Michael Saylor: The Virtuous Network

I think it's going to take about 100 hours to understand Bitcoin.

They're like, 100 hours, that's too much.

That's, you know, there must be something wrong with Bitcoin.

I don't have 100 hours.

Thank God.

My stock broker doesn't make me spend 100 hours to take any other investment decision.

I can't be bothered.

You have 10 minutes.

You have 20 minutes, 90,000 hours to make your money.

Spend 100 hours.

Figure out how to keep your money.

Here's the problem.

Too much money.

Too much power.

Too much technology.

Too many people thinking that they were put on this earth to help.

Large ego, large power, large capability.

You're triggering the dysfunction.

That's one of the artifacts of modern technology that we've created systems

that are so powerful and so intertwined.

We could all do with some humility and some respect and appreciation

for classic Austrian economics.

Let the market decide and then also just decentralization.

It's good for no one to have too much power.

It's good for it to be hard to do things and slow.

Too many people doing too many things.

Maybe the human race is a lot better if we just did less and slower.

The world is a world of technology.

The world of technology.

The world of technology.

The world of technology.

The world of technology.

Hello and welcome to another episode of You're the Voice.

I'm in Prague last day of BTC Prague and I have the greatest honor of sitting here with Michael Sailor.

Thank you for having this conversation with me, Michael.

Yeah, thanks for having me.

Those who have been living under Iraq, just a quick intro of who Michael Sailor is.

Michael Sailor is an American entrepreneur and business executive.

He's the executive chairman and co-founder of Microstrategy,

a public software and services company that recently announced it is also a Bitcoin development company.

Microstrategy is undoubtedly the pioneer in holding the company's reserves in Bitcoin.

Till recently he was Microstrategy CEO for about 33 years.

And Michael is considered to be one of Bitcoin's biggest advocates and I'm sure that like me,

many other people are grateful that you are able to carry so many deep insightful conversations,

which for me have been a huge part of my learning curve and journey into Bitcoin.

So thank you so much for that.

Yeah, thanks for having me.

Okay, so my first question.

We live in a world that everything is big.

You said recently, big pharma, big tech, big everything.

Can you talk a bit about that and about the trend of centralizing powers in the hands of a few?

I think that technology has enabled us to create systems of unprecedented reach and power.

And we can see that in say Google that streams billions and billions of hours of video.

We can see that we can see a company that answers everyone's questions.

We have Microsoft that runs everyone's corporate information systems.

We have Apple that enables a billion people to take photos and send messages.

And these these big technology systems, they're both good and bad.

The good is Apple can ship a product over the weekend to a billion people for the cost of electricity.

And never in the history of the world could accompany ship a product, a new camera, a new recorder,

a new communication device to a billion people over the weekend.

And that's why it became the world's most valuable company.

But you know, when you consider all these things, global networks, global companies, they like,

they all have a management team which consists of a CEO, a CFO and a general counsel.

And so at the top of the pyramid is five people and a board of directors that have to run a business that provides the communications.

I've had meta for two and a half or three billion people.

So in that particular world, if a government decides it's dangerous to mention a word,

they will go to the general counsel and say, this is dangerous to mention that word.

And the general counsel will say to a head of technology, write a software program that scrubs out the mention of that word.

And then a billion people will no longer be able to pronounce a word.

A hundred years ago, there wasn't any company that could let a billion people take photographs.

There wasn't another company that would deliver instantaneously the messages between a billion people.

So, you know, the good and the bad of the modern age is, in the modern era, we have pharmaceutical companies that give us antibiotics.

But maybe they give you a vaccine that doesn't work the way you expect it.

In the modern era, you know, you have technology companies that give free education to billions of people.

But maybe they don't give certain information to a billion people.

And so that's the good and the bad.

On the margin, life expectancy was 50 in 1900. It became 70.

In 1950, with the advent of antibiotics, modern medicine clearly has had, you know, if you look at the plight of a woman in childbirth in the 1700s,

or if you look at infant mortality rate in the 18th century, it was tremendous and hideous.

And we have conquered so many of these awful things while driving life expectancy from 30 all the way up to 80.

But the price we paid is big government, big education, big technology, big pharma, big defense, and we're just able to, you know, now big retail, a company that can actually provide you with whatever you want in two hours.

That's the positive. The negative is the general council of that company can decide not to deprive, not to offer you something that you might want anywhere in the world.

And you've lost the 800,000 little retailers that used to do the job.

So we take the good with the bad and technology, it brings us these beautiful, amazing things.

Everybody's telepathically connected to everybody. But that's, you know, that telepathic thing.

If you ever watch one of those X-Men movies, the teenage girl is a telepath and when her telepathy starts working, she starts hearing the thoughts of everybody around her.

And then she starts hearing the thoughts of the serial killers and the criminals. And if she doesn't figure out how to tune out those thoughts, she goes insane.

Right. And it's an apt metaphor in a world where everybody can talk to everyone instantly via one platform.

What happens if the person running the platform goes insane? What happens if they get angry? What happens if we all listen too much to each other?

And it falls in the category of be careful what you wish for. There's a dark side to it.

But technology is pandora's box. You've opened it. You can't put it back in the box. You have to live in a new world.

And you have to find the good and then you have to find a way to manage, you know, the toxic tendencies of that technology capability.

100% and it's like the tool in the wrong hands is being used in the wrong way.

The challenge with big systems is they're systemically unstable. Sometimes we think, oh well, there's an evil person that has control of this system.

And it's very easy when we look at this system going astray and a foreign nation to think that was big brother and that was a bad person.

You know, and we're they were an evil dictator and I could name a bunch of them in the 20th century.

But the observation of the example I give people oftentimes is you could see things going awry before COVID.

Two years before COVID, the dress rehearsal was something I call the Twitter cane.

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Have you heard of the Twitter King? No. The world was wired in Twitter. We had 24-7 cable weather channels.

There was a hurricane forming over the Caribbean. Hurricane Irma, I believe. Like any other hurricane, they formed for hundreds of thousands of years since humans have lived in North America.

Hurricane has been forming. They form over the Caribbean in a certain season and then they meander this way and that. Maybe they hit land and if they hit land, they probably dissipate.

Occasionally they hit every 100 years and they do a lot of destruction.

In this case, though, the hurricane spun up and somebody on Twitter started covering it and they said, this looks like the big one. This is going to strike Miami and maybe it will actually flood Miami and wipe out the city.

Well, if you actually said on Twitter, there's a storm in the Caribbean but it's of no consequence. Statistically, it doesn't matter. No one's going to like that tweet.

But if you say there's a storm in the Caribbean, this one's going to wipe out Florida. Everybody likes that tweet. They retweet.

Some people quote tweet and say, this is stupid. This won't happen. Some people comment. This is stupid. This won't happen. Some people agree. Yeah, when this happens, you should, you know, go to my hotel.

Everybody jumps on board. It doesn't matter. The algorithm amplifies up the message.

So pretty soon the weather forecast are on 24 seven cable weather. See the little tweet. And they say, well, looks like there's a massive one over the Caribbean. It's going to hit Florida.

It's loving it on Miami.

Ratings triple. Everybody starts tuning in nonstop. Now the mayor of Miami watches it. Now the governor of Florida watches it. Now the head of FEMA watches it.

Pretty soon, you know, maybe the president on the States is commenting on it. Everybody comments on the big hurricane that's headed for Miami. Now people start to have meetings. Now the advertisers start advertising on the weather channel.

Now the Twitter people start posting the weather channel is all very colorful. It bills. It bills. It bills. Well, so it bills enough that it. They're being talking about it. Pretty soon national news picks up. You know, it goes beyond the weather channel. It's on national CNN. They're covering it.

People are buying advertising. People are commenting. Blah, blah. It's just going to happen. This is not going to happen. Blah, blah, blah. Massive Twitter came.

So the politicians get together and you know, the mayor of Miami says, well, you know, maybe this is going to hit Miami. We think we're going to have to make safety precautions or take precautions.

Well, the next politician says, I'm not going to be outdone. We're shutting down Miami Beach. Miami Beach is shut down, man, because we can't allow our citizens to be destroyed by the tsunami that's going to hit Miami Beach.

The police could call up now all the sudden we have to declare a martial law. Well, the governor can't overlook this. So the governor calls the press conference. And the governor declares that there's a big hurricane coming to Florida. And we want to protect our citizens and Florida cares.

I demand support from the national government. We wanted to clear an emergency. Get FEMA involved. The government is not paying attention to us. The government. Well, you know, the government cares more. Pretty soon the national governments involved, the state governments involved, the city governments involved Miami Beach is involved.

I live in Miami Beach. I have a house in Miami Beach. It's been there for a hundred years. There's been 10,000 hurricanes never knocked down Miami Beach. But at this point, the politicians decide we need to evacuate Miami Beach.

If you want to stay, you can't stay. We're declaring martial law. What if I don't leave? You're going to jail. You're going to jail. Call the police. Knock on the doors. Evict everybody. What if someone robs our house? Doesn't matter. You got to go. Everybody gets kicked out of Miami. Where do you go?

Everybody floods every hotel in the middle of the state. The hotels are all booked. You have to shut down your business, miss. You have to shut down your hair salon, your yoga studio. All the hotels are forcibly closed. The nightclubs are closed. The restaurants are closed. The supermarkets are closed.

We're running out of toilet paper. Oh my, there's a massive crisis. Where have you seen this before? Do you recall this crisis? Massive crisis. So I happen to have a family that live across the state. And so the people that work for me in my house, they flee and they go to Sarasota because all the state authorities say you need to go to Sarasota or a Tampa to avoid the hurricane that's going to hit Miami Beach. You'll be safe.

And if you don't go, we're arresting you. Everybody goes to the other side of Miami and they go to the hotels and the entire economy shuts down in 20, 30, 40 billion dollars of damage is done. The hurricane. Me and there's this way in that way. And as you know, no one can tell the future and whether is very unpredictable. And so the hurricane is coming in in the last 48 hours. The hurricane shifts and then the hurricane goes the opposite direction and goes to the west coast of Florida.

It spins around and slams into Sarasota and and enables for where everybody was evacuated to.

Well, this is a ground zero hit disaster. The hurricane struck the place that we didn't think it would strike. And we sent all the citizens there and they're all in hotels and the place the hurricane struck.

The hurricane misses Miami and Miami Beach, which is empty. The economy is destroyed. The city is empty. People have lost their minds. It strikes Naples. It strikes Sarasota. There is no damage. Everybody's fine except for the damage, the politicians and the media and the system did.

Now who's to blame? It's the Twitter came. I watched it in 2018. I said there's something wrong here. Twitter plugged into into cable news, plugged into the politicians. The politicians just want to help out of abundance of caution. We're just trying to keep you safe.

They destroyed billions and billions of dollars of private property. They deprived people of their civil liberties. They forced people into the eye of the storm.

Yes.

But doesn't it feel like a dress rehearsal for something that maybe came later?

And again, it wasn't the red thing or a blue thing. That's a red state. But you know, whether you're a blue politician or a red politician, it didn't matter. I think here's the problem.

Too much money, too much power, too much technology, too many people thinking that they were put on this earth to help.

Right? Large ego, large power, large capability. And when a random storm, like any other storm for the past 100,000 years occurs in that environment, it's like a powder keg and it goes unstable.

It's like an autoimmune disease or anaphylactic shock that manifests itself at a complex vertebrae. It's like I put a peanut under your nose and your body shut down and you died.

Did the peanut kill you? No, you killed yourself. But why did you kill yourself? Something is systemically unstable.

And in our society, technology has threaded in such a way that everybody is telepathically connected to everybody and everything is inflammatory.

And the inflammation, ripples, amplifies, resonates. You ever see a guy with a wash guitar and a microphone and an amplifier and he puts the microphone in final touch guitar and feeds back into the system and it blows everybody's ear drums.

You have to have some respect when you're around power because you get feedback. And we're just getting a lot more feedback in our systems today because all these things are looping into each other.

You know, I pick up my phone and you know, and the phone provider can actually put a public service warning on the phone for 4122 days in a row, it'll tell you you ought to be panicked in order to protect you.

But the point is if I poke you 1400 times in a row, if you were healthy, you won't be when I finish.

That's right. You'll trigger that for you. We're triggering. Right. You're triggering the dysfunction. And I think that that's one of the artifacts of modern technology that we've created systems that are so powerful and so intertwined that you trigger these things.

And it's a reason why we could all do with some humility and some respect and appreciation for for classic Austrian economics, let the market decide and then also just decentralization. It's good for no one to have too much power. It's good for everything to be sometimes it's good for it to be hard to do things and slow.

Because the modern society is I want to do things fast and quickly and easily. The lesson of Bitcoin is it's okay to do things with great difficulty deliberately and slowly.

And sometimes the lack of doing things is the feature. And you know, in the Dow of Steve, the famous quote is doing stuff is highly overrated.

Right. People try to too many too many people doing too many things. And maybe the human race is a lot better if we just did less and slowly and slower.

Love that message and that takes me a little bit into Bitcoin. So can you share your view about Bitcoin as a digital asset or property and not currency. And what's the differentiation for you?

I think that that Bitcoin adoption has been held back by misunderstanding of its true nature because the industry has been collectively and colloquially called the cryptocurrency industry.

So people's immediate reaction is it must therefore be a currency and a currency is a medium of exchange and they think of the euro and the dollar and the yen and the shuckle and whatever.

And they think it's a currency and their immediate reaction as well. I know it's not legal tender so it's tax inefficient to trade it. And I know it's not my government's favorite currency.

So it must be against the government and it seems silly and it's not stable and it's volatile and nothing's priced in it. So I therefore I think it's stupid or threatening.

Now if you simply if you step back and ask more deeply what is Bitcoin? Well, Bitcoin is digital money. What is money?

Money could be a store of value, a medium exchange or a unit of account, but the aspect of money that's a medium of exchange is currency.

And the aspect of money that's a store of value is capital.

More like property, but especially capital. Most people don't really think about a form of money and capital because we haven't really had a strong

money as capital since the gold standard. The closest thing would be when you could hold gold as your capital asset and then you used notes or paper currency that was pegged gold or some other currency as a medium exchange.

But if you think about Bitcoin as digital capital and you think about the dollar as currency. Once you understand that you see, well, currencies are medium exchanges and the thing you need in a medium exchange is it needs to be legal tender because you need to be able to transfer it tax free.

And of course the dollar is the world reserve currency and then other countries will have their own currencies. They'll be the euro, the CNY, the peso, etc.

Any country that's affected affected nation state will have their own currency and when the nation state is failing after a war, it may dollar rise. It may, you know, nation states will adopt a euro in lieu of their own currency when they can't support one or they'll adopt the dollar or they'll adopt CNY.

And so there's like whatever 120 currencies, but there's 180 or more countries, right. So that's there's nothing exciting going on there right now with the with the exception that people are creating digital currency in the form of stable coins like tether or circle and in a country with a collapsing fiat currency like Argentina or Turkey or Lebanon.

You would prefer the digital currency stable coin because that dollar looks like a store of value to you. Right. If you actually converted a million pesos to a million dollars 25 years ago, you now have a billion pesos. So it's perfectly fine as a count the last set and as a medium exchange when your existing economy is collapsing.

If your existing economy is not collapsing and you're in the European Union or the United States or a country where the currency is pegged to the dollar.

In that case, you can just use your local currency as a medium of exchange and then the issue is what your store value. And if you talked any wealthy person in any of those places, none of them will tell you the euro is the store value and they won't tell you the dollars the store value.

Every rich person you meet is going to tell you that they own a portfolio of real estate or property assets or they own company stocks or perhaps they own scarce desirable art or collectibles or sports team.

They will own something which is probably scarce desirable appreciated. It will not be pure currency and the majority of the money probably isn't in credit instruments or bonds either. They might occasionally sit in them.

But most of their capital is invested in property assets or super high quality collectibles or equities that they believe in or their own private companies alternative assets even.

Yes.

So if you understand Bitcoin is digital currency, your reaction is immediate and negative and ignorant and inflammatory.

If you simply turn the narrative and say, hey, it's digital property, you're going to buy it instead of buying a building.

You know, and that's a very simple thing. You know, it's like you have $10 million you live in Africa. You can buy anything in Africa for $10 million. Any company, any building, any land, any set of commodities, any bonds, but the catch is you have to keep it there for 100 years.

Or you can buy Bitcoin. What would you buy in Africa that you would prefer to owning global digital property that you could take with you? And the answer is nothing.

Of course.

There's nothing you would buy and there's no country you would buy it in. Nothing. You wouldn't buy a diversified portfolio of anything. Right?

And so that illustrates the point and the point is Bitcoin is digital capital. It's global capital and it conveys the same property rights to a business person or an individual in Africa.

An individual with $100, a business person with a million dollars, a billionaire with a billion dollar, they all have the government. They all have the same property right, the same opportunity as a billionaire in Manhattan.

As the king of England, as the royal family in Dubai. Right? Now, if I took Bitcoin away from you and I put you back into Africa and I said, okay, now you can't buy Bitcoin.

Now I can buy the best hotel I can find in Nigeria. Hold that for 100 years. Good luck with that.

But there's nobody in the right mind would say that investment seems as high quality as buying the best portfolio of stocks and holding them in the Upper East side of New York City. Right? Just not as good. Right?

So Bitcoin is digital capital. It's global capital. It's I would call it digital property because it's easier for people to get their head around the idea of property with the only caveat being if I buy a billion dollar building in London.

It takes me a year to buy it, it takes me a year to sell it. I can't move it. I may be property taxed on it. But otherwise, it'll probably appreciate in value faster than the monetary inflation rate or at the rate of monetary inflation because it's scarce desirable as long as people want to live in London and do business in London.

If I buy a billion dollars of Bitcoin while living in London, I can buy that with no transaction cost in a minute, a few hours probably. I can sell it in a few hours when I want 24, 7, 365.

I can move it to any jurisdiction and I can place it in the custody of any custodian. It is globally desirable by anybody with money anywhere in the world.

So Bitcoin is digital property, but it's got a lot of characteristics that are better than physical property. And it's kind of difficult to break up the building into 100 pieces and then recombine them together next week.

But Bitcoin is fungible. It's liquid. It's global. Right? I can move it at high frequency. And you know, the building you bought in London.

Well, okay, you bought a billion dollar building. Can you buy a hundred? Can you buy 99 more buildings that are equally valuable also in London? Can you do that this year?

Well, they're not fungible, right? Right? Every building is different than every other building. People will say, well, that building is on the end of the street corner and it's other building that looks exactly the same is only worth half as much.

And if I'm the mayor and I change the traffic pattern, I can devalue your building. Correct.

So Bitcoin is universal global fungible, standardized property and it's digital. A computer can move it around.

And that's why it holds such a global appeal to everybody on the planet. No matter, you want to buy $20 worth of a building? Good luck with that. You can buy $20 Bitcoin.

You know, you can work your way up to a million dollars of Bitcoin, 20 and 20 dollar increments. And when you get to a million, it's not devalued. Try buying a building, $20 at a time.

Right. You're not going to buy a million dollar building, $20 at a time. So Bitcoin offers property rights and it offers this digital capital to 8 billion people at scale.

They can buy with their weekly paycheck and it works whether or not you're working class, middle class, upper class, a pension fund, mega corp, little corp nation state.

Everybody has the same exact asset. They all have the same benefit. And one more point on make a very powerful important point.

If you are rich person and you live in Alabama and you buy $27 million of property in Alabama, there's nothing anybody in Israel is doing to increase the value of your property in Alabama.

That's right.

There's nothing going on in Moscow or Dubai or Abu Dhabi or Singapore or London to increase the value of your property in Alabama.

That's right.

You're making a local investment when you are that same person and you buy $27 million of Bitcoin in Alabama.

There's a person in Singapore that comes up with an idea for a trade that's illegal in Alabama.

Yep.

That you couldn't do if you want to. That guy builds $10 million of equipment, borrows $10 billion worth of Bitcoin, does the trade and triples the value of Bitcoin.

And you triple your money because somebody somewhere else in the world came up with an idea. You didn't know about you weren't capable of and legally you couldn't have done.

But that's the power of being connected into the global economy.

And it works the other way.

The guy in Singapore benefits from what's going on in Paris and London and Dubai and Abu Dhabi and what's going on here in Prague right now.

Everybody's working for everyone in network that's mutually beneficial to all participants.

I call it the Mycelium because it's just like with mushrooms in nature.

The trees are benefiting from the other flowers next to them. Thanks to this Mycelium that connects all of them together.

Call it a virtuous network.

Absolutely.

Absolutely. And you know when I knew I got it, when I sold my apartment this year and I bought Bitcoin with it.

That was when I, okay, I should not have that real estate anymore. And I'm not rich, a rich person.

I just said my assets are way better in Bitcoin than in this real estate.

So let's talk about ETFs a little bit.

It feels the domino effect had started after US.

We now see other countries following suit with issuing their own ETFs.

We see Brazil, Australia and there are other examples.

What is the role of ETFs in Bitcoin's reality in your view?

The ETFs are applications on the Bitcoin network.

So they're securitizing Bitcoin.

And they play an important role because they add value to Bitcoin.

And they solve the following problems.

They make it more convenient to buy.

If you're a 70 year old retiree, you can pick up the phone and say,

I want 10% of my assets to be in Bitcoin, buy it over the next week at the average price click.

Yep. Absolutely.

Seven seconds, one phone call done.

And the person that took the phone call, they get compensated.

The accounting systems work. The risk controls work.

Compliance controls work. You don't have to wire any money.

You might even be able to borrow the money to buy it.

You can buy it without putting any cash down.

You could have, you could have a million dollars of Apple stock pick up the phone and say buy a hundred thousand dollars of Bitcoin.

And then your broker would loan you the hundred thousand dollars from the Apple to buy the Bitcoin.

And you end up paying five percent interest to buy something that's generating a 50% yield right now.

So it solves the credit problem, the convenience problem.

It also solves the custody problem.

And you don't have to worry about who the custodian is.

You don't have to negotiate a crypto exchange agreement.

You don't have to negotiate a custody agreement.

You don't have to figure out a move the Bitcoin.

You don't have to master the Bitcoin network.

You don't have to worry about all that.

So it's much simpler.

And then the other thing it solves is.

Accounting and reporting.

Because all of your financial statements are all integrated and people oftentimes have been doing business with the same bank for.

30 years.

And so everything is in one line and it's all properly calculated.

And if I buy Bitcoin in 18 different days, I've got 18 different bases and they keep track of the bases.

And in the year, I thought to sell something or if I gift it to my children and they get the tax accounting rights.

So it solves all the accounting and all of the reporting issues.

And those are all really critical.

But the other thing it solves is the compliance issue.

Compliance and capital control.

When the ETFs were approved in the US, there was a whole set of institutional investors like pension funds and hedge funds.

With $50 billion, $100 billion, $200 billion, they have a lot of capital, but they could only buy through the ETF.

Even if they wanted to work for a year to set up all these other systems, they're not allowed to.

Their choice prohibit them.

So they've got a compliance problem.

And then what happened is an ETF launched in Hong Kong.

Well, you can imagine if you buy Bitcoin in that ETF in Hong Kong, that Bitcoin is not being custodyed in the United States.

The Hong Kong financial system prefers the assets to be custodyed at a regulated bank in Hong Kong.

So if I'm a Hong Kong investor or a Hong Kong institution or Hong Kong company, I could funnel money into Bitcoin via the Hong Kong ETF.

Now the rumor is that there will be ETFs in mainland China.

Those ETFs will come to you via a Shanghai based financial institution and the Bitcoin will be custodyed in a Chinese mainland bank, maybe in Shanghai.

There's 1.5 billion people in China that want to buy Bitcoin.

The Chinese government doesn't have an objection to them getting rich.

It doesn't have objection to China getting rich.

They all like money.

They all like wealth.

Their objection is they don't want people to take more than $50,000 a year in capital outside of China.

So if you buy $10 million of Bitcoin, put it in a hardware wallet and leave the country, you violated the capital controls.

But if you buy $10 million of Bitcoin via an ETF and Shanghai and the Bitcoin is then purchased by the exchange and custodyed in China,

the Chinese banking system benefits, the Chinese currency benefits, the Chinese culture benefits, the Chinese government gets their taxes, the Chinese investors get Bitcoin.

And so the real significance of the ETFs is they're solving the problem of credit access, compliance, accounting, convenience, reporting.

And presumably there's going to be a different one in every city in the world or every country in the world.

If whatever nation, if the Saudis want Bitcoin to stay in Saudi Arabia, they'll have an ETF and re-ad.

The Emirates will think, well maybe we'll keep one in Dubai.

So you think we're going to see that avalanche continue?

It was already 34.

34 holding more than a million Bitcoin.

So I think we'll keep seeing a spread.

I think you'll see an ETF in every country.

In Argentina, they don't want you to take capital out of the country.

So the logical solution for them is an ETF where the Bitcoin is custodyed in an Argentine bank.

But is that happen?

You see what's going on is when the Chinese buy billions of dollars of Bitcoin, they'll drop up the price of Bitcoin in New York.

That's the network effect.

And in Argentina.

That's right.

Well so there's just one more application.

You know, ETFs are an application.

Micro-Compans is on the Bitcoin standard application like Micro-Strategy, you know, in cash app and strike and other mobile apps.

They're an application.

And the crypto exchanges like Coinbase and Binance, they're an application.

You know, eventually people will build it into their mutual funds, build it into their pension funds, build it into their insurance plans.

More applications.

Each application wants Bitcoin.

Each application slips the Bitcoin because they want capital because we call it capitalism because these are the capital markets.

Every company needs capital.

We build a civilization on capital.

How much?

400 trillion dollars a capital.

There's 900 trillion dollars of wealth in the world.

At least half of it has to be pure economic energy or monetary premium.

The world wants capital.

Everybody needs it.

Every government, every school, every institution, you know, every charity, every religion, every family, every company.

They all need capital.

Right?

So Bitcoin will just spread as an asset to capitalize on.

It is kind of the ultimate monetary union.

It's a cooperative bank and cyber space.

Everybody that joins makes the network more powerful, drives up the value of their assets.

And the more people that join, the more power they all have.

Just like you have a union.

If every worker in the country joins the union, the union is pretty powerful.

If nobody joins the union, there's no point in being in the union.

It's like here's a big idea.

What if we created a union, but we put our money in it instead of our labor?

It's not a labor union.

It's a monetary union.

Very powerful.

Okay.

My next question.

How does micro strategy decide which strategies to take to raise capital?

Senior debt bonds, convertible debt?

We've seen different tools that you're using for that.

We use them all from time to time.

When we had extra cash on our balance sheet, our first strategy was to buy with cash.

Then we had some cash we'd earmarked for a Dutch auction to buy back stock.

When we had excess cash afterwards, we took the excess cash we bought Bitcoin.

Then the stock exploded in value in some of our employees' exercise stock options.

We had cash from that.

We took the cash we bought Bitcoin.

Then we sold our software and we made cash in the software business.

We had extra at the end of the year, so we bought Bitcoin.

Then we had an opportunity to sell a convertible bond to the market.

The market wanted to buy a bigger one and we upsized that we had a lot of cash.

We bought Bitcoin.

Then we went back to the market and did another bond offering because Bitcoin price went through the all-time high.

We were able to raise a billion dollars for zero percent interest.

Then why wouldn't you?

If someone wanted to give you a billion dollars for free for six years, would you take the money?

Sure.

We had that opportunity, so we availed ourself of it and we did that.

Then Bitcoin price went down and we had not taken out any kind of mortgage on the company.

We went and we mortgage the company with a five hundred million dollar senior secured note.

We pledged the cash flows of the business and the future.

That was about a six percent, six and a quarter percent loan.

We bought Bitcoin with that.

Then the price of Bitcoin went up again and the stock skyrocketed.

We thought we'll go do an equity offering and we did an apt-a-market equity offering.

We sold about a billion dollars worth of stock.

We sold it at a premium to the underlying Bitcoin and so we sold the stock bought the Bitcoin.

Along the way, the price of this Bitcoin went down and then it went up again and eventually went back to the market.

We sold a bit more stock and then we sold another convertible bond and then another one and another one.

Our strategy is a function of the capital markets.

It's a function of the debt markets and are they open and closed?

The equity markets, the Bitcoin markets, the Bitcoin volatility.

We have bought Bitcoin every quarter.

The real short answer is we just buy Bitcoin every quarter and we buy it with whatever cash, equity or debt we feel is most appropriate.

The market is always offering you opportunities so you just have to be paying attention to them.

The advantage we have is we're on a Bitcoin standard and we're laser-like focused on Bitcoin so our strategy is to buy Bitcoin and hold Bitcoin.

Because we are laser-like focused and everybody understands our strategy, we're transparent, we're committed, we're reliable.

That means that all of the equity holders, the investors in the market that want to buy levered Bitcoin equity, they can buy our stock.

Because we don't hedge, that means our stock is more volatile than Bitcoin.

So the S&P volatility is about 10, Bitcoin is more like 50, our stock can be 90 to 100.

If you are an options trader and you plug a volatility of 90 into the black sholes equation, the option value is up through the roof.

And if you plug volatility of 10, the option has no value.

So because we pursue a very laser-like focus Bitcoin strategy of leverage and because our investors know we're not going to hedge, that makes it possible for them to hedge.

We don't deprive our investors of the opportunity to sell the volatility, hedge the volatility, buy the debt, sell the debt, short the stock along.

If you hate Bitcoin and you want to short the stock, you need to know that we're not going to sell the Bitcoin, because that would blow up your trade.

So we've created a very reliable company and it doesn't matter whether you like Bitcoin, hate Bitcoin, like micro strategy, hate our strategy.

It doesn't matter, you don't even need to know what Bitcoin is.

There's actually an ETF called MSTY.

What they do is they just sell the volatility of micro strategy, call options.

Last, I checked they were generating 150% annual interest.

And so there are people that don't know what Bitcoin is, but they just think, I guess it's not going to go to zero in the next six months.

And so I might just go ahead and sell that volatility. If it doesn't go to zero in six months, my break even is nine months.

If it goes to zero in nine months, I probably made money. If it doesn't go to zero, I make a lot of money.

And so our ability by Bitcoin has been enhanced by us embracing volatility by embracing Bitcoin by being simple and consistent.

And because we don't try to hedge Bitcoin and don't try to pick something else to invest in, we can spend all of our time in the capital markets just figuring out how we're going to raise more money.

Right. And do you get other companies coming to you or to try and mimic your model to look at how micro strategy is doing it?

More recently, I get approached by public company officers and CEOs that have noticed what we're doing.

And, you know, we're starting to see more public companies. I think there's four or five public companies in the past month that have started to embrace a Bitcoin standard.

And there are a thousand that are good candidates for it. I think 2024 is like the first year of institutional adoption of Bitcoin.

Like 1994 was the year of institutional adoption of the internet.

And you wouldn't have done it before this year. But like, so we're six months into year one.

Yeah. Wow. Where is it going to go?

It's massive opportunity for everyone right now. If they open their eyes, if they do the work, you know, one thing I say to people is the average person is going to work 20 years at least.

So you're going to work 40,000 hours to make money.

If you're going to invest 40,000 hours of your life to make money, you probably ought to invest 100 hours of your life to keep it.

And the great irony is it is not controversial to every single conventional thinker will say, son, you're going to have to work hard for 30 years to make what I have.

And they all send their kids off to school for 16 years. And then they send them the workplace for 30 years.

So you got to work 45 years, 2000 hours a year, 90,000 hours. If you're going to be successful.

And I say, well, sir, you know, I think it's going to take about 100 hours to understand Bitcoin. They're like 100 hours. That's too much.

That's, you know, there must be something wrong with Bitcoin. I don't have 100 hours.

My stock broker doesn't make me spend 100 hours to take any other investment decision. I can't be bothered.

You have 10 minutes. You have 20 minutes. Yeah. Yeah. 90,000 hours to make your money.

Spend 100 hours. Figure out how to keep your money.

I would have gone further with you on that. What we have to finish. So my last question is you ended your presentation yesterday here at BTC Prague with spreading Bitcoin with love.

Can you say a bit more about that?

Bitcoin's a paradigm shift. It's the world's first perfect money. It's digital capital. It's the digital transformation of everything that's capital asset.

It's energy flowing into cyber space. These are all profound complicated scary topics.

It converts all the economics you learned from an art to a science. Everything you learn, you have to unlearn.

All of your monetary theory, you know, all of your bromides, you know, I have to have a diversified portfolio. Well, no, you don't.

Diversification is selling the winner to buy the losers. But that's not what I've been taught for 30 years.

Everything you're talking about is the opposite of everything I've been taught, you know, every rich old person that I know, every rich old, powerful person says that it's a scam.

Well, every rich old, powerful person doesn't need it. They're rich and they're old.

There's nothing left for them in life to do. The people that need it are the 20-somethings, you know, starting their career.

It's like, I don't have any money. I don't have any power. I don't have any respect. How am I going to get ahead?

So, what you have is this new thing. It's moving faster than the speed of sound. It's creating a shock wave. It's going through the economy.

It's creating a lot of noise, a lot of sound, a lot of fury. It's scary. The human conventional reaction to any of that is to push back.

Right? Human nature is to fear that that we don't understand and to react with anger or irritation. Why are you pitching this? What is this scam? Why are you bothering?

I don't want to talk about this. What are you telling me? Right? So, that being the case, you're selling a new idea, a new ideology, a new protocol, a new philosophy of economics, a new philosophy of money.

You're selling a new idea of money to people that have never in their life thought about what money is. And you're questioning fundamental premises and they're successful and they're comfortable.

Correct. And they're probably wealthier than you. So, the natural reaction of them is to treat you skeptically or rudely or reject you.

And I think the right response is to think like a salesperson. The customer is always right. You're selling them a new product. This is a new product. It's better than the old product. It's electric car. It's electric refrigerator. It's electric hair dryer. It's a mobile phone. It's a new jet. It's a new kind of something.

The customer has never seen it before. The customer is afraid of it. The customer doesn't get it. The customer tells you to get lost. The right response is, well, sir, I can understand why you would say this, but you know that your wife might like it.

I can see why you would say this, but you know it'll make your company rich. I can see why you would say this, but you know it'll help you win the election. I can see why you don't understand it, but if you spend a bit more time, you'd realize it'll make your bank successful.

I, you know, well, I guess I guess you don't understand it, but if your circumstance changes, we're here as a solution. Call me. Right. The customer is right. Keep the door open. Be polite. They hate you or their rude or they're rejecting you because they don't understand or they're afraid. Right. And you can't take it personally.

You know, in the wrong responses, you're just too stupid to buy my jet. You know, are you too stupid? You don't deserve my computer anyway. Yeah, I've got to care for cancer, but I hope you die of cancer because you don't appreciate, you know, right. I, you know, I hope that could stuck in your throat. And I won't be here, right. I mean, that's a juvenile reaction. But everybody's got their own talents.

In business, you have a hundred people apply for a job. The people you put in sales are the ones that are agreeable, have a good self image, and they're willing to get beat up and keep a smile on their face. And they'll keep coming back. And they don't take it personally. Right.

The people that you don't put in sales are the people that are impatient want you to understand it immediately and take it personally and get angry if you don't buy their thing. That's right.

These are probably people that are better working in a cubicle as an engineer or in a machine shop with a machine or something, right. There's probably another thing they can do, but they should not be in sales.

So I say spread Bitcoin with love, not hate when you when you actually react negatively violence invites violence hate, hate invites inflammation.

And you just slow down adoption, you close off communication paths. And people, most people don't really understand what you're saying, but they understand if you were mean to them.

And so when you give them pitch them the new idea when you introduce digital capital and they don't get it, if you react negatively, they'll remember that you yelled at them.

And then three years later, when they need it out of spite, they won't go back to you because people just don't want to do business with someone they don't like.

That's right.

And they won't even remember that they were rude to you. Right. The kind, you know, I've been in business my entire life.

I'll go see a customer. Hey, we've got this software. This is going to make you millions that I get get the heck out of my office. You stupid. I'll never buy you 10 years later. I'm like, you know, you're my customer. You give me millions a year. It's made you hundreds of millions of dollars.

Like, yeah, it's been a great partnership. I'm like, you remember when we first met like, no, now what did I say? Like nobody remembers when they were mean to you. Right. Except you remember.

And if you remember and take it personally, you never make the sale. And if you, if you don't take it personally, you know, here's an idea. It's good for the world. You don't, you don't appreciate it. It's because you don't understand it. That's okay. I'll keep I'll be here.

Eventually, you'll understand it. I have confidence.

Yep. Right.

I'll be here nicely waiting for you. I'll be here when you change your mind.

Meanwhile, meanwhile, I'll go talk to other people. You know, and I'll just keep knocking on doors. And at some point, their competitor will decide to adopt Bitcoin. And I'll go, whoa.

And then they'll call you back. And then what will you tell me about the Bitcoin thing? And you go, oh, yeah. Yeah. Um, this like, well, my competitor is doing. Yeah, like I told them.

Well, why don't you tell me. Well, sir, I actually came to see you two years ago. Do you told me to pound sand and, and die? I did. I'm sorry about that. I don't remember that one. I mean, really, everybody's like that. I mean, people that introduced Bitcoin to me. I say, you know, when I tell you about Bitcoin, I'm like, no, they're like, well, you told me to shut up. It was stupid. I'm like, did I really I'm sorry about that?

Yeah. So we need to spread Bitcoin is do it with love. Just don't don't we don't need to attack people and attack their institutions and and attack them personally. Eventually, every institution will come around. Eventually, every person will come around.

Everybody benefits from technology that makes them more powerful. Who doesn't who wants to be less powerful and less capable? I don't know, such people. No one's got that in their charter. They just don't understand how we can help them.

So with that, I want to say that the work you're doing and who you are, I think is real expression of love to the world. And I thank you for that and a heartfelt thank you for this conversation. Thank you so much for being with me.

Thanks for having me. Give me the chance. You've been a joy.

Thank you.