shaan Puri

Right, I think it's all pretty above board. He's basically bet his entire company on Bitcoin. They own $5,000,000,000 of Bitcoin, and the company's worth $7,000,000,000. His objective, his stated objective to us coming on, was to communicate the nature and virtues of Bitcoin to the audience and leave them excited about the opportunities that Bitcoin offers. There was no bait and switch; he said what he wanted to do, and he tried to do that. It's clear that he is incentivized for more people, companies, and individuals to buy Bitcoin because he is maybe the largest holder of Bitcoin in the world. I don't know what Satoshi's stake is worth now. I believe you may want to check that out. Does he have more Bitcoin than Satoshi? I don't think so.

Michael Saylor

I think

Sam Parr

he said I think

Abreu Andrade

he said

Sam Parr

in the podcast 3,000,000,000 at one?

Shaan Puri

His $3,000,000,000 is his gain. He owns $5,000,000,000 worth. So what is Satoshi's statement? Either way, he's one of the top 5 Bitcoin whales in the world. He clearly wants Bitcoin to go up and wants more people to adopt it. To me, that's like you gotta have a natural discount on what somebody's saying when it comes to when they're highly incentivized for you to invest in that same thing. That doesn't mean he's wrong or he's doing anything dishonest. It's just that you have to know that, hey, this guy clearly believes it. He has high conviction, and he has an incentive to make other people believe it too.

Sam Parr

abreu what did you think

Abreu Andrade

I mean I think

Shaan Puri

I... are you just quaking in fear right now? Say what you really want to say. Let's not... let's not avoid saying it.

Abreu Andrade

We believe... I for the most part agree with what you guys said. I mean, talking about Michael himself, he's super intelligent but professorial. He doesn't make for a great guest. You see this on other podcasts as well. Like when Joe Rogan has some renowned, super intelligent scientists on, sometimes they just want to go on about their field and their studies. So, those don't make for the best guests. So, I'll say that.

Shaan Puri

Yeah, which is kind of sad because, you know, from my point of view, I guess we both walked away from the podcast feeling a little disheartened. I don't know, we didn't feel like we had a slam dunk. I think you felt that for a different reason than me. For me, it was just that I didn't think it was highly entertaining for people, and I'm kind of bummed about that. I actually think he's a super interesting guy with a super interesting life and business story. Also, what he's doing with Bitcoin is fascinating. So somehow, despite there being an underlying substance that is super interesting, I don't think it got communicated well. I almost wish I could just do a "Billy of the Week" segment explaining everything I know about Michael Saylor. Doing the research for this interview, I think that would be way more entertaining than what actually happened. When he came on, it was basically talking about quite technical economic terms that I think, for most people, are not going to resonate with. It's not going to click, and it was done in a way that didn't feel like someone was trying to break it down and make it more accessible. It was just like, "This is what it is," and I can sort of explain it in bits and pieces to you if you want. If you don't see it, you're crazy, you know?

Abreu Andrade

One of the best parts was towards the end, Sean, when you took a few minutes and kind of explained what we just talked about on a high level. I thought that was the easiest part to digest of the whole thing. More of that should have been what the podcast was, and unfortunately, it wasn't. It wasn't for a lack of research as far as the interview not being that great. You guys put a ton of research into this. I think sometimes just the guest's personality doesn't make for the best podcast.

Sam Parr

Well, I think people can listen to it. It's an hour long. I want to say I appreciate him coming on. Michael is a big deal, and I definitely appreciate him being here. I want to take back what I said about not trusting him entirely. After that interview, there's something sitting right with me. It feels like something inside of him is saying that something is going on here, and I need to figure out what it is. Maybe we can have him on another time now that we kind of know him a little bit more. But yeah, I'm sure of that.

Shaan Puri

You know, actually, it'll be kind of interesting because we're going to leave this in, by the way. Like, whatever our discussion about it, I hope it gets received as what it is. This is an instant hot take reaction to something that we're really excited about. Then it happened, and we're giving a quick reaction. I think, you know, Sam basically didn't see the kind of the Bitcoin bull case as black and white as maybe Michael Taylor put it. First of all,

Sam Parr

Let me just say that my opinion of him is totally separate from Bitcoin. I would say I'm a huge novice; I'm not an expert. However, I felt that he was actually a poor representation of it. There's something about it that makes me think, "Oh, I don't know if I could trust this," right? Because he's representing it.

Shaan Puri

You weren't buying what he was selling. I don't know how to put it, but there was no attack on his character. You just didn't walk away from listening to the guy for the hour fully bought in. Sometimes, with certain guests, they start to explain what's going on in their field or their business, and we walk away saying, "Shit, that guy knows what he's talking about." I totally agree with the way the world is going, and I want to invest in that guy's company. You know, that's sometimes the way we feel.

Sam Parr

He didn't persuade me. If that was his goal, I don't think it was achieved.

Shaan Puri

Can I give people the... like, I'm gonna try a 3-minute "Billy of the Week" segment on this guy real quick?

Sam Parr

this is your podcast you do what you want yeah go for it

Shaan Puri

I mean are you interested I don't know if you're interested okay

Michael Saylor

so let

Sam Parr

me just just do it just do it

Shaan Puri

here's here's okay michael saylor to me is you know more than the billy of the week he might be the billy of the month okay so here's some cool things about him that I I found doing some research for this so the guy's a badass he you know graduates 1st in his class in high school valedictorian he's voted most likely to succeed he goes to mit on a like you know rotc you know scholarship he goes to the air force he wants to be kind of like a fighter pilot and you know eventually like you know he I think for whatever reason he he wasn't gonna be able to be a fighter pilot I think some he didn't pass one of the physicals or something like that and so he's like you know because they have a very strict requirement for that so anyways he decides at 20 he's he's he's working at dupont I don't know if you knew this part sam he's he works at dupont when he's like right out of college basically and he's doing simulations for dupont and dupont's trying to make a $1,000,000,000 decision should we invest in this or not and if anybody's been in a big company you know that when an executive is trying to make a case for when an executive wants to do something it's sort of their pet project they don't really want the simulation to be this really objective case of pros and cons they kinda just want some data to support what they already wanna do so they can go get a $1,000,000,000 of funding to go do the thing they want and so he builds the simulation and the simulation basically says don't do it and and anyways he he ends up just like leaving dupont he's like I don't know why the hell I'm at this company they just they didn't even want the results of the simulation they just wanted me to say what needed to be said so that some executive could go pitch their case so I'm leaving this place and the executive is basically like hey where's that kid who's doing that model I need that data and he's like he's like and they're like he left the company he quit and so the guy's like go hire him back give him what he wants and so they go to him and they say hey we want to hire you back and we'll give you more money he's like oh I don't really want to work there so I don't want more money and then the executive is like give him more give him whatever he wants just give it to him and he's like well I kind of want to start my own company so why don't we do this you give me a quarter $1,000,000 and I want to hire some of my colleagues from dupont I want to hire 8 to 10 people from there and I want you to be my first customer so I want you to give me you know a few $1,000,000 worth of contracts to do work for you and I'm going to start my company microstrategy which does the same simulating thing for companies and you'll be my first customer so pretty badass negotiation he goes and instead of being an employee he basically gets dupont to seed fund his company and become a multimillion dollar customer for him so from there he's 24 years old that's microstrategy how it starts basically what they do is like what's called business intelligence or executive intelligence they they take all the data you have so like you're victoria's secret you have all this data of purchasing in all your stores all across the country microstrategy goes in and says hey you're carrying the wrong sizes you you need bigger bras in chicago than in new york you're so if you rebalance your inventory you're gonna save all this money and there's data you're you're sitting on this gold mine of data you just don't know how to analyze it we can give you intelligence from this data so he does that from mcdonald's and for victoria's secret and all these different companies by 34 he's a billionaire the company's public it's worth $11,000,000,000 he owns the majority of the company he owns over 50% and he's doing his thing now over time 2003 2004 stock price crashes from $333 a share to 42¢ a share or something like that and you know he goes through that whole transition he's been the ceo of microstrategy for like 30 years like literally I was born in 1988 sam's born in 1989 he's been the ceo of microstrategy since 1989 you know like that's pretty wild and more recently like you know microstrategy has been flat for like a decade stock price not really going anywhere business is profitable he's got $500,000,000 of cash in the bank but the stock price is not growing and he's like

Sam Parr

$500,000,000 I think personally he said

Michael Saylor

no no

Shaan Puri

I think in this case it was the corporate treasury who had about **$500,000,000**. He owns the majority of the company. I think he currently owns around **$500,000,000**.

Sam Parr

I think in the podcast he was like, "I have..." whatever. He was basically incredibly wealthy, and the company was great.

Shaan Puri

he's incredibly wealthy and the company's incredibly wealthy and he basically comes to this realization during the covid crash and he's talked about this on other podcasts which is he comes to this realization that wait a minute if the money supply you know we hear about government stimulus we hear government's printing $2,000,000,000,000 $6,000,000,000,000 $13,000,000,000,000 total the money supply is increasing which means if you had $500,000,000 in the bank if you go back and look it'll still say $500,000,000 but it won't be able to buy you as much as it did before because there's all this 1,000,000,000,000 of new dollars in the in the in the in the money supply and similarly like people have been wondering during covid wait a minute all the businesses are shut down and people are locked in their homes why are all the stock prices at like all time highs what's this disconnect between main street and wall street and what he's pointing out I think rightfully so is that when you have all this money printing assets inflate basically assets like companies inflate so that's why the stock prices are going up it's not that you know zoom or you know zoom's a bad example it's not that apple is making all all this much more money than they were 3 months ago it's that apple stock is more of a hard asset to own versus just keeping cash in dollars which is getting printed and diluted essentially by the government right so long story short microstrategy goes out and they basically do this aggressive strategy to buy a quarter $1,000,000,000 of bitcoin they're kind of the 1st public company to go do such a bold bet and then he keeps buying bitcoin more and more and more he's basically bought $2,000,000,000 of bitcoin so first he took all the money they have majority of the money they have and they bought bitcoin with it and and he first announced it and he told his shareholders look we're gonna buy a bunch of bitcoin with our cash if you don't wanna hold our shares we'll buy your shares back from you if you don't like that strategy so they bought 60 $70,000,000 back they use the rest of the cash to buy bitcoin then he starts issuing debt he goes and he raises $500,000,000 he goes and raises $1,000,000,000 of debt from the public markets takes all that money buys bitcoin with it and so since then he's basically put in $2,000,000,000 he's gained $3,000,000,000 and he has a total stake of bitcoin of $5,000,000,000 which I think makes him makes microstrategy you know a top five owner of bitcoin in the world you know just behind satoshi and maybe a couple others and since then you know famously elon tweeted out something about bitcoin michael saylor responded saying hey from one rocket scientist to another let me show you how we let me explain to you why we did it and you should too and a few months later tesla goes and buys $1,500,000,000 of bitcoin so he's kinda was ahead of the curve on this stuff in addition to that some other cool things early on in the dot he sort of identified early on that the internet was gonna be a big deal and bought a bunch of domains so we spent about $2,000,000 buying domains like alarm.com wisdom.com strategy.com michael.com mike.com angel.com courage you know hope and he owns all these premium domains one word english word domains and he has since you know sold or created businesses under those domains for you know over a $100,000,000,000 so he turned a you know 1 or 2,000,000 1 or $2,000,000 sorry 1 or $2,000,000 domain purchases into over a $100,000,000 of value he also has this thing called sailor.org which is just like a free education it's just a free university and he said you know since 1999 they've had over half a 1000000 students in it so this guy's done a bunch of cool shit and I think is like a pirate of the best kind like super smart technologist super smart business guy has just been in the game for so long and is doing pretty radical things so that's why you know I think this guy's a baller unfortunately I didn't feel that all that came through on the podcast but you know I'm a fan well

Sam Parr

I think Michael and his team will reach out and say thank you, Sean, because I believe you did an awesome job. You did a better job of showcasing him than he did, which is cool. I think you're just better at storytelling. So maybe people will have the same opinion after this interview. The part that I kind of felt uncertain about happens like probably 15 minutes left in the episode. Maybe Abreu or someone will mark it, and you guys will be able to hear for yourselves. But I think, Sean, you're just really good at this. I guess we'll see. This episode is going to be weird. I wonder what people are going to say. I guess we'll find out.

Shaan Puri

yeah same alright cool