#385: Michael Saylor On Buying Bitcoin With His Balance Sheet

Michael Saylor is an entrepreneur and business executive, who co-founded and leads MicroStrategy, a company which provides business intelligence, mobile software, and cloud-based services. He has become well known in the Bitcoin community for using the company's balance sheet to purchase more than $400 million of Bitcoin. In this conversation, we discuss how Michael built MicroStrategy, what his $500 million dilemma earlier this year was, and why he choose to put more than $400 million into Bitcoin with the company's balance sheet. ============================== Crypto.com is the only all-in-one platform that allows you to BUY / SELL / STORE / EARN / LOAN / INVEST crypto all from one place. Join over 1 million users currently using the Crypto.com app. Download and earn $50 USD using my code ‘pomp2020’, or use the link https://platinum.crypto.com/r/pomp2020 when you sign up for one of their metal cards today. ============================== Coinbase Wallets are adding support for .crypto and .zil domains through their partnership with Unstoppable Domains. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can send money using these new domains instead of long Bitcoin wallet addresses, while also storing your domain in Coinbase's collectibles section. Go to unstoppabledomains.com in the dapp browser to register and manage your domains. ============================== Pomp writes a daily letter to over 50,000 investors about business, technology, and finance. He breaks down complex topics into easy to understand language, while sharing opinions on various aspects of each industry. You can subscribe at https://www.pompletter.com

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Anthony Pompliano?

  What's up everyone, this is Anthony Pompliano. Most of you know me as Pomp. You're listening to the Pomp Podcast, simply the best podcast out there. Let's kick this thing off. Michael Saylor is an entrepreneur and business executive who co-founded and leads MicroStrategy, a company which provides business intelligence, mobile software, and cloud-based services. He has become well-known in the Bitcoin community for using the company's balance sheet to purchase more than $400 million of Bitcoin. In this conversation, we discuss how Michael built MicroStrategy, what his $500 million dilemma earlier this year was, and why he chose to put more than $400 million into Bitcoin with the company's balance sheet.

• 0:43Anthony Pompliano?

  I really enjoyed this conversation with Michael, and I hope you do as well. Before we get into the episode though, I want to quickly talk about our sponsors. First up is Crypto.com. They're an all-in-one platform that allows you to buy, sell, store, earn, loan, or invest crypto, all from one place. They've got over 1 million users currently using the Crypto.com app, and their whole goal is to drive mass adoption. So go check out Crypto.com, the all-in-one platform that allows you to buy, sell, store, earn, loan, or invest crypto, all from one place. Crypto.com, go check them out. Next up is Unstoppable Domains. Coinbase wallets have finally added support for .crypto and .zill domains through their partnership with Unstoppable Domains.

• 1:25Anthony Pompliano?

  Previously, you had to send these really long Bitcoin wallet addresses of random letters and numbers. No longer do you have to do that. Unstoppable Domains provides an all-in-one solution for blockchain domains. You can now send money to pomp.crypto rather than the long Bitcoin wallet address. So go check them out at unstoppabledomains.com. Again, unstoppabledomains.com. It's like any other URL service. Once the name is gone, so pomp.crypto, I got that one. You can't get it. There's plenty of others. Go get the ones you want before somebody else grabs them. UnstoppableDomains.com. Lastly, don't forget that I write a daily letter to over 50,000 investors about business, technology, and finance.

• 2:09Anthony Pompliano?

  I break down complex topics into easy-to-understand language while sharing my personal opinion on various aspects of each industry. You can subscribe at pompletter.com. Again, pompletter.com. Alright, let's get into this episode with Michael. I hope you guys enjoy it.

• 2:26Speaker 01

  Is a partner at Morgan Creek Digital. All opinions expressed by Pomp or his guests on this podcast are solely their opinions and do not reflect the opinions of Morgan Creek Digital or Morgan Creek Capital Management. You should not treat any opinion expressed by Pomp as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his opinion. This podcast is for informational purposes only.

• 2:51Anthony Pompliano?

  All right, guys. Bang, bang. I have Mr. Michael Saylor here. You're an absolute legend, my friend. Thank you so much for for doing this.

• 3:00Speaker 02

  Happy to be here.

• 3:03Anthony Pompliano?

  Let's start. You are Bitcoin famous now for being the CEO of the first publicly traded company to convert a material amount of your balance sheet into Bitcoin and use it as a reserve asset. We will get to all of that fun stuff in a minute, but let's just start with your background and kind of how you got to running micro strategy, what that business does and kind of that background that really led you to this.

• 3:29Speaker 02

  Okay. I grew up in an Air Force family, lived on military bases my entire life. I went to MIT on an Air Force scholarship. I I got a degree in Astronautical Engineering, studied spaceship design. While I was there, I got another degree in the history of science. I studied the structure of scientific revolutions and paradigm shifts and became very fascinated with how new new technologies get introduced.

• 4:00Speaker 02

  Learned to fly in the Air Force.

• 4:04Speaker 02

  But I never went active duty because just as I was about to graduate, the Cold War ended. The Reagan-Star Wars buildup won it. And one day, my commanding officer walked into the room and said, you know, we paid for education. You're on the hook for five years. Active duty, but if you want to join the reserve, you can do that. If you want to go active duty, then you're going to wait two years before you get called up. So, you know, the choice would get paid three times as much in the civilian world.

• 4:34Speaker 02

  You know, and serve in the reserve or wait. So.

• 4:40Speaker 02

  This was an easier choice for me because I was gonna be a pilot and in my final semester, I was diagnosed mistakenly with a benign heart murmur and it disqualified me from flying combat jets. And so my hopes dashed to being a fighter pilot. I decided I did not want to wait around and so I joined the Air Force Reserve and I became a civilian unexpectedly in the final month of my undergraduate career. I thought I wanted to be a professor. I got into a PhD program but I had no money. And so I decided I would go work for a year and then I would apply

• 5:22Speaker 02

  for a fellowship and then I would go back and get my PhD. I worked for the first six months, the company I worked for blew up, you know, and I ended up working at DuPont and I was building computer simulations for DuPont and around the 18-month point, I attended my resignation to go back to MIT and I was building computer simulations to predict the return on billion-dollar capital investments in the petrochemical industry. And a computer model was going to be used to justify $1.5 billion investment and the executive that wanted the money, you know, I'm sure he said

• 6:02Speaker 02

  to his staffers, "Hey, tell the kid we need him to finish the job." And I was 24 and living in an apartment with milk crates for bookshelves, spending $700 a month. And I knew I didn't want to stay and be a corporate bureaucrat, so I was like, "No, I'm not staying." And the executive said, "Well, give him whatever he wants." And I said, "Well, you want to raise?" I was like, "No, I don't want to raise." "What do you want?" I said, "Well, when I was in high school, I wanted to be a rock and roll star and that was dashed. And when I was in college, I wanted to be a fighter pilot astronaut and those hopes were dashed. And my third idea was be a professor and that's what I'm gonna go do. And there's only one last thing on my checklist,

• 6:46Speaker 02

  which is I'd like to be a CEO of my own company." And I said, "Okay, so if you want me to stay, you're gonna have to let me start my company. I want, I think I got a quarter million dollars in cash, two and a half million dollars in contracts. They let me hire 10 people from DuPont, gave me free office space and computer equipment for the first two or three years."

• 7:07Speaker 02

  I took the, you know, they said, we can't give you the money upfront. You're just a 24 year old. I said, you got to because this was the only time this negotiating strategy ever works. I said, you gotta give me the money because I have no money. Like I had, um, you know, they said, well, but and they went back to their boss and I, and they did this deal that you would never, ever, ever do. But I just happened to be the one guy on the east coast that could make their computer program work. And the guy was 12 weeks from getting a billion dollar check from a mega corporation and it was all irrelevant. So they gave me the money. I, I thought, holy crap, I have $250,000. This is enough capital to last me for seven years.

• 7:51Speaker 02

  So I figured seven years. Good. Let's start. And so age 24, I started MicroStrategy with the thought that I didn't want to work for anybody else. And when it failed, I would go back to college. And it never failed. And the first year we did, you know, 10 people and then 20 and then we were 5 million, then we were 10 million, then we were 20 million, then we were 40 million. And at some point we were 80 million and then we kind of came to the market and, you know, 96, 97 timeframe and the dot com revolution's going crazy. Everybody's clamoring, you gotta go public. So we came public in 1998. And then there was no going back, you know, I got on the roller coaster.

• 8:34Speaker 02

  And so that's how I started MicroStrategy. I didn't, I didn't mean to. I kind of fell off the, the turnip truck and hit my head on a pot of gold and I'll keep it.

• 8:46Anthony Pompliano?

  So when you decided to go public, uh, this was like right in the heart or at the start really of like kind of this mania phase. Uh, talk a little bit about, um, going through as a public company, uh, leader, kind of the multiple market cycles, right? Cause if you went public in 98, you get 99, this big boom, you have to get the crash. You kind of then see, you know, another rise, oh eight, oh nine happens, right? Then you kind of get this incredible, uh, decade in the equity markets. Um, and then you get COVID. It's like, how have you kind of navigated every single one of these? Uh, cause I don't think a lot of people realize like you started company at 24 years old, you're still running that company today, right? And so it's, it's been a journey.

• 9:26Speaker 02

  You know, like, Here's an irony. You know, I never got that PhD. I'm just like a silly MIT undergraduate. I remember I was competing in my early years with this guy, this professor from MIT, who had like umpteen degrees and was so much more educated. And, uh, you know, I would be running a million dollar company. He's got a million dollar company. And he said, what are you doing? I said, well, I'm building these computer simulations on a Macintosh. He said, you know, well, all the experts say the Macintosh is going to die. That's a bad idea. So, well, eventually, you know, eventually I ported it to Windows. And the, and the next time I saw him, the company's five million dollars. And we're working on Windows. And he goes, what are you doing?

• 10:09Speaker 02

  I said, well, I'm building, I'm building executive information systems on Windows machines using this thing called Wings, this new spreadsheet with a programming language. He said, oh, well, experts say that Wings will never work. Excel's going to dominate the spreadsheet market, and that's a bad idea. He was still running the million dollar consulting company, giving advice. I said, okay. Well, it turns out he was right. And in a year, we flipped the company and we rebuilt the product on Visual Basic, and we doubled again. And he said, what are you doing? I said, well, now we're doing this like executive information decision support system. And he goes, well, that, you know, that won't work on Visual Basic. You're going to go to C++. And, and he stayed one million and we were like 20 million.

• 10:52Speaker 02

  And then the next thing you know, we started building decision support systems on relational databases. And everybody said, well, that'll never work. That's too slow. Right? And, and it kind of worked until we got to 40 million. And then along came the web and we flipped it again. And we put a web interface on it and that got us to 80 million. And, and every single two or three years, there's something new that was simultaneously an existential threat, like it's going to kill us, or an opportunity if we embrace it.

• 11:23Speaker 02

  And we're always inventing the next thing. So eventually, we found ourselves into the business intelligence business. And we created business intelligence, web intelligence, relational intelligence. I had three big competitors, Business Objects Cognos, Crystal Reports. And we got to like 2007, 2008. And Conventional Wisdom, well, they all had to sell out. So all three of them sold, one sold Oracle, one sold SAP, one sold IBM. And we're still standing, right? And then we accrued some more customers and we kept motoring on and then along came the iPhone.

• 12:06Speaker 02

  You know, and the iPhone, the first iPhone in 2007 was kind of a toy, had no cut and paste, no App Store. 2009, the iPhone actually started looking pretty interesting. And I just, I became very enamored with the mobile wave. What happens when software leaps off of a PC out from under your desk? Because that's what they were. I mean, the computers were rocks under your desk and they were ugly. And they had lots of cables coming out of them. I thought, what if the software is running in your hand? And what if that phone's in your pocket? It's like software going from solid state block of ice. It gets the liquid, a laptop, and then it goes to vapor state. And a vapor state was on the phone.

• 12:52Speaker 02

  And then I thought, well, man, all of a sudden, instead of going to the office to sit down at a desk and run your software, maybe you have the software at your kid's soccer game on a Saturday afternoon. And then maybe rethink how the software works. So we started doing mobile stuff. And we implemented mobile intelligence. And that took us to the next level. Now, along the way, I kind of, I took one path, but I was always kind of a tech inventor at heart, entrepreneurial. So back in 96, when the internet hit.

• 13:28Speaker 02

  You needed an email domain, so we bought MicroStrategy.com. But I was too lazy. So I thought, why do I gotta type MicroStrategy.com? Why don't we buy Strategy.com? So we went and we bought, back when no one cared, we bought Strategy.com for like 50 grand. And then I, and then I thought, why don't we just start buying words? So we bought Wisdom.com and then we bought Usher.com. And by the way, do you know who owns Hope in the world?

• 13:59Speaker 01

  No.

• 14:00Speaker 02

  I own Hope, Hope.com. Hope, Emma. I bought Speaker, I bought Alert, I bought Angel, I bought Alarm, I bought Voice. I mean, and, and here's my thinking. You know, there are all these search engines and if you go online and you search for Voice, you get like 2 billion hits on Google. Okay, if you want to launch a company named Voice and you own Voice.com, you go to the top of the list of the billions. And so my thinking was, if 10 billion, 5 billion people go to school and they learn how to spell Alert or Emma, right? Emma, E-M-M-A.

• 14:44Speaker 02

  If they know how to spell that, isn't that good for a brand? And so I started thinking about branding and, and I launched a business Alarm.com. We eventually spun it off. It's a multi-billion dollar publicly traded company on the NASDAQ today. And, you know, we made some money. We didn't make the billions, but we made a lot of money off it, like 30, 40 million. And then we launched another company, Alarm was all about integrating your home alarm system with the internet. Yeah. And then we launched another company called Angel. And Angel was like an early version of Siri. It was interactive voice response from any telephone, like an angel on your shoulder, talk to it and they respond.

• 15:26Speaker 02

  We eventually sold that for about 100, 120 million. And so, you know, what I learned was it's easier to invent things and, and it's easier, you know, you can invent something, you can even get it to scale. Can you, can you maintain it and can you commercialize it? Right? A lot of people find like you can buy that boat. Can you afford to maintain that boat? That's harder. Now you maintain that boat. Are you really going to enjoy that boat? Are you going to use that thing? That's harder. The analogy in business is just because you can buy it doesn't mean you can make it competitive. And even if it's competitive, doesn't mean you can make profit from it. So eventually I learned that you can't keep inventing stuff. And we streamlined.

• 16:11Speaker 02

  We sold those off, but I got, I got to 2020. 2019. Where I sold voice.com. I tell you that story in a bit, but I got to 2020. We had a portfolio domain names are sitting there. I appreciated digital scarcity. I thought these are unique in the universe. Only one person can own the world. By the way, you know who owns michael.com?

• 16:36Anthony Pompliano?

  Please tell me it's you.

• 16:37Speaker 02

  Yeah, by the way, and, and you know who's lazy? I thought, well, what if someone just wants to type in Mike? Bought that too. I'm waiting for Michael Jordan to call me up.

• 16:48Speaker 02

  Like, why wouldn't you own michael.com?

• 16:50Anthony Pompliano?

  How much money do you think you spent on domains over the years acquiring all of these?

• 16:57Speaker 02

  Two million bucks, million bucks.

• 16:59Anthony Pompliano?

  Okay, so, so let's call it low, single digit, seven figure. Right? So million, two million, three million, whatever it is.

• 17:06Speaker 02

  Back in the, back in the day, back in the nineties, and I just sat on them because I figured the English language is going to be around for a while.

• 17:13Anthony Pompliano?

  Okay, and before you sold voice.com, how much do you think that you had made from selling the domains?

• 17:22Speaker 02

  We made like 35 million in the alarm transaction and more than a hundred million in the angel transaction. So, so, but we had, we had commercialized businesses with them. So we sold the domain and, and the business with them as part of it. And Voice was the first, the first naked domain sale that we did that was material. And we did that one for 30 million and we just sold the domain, nothing else.

• 17:50Anthony Pompliano?

  And when you go to do this, when people hear, wait a second, the same guy who did this Bitcoin thing, sold a domain for 30 million dollars. He also has a business that's worth, you know, over a billion dollars in the public markets, et cetera. He's spun off multiple companies that are now worth tens of millions, hundreds of millions of dollars. Like this guy just keeps hit after hit after hit after hit.

• 18:14Anthony Pompliano?

  How does something like voice.com come together? Do they approach you? Do you put it up on like a broker site and say, hey, there's a 30 million dollar domain? How does that work?

• 18:23Speaker 02

  You know, at some point I said to my marketing people, why don't you make a list of all of our premium domains? And my definition of a premium domain is, is a domain where if you hit the Google search, you would get 500 million hits or a billion or five billion hits when you typed it in the search engine. And they're all just, you know, ideas like wisdom and hope. Yeah. And I said, why don't you make a list of them and send them out to every, you know, everybody we know and see if anybody's interested in them. And we sent out the letter and we heard back, you know, nothing, right? Maybe I got like two venture capitalists called me, but nothing ever went anywhere. And I was like, okay, forget that. Go back and running my own business.

• 19:07Speaker 02

  And with voice, you know, this is how this goes down. I'm sitting at my desk one day and one of my junior 20 something business development reps walks in and he goes, hey, some broker, you know, called us and, and they offered us like a hundred and $50,000, you know, for this domain, voice. And I looked at him and I'm like, look, I've been waiting for 20 stinking years. Like a hundred and $50,000 isn't going to do much for me. I said, tell them no. Okay. So nothing, nothing goes on and then they come back and they, they offered us 300,000 now. I said, well, tell them no, don't bother me.

• 19:47Speaker 02

  So I waited and then the next day they come back and they doubled it 600,000. I said, uh, no, still not interested. Um, tell them, tell them it's gonna have to be something north of, you know, 10 million bucks. I'm just not interested. I go, well, they, they offered 1.2 and then it went to three and then it went to six. And when it got to 10 or something like that, finally, that, you know, I'm starting, I've got all these other people lobbying me. Salespeople sitting like jackals, you know, like you're gonna wanna, you know, they're all like, you have to sell this. You have to sell this.

• 20:32Speaker 02

  And this is where we're selling, selling intangible assets like anything, artwork. It all comes down to how much are they worth to you? Right? And so if you needed the 10 million dollars, you would have taken the 10 million dollars. But at this point, you know, I have 500 million dollars of cash in the bank. If I, and, and by, I, I love my things, you know, like I, I love them, tears, right? Maybe you can tell that I'm a little bit passionate about some of this stuff, you know? So I would rather own it and not have the 10 million than sell it, you know, for, for that. So I said, Tom, no.

• 21:18Speaker 02

  They said, okay, well, they want it to 22 million. I said, I think when they said 10, I said, the number's, I'll sell it for 30 million. So the only price I ever put on the table, 30 million bucks. I didn't like nothing else. I was like, after it gets to 10, I'm like, I will sell it for 30 million because that's enough to, I thought, by the way, it's an, I didn't sell it for 30 million because I thought that's what it was worth. I think that the word voice in the English language is worth 100 million. Like I've seen people drop a hundred million dollars on an ad campaign and you want to drop a hundred million in ad campaign with the with the iVoice.net type domain. It's like

• 22:03Speaker 02

  that. So I thought it was worth more, but I thought, well, I can, I need to market to market. I need to like create some kind of market comp for it. So we'll do thirty million. So I tell them thirty million. They said they'll give you twenty-two. I said, uh, no, but tell them I'll talk to them. And so around twenty-two million, I agreed to get on the phone. And you know, so like I'm talking to a broker and a lawyer. I'm like, I, I, you know, all through this, we're like, well, who's the buyer? Who's the buyer? Not some, some, somebody, you know, like, and if they'd said, if someone had said, yeah, we're a startup and we've got like twelve million dollars in the bank and we'll give you all of our cash and this is all we've got. Maybe they might have swayed me.

• 22:49Speaker 02

  But, but I just had a whale on the other end of the line that that wouldn't identify themselves. And I thought, okay, well, that's the case. I'm just gonna wait until they hit my bid, you know, if you had, if you had an acre in Central Park and someone wanted to buy it from you and the price is the price, you would wait. And then once it's like, you don't want it, I'll wait. I got another decade. I'm not going anywhere. Somebody's gonna eventually want to commercialize voice. So eventually they got on the phone and I'm talking to a broker and I hear like a click, click, and there's other people eavesdropping on the line. So I'm kind of just talking to myself. They said, well, we're authorized to go to twenty-two or twenty-three million. I said,

• 23:32Speaker 02

  you know, sorry, I said, go to the Google search engine and type in voice right now. And then why don't you, what you'll notice is that it's more popular than like what's up with a billion users. It's a better brand than you would get, you know, if you were to um, get a billion people online. It's, it's a better brand than, than Oracle or than SAP or than hundred billion dollar plus companies. So this is how I value it. I'm, I said, like, this is like my daughter. I'll marry her off, but only to a man that's gonna treat her better than I will treat her. So if you guys really value this, then

• 24:15Speaker 02

  Give me the 30 million. Otherwise, I'm keeping it, you know?

• 24:20Anthony Pompliano?

  And so at some point, they come up to 30 million, right? You guys agree.

• 24:24Speaker 02

  At that point, they agreed to 30 million.

• 24:26Anthony Pompliano?

  But did you know who it was before you agreed?

• 24:30Speaker 02

  No. I never knew who it was.

• 24:33Anthony Pompliano?

  Really?

• 24:33Speaker 02

  Who it was.

• 24:34Anthony Pompliano?

  Okay, so you agree.

• 24:35Speaker 02

  I sold it in the blind, basically saying no, from 150 grand up to 30 million. And then finally, they did it. I still didn't know who it was until after the transaction closed. And then I hear it's some crypto company, and that's the end of it for me. And that's my introduction to crypto.

• 24:54Anthony Pompliano?

  I literally am thinking about the broker who's like, okay, just showed up to work, $150,000 trying to buy a domain. And next thing they know, a couple of weeks later, they're brokering $30 million deals. And probably, you know, they're peeing in their pants, right? Just hoping to God this goes through because they've already thinking about what house they're going to buy based on the commission type situation, right?

• 25:13Speaker 02

  It was amusing.

• 25:17Anthony Pompliano?

  And so you do this. You say that it's your first kind of foray or experience with crypto, but there's this.

• 25:26Speaker 02

  I had no experience with crypto.

• 25:27Anthony Pompliano?

  All right, so there's this tweet.

• 25:29Speaker 02

  I just sold the domain.

• 25:30Anthony Pompliano?

  There's this tweet that everyone is begging me to talk to you about, which is in, I think it's 2012 or 2013. You basically put out a tweet. So you're early because it's 2012, 2013 about Bitcoin. You're also on Twitter then, which was still pretty early for Twitter in general. And you basically tweet out, you know, kind of saying what I would consider a pretty down the fairway critique of Bitcoin, which is like, it's not going anywhere. Right? Fast forward seven.

• 25:57Speaker 02

  Online gambling, it's days or never. Yeah.

• 26:01Anthony Pompliano?

  Seven, eight years, and now you've got a material part of your balance sheet in Bitcoin. What happens? How does that happen?

• 26:08Speaker 02

  Okay, Anthony, can I tell you the truth?

• 26:10Anthony Pompliano?

  Of course.

• 26:13Speaker 02

  I got an iPhone back in the day. I installed Twitter on it and it used to be really fun and I used to really enjoy reading the news and tweeting stuff, right? And it's like, it was like, you know, by the way, there are certain people on Twitter that still seem to enjoy just tweeting out whatever the heck they want. So I was in that stage and I had a lot of opinions and so I'm tweeting stuff and eventually, yeah, and by the way, I tweeted a thousand things. I forgot all the things I tweeted. So eventually I realized that it's probably better for my, my communication effectiveness

• 26:54Speaker 02

  if I limit my tweeting to stay on brand. So like I have a company, MicroStrategy, if I have something intelligent to say about MicroStrategy, I say it. And I have a nonprofit foundation, the Sailor Academy, that gives away free education to hundreds of thousands of people, which is giving away a free college degree. And if I have something that I can do to help them, I say it. And then whenever anybody else does anything that I might have an opinion, I keep my mouth shut now because I've realized it's just an opinion and I've lived long enough to be wrong on a lot of things.

• 27:33Speaker 02

  But now, coming back to that specific tweet, I really am ashamed to say, I didn't know I tweeted it until the day that I tweeted that I bought 250 million worth of Bitcoin. And then I discovered the Hive Mind crypto Twitter consciousness where all of a sudden they all went through all my tweets, they found it, they reminded me of it, they compared it, and I'm like, oh my God, I literally forgot I ever said that. And you know, I, I took it as kind of like kind ribbing, like I didn't get all worked up about it. I'm like, you're right, I was wrong, what an idiot I was. I wish I could go back and do it again.

• 28:19Anthony Pompliano?

  Well, the part to me that was so funny about all of this is, one, you're right that the internet never forgets, right? And it sounds like you were using Twitter early on, how I use it, which is sometimes I literally tweet things and I tweet them for myself to remember what I'm thinking, right? Like I just throw something out there. The problem is that the internet doesn't forget. And even if that was a thought in the moment, right? You change your mind later, it's a stamp, you know, kind of that never goes away. And so when they found it and I saw that, I was like, oh, my God, this is amazing. Like, literally in a six, seven year time period, it's not just from a, I don't believe it has value to, oh, maybe it has some value,

• 28:58Anthony Pompliano?

  right? I mean, you, would you consider the move of taking the 250 million, the first investment? Is that a bet the company type move? Or do you look at that as more conservative than a bet the company type decision?

• 29:15Speaker 02

  I wouldn't say, I would not say it's a bet the company decision. What I would say is,

• 29:23Speaker 02

  we looked at it and before I made that, that decision, before the, before I was able to convince anybody on the board or the executive team to agree that was the right idea, we all needed to collectively be of the opinion that we were going to be generating cash ad infinitum. Right? So, so like there's a journey that we went through corporately over the past year, and there's a journey that Bitcoin went through over the last seven years. So if we focus upon our journey, we had 500, 600 million in cash, and we were buying our stock back a bit. And then we were thinking, maybe we'll need to buy another company. We need it for a rainy day,

• 30:08Speaker 02

  or maybe something really bad will happen and we'll really need the money. You know, one of my heroes is Steve Jobs. And Steve Jobs, you know, you know, if you had a near bankruptcy experience, and he did, and I did too, by the way, by the way, I lived, I lived to see my stock go from $333 a share to 42 cents.

• 30:32Speaker 02

  Okay.

• 30:33Anthony Pompliano?

  Wait, wait, wait, wait, hold on. Back up.

• 30:35Speaker 02

  Yeah.

• 30:35Anthony Pompliano?

  The stock price fell. What time period is this?

• 30:38Speaker 02

  You know, it's not like I like to brag about this stuff because it's not something you want to be proud of. But I will tell you that the two of my bragging rights are I am the pretty much the longest lived public company CEO in my industry because I've been public company CEO for 22 years. And the second thing is, is I'm pretty sure I'm the only public company CEO that ever presided over a 99.8% drop in the stock price and kept his job.

• 31:10Anthony Pompliano?

  I mean, this is okay. So when does this happen?

• 31:12Speaker 02

  Like 2003, you know?

• 31:15Anthony Pompliano?

  Okay.

• 31:16Speaker 02

  I, I, look, it's, it's another story. I learned a lot of lessons. At the short, we don't want to get off the subject of Bitcoin and the subject of whatever. The short, the, the short lesson there is don't run out of money. Always have cash on the ballot sheet and don't spend more money than you're taking in. And I feel like an idiot to give that advice to anybody, but it's still good advice right now.

• 31:44Anthony Pompliano?

  For sure.

• 31:45Speaker 02

  Let's fast forward back to 2020. So we had the money. We're, we're very conservative, no debt, ready for a rainy day, ready to seize the opportunity, buying our stock back. Covid hits, the pandemic hits, everybody's, you know, our equity is in the tank. You know, uh, we're losing momentum and the first thing that happens in, in Q1 is it's all kind of shock and awe. And in Q2, the question is, how does this impact my customers, our business, our product, our value proposition? And, uh, you know, and by the way, everybody gets impacted differently, right?

• 32:26Speaker 02

  If you're running a cruise line or a theater or whatever, and sometimes counterintuitively. And, uh, in our case, we sell enterprise software that helps you think better. We sell business intelligence and we sell business intelligence to, to lots of governments, agencies. We sell it to massive banks. We sell it to, in essence, global 2000 companies.

• 32:51Speaker 02

  Even the ones that get impacted, they're like the national airline, they can't go out of business. Right? They, so that's our customer base. So we realized that our software kept working. Demand was still there. Everything is smooth. And in fact, the great thing about software is software you can ship. Even, you know, over the internet, all of our services went remote. So our value proposition is intact. And the, the surprise for us is our, is our productivity went through the roof and our cost structure compressed. All of a sudden, you know, $20 million a year flying around in airplanes went away.

• 33:32Speaker 02

  And $10 million worth of trade shows and $20 million worth of marketing things went away. But the customer and the demand didn't go away. So we, we actually found that we were much more efficient. So bottom line is, yeah, we got that black swan event. But that black swan event actually kicked us into a high gear productivity. And so that was, that was the positive on the, on the P and L side. We, we realized that we were going to generate more cash. And we, and there, and there was no real, no real rational business plan. Where I take $200 million and I spend it to make the business better. I can burn it to make the bit, but I can't spend it to make the business better. So.

• 34:17Speaker 02

  Simultaneously, we got a gift from the Fed and the macroeconomic side. So while we're trying to figure out what happens on, on the P and L. All of a sudden, we see, what do we see? The long bond index goes up 22%. If you had asked me, Anthony, like, what's the, what's the investment? That you do not want to make, I would never in a million years buy a 30 year bond that yielded 2% interest. Never, ever. And yet, that was a winner this year. If you bought a 30 year bond at 2% interest, when the interest rates go to, to 1.2, you've actually got a massive spike. So equity spiked.

• 35:02Speaker 02

  Big tech spiked, bond spiked, and you know, and we looked at our cash and I had to listen to a litany of, of talking heads, Ray Dalio on down, you know, if Ray Dalio didn't say cash is trash, every podcaster that trolled Ray Dalio said, Ray Dalio says cash is trash, cash is trash. And you know, and then I'm, and then I went to school at some point on you, this is probably, this is after I realized I had a problem. And I listened to you describe the plight of the working man. I, you know, I go to work, I get paid five, okay, this is not a working man, this is a working lawyer. I get paid

• 35:45Speaker 02

  $500,000 a year. I save $50,000. I put it in my piggy bank. I have 500,000 in cash in the bank. I have kids and I have a future. And then all of a sudden I realized that the cost of a college education is going up at 8% a year and my cash is yielding zero. Now, at that point, you know, we've got the, the pomp podcast telling me I'm crazy to work for dollars and save my cash. And if you take the $500,000 in the plight of the lawyer with the two kids, we're going to send them to Harvard and the $500,000 of cash in the bank yielding zero. And now you multiply everything by a thousand. That's

• 36:28Speaker 02

  me. I have 500 million dollar company. We're making 50 million dollars a year. I got thousands of people working as hard as they can possibly work. We're, we're sacrificing right and left. We're squiring our pennies away. We're putting it into the bank account. There it is. And, uh, you know, in 2019 and before, we worried about the unknowable and we thought maybe we'll use it for something. And by the, I, I'm a bit older than you. You know, I remember when you got 5% interest overnight on your money. And it wasn't that long ago that the risk free interest rate was 5% before the great financial crisis. And I'm like, I'm

• 37:12Speaker 02

  To make twenty five, thirty million dollars a year on this. And I kept hoping and waiting for those good times come back. I was the guy that when the interest rates, you know, when the, when the thirty year T bill interest rates started to go to three and a half percent. Finally, they're gonna go to four and then they're gonna go to five and they're gonna go back to normal, right? Normal interest rates. And then, of course, hope was dashed. It went the other way.

• 37:38Speaker 02

  And what happens next? Well, asset inflation goes through the roof, right? And you know, this entire conversation of inflation, it's really twisted because everybody talks about consumer prices, CPI, CPI inflation. That we're not getting enough inflation. We're not getting enough inflation. Okay, well, like, you're not getting, you're not getting inflation on YouTube and Netflix streaming videos and candy bars manufactured by robots and factories and Domino's Pizza. You're getting inflation on everything you want. If you wanted an Ivy League education, if you wanted a beachfront house in Miami, if you wanted the apartment in New York,

• 38:20Speaker 02

  if you wanted anything scarce, everything you want is going up seven percent. And that's asset inflation. But if I want, if I want a bond that's going to yield fifty thousand dollars a year, you know, it used to cost a million bucks and this year it costs ten million dollars. The cost of the asset went up by two percent? No, I have, I have a house in Miami Beach. It was a nice house built in the nineteen thirties and I, and I have the deed that of sale for the house. A hundred thousand dollars for that house in nineteen thirty.

• 39:05Speaker 02

  It's gone up and priced by a factor of a hundred. It's like, you know, so no inflation, kind of inflation, but it's it's asset inflation. So I didn't really think about it until I got slugged in the face with the two by four, which kind of happened around March or April. When Main Street shut down, the economy shut down and bonds went through the roof. When municipal bonds went up while every city is bankrupt. Whenever, when Apple stock and every other public tech equity went up. Why and the multiples blew out. And the economy went to the worst place I've seen in thirty years.

• 39:48Speaker 02

  At that point, you start having a thought with yourself, which is. What is, what is the true inflation rate? And and we should probably coin a different term, right? If you, if you looked at asset inflation on a good year for the last decade, it's seven percent a year. Normal, right? This year. You can make an argument, it was twenty five percent. Right? I mean, if you look at the long bond index and if you look at these equities, you can make an argument that the asset inflation rate leaped to twenty five and thirty percent depending. And and now. What does that mean to me metaphorically? Well, here's how I feel. I felt like I had five hundred million dollars of cash. In the bank, safe.

• 40:31Speaker 02

  And it was yielding two, three percent and I'm ready for a rainy day and then I'm starting to do stuff with it. And then every month, some banker sends me a note saying the interest went down. It went down. Now there is no interest.

• 40:45Speaker 02

  And then someone took my cash out of the bank and they put it in the backyard in pallets. And then they opened my back gate. And then every month, someone comes along and starts burning two percent of the money.

• 41:00Speaker 02

  And then I started thinking, well, you know, in 12 months, 25% of the money is going to be gone.

• 41:07Speaker 02

  And then, you know, then I started thinking, what is the point of all this? Right? What am I doing wrong? And of course, the answer is you can't hold cash. And so what do you do with it? Right? Well, I mean, the answer is.

• 41:22Anthony Pompliano?

  So, so hold on a second here. So you realize the macro issues. I think there was a couple of different things that happened, right? So the macro issues happen. You're sitting there, you're in a very unique situation because you have so much cash on the company's balance sheet. You run a business that throws off a lot of cash, right? So you kind of have that advantage. It actually improves economically, like you described in terms of your costs are going down. That the structure of your contracts kind of are weathering very well through the storm. And so you, you remain in a strong business position where you have cash. And actually, the cash is growing, not through investment, it's growing from kind of your, your income. And you begin to get worried about that. How do you get to crypto?

• 42:06Anthony Pompliano?

  Right? And I'm leaving you a little bit in terms of, you've got a friend who basically kind of hit you over the head a second time. So let me tell that story as to kind of what pushes you to at least go explore crypto. And then we could talk about kind of what you do, but, but just talk through that process of like, how you actually arrive at, okay, crypto is a potential solution.

• 42:26Speaker 02

  You know, when times are good, everybody's busy. You know, if you're in love with the iPhone, then the answer to everything is iPhone. If you're in love with your Apple Watch, when you're in love with Twitter, the answer is, you know, that, you know? So when times are good, everybody focuses on that and there's only limited time. So I, I think I was closed to the possibility. It's just, there's so many other things going on. And when the COVID crisis hit, everybody got sent home and we all had to, had to contemplate ideas that we had previously rejected. And we had to embrace ideas that, that just were very foreign to us. So how do I discover crypto?

• 43:12Speaker 02

  Well, first I have a mega, mega, mega problem. And the mega problem is I have a lot of cash and I'm watching it melt away.

• 43:23Speaker 02

  And I'm helped to realize I have a mega problem by this insane V recovery in the bond market and the equity market and, you know, all of the talking heads. So after that, then I have an opportunity, which is I've got a cash generating business. And then I've got one more problem, which is the investors, the outside investment community, if you go to them and say, hey, we're a great enterprise software company and we've got all this cash. Their answer is, well, we don't really value the cash. What I mean, because they're smarter than I am, right? I'm not being, I'm not joking, I'm being serious. They are smarter than I am.

• 44:08Speaker 02

  They knew before I knew that cash is trash and you're a fool to sit on the cash. You're just, if the natural asset inflation rate is 10%, it means that every time I generate 50 million in operating income, I burn 50 million in purchasing power on the cash. And we're just running as hard as we can to stand still. So we weren't getting any credit for the cash. We didn't need the cash. Ergo, we need to do something. And so what is the thing you're going to do? And we started working through it like, what do you do if you have 500 million dollars of cash? You don't need, well, you can buy your own stock back, right? There's a limit to how fast you can do it.

• 44:51Speaker 02

  If you go into a market and a thinly traded stock and you're buying 20% of the float every day, you know, that's going to take about four years. Right? It's like, you know, if your ice cube is melting 15 or 20% a year, you don't got four years or at least, you know, inflation is going to do a better job. So that didn't really make sense. So we had, we got kicked into high gear. Like everybody got kicked into high gear this year, right? If you didn't know how to use Zoom, yeah. Like we started, we started on a Monday morning with one video conferencing technology. We discarded it, I'm not going to say which one. We discarded it for another one by 11:00 AM.

• 45:36Speaker 02

  By 2:00 PM, we're using Zoom. By 4:00 PM, the CEO sends out an edict, Zoom is not the corporate standard. Everyone will switch over to Zoom starting tomorrow. Right, that's how, and by the way, the same CEO that said, I don't believe in remote work. You got to show up to the office or else you're not working for me. And I would have sworn up and down, I hated remote work until COVID crisis hit. Flip. And so that same idea happened with the balance sheet. There are all these strongly held views. You got to be conservative. You got to invest in cash and short-term T-bills. And you don't contemplate anything else. And then all of a sudden, you contemplate other things. So, I mean, you're an expert.

• 46:18Speaker 02

  You tell me if you had $500 million of cash right now, where would you invest it?

• 46:25Anthony Pompliano?

  Uh, I'm cheating because you and I see eye to eye now, because I'd go buy a lot of Bitcoin.

• 46:30Speaker 02

  Okay. And so if you didn't know what you know, but you were an intelligent person, and you watched YouTube and you watched everything else, what would be your laundry list of assets to consider investing in?

• 46:45Anthony Pompliano?

  Yeah, it basically would be all the inflation hedge assets, right? You'd look at everything from real estate, precious metals, Bitcoin. You kind of just go down the line, hard assets that have some sort of inflation hedge type qualities that really are more kind of wealth preservation than anything would be the, the, the general bucket to at least go start exploring with.

• 47:03Speaker 02

  Okay, so let's take through them. Commercial real estate. How do you go buy $500 million worth of commercial real estate at a fair price? That's not an impaired asset by something happening in the economy right now. How, how many people want to sell you commercial real estate at a fair price right now that is not impaired?

• 47:23Anthony Pompliano?

  They all think it's still worth what it was worth in January.

• 47:25Speaker 02

  Okay, so that, you know, that's kind of difficult. So what's my next thing? Go buy, I'm not so silly as to go buy like 20th century stock. Go buy Apple, Amazon, Facebook, you know, Twitter. Oh, by the way, back in 2012, I wrote the mobile wave. You know what I said in the mobile wave? I said, go buy Facebook, Amazon, Apple, Twitter. It was a good idea in 2012. If you had done it, then you would have made 10 times your money. Very good idea. Not the same idea this week.

• 48:02Speaker 02

  Right? I mean, at this point, you know, is is Apple Computer going to go up by a factor of 10 from here? Right? Maybe it might double, it might be cut in half, but you know, you're with the best equity in the world, you've got a you've got equal upside downside, you're really just.

• 48:20Anthony Pompliano?

  Yeah, there's no asymmetric pay. Exactly. And so when you started to look at this, did you look at real estate, precious metals? And Bitcoin or kind of what was what was the on the menu, if you will, for a valuing?

• 48:32Speaker 02

  I went, okay, and this is where I gotta, I gotta give a plug to my friend Eric Weiss, Eric Weiss. Running his own Bitcoin Bitcoin investment, you know, advisory service. You know, and he's saying, this is what I'm doing. And I'm just dismissing him like, whatever this Bitcoin thing, I don't know what it is, but it's crazy crypto and it's like shoggang. So he just, he keeps mentioning it and I keep thinking about it. And then then one day we're sitting around my pool in Miami and he starts explaining it. And something clicks in my head that maybe this is a pretty good idea, you know, like I, I have been beaten

• 49:14Speaker 02

  over the head with the two by four. And so I'm a bit more open minded, but I started thinking about it. And then I realized I really got to look at precious metal, you know, you got now you go to the Robert Kiyosaki, silver, gold or Bitcoin, you know, choose one. And so we get down to choosing, are we going to invest in precious metals or Bitcoin? I am I gonna, I already dismissed commercial real estate, I dismissed a market basket of equities, the spider. You know, NASDAQ 100, that stuff's just not compelling. I, you know, I tell you what I want, right? What I want is something that that might be cut in half that can go up by a factor of 10.

• 49:57Anthony Pompliano?

  Asymmetric payoff.

• 49:58Speaker 02

  Wait, wait. That's what any intelligent investor, that's what you want when you bought Amazon in 2011. That's what you were getting when you bought Apple Computer, when the iPhone came out. That's what every, every rational winner is getting. You want a 10x upside and then you want, yeah, I can even live with losing all the money. Although, here's the catch. You know, like every good investment, in my opinion, if you're going to put a lot of money at work, the, the winning formula for the past 10 years or 15 years has been, find a digital dominant network that's dematerialized some, some fundamental thing.

• 50:39Speaker 02

  The mobile network is Apple, the information network at Google, the video network YouTube, you know, the social network, Facebook, even Twitter, a speech network, dematerialized and Amazon, the retail network.

• 50:55Speaker 02

  You buy them when they're $100 billion market cap. When something hits $100 billion, and by, when they're 10 times bigger than the next biggest thing, and they're $100 billion, they're probably going to crush everything. And at that point, like, you know, I remember lecturing Wall Street guys in 2011, 2012 about Apple. You know, and here's what they said, they said, well, we know you love Apple and, and you think it's going to beat the world. But, you know, our idea is if Apple goes up too high, we're going to sell the stock and we're going to buy HP. So we can, and Dell, so we can diversify your computer portfolio. And then if, and if all your tech names, if Apple and Amazon and Facebook go up too much,

• 51:40Speaker 02

  we're going to sell those so you don't get too much in technology. Okay. And my answer was, what you know, if you think about it broadly, there's no example of a successful company in the history of the world that wasn't a technology company. Standard Oil was a technology company. If you go and go to Hershey's factory, you'll find they figured out how to manufacture 50,000 candy bars in a clean room. And it's the most sophisticated piece of technology you will ever see in your life. You think they're not technology companies, you're just ignorant. There is no, there is no winning investment in a company that's not a technology company at their time. General Electric, there was a time when electricity was interesting technology.

• 52:24Speaker 02

  Boeing, same thing before we could fly. So, so the idea you sell too much tech is a foolish idea, in my opinion. The idea that you sell Apple when it gets too big is another foolish idea. Like, well, there's never been a company that was 500 billion in market cap. What, or a trillion, right? The people say that. There's never been a company as valuable as Apple because there's never been a company as valuable as Apple. And another way to say that is, there's never been a company that could create a software camera, change the way it works, and ship it to a billion people overnight for a nickel. And if you could actually ship a product to a billion people overnight for a nickel,

• 53:08Speaker 02

  you could create a lot of value with no cost. So, obviously, these digital networks, Facebook, Apple, Amazon, you know, you, you could see them. They're all around us. They're, they're insanely, um, value generating. But there, but there's another dynamic here, which is the network effect, right? Metcalf's law. It's like, as soon as, as soon as everybody uses Facebook, you know, you can't, how do I get 257 of my closest friends to switch to the next thing? It's really hard. Like Twitter, you know? How do you get all of your followers on Twitter to switch to the next speech network?

• 53:51Speaker 02

  You think, you know, even if, you know, even if a guy has a massive following on Twitter, you think he's going to switch, you know, to another thing? Probably not.

• 54:02Anthony Pompliano?

  He's gonna be the last person to leave.

• 54:04Speaker 02

  So, you, you know, you're buried in concrete there. So now, we come back to Bitcoin. Okay, the number one knock on Bitcoin for the outsider is, well, it's just software. Someone else can copy it. And I think Bitcoiners, they don't do themselves justice here. I mean, sometimes I think the exchanges and some of the others, they over promote the fact that there's 237 different crypto pairs you can trade, right? And I've done that. It's like that. It's that long tail where all of a sudden there's one thing and I want to have a list of 47 things. But you know what's an epiphany?

• 54:48Speaker 02

  You know, the epiphany is when you're a young CEO and you're like, I'm going to put a salesperson in every single state in America. There's 50 states, 50 salespeople. There's an epiphany when you go to New York City and you realize that half of all the money in the country is in one city. And then you realize that maybe you're being captured by orthodoxy. So in this entire crypto area, it's great to have all the innovation and it's good to experiment with this and that and DeFi and maybe that'll work and maybe that'll work and maybe that'll work. But to the outsider, the outsider, you look at it and you're like, well, what if everybody moves their money off of Bitcoin to Ether

• 55:29Speaker 02

  or to whatever or to YoYoCoin and, you know, and they stop? And then someone puts this language, eight pages of language in front of you, what happens if there's a hard fork or a soft fork? You know how debilitating, anxiety inducing that would be to get to deliver eight pages of legal disclaimers on hard fork, soft fork risk? Like you mean like my crypto can float away and they get all anxiety written? So you've got to get beyond that. Okay. And it's easy to get beyond that. The easy way to get beyond it is to say, look, this is a proof of work crypto network designed to be a store of value. And the only thing we're going to do is maintain a constant store

• 56:14Speaker 02

  of value as a digital gold. And we're going to expend huge amounts of energy to protect that network and upgrade that network. And you can take your $500 million out of the bank and put it on our network. And everybody in the community is going to spend every iota of their energy to make sure no one F's with that network. Okay?

• 56:38Anthony Pompliano?

  Okay. All right. So hold on. So when you, when you start to understand this, uh, it sounds like you pretty astutely Bitcoin, everything else. There was a separation in your mind in terms of understanding that. Uh, and as you were learning about that, were you going into this, um, with an open mind as, uh, I don't even remember that I tweeted this thing, you know, in the past, I know I've got this problem. This is the promise of this thing is a store of value. Like, let me go explore it. Or do you basically have people who are kind of guiding you and pushing you and saying, hey, this is the solution. This is your solution. Like, is this a self-guided tour? Or is this externally guided?

• 57:21Speaker 02

  Why, I am completely oblivious to any previous opinion I had had than the before. But I, I didn't follow Bitcoin all through the 2017 Bitcoin Cash for any of the fireworks that were very colorful. I missed it all. Right?

• 57:37Anthony Pompliano?

  Okay.

• 57:37Speaker 02

  So I, you know, I show up with a clean slate in 2020, and I'm reading about this as history. And I'm looking at, you know, Andreas's, you know, videos and your videos and Dan Held's videos. And I'm reading the Bitcoin Standard by Saifedean. And I'm reading Parker Lewis's essays and

• 57:59Anthony Pompliano?

  You got indoctrinated by the Bitcoin community. You got hit with all the content.

• 58:03Speaker 02

  Yeah. And, and then all the maximalist and I'm seeing Max Kaiser and I'm, you know, and I'm sorry, I'm like, I'm starting to figure, oh, there seems to be some interesting drama here, but it's more entertaining for me. Right? And here's the thing that really just, that just kicks you over the edge, though. It's just, when you go to real Bitcoin dominance, and you look at Bitcoin, and then Bitcoin Cash, and then the next one, the next one, you realize, okay, Bitcoin is 92% of everything. And the next competitor is 2%. And then the next competitor is 1.5%. Okay, the number one knock on Bitcoin is, well, maybe it's the MySpace to Facebook.

• 58:46Speaker 02

  It's like, absolutely not. If you know anything about MySpace, you realize that MySpace was never worth more than a billion dollars. Okay, MySpace was one, was 200 times smaller than Bitcoin is right now. It was never that case, right? There's never an example of a hundred billion dollar monster digital network that was vanquished once it got to that dominant position. So all you got to do is see that chart and then you think about the, think about the dynamic and the network effect and you're like, this is already one, right? It's one, it's been tested and you know, and by the way, the hard forks, I think are a big advantage.

• 59:29Speaker 02

  The fact that, the fact that Bitcoin went through it and we saw what happened and we saw that the community would defend Bitcoin. That's what gives a person like me confidence to invest hundreds of millions of dollars in Bitcoin. I, I, I don't want to hear that you've got a new idea and you're upset over transaction fees and you would like to implement smart contracts or you got to change everything. I don't want to hear that. I want to hear that you're going to defend the network to the death against someone that's going to break it or compromise it in any way, shape or form.

• 1:00:08Anthony Pompliano?

  When you decide personally, this is a good idea. Uh, I'm going to take a material amount of the $500 million and I'm going to go buy Bitcoin with it. You've got a board, you've got shareholders, you've got regulators, there's, there's a number of stakeholders, right? That people who either have financial interest in what you're doing, uh, or really care about what you're doing, uh, from regulatory standpoint. What are those conversations like? Do you just go to the board and say, hey, there's this thing called Bitcoin, I'm going to take 250 million dollars, I'm going to go buy it. Do you kind of warm them up with some information first? Like, like what is that conversation at the board level like?

• 1:00:44Speaker 02

  I start assigning them homework.

• 1:00:48Speaker 02

  And they all know you. So they've all watched a variety of your podcasts. They all know Andreas. They all required to watch the debate between Eric Voorhees and Peter Schiff on fiat versus Bitcoin. What is better money? Right? And then a nonstop stream of essays, you know, on macroeconomics and Bitcoin theory. And, you know, the who's who, let me, and people you've interviewed. Lynn Alden publishes her piece, it goes to my board, you know? The bullish case for Bitcoin goes to the board. All of those things.

• 1:01:31Speaker 02

  And it's, and between them and the general counsel and the CFO and myself, we're all basically just going down the rabbit hole. And following that is, you know, is a series of discussions. One on ones with everybody. Everybody goes off, does their own homework. We all come together. Lots of group discussion. We all split. The CFO goes off to organize and start to consult with arrays of accountants. The general counsel goes off to consult with arrays of attorneys, you know? Then we go off and consult with arrays of financial advisors. Then we consult with arrays of bankers.

• 1:02:15Speaker 02

  Then we come back together again and then we share. Then we have deliberations. Then we deliberate some more. And then we think very carefully about what is the appropriate and prudent way in order to begin to move forward with our effective strategy.

• 1:02:33Anthony Pompliano?

  All right. So the first purchase is $250 million. You announced today that you did another $175 million. So you're now at $425 million, which is almost all of that $500 million of cash or a good portion of it. Walk us through, I got a ton of questions around what I'll call operationally investing hundreds of millions. So how do you think about entering the market and trying not to move price? How do you think about OTC, right? Desks, obviously, for those who are listening who might be confused, Michael and the team is not going on Coinbase and letting a $400 million, you know,

• 1:03:15Anthony Pompliano?

  market order rip. So there's some very thoughtful things that go into this. Let's talk first just about how do you actually acquire this much Bitcoin without kind of moving price?

• 1:03:26Speaker 02

  And before we get there, I'll make one more point. We had 500 million in cash. We wanted to buy our own stock back with it or put it into some, some asset like Bitcoin. Our first step is to announce that we're thinking that through. Our second step is announce a tender offer for our stock, 250 million. That took place the same day we announced that we bought the 250 million Bitcoin. Then we have a 20 day period where we wait for our shareholders to decide if they're going to tender and how much. So we had to move through that. When we got done, we actually bought $60 million worth of our stock. That hit the wire in the last few days too. So what we've, our real goal was to invest it all.

• 1:04:11Anthony Pompliano?

  Got it. So that was the, so it was 250 in Bitcoin. The tender ends up being 60 million or so. So you're at like 310. And then that hat, you had kind of another 175 million that you could play with and still keep some cash in the bank.

• 1:04:24Speaker 02

  Yeah. And it's the shareholders' decision as to how much of that will be tender, right? So we, we wait for them. And then after the tender offer, we had excess cash in our treasury. So the next step is for us to, is to invest our treasury cash. So that's what we announced today. In fact, we've, we've wrapped it all. So substantially 95% of that money is either invested in our stock or in Bitcoin. And we've accomplished that in short order, right? Like over the course of six weeks or four weeks. Now, regarding acquiring that much Bitcoin, first of all, I can't give you like exact blow by blow details because I've got security issues and the world is watching and I.

• 1:05:11Speaker 02

  I can't, but what I can do is, is, is I can describe to you, if you were running a company, how you should think about this. You know, if you were in my position, which is you're gonna go and you're on, you're going to audition a bunch of, a bunch of institutional grade exchanges. You're going to work through and look for institutional grade custodians. You're, you're, you're going to look at, you know, all, all of the security issues, all the technology issues, et cetera. You're gonna, you're gonna think about the team. You're gonna build a relationship with them.

• 1:05:52Speaker 02

  And then you're gonna buy, if you're gonna buy that much, you're going to buy it in thousands or tens of thousands or hun- a hundred thousand plus small transactions, day and night, minute by minute, over the, like, over the course of many, many, many days. So, so it's not like we're going and I'll, I'll sit and I'll watch this happening. And I've got a great team, you know, a great team that I've worked with and some excellent professionals. They are brilliant geniuses at what they do. But let me tell you, they've got great technology too. Right? It's like, and, and you gotta have the right technology, you gotta have the right team,

• 1:06:35Speaker 02

  and then you have to be very patient, like very, very patient. You know, like, I'll, I'll watch people walk in on Monday morning and, and I was like, okay, some dude just got up at nine AM and decided to buy some Bitcoin and the price spikes. You know, whenever I see that, I'm like, well, that guy won't be in the market very long because no one that really wanted to buy a lot of Bitcoin would be so silly as to spike the price so hard, you know? I, I can tell you this, which is, we bought $425 million worth of it and we never ran the price. Not a dollar.

• 1:07:16Speaker 02

  Like you don't know.

• 1:07:17Anthony Pompliano?

  Impressive. Yeah, it's pretty impressive.

• 1:07:19Speaker 02

  I'm in the market. You wouldn't know that I'm trading against you ever because that's just, that's not how you get stuff done, right? Let the market come to you. So the good news is, if you want to buy hundreds of millions or sell hundreds of millions, you can do it and not be seen and and you can do it without moving the market materially or panicking anybody. But you have to have the right team, the right tools and the right discipline. You can't be in a hurry.

• 1:07:48Anthony Pompliano?

  Got it. That makes sense. How has the reaction been from other CEOs or people who kind of are outside the company? I'm assuming that you've gotten people coming inbound that are peers. Are they laughing at you? Are they excited? Are they asking, how did you do this? Why did you do this? Like, what are those conversations like?

• 1:08:11Speaker 02

  Well, first of all, I think this is a year where every CEO is busy, like minding his own business. Right? Like that, that they've either got a business that that that has serious, serious solvency issues or or struggle, or they've got a business that's being digitally disrupted or twisted one way or the other and and or they've got all sorts of of employee care and feeding issues. So this is not the year where a lot of CEOs are necessarily sitting around shooting the whatever about, you know, what's happening this year, right?

• 1:08:50Speaker 02

  Everybody's kind of all hands on deck, working hard. The people I do speak to, though, and I speak to some, I would say everybody has has had a lot of their assumptions shaken this year. Assumptions about, you know, how the market will behave, assumptions about regulations, right? I mean, assumptions about international business, assumptions about their balance sheet and things that were inconceivable last year.

• 1:09:24Speaker 02

  Oracle, TikTok, you know, all sorts of interesting things that you you will see on the paper. And people are just like nod and they're like, not even a second thought like, oh yeah, that's happening, that's happening. All those things are are are being considered this year to a much greater degree. So I I do have people coming to me and and they and they want to know how do we think about it and why do we do it? And, you know, and and they're all starting to what to think what's their angle on this now. And so I I think it's catalyzing people to be much more open minded.

• 1:10:02Anthony Pompliano?

  Yeah, I think it makes a lot of sense. Do you feel like you've kind of broken the dam open and now a bunch of people will follow? Or do you think that this is kind of a slowly, but surely it will take a lot of time for more to to kind of follow in your footsteps?

• 1:10:16Speaker 02

  I think it's like the four minute mile. I think the people told themselves they couldn't do it. And then someone does it. And then in the next year, dozens and dozens of people do it. Right? This particular case, there's a lot of stuff that I've done in my career that was a lot harder than this. And I and I will say, any entrepreneur that ever successfully launches a business and, you know, and gets to profitability will have accomplished something much harder than what we did. So it's a it's a it's a challenging project, but it's not beyond beyond the capability of any any management team. I think that a lot of people just kind

• 1:10:58Speaker 02

  of had a mental block, you know, or they it's just in this block of I just dismissed it. I don't even consider it. And then they get focused on something else. My own experience is, you know, on the day from the day that I decided that I wanted to buy Bitcoin, if if I decided on that day as an individual, you go to these, you know, high exchanges, it's going to be six weeks to get through the KYC for an individual, if you want to do it. If you're a company, a private company, and if you had your team all around you, from the point that that you thought it was interesting, you're 12 weeks to 18 weeks to get through the hoops. If you're

• 1:11:45Speaker 02

  A nimble publicly traded company, I think you're looking at six months. And if you're a good company, like just a good rational publicly traded company you put on the docket, you would do it in nine to 12 months. And so I, I think that um, people were kind of oblivious to the, to the, the need slash the role of Bitcoin. And the Bitcoin narrative of digital gold, right? This is the ultimate inflation hedge. This is, this is, if it's, it's not 10x better than gold, it's 100x. Maybe it's a thousandx better than gold. We could go on for hours. I could tell you why I think it's a thousandx better than gold.

• 1:12:25Speaker 02

  But let's just assume, since we're preaching to the choir, that it's a thousandx better than gold. Once you realize that it's a thousandx better than gold, from that point, it's minimum 12 weeks if you went like a bat out of hell, and probably six months. And I kind of feel that if people were waiting to see if this was possible, well, they kind of saw our announcement in August. So the six-month clock starts in August. If, if they were uh, super, if they were just perfectly configured, if they had all the same characteristics as us, then they start focusing on this in May or June.

• 1:13:11Speaker 02

  Nobody's thinking about this in March or April. It was just so busy trying to keep the doors open and, and their bell's getting rung. So take August and say August, September, October. I, you know, December, January, February. I think that what you're going to see is over the next two, three, four months, something interesting. And um, then I, the, the other point, right? That's not, not lost upon me is there's 3,500 publicly traded companies, there's $5 trillion in their treasuries, and it's all melting. And, and yeah, at some point, you have a fiduciary obligation to not lose the money. Okay.

• 1:13:55Speaker 02

  Yeah, like it's it it used to be acceptable to be conservative, but that was before the asset inflation rate went from 6% to 30%. You know, when the inflation rate goes to 30%, it's not necessarily something you can ignore. So I think that a lot of people are getting catalyzed right now. I think I think it has to be kind of CEO CFO led. Right, because it is an innovative thing. But I think that that we've shown people how to do it. You know, and we've shown them that it's it's possible and straightforward. And and once it's like anything, if I tell you it's possible, go figure it out on the internet or go figure on YouTube.

• 1:14:39Speaker 02

  You can figure it out yourself. Right, all you got to know is that it's possible. You know, it's possible to run 52 miles in a single day. Go figure it out. You're going to go Google 52 miles in a single day and then all of a sudden fall down the rabbit hole. So I think people now know it's possible, but I don't think you can expect them to move in less than six months reasonably and in a year.

• 1:15:02Anthony Pompliano?

  How are you thinking about and last question before we get into the rapid fire? How are you thinking about the volatility? Right, so obviously it's one of the most volatile assets that you could have chosen. And when we talk about volatility, it's not like, hey, make up to 2% or down 2%. You can have double digit percentage days up or down. Does that change your strategy? Is this just your long term holding it for, you know, years and years? Kind of how do you think about that?

• 1:15:31Speaker 02

  Well, so first of all, I think the volatility is falling. And I think I got to do is look at the chart. And there's a narrative like everybody's like, everybody wants to say that they know something about crypto, wants to jump up and say, well, you know, it's volatile. Well, well, it was volatile in 2017. You know, when like individuals were trading it on their mobile phone. But yeah, think about what I just what I just said about how we acquired it. We buy $175 million.

• 1:16:03Speaker 02

  I'm in the market every minute of the day for multiple days in a row. I'm damping the volatility. One person like me, right? In every, every trading day that I'm in the market, I'm damping it to the upside and the downside, and I'm damping it with large sums of money, right? And, and so, how many, how many institutions does it take before they damp it? Right, like, I'm the, I'm the dude, I'm like, okay, I'll pay an extra whatever, but stop this thing. I'm holding it for a hundred fricking years, right? It's like, I'm not really, I'm not the day trader guy that's worried about it. So, I think that as the institutions come in and as they buy bigger amounts,

• 1:16:46Speaker 02

  they're damping the volatility, and that's my first observation. My second observation is crypto trades 168 hours a week. Every other asset trades 35 hours a week at best, and sometimes less on holidays, right? You're trading, I, I look at this thing in awe, you know? When I look at these exchanges, Saturday night, 9:30 PM, and I'm watching the thing stream, and I'm like, this is the most magical, hardest working security in the history of the world. And, and I would think everybody ought to be in awe that the thing's not going haywire. It's remarkably non-volatile in that regard.

• 1:17:28Speaker 02

  Like, in my opinion, you could go and, you could go into the market, and you could liquidate 50 or 100 million dollars worth of this stuff in a matter of an hour, any hour of the day, any day of the week, on a holiday, and maybe you take a 3% haircut. But, go try to liquidate 100 million dollars of gold on a Saturday afternoon in Istanbul on the street side. You know, so, but, so that, my answer is, I don't think it's that volatile, but my other answer, beyond this, let's be honest, there's a negative real yield on everything else I can buy.

• 1:18:07Speaker 02

  Okay, gold's got a negative 3, 4, 5% real yield, in my opinion. We talk about why. Bonds have a negative real yield. It's just a question. We're just gonna debate, is it a 7% asset inflation, or 15% or 3%? But it doesn't really matter. Every other non-volatile asset is a negative real yield, which means that everything else is lifeblood draining out of my veins. So if my choice would be to accept some volatility and live, or I had non-volatile cash that bought 30% less in a matter of eight weeks,

• 1:18:47Speaker 02

  non-volatile, that was 30% less, at that rate, you're not gonna make it through the decade. And so volatility is just something you gotta live with. But I really think there's a group of crypto enthusiasts that lived the last 10 years. And they're the result of their experience. They lived through a difficult time, and they're heroes. And I respect them. But you live through that, you live through volatility. I think the next 10 years are not gonna look like that. I think the next 10 years, as you have people coming in that are moving hundreds of millions of dollars in and out of the market, they're going to tend to damp all the volatility,

• 1:19:29Speaker 02

  and the institutions are gonna damp it because in their interest. And so if there is any, it's just gonna be to the upside for the good of everybody, and otherwise, not a big problem for me.

• 1:19:41Anthony Pompliano?

  I literally think that is the perfect way to look at this. Is, what is it, $200 billion asset today, market cap wise, go to 8, 9 trillion, you're looking at 40 plus X, right to the gold market cap. And you're talking about an asset that is superior in almost every single way. And so if you think it's just gonna be equal on a market cap basis, you're not a student of history, because we know that they usually tend to have much larger market caps. And so when you start to look at just the numbers, right? You can not only put big numbers to work in the market, but also the upside of this thing is incredible over a long enough time period.

• 1:20:22Speaker 02

  You know, digital gold is a great narrative, but to say that this is much better than gold undersells it because the truth is, if you look at these treasuries, there's something like $200 trillion worth of debt instruments and other treasury instruments that have a negative real yield and precious metal is just one of them. So if you're looking at $10 trillion in gold, there's easily $100 trillion of, you know, what is it, shadow money, 75 trillion of that, 75 trillion of sovereign debt, 50 trillion of other stuff. So you're really looking at 200 trillion or more of negative real yield. The only debate is how negative

• 1:21:04Speaker 02

  it is. And Bitcoin is the only thing I could find is positive. You know, if I could find a better thing, we'd be talking about it.

• 1:21:12Anthony Pompliano?

  No brainer. I asked the same two questions to everybody to finish up. What is the most important book you've ever read?

• 1:21:20Speaker 02

  Okay. You're gonna hate me for this, but it's The Moon is a Harsh Mistress. Okay? And, you know, Robert Heinlein was my favorite author growing up. I'm a rocket scientist. And of course, it's, it's, it's about a protagonist computer whose name is Mike, who saves the moon. So I like that a lot. And I like, and I grew up with that. It was very inspirational.

• 1:21:52Anthony Pompliano?

  So, speaking of the moon, aliens, believer or non-believer?

• 1:21:56Speaker 02

  I think they're out there. I think that, I think that there's so many stars and galaxies and planets. Statistically, it just seems to be impossible that somewhere, there isn't somebody.

• 1:22:13Anthony Pompliano?

  I tend to agree with you. The galaxy is very, very big. You get asked me one question to, to finish up. What's the one question you got for me?

• 1:22:24Speaker 02

  Jack Dorsey has a one word Twitter bio. And that one word is Bitcoin.

• 1:22:33Speaker 02

  And he's also got $10 billion in cash and cash equivalents between Twitter and Square.

• 1:22:42Speaker 02

  And to my knowledge, none of it is invested in Bitcoin, either Square or Twitter. You want to help me try to persuade Jack to like, you know, break off a small 500 million or billion dollars and go buy some Bitcoin? Because I know he loves the community and I know he's doing as much as he can to help. But the single most useful thing he could do to help is lead on the corporate treasury side. If he bought a billion dollars worth of Bitcoin, what do you think happens the next day?

• 1:23:17Anthony Pompliano?

  Uh, I think that he's thought about it, uh, would be my guess. Uh, my guess is that there are, uh, bigger problems that he perceives, uh, in terms of activist investors and kind of, you know, he's, he's always the, um, I, I joke and say, uh, show me another, uh, entrepreneur who's built two tens of billions of dollar market cap companies and is running them simultaneously. And, uh, yet somehow people still have a problem with the guy, uh, which is insane to me.

• 1:23:47Speaker 02

  I don't, he's an amazing guy and he's inspirational, but it's not like he shirks controversy.

• 1:23:53Anthony Pompliano?

  Oh, no, no, no, look, I, I absolutely think that, uh, again, this is me speaking my opinion, obviously. I've never talked to Jack about this. I don't have any inside information.

• 1:24:05Anthony Pompliano?

  I would guess that if it was his choice, he would absolutely do it if he kind of had sole power. Uh, I, I think that, um, you know, you kind of pick your battles sometimes. And my guess is that, uh, when Elliot, uh, management is knocking on the door and basically got a, a target on your back as the CEO, the first thing you don't want to propose in the board meeting is, uh, hey, why don't we take 500 million dollars and go buy Bitcoin?

• 1:24:29Anthony Pompliano?

  But at the same time, doesn't mean that that wouldn't be the right thing to go do. Just you gotta pick your battles sometimes.

• 1:24:34Speaker 02

  If we can get the crypto community to give them some air cover or go wage a, a, a charm offensive on all of those.

• 1:24:41Anthony Pompliano?

  What we need is we need, uh, the Bitcoin community to go like meme Elliot management to death. And then, uh, that they'll back off maybe and leave him alone. So I don't know. Well, we'll see. Look, it's, um, I tend to think that there will be many more people who will follow this. I think you're right in terms of it'll just take a little bit of time for them to kind of get geared up and do it. I don't know if people will do as much as you guys did on a percentage basis, kind of out of the gate, right? It feels like maybe people start with five, 10%, just because humans are naturally just, they lack conviction. They want to be conservative. They kind of feel like they're being prudent, you know, whatever. I tend to think actually the argument you laid out is not only conservative because you're actually protecting the cash,

• 1:25:24Anthony Pompliano?

  but it's also very prudent in the sense of kind of how you did, you know, 50% into Bitcoin, 50% as a tender, and then kind of doubled up or, you know, kind of filled up with the rest in Bitcoin. And so we'll see what happens, but you know, if, if no one has said it to you yet, just we're cheering you on. So keep going because it's pretty incredible that, that you did this. And I, I said it when, when you first put out the very first press release, you guys bought the original Bitcoin purchase. I said to multiple people, I said, look, this isn't somebody who doesn't understand what they're doing, right? It was very clear in the language you used in the press release, et cetera. This is a Bitcoiner who is running this company and very much understands the macro environment,

• 1:26:08Anthony Pompliano?

  kind of their, their asset choices, if you will, and has chosen Bitcoin for, I think, all of the reasons that Bitcoin community is attracted to it. And so that, you know, for whatever reason, came through pretty clearly to me in that, in that press release. So, so it was cool to see.

• 1:26:24Speaker 02

  Yeah, well, I guess I would end just by saying that, that I find the entire Bitcoin community to be inspirational. And I did note in our press release, one of, one of the key drivers of our belief and the success of this is the community ethos. It's a, it's a pretty amazing group of people and, and all of the thinking and all of the initiatives, I just find to be extraordinary. And I think, I think that we wouldn't be doing what we're doing without everybody that's ever passed through this podcast.

• 1:26:59Anthony Pompliano?

  That means a lot. How can people find you on the internet or find out more about MicroStrategy?

• 1:27:06Speaker 02

  MicroStrategy is microstrategy.com. I'm Michael underscore Saylor at Twitter. You can probably Google me and you'll get every single one of my contacts if you want.

• 1:27:22Anthony Pompliano?

  Awesome. Listen, Michael, thank you so much for doing this. This was fantastic and we will absolutely do this again at some point in the future.

• 1:27:29Speaker 02

  Well, thanks for having me.