Guy Adami interviews Michael Saylor, CEO of MicroStrategy

Ladies and gentlemen, please welcome our moderator, TV personality and host CNBC Fast Money,

Guy Adammi.

Hey everyone, hopefully everybody's enjoying the conference.

I was hoping we get more people, but I guess people in meetings I totally get it, but I want

to thank everybody that's here for making the effort to get down to Florida.

A couple of years ago they asked me to co-host Power Lunch and one of the guests was going

to be Michael Seller, which I found fascinating.

So I obviously did my homework.

I did the interview with Morgan Brennan, and I'd say five or ten minutes after the interview

ended, Mr. Seller reached out to me and said, I thought it was well done and really appreciated

it.

And we started a bit of a friendship.

So when I reached out to Michael a few months ago and asked him to come down here, he immediately

said, yes, I don't think he needs an introduction.

I'm sure you all know who he is.

And without further ado, ladies and gentlemen, the CEO of MicroStrategy is Michael Seller.

Well, Michael, you heard my introduction.

I mean, we did that interview on CNBC and it was fascinating.

And that was a couple of years ago, but you had your sort of come for lack of a better

experience.

Jesus moment in terms of crypto, probably March, April, I guess of 2020.

Can you sort of speak to that and what forced you into that?

What was the catalyst to get you there?

You know, we're running a conservatively managed company with large cash flows.

And we accumulated more than half a billion dollars of cash over the previous few years.

And the cash used to generate with conventional treasury strategies about 550 basis points.

I remember when you could basically get more than 500 basis points for overnight money,

no credit risk.

And I say you're holding $500 million and you're thinking maybe I get $25 million a year.

The rest of the business was generating $30, $40 million a year in cash flow.

It felt like a balanced asset.

And I come to Jesus moment was March, April, the second quarter of 2020, interest rates

have been sliding for a decade, you know, hope springs eternal.

And I pretty much lost hope.

They got pegged to zero.

You know, Jerome Powell said we're not even thinking about raising interest rates to the

year 2024.

I said my $500 million looks like dead money.

It's going to generate zero.

Meanwhile, COVID hit.

We all went virtual.

The company started generating much more cash.

75, we thought $75, $80, $90 million a year in cash flow on the operating side.

But then we saw on the balance sheet side, the cash was going to generate zero.

And then we watched as there's a K shape recovery and assets all appreciated in price 25%.

And I started thinking over the next four to eight years, the monetary expansion rate

is going to be double what it had been in the past 10 years.

It's going to be going from 10% to 20%.

This treasury balance is going to lose 20% of its purchasing power a year.

The nominal yield is going to be zero.

The real yield is going to be minus 15 minus 20%.

My investors valued the company at one time's revenue plus the cash.

Their view was cash is trash, give it all back to us.

And so we got to this point where we realized we either needed to give all the cash back

to the shareholders and decap the lies the company.

Or we needed to invest it in something which was going to go up in value more than the

rate of the money expansion.

And that set us on this search for what eventually became Bitcoin.

Well, it's interesting you talk about balance sheet corporate balance sheets and how most

companies look at it wrong.

If you have cash on your balance sheet that's actually a liability.

Can you speak to that because more and more I think people are coming to that realization.

But it took a long time for people to get there.

I think there's two types of inflation you can focus on.

One is consumer inflation as measured by CPI.

And the other is asset inflation as measured by, and I think the best surrogate I can find

is the S&P index.

So asset inflation is the cost to capital.

It's the cost to stay wealthy.

If you want to be rich or stay rich or maintain shareholder value, you got to hit that hurdle

rate.

That's traditionally been 10% a year up until 2020.

And then it doubled.

You know, almost went to 25%.

So the monetary inflation rate is the cost to capital is the S&P index.

If you're a private individual and you own everything you need, your car, your house,

and you're looking toward retirement, you could think, well, I just need to keep up with

the CPI.

I don't need to buy anything.

I don't need to buy stocks.

I don't need to buy a house in the Hamptons.

So if I can keep up with CPI, I'm good.

But if you're a young individual, you're in your 20s, you want to buy a house, you want

to send your kids to expensive school, you want luxury assets, you want to stock portfolio,

you want so security from the private sector.

If the price of an S&P stock is going up at 10% a year and your salary is going up at

3% a year, you got a negative real yield of minus 7.

So what I realize is I'm a public company CEO.

If I want a whole shareholder value and I'm holding 500 million in cash, I need to beat

the S&P index.

How do you do that?

You could buy the S&P, but the problem is not very popular with your shareholders.

And there's a technicality, which is the S&P index is a security.

And you can't hold more than 40% of your assets as securities if you're an SEC operating

company.

So I can't really buy a package of securities.

I got to either lever up the company, give all the capital back to the shareholders, buy

my own stock back, or I have to buy property, not a security that will actually hold its

value that scares and desirable.

And so, you know, the general idea, the theme is you're sitting on conventional treasury

strategy, which yields 1% interest.

And the monetary inflation rate, the cost of capital is 20%.

Your minus 19% real yield.

Your burning 19% of your treasury a year.

It used to be sovereign debt yielded 5%, 4%, 6%, and you expected 7, 8%, 9% inflation.

You're a minus real yield, minus 3.

You can do that for 30 years.

And if it's going to take 30 years to burn your treasury, you can justify having a conventional

strategy because you're better off to have the insurance policy for 30 years just in

case to protect the operating business.

But when the cost of capital goes to 25%, and the nominal yield is zero, and your negative

real yield is minus 25%, now you're burning through your treasury in 3 to 4 years.

And that's not the worst case.

The worst case is I'm sitting in Argentina, or Turkey, or Lebanon, or Venezuela.

And the inflation rate goes to 100%, or 200%, or 1000%, and you're going to burn through

all your cash in 12 months.

And so you can see that risk-free rate varies depending on the macroeconomic circumstances.

And if you're going to run a business responsibly to preserve shareholder value, you've got to

have an opinion about what is the real yield on your treasury strategy, and how important

is it to have capital?

And if I'd given all the capital back and just divvited it all back to the shareholders,

then we're a low-growth company generating cash that's losing 15% of its purchasing

power a year, competing against Microsoft.

And at that point, while your shareholders start to wonder whether you'll be around,

so the stock trades down, and then the employees start to wonder, and then the customers start

to wonder, you get yourself in a death spiral, and you can spend into oblivion.

So I didn't want to decapitalize the company financially if I'm fighting a war for human

capital and customer retention.

So that's why I concluded, in essence, the traditional treasury strategy is bankrupt

in a highly inflationary environment, and you've got to do something different on your

balance sheet.

So you came to that realization, it obviously took you a period of time to get up the

curve, and you mentioned property, I'm going to come back to that.

But it's not just you don't work in a vacuum.

You want to get your board of directors to sign off on this as well.

Sign off on putting Bitcoin on your back sheet.

Now, if memory serves, you send them all home over the weekend with a homework assignment,

and they all came back to you with the thumbs up.

Can you speak to that?

Because I think that's really fascinating.

The theoretical thing you want to do is you want to replace your balance sheet, which

has got crumbling credit.

I've got credit generating 1% yield with a cost-accapital of 20%.

I'm crumbling.

I want to replace my balance sheet with some property, a non-currency derivative.

So either by a building, or by land, or by a portfolio of art, or by gold, or by some

crypto gold.

After sifting through every possible property, I settled upon the idea of crypto gold, and

then I sifted through 6,500 cryptos, and I figured Bitcoin is the closest thing to digital

gold on the dominant network.

It's the least risky of the crypto assets, and it's the one that is acknowledged as a

property.

So now, if I've come to that conclusion, I've got my general counsel, my CFO, I've got

my outside auditors, I've got my outside counsel, law firm, and I've got my boarded directors.

So this becomes an education exercise.

I gave them about five hours worth of videos, what is Bitcoin?

How do you think about the macroeconomic?

So I said, watch all these, then I gave them a bunch of materials, started pointing them

toward articles on Bitcoin, the bullish case for Bitcoin, the Bitcoin standard.

I said, you know, guys, I want you to watch all these videos, peruse these things, and

then I m going to talk to you.

So first I give them the homework.

You know, you can be amazed what you can learn on YouTube, guy.

You can learn anything on YouTube.

Right?

You got to pick the right.

The right YouTube, not the wrong YouTube, but if you pick the right things, I gave them

that.

Then I talked to them after that and answered all the questions.

Then we all got together as a group, as we talked with each other.

Then we broke up into working groups, the general counsel, letter review on the regulatory

statutory issues.

You know, we study every single publicly traded company that's got me crypto on the balance

sheet.

What have they done?

We study all the guidelines.

The CFO leads the financial review with the accountants and the finance department.

You know, I lead some strategy discussions.

We have a discussion on shareholder relations.

How are we going to actually bring our shareholders along?

And you know, we work through the accounting.

We work through the statutory disclosure issues.

And we subtle upon a very conservative strategy.

We basically said, we're going to buy back $250 million worth of our stock.

And we're going to invest $250 million in an asset as an inflation hedge.

We put that out on the wire.

And you know, we announced that to all of our shareholders.

We waited for five days, crickets.

The stock did in trade.

Everybody kind of liked just it in a home and ignored it completely.

Five days later, we accelerated the process because we can't just wait forever.

I mean, clock is ticking.

So we announced that we had rifle through.

We studied every alternative.

We made a decision.

The decision was to invest $250 million in Bitcoin.

We did it around 11,000 some change of coin between 11, 11, 1500 to coin.

So early on by today's standards.

And then we said, we're going to announce a Dutch auction.

We're going to buy back $250 million worth of our shares at a premium.

I think the stock was trading 120 and we announced we tend to up to 140.

And we give everybody 20 days to think about it.

Because you got 20 days to decide, do you want to be on on micro strategies Bitcoin journey?

Do you want to get off?

If you want to get off, we buy you out at a profit.

If you want to stay on, you stay with us.

When you see these press releases at 9 a.m., and you got to make a decision by 9.30 a.m.,

right?

That's kind of anxiety inducing.

So we thought the kindest, generalist thing we can do is give everybody 20 trading days.

Stock traded up.

First it traded into 130s and it traded above.

People thought, well, this is a put option.

Traded above 140.

People had their 20 days to get in or get out.

The shareholder base rotated.

At the end of the period, we had about $60 million is tendered.

We had an extra $175 million in cash.

We bought Bitcoin with it.

All of a sudden we had a $425 million position at about, you know, we bought that Bitcoin $10,500.

So a low basis.

And then we waited.

You know, and the our stock traded up, Bitcoin traded up, the market started to register.

Oh, here's the publicly traded company that could use this as a strategy.

You know, the rest is kind of history.

Well, it's interesting.

You said a lot of interesting things, but anxiety inducing.

And I remember one of the first times we spoke, you talked about our society is based

on, is predicated on doing exactly that.

And think about the last two days, for example, in terms of the market.

I'm sure there are people looking at their phones, seeing what the market's doing.

It's all anxiety inducing it.

You gave people 20 days.

How are you able to get yourself away from that and have the clarity that's required to

have a vision of not five minutes, but five years, 50 years?

Well, you know, I became a big believer in big tech and the mobile wave around 2010.

And I made large investments in Apple, Amazon, Facebook and Google between 2010 and 2012.

And during that time period, there were a lot of haters of Amazon.

They hated it.

A lot of people would tell you, if Apple stock doubles, you should sell half of it and diversify

into the other computer companies.

When Amazon goes up, you should sell half of it and diversify in the other retail companies.

You know, what are these things?

I don't get it.

And you know, my view then was it doesn't make sense to sell the big tech dominant monopoly

because it's going to eat everything.

One company, Amazon One, Walmart kept up every other retail or 15,000 retailers lost.

With Apple, one company won the mobile wave.

They got 150% of the profit mobile phones.

Every other company lost money to compete with them.

And so my experience as a private investor is you got to figure out what's the dominant

technology that's going to win in the eyes of a billion people.

They have an overwhelming lever.

Once you figure that out, if you're if 98% of the people disagree with you, it's probably

a good investment.

Like I could have lined up everybody on Wall Street in 2010.

You can go back and you probably had a parade of people talking heads on television, telling

you why Amazon did it make money.

They're never going to make money, blah, blah, blah.

And here we are today.

So that was my experience, a happy experience.

I knew find the dominant technology and put the chip down and wait a decade.

I had my father's experience.

My father worked for his entire life and retired as a chief mass of charge in the Air Force.

And then his retirement savings, he can't invest in a savings account.

They yield zero.

So he goes and he buys some stocks and he bought like British petroleum stock.

And so my dad's owning British petroleum, they have an oil well blow up.

And then the president of the United States decides to enter into the fray.

The stock gets destroyed.

And it's like, why does a non-commissioned officer have to become a stock analyst and bet

their life savings on guessing which stock will get destroyed or not get destroyed based

on an act of God so he can live happily ever after in his retirement?

And it struck me as, that's not right.

The political system destroyed the savings account.

You know, you used to be, you could buy a bond yielding 6% interest and the risk was the

United States government would default on it.

And we got to the point where, you know, a guy driving a taxi cab has to guess whether

or not Facebook will beat Apple.

You know, you're taking risk.

And so my view was there's something wrong.

People shouldn't have to be hedge funds and they shouldn't have to guess whether a stock

will beat their quarterly earnings in order to not lose all their money.

There's something busted there.

And the appeal of Bitcoin is, it's just a savings account in cyber space run by software.

It's like Bitcoin is like a savings account run by software and it's incorruptible.

The software doesn't get to change the rules.

You're not guessing whether they'll hit their quarterly earnings.

You're just putting your money in that bank in cyber space and you're waiting for a decade.

Even over the course of a decade after you've smoothed on all the volatility, it's outperforming

the S&P.

There's no CEO to give himself stock options.

There's no board to issue credit or debt and dilute you.

You're not going to, you don't have to worry about your stock triples and the company sells

more stock.

All you're doing is you're converting what is a weaker form of property into a stronger

form of property and waiting for a long period of time.

I should talk ahead.

I mean, unfortunately, I find myself one of those talking heads.

With that said, we say things on the network, a lot of the networks, when we talk about

Bitcoin, we call it cryptocurrency.

Bitcoin is a currency and I'm sure that makes you wince in pain because you have a much

different view.

You view this as property and that's not nuance.

That's an actual distinction.

Yeah, I think that if you're going to be in the entire crypto economy, you have to understand

the legal and the technical definition of property versus security versus currency.

A currency is a legal tender and you can legally transfer it a thousand times a year without

incurring a tax obligation.

I can take a million dollars on six months ago, hold it for six months, give it to you,

and there's no accounting event, there's no tax event.

I take a million dollars of property if it trades, and I give you a million dollars

of that property, but the basis has changed and of course it's going to change.

There's a capital gain or a capital loss that has to be accounted for.

If something's property, you're not going to want to trade it.

You're going to want to hold property for a decade.

Maybe the ideal holding period for property is forever.

You're a wealthy family in New York.

Your grandfather bought a city block in New York in 1930.

You're holding it in your 2022.

You're going to give it to your grandkids and property is meant to be levered up.

I'm going to mortgage it.

I'm going to live off of the borrowings or I'm going to develop it or I'm going to sell

the air rights over it.

I'm going to lean it.

Or I'm going to rent it, but I'm going to hold it.

That's the way a rational business person handles property.

Currency is something that I'm going to move with high velocity.

It's a working capital.

Cryptocurrency is a stablecoin.

Every stablecoin is an essence of crypto dollar.

The world wants to move crypto dollars around because they can move them at high velocity

and they solve a problem.

I can settle every three hours and I can trade 24, 7, 365.

There's a place for high velocity, currency.

But property solves a different problem.

I'm sitting in Argentina and I want to trade my weak property.

Weak property is a business that sells stuff in pesos.

I want to convert it and it's limited to Argentina.

I sell my building.

I convert it to Bitcoin.

My Bitcoin is valuable and desirable to anybody with money in London, Paris, Beijing, or Moscow.

My building in Argentina is valuable only to someone in Argentina.

I can rent the building for pesos.

I can rent the Bitcoin for euros or dollars.

Weak property goes to strong property.

Weak currency, the peso losing 80% of its value in a year goes to the dollar losing 15%

of its value in a year.

When you think that way, you realize there's a massive demand for strong property everywhere

in the world.

But there's even a bigger demand for strong currency.

The cryptocurrency is the stablecoin.

It's the tether.

It's the circle.

It's whatever the United States endorses if a bank like Silvergate issues a stablecoin,

that's going to be cryptocurrency.

What's interesting you mentioned, you know, currencies that are attractive.

We live on a planet where it's seemingly every central bank is trying to devalue their

currency against the next guys in Gauss to make their goods more attractive.

You mentioned Jerome Powell who just seemingly a few years ago, we're not thinking about

raising rates to post Thanksgiving to a complete 180 in terms of everything we're talking

about now.

Some of the volatility we're seeing is no doubt in the back of that.

So what is your current macroeconomic outlook?

What's going on to you?

First of all, I'd say you can't be an investor without understanding and having a macroeconomic

outlook and a microeconomic outlook.

If you're going to own stocks and you own international stocks that actually sell their products

in South America, you have a partial currency derivative and you have to have an opinion

on the real, the bowl of R and the peso in order to own the stock.

If you're going to own an asset, you've got to understand, is it a currency derivative,

pure and simple, like a bond, an Argentine bond, a U.S. bond?

Is it a 100% currency derivative or is it a partial currency derivative, like a value

stock or is it a property like owning a Leonardo da Vinci painting that's valued just for the

essence of its ownership?

So my macroeconomic view is there's 130 currencies that are floating right now in one shape

or form.

The strongest currency is the dollar.

It's losing purchasing power at maybe double.

The rate it was losing purchasing power before 2020.

So if it was losing 7% to 10% of its purchasing power a year, it's now losing 15% to 20%

of its purchasing power a year.

We're going to stay in an environment for the next four to eight years where we're going

to run higher deficits.

We're going to have a lower interest rates, looser monetary policy than we had before 2020.

It's just a question of are you a 15% or 20% or 12% or I don't think anybody reasonably

can expect that we're going to go back to a tighter money policy than we had in 2019

or 2018.

So my forecast there is all the strong currencies of the world, which are the dollar, the

euro, and then all the currencies pegged to the dollar, the DRAM, etc.

All of those currencies lose 15% of their purchasing power a year for quite a while.

The second tier currencies are losing double that.

They're losing 30% of their purchasing power a year and they're just weakening against

the dollar and you can see it.

And then the third tier currencies are losing anywhere 50% to 100%.

Well, they're running 50 to 100% inflation.

You can see that in like an Argentina right now.

The indisha of the weakest currencies is either nominal inflation is diverging from the

black market inflation.

The official exchange rate of the peso is like a hundred peso to the dollar.

But the blue market rate hit 210 pesos to the dollar the other day.

And 36 months ago, 15 pesos to the dollar.

And 15 years ago, it was two pesos to the dollar.

And I remember when it was one peso to the dollar.

So the weakest currencies are going to have capital controls.

We see the Chinese currency, the C and Ys pegged to the dollar, but the only way they pegged

to the dollar is the capital controls.

And Argentina has somewhat capital controls.

That's why you got to pay 200 pesos to get a dollar.

And officially the government only pays you 100 pesos.

I'm not looking to play like where's Bitcoin going price wise.

But I want to mention something because it's, I think it's interesting.

It's, I don't think it's coincidental that the recent decline in Bitcoin has come on the

heels of a Fed that's seemingly trying to get themselves back from being, in my words,

reckless to having some semblance of order.

With that said to what you're saying, if they were to have to backtrack for whatever

reason, market collapse, or they just can't continue raising rates and reducing their balance

sheet, how bullish would that acknowledgement that they have effectively failed be for Bitcoin?

Well, you know, I'm not a trader.

And so my short time horizon is four years.

During five years, well, I'll take that kind of risk.

And my normal time horizon is a decade for a forecast.

And the ideal time horizon is forever.

It's property.

Do I want to own Manhattan?

Do I want to own London?

Do I want to own gold?

Or do I want to own Bitcoin for the next three years?

Having said all that, right, the way Bitcoin trades oftentimes is it trades like with the

derivative, the acceleration or the jerk or something of the money supply.

So the fast money traders control it in the near term.

And they will tend to kind of do the opposite of the long term, which I find interesting.

When the Fed said there was no inflation, right, people come on television and say, there's

no inflation.

Maybe you don't need Bitcoin because Bitcoin's inflation hedge.

And then the fast money trades against it for a bit.

And then another week or two weeks go by.

And then once you get outside the fast money, the momentum, the more fundamental players

come in and they start buying it up and it accelerates.

And I think when the Fed says, well, I guess there is inflation, we've got big inflation,

but we recognize it's a problem.

The fast money says, oh, well, they recognize it's a problem.

So it trades against Bitcoin.

Like, well, the Fed's going to treat the problem.

And you're in that dynamic.

And then I think eventually over time, the longer term investors come in and they start

to drive it the other direction.

So you've got to decide whether you're fast money.

If you're fast money, you're trading on the volatility.

And those guys, I guess they know what they're doing.

They can figure it out.

But I can't figure it out from hour to hour day to day.

My view is if everybody in the world today universally agrees we have an inflation problem,

the question you're going to ask yourself is if the Fed raises short term rates to 1% or 2%,

and they've agreed there's a 7% CPI, and if you can establish a 15% to 20% monetary inflation rate,

what's the likelihood that inflation's going away?

Not great, to be honest with you.

And I'm on a show called Fast Money and I can't figure it out.

So current regulatory outlook for crypto Bitcoin, all those things, the industry,

and the risks associated with that and political considerations, because now that's coming into play.

Yeah, if you look at the entire crypto ecosystem, you've got digital property, digital currency,

and digital securities, and digital platforms.

And they all have a different regulatory overhang and regulatory risk.

But the least risky of these things is digital property.

Bitcoin's the dominant digital property.

It's a common property.

It's not a security.

It's acknowledged as not a security.

That makes it ethical for a public official to endorse it without a conflict of interest.

If you're the mayor of Miami or you're the governor of New York or you're a senator of congressmen

or the head of a country and you stood up and said, I think everybody should have a chicken in every pot,

a farm, a house, some land, and some Bitcoin.

You just said the same thing.

You said, I'm endorsing food as property, land as property, houses property,

a synthetic digital asset as property, live happily ever after.

You know, it's a better store of value than the US dollar, than the peso, than the ball of art.

So I think Bitcoin has got some clarity there.

If in the use cases property, buy it as property, if you sell it or transfer it, you know,

capital gains tax, a loss, a gain, or whatever, that's been decided.

Are there other digital properties?

Well, I mean, the Bitcoin forks are 1% of Bitcoin.

They failed.

There's a lot of question about, is there any other digital property?

I can't, I would not endorse any other digital property other than Bitcoin,

because everything else is murky.

Now you got a digital currency.

Well, you've got, you've got a lot of digital stable coins.

There's 17 or 18 stable coins.

The digital currency that's won is the dollar.

If the world had its way, we would have $1 to $10 trillion worth of digital dollars circulating.

Why aren't they?

Well, they, you know, they need to be endorsed by the banking regulators.

If, if JP Morgan issues a digital dollar, they could issue a trillion dollars worth of

it.

Like that, because the use case for the digital dollar right now is offshore settlement

of crypto trades and people that don't trust their own government and their own banks.

If you're in Turkey or Lebanon or Argentina, a short story.

I have a million dollars in Argentina tying bank.

I'm worried about the peso.

They're pegged one to the, one peso to the dollar.

On one night, the government sends a fax machine, a fax memo and they convert everybody's

dollars to pesos.

The next day they devalue the peso, 10 to 1.

The next day they hand me back one tenth of the money I had and that's under a capital

of control.

That's what happens in a, in a government, in a environment where you don't trust the

bank.

So people that are concerned about that, they want to own digital currency.

They want to swap their lira or their Lebanese pounds or their Argentine pesos or their boulevards

to tether or to a circle or whatever stable coin.

But you're not going to see Amazon and IBM and Microsoft do tens of billions of dollars

of cross-border remittances with a stable coin unless it's issued by an FDIC insured institution.

So corporate treasury usage and retail remittances require a government endorsement.

And so I think with digital currency, we're waiting for that government endorse digital currency.

When El Salvador endorsed the stuff, you saw three million people download a wallet within

four weeks.

That's half the country.

So I think that there's a demand for that, but there's a question of who can issue a stable

coin.

Do you need a money transfer license, a state banking license, a federal banking license,

a federal banking license in every country?

What's the KYC, etc?

With regard to digital securities, most of the other cryptos are securities.

And I think that's been made clear by a lot of regulators.

If there's a small group of people and they've issued a token, it looks like an investment

contract, you're relying upon the work of others to make profit, if it generates a yield,

looks like a security.

We're waiting for more clarity on how do I issue a digital token that's a security and

then what are the liabilities associated with that?

I think that that's the biggest regulatory overhang.

And the last piece is digital platforms.

What's the innovation of crypto?

There's four big innovations.

One innovation is digital property and cyberspace.

You could put $100 trillion on the Bitcoin network.

Big innovation.

I can take $10 million, move it from Rio de Janeiro to Moscow to Beijing to London.

And I could never do that with pure property in the history of the human race.

That's an innovation.

The second innovation is cryptocurrency.

The world wants $10 trillion worth of US dollars.

If they get it, 100 currencies will collapse and will have a dozen strong currencies that

will exist.

And nobody in Asia or nobody in Africa is going to use any currency other than the dollar

unless they're forced.

So that's the second innovation and we're working to get through that adoption phase.

The third innovation is I can issue a token or a security really fast, maybe, and trade

it with high velocity.

We're waiting to get guidance on, well, how do I issue a compliant token?

How do I do that?

And then is there a faster way than taking a company public?

The taking a company a public way, I know very well.

It takes six months to a year.

It's a $10 million expense and takes a year.

And it becomes a 50 person finance account.

It's a $10 million overhead every year forever.

That's the heavy way, the 20th century way.

Is there a 21st century way?

Well, we're waiting.

The fourth innovation is digital platform trading this stuff 24, 7, 365, and cross collateral

izing it.

Does the world want that?

Yeah, I mean, they want to trade on, they want to trade all sorts of derivatives and they

want to do sports betting, they want to trade digital commodities, they want to trade

digital tokens.

Is there a, you know, and what's the example of success?

Well, the big offshore crypto exchanges, you know, big example of success, all the crypto

tokens.

But what's the regulator view?

They want to be national securities exchanges.

The SEC wants these things to be national securities exchanges and adopt the principles

and the protocols of a national security exchange, which means you can't have 20 to 1 leverage,

it means you got to have surveillance agreements, means you got to be transparent.

And so clearly, over the next 36 months, it's a 36 month, 40 month, I don't think it gets

sorted out in 12 months.

But it's over the next three to five years.

This industry needs to go from entrepreneurial, fast and loose to institutional, regulated,

orderly, transparent, like, you know, private companies to public companies, unregulated to

regulated, retail offshore to institutional onshore.

And you know, when you're looking at it as an investor, if you're a public investor,

a public company, a public official, you're safe harbor, you're safe place is Bitcoin as

property.

Not Bitcoin is a medium of exchange, but Bitcoin is a store of value.

I'm going to buy it, hold it for a decade.

That's a clear place.

If you're a tech VC, a crypto venture capitalist, I mean, who's going to do that?

Who's going to dominate stable coins?

Who's going to dominate digital platforms?

Who's going to dominate, you know, what's the cool, you know, DeFi, swap exchange?

You can play that, but you have to understand the competition, the regulation, the security

issues, and it's a lot more complicated.

And if you're a speculator, you're a speculator, dogecoin versus shipcoin.

That's speculation.

Not so bad.

6040 model that was dominated the 20th century, I mean, what's the modern asset allocation

model in your opinion in 2022?

I think traditional balance sheet, if you look at the corporate treasury model, it's traditionally

been all cash and cash equivalents.

And I think that's defective in the Western world because that's crumbling credit and

you're losing 15% to 20% a year.

But I think that the illustrative point would be if I took that treasury strategy to Africa

or South America, where you've got a negative real yield of minus 50%.

And I don't think there be any debate.

You can't capitalize a company in the international market on credit.

You have to.

So all those international companies, I think their model is flipped from international currencies

to the US currency.

If you're an Argentine rancher, you would rather be sitting on stablecoin US dollars as

you're working capital.

So I think you're going to see everybody wants to trade up.

You see the headline in the Wall Street Journal, huge demand for dollars in Bitcoin and

Turkey last week.

So I think that you're going to see balance sheets in weak countries trade from a weak

currency to a strong currency.

I think that if you're holding a large treasury in the US, you can't hold working capital.

And you can see this for the past 20 years guy, major companies have all leveraged up.

If you're a leveraged up with debt, you've got negative working capital.

The way that a CFO solves the problem is they basically divin in or they buy back with

all their cash and they convert it to their own stock or they're doing act of vision acquisitions.

Massive acquisitions, massive buybacks, massive leverage, and anybody holding cash is just

getting beat to death by negative real yields.

And I think that if you're a public institutional investor, 6040 is dead because we're at the

end of the line on interest rates.

We're not going to negative interest rates.

I think that political consensus is pretty clear.

So it makes a lot more sense to replace the bond aspect of your portfolio with property.

Right?

If I was giving advice to anybody, if you're wanting to be risk averse, take a portion

and buy super high quality big tech dominant networks, you buy big tech monopolies and then

take another portion and buy the highest quality physical 20th century property you can buy.

Buy city blocks in Manhattan, buy buildings, buy scarce art, buy sports teams, buy the

Patriots, buy something, but Disney is partly property.

They own Marvel, they own Mickey Mouse, they own Star Wars, they own intellectual property.

That's why we love them.

We don't love commodity cash cows that have to compete in a competitive market for cash

generation to sell generics.

We don't love that because that looks like a bond.

I would buy property, I would buy big tech monopoly because you can assume they can raise

their prices and they can apple can ship a new product to a billion people overnight for

a nickel.

They have a chance.

And then I would buy digital property as Bitcoin.

Bitcoin is the dominant digital property.

There may be other digital properties that will form.

I'm not comfortable with them enough to recommend them.

But I think that Bitcoin meets a need for everybody in the world.

If you want to have a non-sauver and non-cash derivative store of value beyond the control

of any government or any company that is not a security that is on an open permissionless

network that you can trade 24, 7, 365, that checks a lot of boxes for a lot of investors

if you think that 5% of the world wants it and having 5% of it in your portfolio is rational,

1%, 10%, some amount, I think everybody is going to make that decision based on their

risk tolerance and their portfolio charter.

You're definitely trying to democratize education in the last minute and a half.

I'd be remiss if I didn't bring up sale or academy.

Can you sort of speak to that?

You know, it impoverished my family.

My family's life savings for 200 years were wiped out in the first four weeks that I attended

MIT.

It's expensive to get an education and I'm sitting in the back of a lecture hall and the professors

about there and I'm paying more money than my family could make or save in five years

to spend a few minutes and I said this isn't right that is insanely expensive and then

I got to the point where I realized I could just put a video camera on that professor and

if I upload the courses and if I actually put the textbook in the public domain, I can

give away the same computer science degree or physics degree to a million people for a

nickel.

I can give it away to a billion people for a nickel.

So we created an organization, Sailor Academy that's eventually going to become Sailor University

and we give away free college degrees to anybody that wants it.

All they got to do is have an iPad or a computer.

We just got approved by the state of Florida to give a free MBA.

So if you get through the courses, you can get an MBA degree.

It'll be accredited by Florida.

It'll cost you nothing other than the electricity and a used iPad.

I don't think you can teach ballet that way, guy.

I don't think you can teach golf that way.

I do think you can teach mathematics on a computer for free.

The world's got maybe 10 million PhDs.

We need a billion PhDs.

You can't spend millions of dollars to get an education.

We need to give away an education for a nickel to billions of people to move the human

race forward.

It is possible.

I'm on a mission to do it.

And I like the way things are headed.

We've passed a million student threshold now.

We're adding more students every week.

You know, then MIT added every year and we're giving them the education for free.

So we'll see where it goes.

Well, I'm sure it's going to go great places.

Maybe if I apply, you'll write me a letter of recommendation.

But I want to be respectful of your time, Michael.

Thanks for joining us.

Thanks, everybody, for being here.

Thank you, Michael Seller.

Thank you.