#1512 Simon Greovich | Bitcoin Made Metaplanet Stock EXPLODE

Simon Greovich is the President & CEO of Metaplanet. This conversation was recorded at Bitcoin Investor Week in New York. In this conversation we discuss Metaplanet buying bitcoin and becoming the best stock of the year, the best tools for acquiring bitcoin, economic conditions in Japan, getting exposure to global markets, growth expectations, educating Wall Street, and how people can help. ========================Bitwise is one of the largest and fastest-growing crypto asset managers. As of December 31, 2021, the company managed over $1.3 billion across an expanding suite of investment solutions, which include the world's largest crypto index fund and other innovative products spanning Bitcoin, Ethereum, DeFi, and crypto equities. Whether you’re an individual, advisor, or institution, Bitwise provides intelligent access to crypto with your unique circumstances in mind. Visit www.bitwiseinvestments.com to learn more. Certain of the Bitwise investment products may be subject to the extreme risks associated with investing in crypto assets. Visit www.bitwiseinvestments.com/disclosures/ to learn more.=======================The future is being built today and the future of currency isn’t dollars, euros, pounds, or yen, it’s crypto. And Gemini thinks that’s a great thing. Because a future where money is decentralized, inclusive, and globally accessible, that’s a future that we are anxious to be a part of. Go where dollars won’t. With Gemini. =======================Pomp writes a daily letter to over 265,000+ 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://pomp.substack.com/=======================View 10k+ open startup jobs:⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://dreamstartupjob.com/⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠Enroll in my Crypto Academy: https://www.thecryptoacademy.io/

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

• 0:02Anthony Pompliano?

  What's up everyone. This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode.

• 0:30Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only.

• 0:54Anthony Pompliano?

  It's no secret that Bitcoin ETFs have taken Wall Street by storm. With over $35 billion in assets in just one year, it's become the most successful ETF launch in history. My partner Bitwise is the first and only Bitcoin ETF provider to openly publish its Bitcoin wallet addresses, allowing anyone to verify the fund's holdings. I believe this level of transparency is exactly the kind of innovation that only crypto makes possible. Bitwise is also the only ETF issuer that is a crypto specialist asset manager, meaning their team solely focuses on Bitcoin and they have the research, education, and support to help investors navigate the space with confidence. All of that is great, but what I love most about Bitwise is probably their commitment to developers. Bitwise donates 10% of their ETF's profits to Bitcoin open source developers.

• 1:39Anthony Pompliano?

  Bitcoin developers are the unsung heroes, working tirelessly to maintain, improve, and innovate the blockchain. Their efforts ensure that Bitcoin remains true to its promise as a decentralized system that is built to last. Go to bitwisePomp.com to learn more about their ETF and other services. Once again, that's bitwisePomp.com. Bitwise, P-O-M-P.com. As always, remember investing is risky and carefully consider the extreme risks associated with crypto before you invest.

• 2:11Anthony Pompliano?

  Today's episode is brought to you by Gemini. The future is being built today and the future of currency isn't dollars, euros, pounds or yen, it's crypto. And Gemini thinks that's a great thing because of future where money is decentralized, inclusive and globally accessible, that's a future that we are anxious to be a part of. Gemini teamed up with futurists, technologists and designers like award-winning artist Matt Griffin, known for his illustrations for Dune, to craft a vision of the future with crypto at its core. The creative theme "Go Where Dollars Won't" emphasizes exploration, growth and the crypto market's limitless potential. Whether it's going on that Martian safari to capture an unforgettable photo of a herd of woolly mammoths grazing the red planet, or using Bitcoin to pay for your lift pass

• 2:53Anthony Pompliano?

  to go strata skiing down the mountain peak of a breathtaking comet. Whatever adventures we'll be living, one thing is for sure. In a future this fantastic, the limits of traditional currency simply cannot keep up. Financial innovation will usher in this new frontier and so "Go Where Dollars Won't" with Gemini. Go check them out at gemini.com/go-were-dollars-won't. Again, go check it out at gemini.com/go-were-dollars-won't.

• 3:23Anthony Pompliano?

  I want to start with, a lot of people have heard about the Bitcoin Treasury strategy. Can you walk us through step by step the Metaplanet story from where you guys kind of started, things weren't going so well, what was the decision-making process like? And then how did you eventually kind of get started with this?

• 3:44Speaker 02

  It's a pleasure to be here, thank you very much. So I started my career actually at Goldman as a derivatives trader. I was working in Tokyo, did that for five and a half years and decided to become an entrepreneur and moved to Thailand, started a hotel company. Grew that hotel company to 30 properties across Southeast Asia. We ultimately re-entered the Japan market and then COVID happened. And COVID was obviously a very difficult period for those in the hospitality industry. And there was a lot of soul-searching at the depths of COVID. Most of our markets were forcibly closed. We had no choice but to close the doors and we had zero revenue. I think no businessperson expects to have zero revenue in their kind of worst models.

• 4:30Speaker 02

  I guess I was sitting there watching podcasts and watched Michael Saylor talk about his journey and at the beginning of 2020, thinking about what to do with his company, with his $500 million, I suppose, of cash at that time and where to deploy that, explored all sorts of different opportunities, and then came to the conclusion that Bitcoin was where he wanted to place his company's money. And that was still early on. We were in the middle of COVID, still trying to survive, trying to raise capital. And I think it must have been 2023, towards the end, when we really had no choice. The Japanese regulator had, our auditor had put a going concern footnote in our financials, which makes

• 5:13Speaker 02

  it very difficult to operate. And at that time, our board and shareholders said, try something, try anything. And I was quite passionate about Bitcoin on the side for some time. It was something that I dabbled in from as early on as 2012 and was always really finding a path where we could connect business with Bitcoin. And so at the end of 2023, sat the board down and said, let's explore this. Let's investigate how we can go about adopting Bitcoin as our Treasury Reserve asset. So it was a number of bunts of sort of hard work, but in April of last year, we formally adopted a Bitcoin standard.

• 5:55Speaker 02

  Our market cap at that time was only $12 million. So it was the beginning of a very exciting journey.

• 6:03Anthony Pompliano?

  You start, you have $12 million market cap. I believe that the number for last year's performance was 3,200%. Or maybe that's the trailing since you've done this. That is literally the best performance in the entire world. A big part of putting Bitcoin on the balance sheet is Bitcoin goes up. But I think the more interesting thing to talk about is you can't just buy one time. You have to continuously accumulate more and more and more Bitcoin. And it's almost the aggressiveness. It's the size of the bet, more so than the direction of the bet, is really what I think has driven a lot of this. And so talk through, you know, you make the first purchase, you kind of announce it. What was the reaction from the Japanese market? What was the reaction from shareholders?

• 6:45Anthony Pompliano?

  And then how do you kind of navigate, really just kind of keeping your foot on the gas and continuing to acquire as much Bitcoin as possible?

• 6:54Speaker 02

  It's been quite the journey. I think when we decided first to buy Bitcoin, it was something that we thought would be good for the company as an alternative to the status quo. It wasn't until many months later, when we began to see the comments that would come on Twitter and in the local web boards, the difference that we were making to the local Japanese investor. Japan's a place where interest rates are incredibly low and there's limited opportunities for people to earn a yield much more than zero. In fact, Japan has one of the largest so-called household savings. They have $9 trillion of cash sitting in bank accounts earning nothing. I think people have been curious about Bitcoin, but it's been rather difficult to acquire Bitcoin.

• 7:38Speaker 02

  Mt. Gox was the famous exchange where I bought my first Bitcoin, where I think Japan was a leader at that time. And as a result of Mt. Gox, regulation became rather strict, and that has been the case ever since. And so if I sit at a meal with a friend or a friend of a friend and try to orange peel them, and at the end of the meal they say, "Yes, I'd like to buy Bitcoin", it takes six weeks, if they're diligent, to be able to buy their first Bitcoin. And that's really because the exchanges... It's not their fault. They're required to send all sorts of long, detailed disclosure documents to investors, share with them that they might lose everything. And then in Japan, it's quite quirky. They have to send you a postcard in the mail to confirm your address.

• 8:23Speaker 02

  So all that takes time. We then discovered that people found out about us and that we were a proxy for Bitcoin. And everybody has a brokerage account, maybe two brokerage accounts on their mobile phone. And so when they realized that we were a way for them to get exposure to Bitcoin, it was very easy for them to press that button on their phone and buy some shares. On the, I guess, the bit about acceleration, it's obviously very important to not just have five or 10 Bitcoin on the balance sheet. You have to be disciplined and focused. So for us, you know, our goal is to become the largest holder of Bitcoin in Asia.

• 9:03Speaker 02

  We have, what, 2,235 Bitcoin now, so it puts us up there, kind of in the top 20. It's a very big gap when you go from there to the leaders. But we feel very confident that over the next year or two, you know, we can get to a point where, I guess, I can more proudly say that we're a large Bitcoin holder. Now, we're still in that no man's land.

• 9:26Anthony Pompliano?

  Now, you have a plethora of financial tools at your disposal. We've seen people sell straight equity in these ATMs. We've seen convertible notes. We've seen preferred, there's all kinds of different tools. Maybe walk us through, what are the tools that you've used so far? And how do you evaluate, okay, I need more capital, I'm going to use this tool versus another tool, here's the pros and cons?

• 9:49Speaker 02

  Sure. So we're still early on in our journey. We traded a reasonable premium to our NAV. And so the most important thing for us now is to ensure that we can grow a large enough base of Bitcoin for us to be able to use some of the more interesting ways to raise capital. To be specific, MicroStrategy started off really raising equity. They had an ATM structure, which they, I think, have successfully executed over the past 24 months, but particularly in the last 12 months. They've now moved on to, we'll have for a while now, convertible bonds. They have this interesting perpetual preferred instrument.

• 10:30Speaker 02

  In Japan, unfortunately, there's no ATM structure. And that's been an incredible innovative, you know, offering that exists in the US. So we were looking for a workaround. And we discovered a workaround, which is effectively a moving strike warrant. So in at-the-money offerings, companies are selling new shares directly into the market. For a moving strike warrant, what our partner is doing is they're effectively shorting borrowed shares. The cash they get from shorting the shares, they use to exercise the moving strike warrants. Cash comes into the company, and then the new shares are basically used to repay or return the shares that have been borrowed. So it's effectively the same as an at-the-money structure.

• 11:15Speaker 02

  So we've been doing that now. We've raised about $200 million of capital since we started. The plan right now is to continue to do this ATM look-alike. And then I think, once we have enough Bitcoin on the balance sheet, we can start to look at debt instruments. I think it will work incredibly well in Japan, even more so than the US, just because, again, the lower yield expectations that locals have.

• 11:40Anthony Pompliano?

  So there's lower yield expectations, but Japan also has a number of other, maybe, advantages economically for this specific strategy. Talk a little bit about interest rates, currencies, and other things that you think are somewhat tailwinds to what you're doing.

• 11:53Speaker 02

  Sure. So purchasing power of the yen since the late 80s has declined almost 2/3. And I think people are beginning to feel that pinch. The yen has weakened. I speak to friends who used to like to travel abroad all the time. Now there's a lot more domestic tourism, which is good. But people can feel the fact that they can't, you know, the yen doesn't go as far anymore. And so, part of our narrative is, you know, we want to help hedge against a yen that's depreciating in value, inflation, but also doing so with Bitcoin on the balance sheet. I think the more interesting part, which is something we discovered a little bit later, was the tax arbitrage.

• 12:37Speaker 02

  And so, if a Japanese individual wants to buy Bitcoin, the capital gains tax is up to 55%. That's the highest of any country in the world, which is a bit extraordinary, and I think something that has to change over time. If they buy a listed company, the tax is only 20%. And if they buy a listed company in a retirement account, then tax on capital gains is zero. And so, we've now become the most efficient, leveraged exposure to Bitcoin that exists for individual investors in Japan.

• 13:09Anthony Pompliano?

  When you are doing this in Japan, I think you became the most popular stock by trading volume. You were the best performing stock in the entire world last year. But this is not only happening in a silo in Japan. When I see you tweet, you tweet English and Japanese. I see that you talk with US institutions. I see that there are people all around the world, not just in the United States or in Japan, talking about this. So it's this weird situation where you're really benefiting from a lot of what happens internally in Japan, but it is a global story. And so talk about how do you straddle that line between you want to continue to appease your Japanese markets, but also you want to participate maybe the global conversation, the global capital markets?

• 13:56Speaker 02

  Obviously Bitcoin is a global commodity. It's a global beautiful instrument that I think more and more people are beginning to discover. Japan is one of the most liquid markets in the world. And so it doesn't make sense for us to be siloed in Japan. Now Japan, we've become a stock that retail investors love, but I think there are a lot of smart institutions that see a lot more flow coming into Bitcoin treasury companies in Japan, and it's a very good way for them to play that. You know, I think, incidentally, I've been speaking a lot to Asian fund managers recently, and a lot of them are lamenting the fact that they've underperformed their US peers that own MicroStrategy. And so when

• 14:40Speaker 02

  they discovered us and that we were a proxy, in a sense, for strategy, that they'd be able to buy us and compete favorably with those that are able to buy. And so I think what Michael Saylor discovered many years ago is that there's many pools of capital in the world that are looking for exposure to Bitcoin. And traditionally, you have to just buy Bitcoin. Now you can buy the ETF. Now you can buy MicroStrategy. But debt investors are able to buy convertible debt. And so in the same way, we hope in Japan to tap into different pools of capital, not just retail investors, but institutional investors locally in Japan and also beyond. So we're very honored and humbled by the fact that institutional investors in all

• 15:24Speaker 02

  parts of the world are now beginning to show interest where we've been included in a couple of ETFs, one large one in the US and one in Europe. And as of this Friday, we're being included in MSCI Japan Index, which is also an incredible, I think, feat.

• 15:40Anthony Pompliano?

  You have been growing faster than MicroStrategy or Strategy. You have a Bitcoin yield that is growing faster. Is this something where you think you can continue to go faster because you're smaller, because you're in Japan? What do you think is driving some of the acceleration? And really, I think what investors are most interested in, if you're going to buy volatility, if you've already convinced yourself that's what you want, well, you might as well just go to what's the most volatile thing, right? And so far, that's been you guys.

• 16:10Speaker 02

  Well, the reason why we're growing faster is obviously we're coming off a much lower base. As we get larger, we expect that growth to slow. But Michael Saylor came up with this wonderful metric called BTC yield, which is effectively the change in Bitcoin per share on a period-by-period basis. It's a measure of how quickly we can grow our Bitcoin per share. And that's something that we're very much focused on. It's a really good way for a company to look at all the different fundraising options out there, calculate what the impact will be on a BTC yield basis, and that will make it very clear what one wants to do. We just adopted two more KPIs actually overnight, two that Michael

• 16:54Speaker 02

  Saylor also pioneered, basically BTC gain. And BTC gain is effectively the amount of extra Bitcoin you generated, taking into consideration dilution, and then multiplying that by local currency, in our case, dollar-yen. In the US, just dollars. You can get a very interesting measure of how much dollar value or yen value that a company is able to create with their Bitcoin treasury strategy.

• 17:23Anthony Pompliano?

  When you look at something like BTC yield, talk a little bit more about, you guys have targets, I think that you've publicly stated that you're trying to hit. And then how do you think about what is good or bad? It's kind of this weird thing, like if I go and I talk to a B2B software company, there's certain industry standard measurements, right, of maybe EBITDA margins or various financial metrics. How do you think about that today as to what would be a good BTC yield? And how do you think about what your target is?

• 17:51Speaker 02

  It's a really tough question.

• 17:54Anthony Pompliano?

  It's all I do is tough questions.

• 17:57Speaker 02

  In the traditional financial world, people are constantly looking at operating profit, obviously important, cash flow. When you look at a Bitcoin treasury company, operating profit isn't something that you guide yourself by. So I think Bitcoin treasury companies will have to, over time, come up with interesting, innovative metrics that traditional analysts can look at to see if this type of business model is one that is growing and is deserving of a certain multiple. Many people now are criticizing Bitcoin treasury companies and saying, how can one trade at a premium to its NAV? In the same way that one doesn't value, say, a Google or a Microsoft based on the equipment

• 18:39Speaker 02

  that they have or the chairs and real estate that they own. In their case, it's about their revenue growth, their earnings growth, their ability to generate cash. In the case of Bitcoin treasury companies, it's really about how quickly you can accumulate Bitcoin. And so for us this year, where, I mean, last year we were 300% BTC yield. We grew our Bitcoin per share by 300% in the last quarter. Our target this year is 35% per quarter. I think MicroStrategy's target is something like 8% to 10%. And that purely is because they have a much larger stack and it's more difficult to grow on a percentage basis. But I think over time, as more and more Bitcoin treasury companies come about, you'll find

• 19:21Speaker 02

  analysts creating their tables, comparing BTC yield, comparing BTC gain, and having a better framework, I think, to describe and value companies like ours.

• 19:33Anthony Pompliano?

  Talk a little bit about maybe the Wall Street apparatus. Investment bankers, consultants, accountants. There is some education you're probably doing with those folks. But there's also, from what I understand, a lot of inbound interest of people who, again, there's volatility, there's return. It's the shiny thing that people are saying, hey, maybe this has legs and can become, you know, something over the next couple of years. So what are those conversations and how have they changed over the last couple of months? And maybe even the last year since you've done this?

• 20:01Speaker 02

  So I used to work at Goldman, so obviously so close to my friends at Goldman. They and Morgan Stanley are probably the last two to really get involved in this space. It was very exciting to see that they were the underwriters for MicroStrategy's most recent convertible bond deal, I guess, a week and a half ago. And up until then, they were noticeably missing.

• 20:24Speaker 02

  Sometimes I just wonder why these banks are so conservative. I feel perhaps they're brainwashed a specific way. They're taught certain metrics and if something doesn't fit into that box, then it doesn't it doesn't work. But they're definitely opening their eyes now. I think the launch of the ETF last year, a lot of people perhaps in this room that play that play the role in educating those in traditional finance about Bitcoin, it's starting to have an impact. We're getting a lot of inbound interest from institutions, from investment banks, where they have a client that wants to speak to us. And I think as more and more people reach out to their banks and say, we'd like to speak to companies that are adopting this sort of strategy, the better the better it is.

• 21:09Anthony Pompliano?

  For the people in this room, what can they do to help you? And I think that helping you helps Bitcoin. Helping you and helping Bitcoin also helps other companies that want to pursue this strategy. So what would your message be to the people in the room?

• 21:23Speaker 02

  We've been inspired incredibly by the work of MicroStrategy.

• 21:29Speaker 02

  And we hope that through the, I guess, the initial success that we've had, and we're very humbled by the interest that the market has taken in us so far. But we want to inspire people in the room. It's just letting everyone know that there is this new category of company called a Bitcoin Treasury company. There aren't that many now, but I think more and more companies will begin to look at this as an interesting path forward. I forget which podcast it was that I listened to that Saylor was speaking on, but I think he said something like, you know, "The chance of anyone in this room creating the new, the next Nvidia, the next Microsoft, the next Facebook is highly unlikely." It's very difficult to do, and there's a lot of things that have to happen just perfectly

• 22:14Speaker 02

  to be able to create that unicorn. But everyone has the opportunity to plug into the Bitcoin network. You don't really require much more work than studying hard and being diligent about the strategy. So I think it's possible for any public company, and probably irresponsible for a public company with cash, just to hold that cash and not to at least consider Bitcoin as a possible alternative.

• 22:38Anthony Pompliano?

  I know you talked to a lot of the other CEOs that are pursuing this strategy. What is your advice to them of things you've learned that they should keep in mind as they go and pursue it?

• 22:49Speaker 02

  I mean, there are quite a few companies, I think, that are beginning to buy Bitcoin, but there's a difference between those, I think, that passionately believe in Bitcoin as an asset for the future versus those, perhaps, that might be seeing it as a way to make their stock go up. There's a huge disparity there. And so I think believing in Bitcoin, understanding why it's something that will be incredibly valuable for a corporate balance sheet, I think is incredibly important. And also, you know, it's great to be able to connect with other CEOs of Bitcoin Treasury companies and really just exchange those ideas. There's a lot of localization that's required. I think in Japan, we discovered a particular niche.

• 23:32Speaker 02

  But I think there should be a MicroStrategy of every single country.

• 23:37Anthony Pompliano?

  Ladies and gentlemen, Metaplanet CEO, Simon Gervage. [applause]