Bloomberg Studio 1.0: MicroStrategy Chairman and CEO Michael Saylor

so how's life in miami it's lovely here

all right you guys ready

okay

he runs the company that owns more

bitcoin than any other company in the

world as of the end of 2021 michael

saylor one of the cryptocurrency's

biggest evangelists started his career

ridingthe.com wave and saw that bubble

pop first hand

could crypto be another bubble waiting

to burst or is it the future

joining me on this edition of bloomberg

studio 1.0 microstrategy founder and ceo

michael saylor

microstrategy holding all this bitcoin

does it ever make you at all nervous

no actually it gives me great comfort i

don't really think we could do anything

better to position our company in an

inflationary environment than to convert

our balance sheet to bitcoin because we

basically built a balance sheet on a

non-sovereign store of value that's not

a currency derivative

two years ago we were sitting on a bunch

of cash and that cash was losing about

10 percent of its purchasing power a

year and then when kovid struck and the

fed took a more accommodative monetary

policy

that cash started losing 25 percent of

its purchasing power year so my anxiety

was maximized around april may of 2020

when we had the k-shape recovery and i

realized that

cash is trash

everything's about to get much more

expensive and

we needed a strategy so we adopted a

bitcoin strategy it's driven up our

stock by a factor of five uh you know in

my opinion it saved the company from

from a not very pleasant fate so i'm

totally pleased with where we are today

just bitcoin none of those other

thousands of cryptocurrencies

look bitcoin is digital property it's

universally acknowledged as common

property because it had a fair

distribution no ico no management team

satoshi disappeared

it's parapursu to a commodity to land to

gold

uh and it's pretty important that it

that it be deemed property um the rest

of the cryptos could be securities

there's there's just a lot of of

regulatory overhang and question about

uh whether they're securities or not and

i think that the the great innovation is

the creation of common property in cyber

space

it took us 13 years to get to the point

where that's universally acknowledged so

that makes bitcoin the safe haven for a

public investor or a public company

everything else feels more like either

venture capital or speculation

now you personally are and the internet

can correct me if i'm wrong the longest

running software ceo in

history

you founded it in 1989 when you were 24

years old

what has this 32-year ride been like you

know i learned a lot of humility we came

public in 1998 so

you know it's now i've been public

company ceo for many many many quarters

i live to see 99

of my peers exit the business so i i

didn't really understand this at the

time but now as i look back what i

realized is all my peers exited the

business because they're forced to grow

their top line and their cash flows at a

frenetic rate and eventually they get

undone by dilutive acquisitions and then

they have to sell themselves

microstrategy we've been very fortunate

we've been focused we soldiered on

and we've always had a passion to make

the best software we could

and

and as our competitors disappeared we

found opportunities you grew up as an

air force brat uh traveling around the

world what kind of kid were you tell us

about your upbringing a young teenage

michael

i read a lot of science fiction i read

pretty much every science fiction book

by all the great science fiction writers

probably two or three times i played

dungeons and dragons you know before we

actually had these uh

wizards warcraft and other games on

computers we actually had to draw out

the dragons and we had to write down

what's in the dungeon

and we had to construct our entire

virtual world so so i think before

computers we used our imaginations to

create simulations and and to exercise

probability and distribution and it

taught me a lot about practical

statistics my background led me

eventually to trip over

a book by robert heinlein called have

spacesuit world travel where the

protagonist

gallivants across the universe saves the

human race from bug-eyed monsters and

for it for his services to humanity gets

a full tuition scholarship to mit

and it stuck in my head that mit was

probably a good place to go if you

believed in engineering and making the

world a better place you studied

aeronautics i believe and then you

pivoted to tech and and founded

microstrategy with one of your mit

fraternity brothers and the software

basically provides business intelligence

helps companies make sense of their data

so that for example

mcdonald's could learn how many big macs

it might sell in a given night in

chicago is that right

yeah the idea is to extract all of the

data at an atomic level like every item

sold every every hour of the day in

every store in the world for every

mcdonald's

what we discovered is the world's full

of companies that have billions of lines

of data and they're trying to make sense

of them and they had to extract those

those sophisticated sets of data

compare them to each other in order to

make a decision about a marketing

campaign or a product launch or even

something as simple as how many items

should i have on each store shelf and

it's worth a lot of money to get it

right and if you get it wrong

you find out that you don't have the

products you need when people want to

buy those things and it costs you a lot

of money so

we were in the right place at the right

time there

you've witnessed some serious

rollercoasters you saw the dot-com

bubble blow up and burst before your

eyes what lessons have you taken away

from that that informs your strategy

today

i would boil it down to this stoic

observation right you can acquire a

thing

but you know can you maintain the thing

and if you can maintain the thing can

you enjoy the thing

and what i discovered is a lot of people

acquire things they can't maintain and a

lot of things people can maintain things

but they can't ever enjoy

and so you want to boil it down to

another metaphor it's laser focus

you have to figure out what you are the

best in the world at and what you can

continue to be the best at the world at

in the face of unrelenting exponentially

increasing competition

and once you figure out what that is

focus on it with all of your resolve

and if you do that then you can stay in

business

you know that that's the first thing i

learned that's why i have laser eyes on

twitter the whole point of laser eyes is

you've gotta you've got a solution focus

on the solution don't get distracted by

all of your good ideas and allow it to

dilute your focus on your great

idea

so about this possible winter are you

really not feeling the cold

you know if you wouldn't hold it for 10

years you shouldn't hold it for 10

minutes

the decision to bet on bitcoin to

acquire the thing would you say that's

your phoenix moment

i would say it probably is i never said

it like i thought about it like that but

i i feel like uh

most of my life was leading up to this

point and i understood the power of

dominant digital networks like google

and facebook and amazon and apple

because i rode that for a decade i also

understood

the detriment of not being that dominant

network microstrategy competes against

microsoft we compete against companies a

hundred times as big as us when we got

to 2020 what i saw was the winning

strategy is digital transformation if

you have the dominant network

the losing strategy is to continue to

work

to work harder and exponentially harder

for a currency growing exponentially

weaker

and i had a sense of the consequences if

we did nothing because i had seen the

demise of 99 of my competitors

and i could see where we were headed if

we uh stuck with the status quo we would

have to either adopt a bitcoin strategy

or sell the company and we

and we elected to pursue bitcoin

what was the reaction from from

investors from other ceos cfos when you

put bitcoin on your balance sheet in

such a big way

compared to the way they're reacting now

you know

many people uh didn't really understand

bitcoin very well they haven't taken the

time to focus on it uh even today

i would say that 98 of the population

hasn't spent 10 hours thinking hard

about bitcoin so

so uh in the year 2020 i think most

people are just ignoring it

um

they really it wasn't really registering

with them maybe one percent

i think that uh when we talked to our

investors what was interesting is

privately most investors were aware of

bitcoin and they thought it was a good

idea

publicly their institutions that they're

part of are have a three to five year

time lag from the point at which they

can adopt new ideas

so about this possible winter are you

really not feeling the cold

um

look if you're going to invest in

bitcoin a short time horizon is four

years a mid-time horizon is 10 years the

right time horizon is forever you know

warren buffett said

you know if you wouldn't hold it for 10

years you shouldn't hold it for 10

minutes

so if you look at the course of four

years no one's ever lost money over four

years holding bitcoin and and if you

look at you know

our experience we started buying it at

ten thousand dollars and now it's up by

a factor of four so

so given the right time horizon you're

fine

so it's a blessing and a curse the

blessing is it makes it the most

exciting interesting thing in the

financial universe everywhere in the

world and and the curses

it can induce anxiety for people that

have a short attention span or or are

focused on a narrow time horizon what do

you think then is behind this early 2022

crash

i think that um

there's a lot of dynamics here if you

look at the entire uh crypto ecosystem

you have um you have a a set of

regulatory uncertainty

especially regulatory uncertainty around

stable coins and crypto tokens

uh and whether or not they're securities

and that creates a little bit of of on

anxiety you have a lot of leverage

offshore you have a lot of crypto

exchanges that can trade with up to 20 x

leverage and those crypto exchanges have

many many tokens that are

cross-collateralized

and between them and the d5 exchanges

you can get much higher than 20x

leverage so that's the second source of

volatility the crypto markets are almost

designed to encourage volatility and

that creates kind of a love-hate

relationship between the crypto

ecosystem and the bitcoin hodlers

the bitcoin hodlers are holding for you

know a decade you know and and

sometimes for a hundred years and

sometimes for a thousand years

and yet you've got fast money hedge

funds that have a tax incentive a huge

amount of leverage and massive

volatility

but you have two totally different

investment mentalities here

and when they come together the result

is

you've got in my opinion the world's

least risky asset to hold over the next

century called bitcoin and you've got

the world's most volatile

fast money market you know called crypto

and they're both conjoined joined at the

hip for better for worse in the year

2022.

so clearly you're a huddler but for the

people who are terrified who have never

been on this roller coaster before

shorter term what does the trajectory of

bitcoin look like to you this year

i i feel like it's consolidating this

level this is a great entry point for

institutional investors i talk to i talk

to high net worth individuals family

offices public company executives

private company

owners and they watch bitcoin run up in

2021 and there are a lot of people that

would be afraid to own it if it was

going up 400 percent a year but if

they're staring at it and it's 40 off

the all-time high and it's consolidating

and they see that it's being embraced by

people like bill miller by very well

respected investors it's being embraced

by the regulators it's being embraced by

senators and congressmen and public

investors and public companies

they're looking at this as like a good

entry point

i'd be remiss emily not to make a more

important point

which is what's really going on here at

a macro level is

inflation the cpi headline inflation is

7 percent look at the turkish lira it's

collapsing the peso is collapsing

so there's a volatility story for a

conventional investor

in manhattan that's got a portfolio of

equities but 75 percent of the world

can't buy the s p index they're in

africa asia

south america

and

if they've got their assets and banks

they're going to have them seized they

can't buy the equity so the real story

here is digital property that solves a

problem that eight billion people face

the big question is then are you going

to buy more yes or no

yeah we're going to buy more

our you know

we're buying more with our cash flows

we've adopted a bitcoin standard emily

that means that when we generate cash we

sweep it into bitcoin we've been

generating you know anywhere from 70 to

100 million dollars of cash flow

so we will also

buy bitcoin with debt we bought bitcoin

with 1.7 billion dollars worth of

convertible debt

uh we bought bitcoin with a 500 million

dollar senior secured note

that we pay six and eight percent

interest on

we also issued a billion dollars worth

of equity at the market and we converted

it all into bitcoin

so combinations of cash flow equity debt

potentially through other partnerships

[Music]

promised to host a yacht party when

bitcoin got to a hundred thousand when

do you think that will be

you promised to host a yacht party when

the 100k party

you know when i did that interview it

was uh the fall

like of 2020 and i think bitcoin is

trading at 15 000.

and and uh you know john valles wrote me

and he said well you host the 100k party

and i said well sure i will there was no

doubt in their mind the party's coming

quite soon i i was just amazed at the

confidence of bitcoiners

um i don't have a a price target for

when it's going to happen

what i learned is laser focus stuff

takes time i'm comfortable with us

working through this year over year i

don't i don't need instant overnight

success

what kind of regulation are you

anticipating which way do you think the

washington winds are blowing

there's

a a profound shared appreciation

that

digital assets are the future of the

financial industry and the united states

needs to lead

and i've been pretty impressed that the

support in the senate and congress from

the administration and from regulators

all around the world for this entire

crypto economy and in the use case as

digital property i think that uh the

regulatory treatment is pretty clear

if you sell it at a profit you lower

capital gains on it just like if you

sold any other property

i think that with regard to the crypto

currencies the stable coins like tether

and circle they're going to be regulated

as currencies clearly the administration

wants to see fdic-approved and insured

banks issue them

so i think that uh that we're going to

see

the banking sector enter into the stable

coin market

i think that many other cryptos are

deemed as securities and will be deemed

as securities and they're going to be

regulated as securities i think that the

marketplace is waiting to see what those

expectations will be

and i think it's pretty clear that um

the writing is on the wall with regard

to crypto exchanges right the sec wants

them to be to abide by the principles

and the rules of national securities

exchanges

and they've said that in the spot etf

denial letter that they wrote and on

several occasions

so i think the regulation is coming to

the exchanges i think regulation is

coming to security tok to the crypto

security tokens

i think it's i think that with regard to

stable coins this is going to be a good

thing right now the the stable coin

market is maybe 170 billion dollars all

in

it's grown dramatically but the truth is

there's a demand for trillions of

dollars of us dollar stable coins and

the reason that that entire market

hasn't grown by an order of magnitude is

because companies like amazon and

microsoft

and government agencies aren't going to

move billions of dollars of stable coins

around unless they feel comfortable the

treasury and the administration endorses

them and when we see

fdic-approved banks when you see a jp

morgan issue a stable coin you may see a

trillion dollars worth of that

and let me just characterize the the

entire movement this is a rotation from

an

entrepreneurial driven industry to an

institutionally driven industry and

we're sitting at this point where we're

crossing the chasm

and the question is which end which

entrepreneurs will be institutionalized

and come public and and get the

appropriate regulatory

licenses

which existing institutions will choose

to enter the market which banks like the

silvergate banks of the world will enter

the market and then um there will be a

shakeout and obviously 6 500 crypto

currencies are not going to be around

here in a decade you're going to see

many of these things go away as the

industry shakes out and as it matures

all right well you led me right to our

lightning round so want to do some rapid

fire questions here just looking for

quick short answers

top three tips for people who want to

get into crypto but don't know where to

start

you you know you should educate yourself

first

and uh and you shouldn't really do

anything until you have a firm

conviction

then do your diligence be very

thoughtful

about which vendors that you work with

and and uh how you move forward and then

third take a long uh a long time horizon

bitcoin is digital property digital

energy or digital gold you have to pick

one

bitcoin is digital energy and it is the

future of the internet

web 2.0 or 3.0 what do you think

i think uh you know they're all

marketing phrases

if you actually put a layer of digital

energy or in this case wrap satoshi's

around your persona as you navigate

through cyberspace you can completely

eliminate all the things that plague us

in the internet the next internet the

next version the internet is a layer of

digital energy

wrapped around digital information quick

one um favorite chess move

what is it

um

i guess uh the queen's gambit as an

opening

um i hear you like routines what is your

daily routine

i i scan the news

i tweet

hopefully something inspirational and

constructive and cheerful

to the entire bitcoin community

i hit the gym

get in some daily exercise

and then i take

a round of meetings either business

meetings or or podcasts or something

work through a bunch of uh business

issues when do you look at the price is

that the first or second thing

sometimes some days i don't look at the

price some days i do mostly i just i

just look uh to see the mood so i so i

can read the room and figure out what's

appropriate and constructive uh to say

in order to

drive

uh the narrative forward you mentioned

twitter your twitter evolution is kind

of epic and i've got a recent tweet

we've just got a minute left i want to

read back to you um bitcoin is a swarm

of cyber hornets serving the goddess of

wisdom feeding on the fire of truth

exponentially growing ever smarter

faster and stronger behind a wall of

encrypted energy

what's the goal here with these tweets

where are you going with that

i tweeted that once i fully grasp what's

going on with bitcoin bitcoin is a

decent is a decentralized network which

means that there are 100 million plus

people out there that are supporters of

bitcoin there are millions and millions

of nodes it is a swarm creature

right it's a chain reaction in cyber

space

and once you understand that that

bitcoin is a chain reaction in

cyberspace it changes your view of the

asset and your view of the world and

your view of the future

so what does keep you up at night

michael i mean you have to think about

the risks what do you worry about it

can't be bitcoin sunshine and rainbows

in miami every day

the truth is i'm much more comfortable

today than any point in my business

career because i feel like

we have found the right strategy at

microstrategy right the bitcoin standard

strategy

and

you know i'm i'm happier uh going to bed

every night than ever have been because

i have a mission and my mission is to

educate the world on bitcoin

and i think i can do a lot of good doing

that

and

the world has a need

so

nothing really keeps me up at night i'm

more motivated than ever i think that's

a great place to end it michael saylor

founder and ceo of microstrategy thank

you for joining us i'm so glad we had

some extended time

today appreciate you taking the time

yeah thank you emily