The Bull Case for Crypto — with Michael Saylor

Michael Saylor returns to discuss the various use cases he sees in the crypto market as well as the dire need for regulation. Follow Michael on Twitter, @saylor Scott opens with his thoughts on the real estate market as well as why TikTok is an existential threat. Algebra of Happiness: feel something. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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

• 0:01Scott Galloway?

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• 0:49Speaker 01

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• 1:18Scott Galloway?

  Episode 175. Josh Trembeer in 1975. Asked, "It's Saturday Night Live, people born in 1975?" Angelina Jolie, Targawood, David Beckham, and Drew Barrymore. No joke, E.T., one of my favorite films, but leaves us with the question, where does E.T. come from? My guess, from his wee alien penis. Go, go, go!

• 1:49Scott Galloway?

  Welcome to the 175th episode of the Prop G Pod. In today's episode, we speak with Michael Saylor, the chairman and CEO of MicroStrategy, a publicly traded business intelligence firm that he founded in 1989, although admittedly, it's become more of a tracking stock for Bitcoin. He joins us today to discuss the bull case for Bitcoin and the role regulation plays in the crypto markets. I have known Michael for 20 years. I wouldn't call us friends, I'd call us friendly. I used to get together with him. I'd come to his place in Miami. I'd tell him about what I was up to. In about 30 seconds, he'd distill down my business and give me pretty salient advice. There's just no getting around it. This guy is brilliant. And the only time I've ever come close to mine... Cryptocurrency, I am what you would refer to as a no coin, or I still have never purchased

• 2:31Scott Galloway?

  a coin, although I'm an investor in an infrastructure company, Ledger, is after the first time we did a podcast with Michael Saylor approximately two years ago, when Michael outlined the bull case for Bitcoin, it was at $18,000, and I thought I'm gonna, one of my many flaws as investors, I can't buy anything unless I feel like it's on sale. So I thought if it goes down to 10 again, I'll buy it. It never went to 10, it went to 66, and now it's back around 19, but it's still up since when I spoke to him about two years ago. So many people have been labeled as, I don't know, bad actors, and he might be an uber evangelist to a fault, but I have known him, and I think he's an honest broker and generally believes this. And if anyone has seen what he's actually done with his own money and his own firm's debt capacity,

• 3:16Scott Galloway?

  there's just no getting around it. He has drank the Kool-Aid here. Anyways, what's happening? Let's talk about real estate. The real estate market has been red hot, or probably white hot would be a better descriptor for quite some time now, since 2019. Get this, prices have spiked 30%. That's about an $80,000 increase for a typical home. According to Investopedia, interest rates on a 30-year mortgage have averaged from about 3% to 4.5% through the last decade. The current average rate on a 30-year fixed mortgage is around 5.7%. But let's look at it more specifically. Six months ago, you could get a 3% mortgage. Now it's going to cost you around 6%. So if you're buying a half a million dollar home,

• 4:00Scott Galloway?

  borrowing $400,000, that means your monthly payment has gone up $1,000 in the last six months. So if it was honey, let's go look at the same home we were looking at six months ago, it's now for the same home, the same price even, $1,000 more a month. And people don't look at homes based on price. Most people look at homes based on their monthly payments. So this has put huge pressure. On the value of real estate by the end of Feb 2022, a record 8.2% of US homes were worth at least $1 million. That's almost double the pre-pandemic share and eight times more than 20 years ago. So despite this, we continue to see record highs. Have we touched the high, though? Have we touched the high? What's driving this? Several things,

• 4:41Scott Galloway?

  including record-high ownership of single-family home by investors, which hit 18% in Q4 of 2021. What's been the key factor driving most of this? Like, most of the markets who have surged, low interest rates. A 2022 report from the Harvard Joint Center for Housing Studies revealed that homeowners cashed out $275 billion in equity in 2021, so a quarter of a trillion dollars, which was the highest level since the peak of the 2005 housing boom. This is all feeling eerily similar to 2006 and 2007, and we kind of know what's happened or what happened next. Now, typically, what kind of rips up as quickly has a harder fall. Now, what might cause that fall? Or, I don't know if it's going to be a crash,

• 5:24Scott Galloway?

  but it's just hard to imagine real estate isn't going to come under a certain amount of pressure. And I think it's natural to think, oh, the assets I own are different. They're sequestered from the shitshow that is the market. I believe that. I believe that Airbnb, Apple, and Amazon, the stocks I own, would somehow be immune from what was going on with all that crazy, stupid shit. No, market dynamics will always trump individual performance. So it is dangerous, and you should scenario plan and model out, well, what happens if everything I own goes down in value, even though it might be performing well? What might cause that? The Fed is raising interest rates, and some of the highest-rate hikes we've seen in decades. The spike in mortgage costs is making homes less affordable

• 6:06Scott Galloway?

  to owner-buy, but interest rates are the only factor that might weigh on property prices. We have interest rates and declining saving rates. Coupled with record low consumer sentiment and you've got yourself a housing market that is cooling off, it might go from white hot to red hot to flat to down. What has struck me, I have several friends who are property developers, is that it went flat for about 30 days and now it seems to be in decline. In other words, the equilibrium here lasted about 30 days. There have been way too few houses for sale, but all of a sudden, it looks like there are a lot of houses for sale. According to data released this week from Realtor.com, home listings increased in June at the fastest pace since 2017. Now, I should couch that by saying it's still not back to pre-pandemic levels, but it feels as if everyone has decided,

• 6:51Scott Galloway?

  oh, wait, it's beginning to look like it's cracking. I'm going to see if I can get that amazing price that Joe down the street got six months ago. These things tend to be, or consumer sentiment or decision making tends to be a little bit rear view, rear view looking. I think what you're going to see is a bit of a Mexican standoff for the next six to 12 months where consumers or home sellers will not be able to acknowledge the market is not worth what it was in November of last year. I just don't see how real estate doesn't get hit. Now, having said that, real estate is very situational. There are some markets where you will see increases and some markets will get hit harder. But with rising interest rates, with consumer sentiment going down, with an unbelievable run up, it just seems like

• 7:34Scott Galloway?

  in the Ukraine, even the generals are getting shot. And the general here being real estate, that's my metaphor, is about to get taken out and get shot. I think you're going to see serious declines in real estate prices across the nation. What does that mean? Will they, will they crash to their pre-pandemic levels? As has, I mean, it's really shocking. I don't care if you look at MicroStrategy, I don't care if you look at Bitcoin, I don't care if you look at Amazon or Apple, or Apple, that's not true, but it's true of Amazon. Basically, look at almost anything, look at where it was pre-pandemic, it spiked in the pandemic and now it's returning to sort of pandemic or pre-pandemic level, so to speak. And if we were to follow that trajectory, we would see a fairly significant drawdown

• 8:17Scott Galloway?

  in housing prices. What does that mean if you're looking for a home? Sometimes it's situational in the sense that You have a new kid, you just need a new home. You're not, you're not able to time the markets. You gotta go into the markets, you gotta buy, you gotta borrow more money and you gotta get on with your life. However, I think if you have the option to sit on the sidelines, I don't think it's a bad idea right now to sit and wait. I think time is on your side if you're a buyer. It's difficult to imagine a scenario where we return to such, to such a seller's market. Typically, things don't, the clock pendulum is never, it's hard to visually spot it at the very bottom. I think as referenced before, you're going to see a flattening of the markets. The flattening may have already happened and we're going to start to see a decline.

• 9:02Scott Galloway?

  But there'll be a stall, it's sticky on the way down because sellers can't get past or can't come, can't come to the realization that their house just isn't worth as much as they thought. And then they, they quote unquote, and this is a big word in the world of financial markets, they capitulate and they start selling. Now, I am obsessed with planes. I have been, just as some people go online and look at, shop for fashion or other people, look at poetry or haiku online or do Wordle. The way I relax at night, I look at jets. And if that sounds strange, it is. I'm fascinated with aviation. I used to look at planes with my father. I can look into the sky and from 20,000 or 30,000 feet below, tell you what type of plane it is.

• 9:43Scott Galloway?

  And I've always wanted a plane and I look at planes, not every night, but two or three times a week. I go to controller.com, which is sort of the Amazon marketplace for, for private jets. And I can tell you that a specific plane, specifically a super midsize, like a Challenger 350, just 30 days ago, there was maybe one or two on the market. Now there are 20 to 25. It feels as if something has happened last week and I'm not equating a private jet to the real estate market. But when you're talking about big ticket purchases, specifically at the luxury end, I think you're about to see a significant increase in supply, which will put pressure. On prices. Okay, enough of that. Enough of enough of what's happening in a world of privilege. What else is happening? By now, you know, we have been very bullish on TikTok,

• 10:28Scott Galloway?

  or at least bullish from a usage level, specifically how it's absolutely crushing its competition and sending children and adults alike into virtual opium dens. But something we hadn't thought much about since 2020, when the Trump administration threatened to ban the app, is just how vulnerable the company is under Chinese leadership, or specifically, I believe, how vulnerable we are under the notion of this mega hydrogen-powered propaganda tool, or potential platform that could be weaponized for propaganda by the CCP. One of the leading FCC commissioners wants Apple and Google to remove TikTok from app stores, citing concerns over the firm's surreptitious data practices. This concern came to light

• 11:11Scott Galloway?

  after BuzzFeed reported that China-based employees of ByteDance, that's TikTok's parent company, had been accessing US user data. TikTok responded that it's trying to stop these leaks and is working with Oracle to safely store 100% of its US data. So I've come sort of full circle on this. Six months ago, I thought, I love TikTok, I enjoy watching it, or I enjoy consuming it, and I thought it was a better version of Facebook, where they seem to be taking moderation more seriously. And I think that's largely true. And I don't have any evidence that they have engaged in anything nefarious, and I think the majority of the people at ByteDance would like it to be the more benign Facebook. Why? Because, like most people, they realize they will have a better life if they make millions

• 11:54Scott Galloway?

  of dollars, and the way for them, or the blue line path to millions of dollars, is to put up, if you will, a Chinese wall between the company and the CCP. So I think actually what you have at ByteDance is a group of people that would like to see a counter to Facebook and Twitter and the cesspool that has become our current social media ecosystem and be better actors. But here's the problem. It's a Chinese company.

• 12:20Scott Galloway?

  And China has made it clear, the CCP is that in a stroke of a pen, they can decide what you can do and what you can't do. They are also very active and very smart and realize that the best investment they can make in a growth economy is espionage. It is much easier to steal IP than it is to create it. Now, what could the CCP do to put their thumb on the scale of certain issues or certain what I'll call information or certain viewpoint that could hurt America? It's simple. It's really simple, and that's what's so goddamn scary about it. And that is, I believe our nation is pretty fragile right now. And that is because social media has had a profit incentive to make our discourse more coarse

• 13:05Scott Galloway?

  and to decide whether you're left center or right center, and then very quickly move you far left or far right with a series of content and kind of tribal or censor tickling content that convinces you that the Squad or Ted Cruz are in fact the Antichrist, whether it's gerrymandering by our elected officials who want to entrench or cement their current positions such that we have hard right and hard left districts. We have become so polarized that effectively we have decided the enemy is each other. TikTok is an existential threat to America. Facebook and Twitter have shown they are a threat. The reason they're a threat is because they are so focused on shareholder value, as they should be, that they have algorithms which are benign, and when I say benign, I mean indifferent to the health

• 13:49Scott Galloway?

  of our commonwealth, and will promote any type of content, even if it depresses teens, even if it creates misinformation around vaccines, even if it weaponizes our elections and creates misinformation around voter fraud. They don't care as long as they get Benjamins. Now, couple that profit incentive with also a bad actor or a competitor that would like to see the next generation of Americans feel worse and worse about America, and you have is what in my view, the threat that very few people are talking about. And I never thought I would say this, Ted Cruz is right. When he was questioning that professional, that executive from ByteDance, it was frightening how evasive that executive was.

• 14:34Speaker 02

  Your privacy policy says you will share information with your corporate group. I'm asking a very simple question. Is ByteDent, your parent company headquartered in Beijing, part of your corporate group? Yes or no, as you use the term in your privacy policy?

• 14:51Scott Galloway?

  Senator, I think it's important that I address the broader point in your statement.

• 14:57Speaker 02

  So are you willing to answer the question, yes or no? It is a yes or no question. Are they part of your corporate group or not?

• 15:02Scott Galloway?

  Yes, Senator, it is. So what should be done here? Facebook and Twitter and other social media companies need to be held accountable for the tremendous damage they've done to our youth and to our Commonwealth. As it relates to TikTok, one or two things should happen. The U.S. division should be spun into an independent company that is heavily regulated to ensure that no data, no data, ever leaves U.S. shores, full stop. That all incentives and all regulation foot to American interests. If that can't happen, then what should happen? TikTok should be banned from the United States, similar to how they have banned Google and Facebook. Who's the idiot here?

• 15:42Scott Galloway?

  We'll be back for our conversation with Michael Saylor. Support for the show comes from Superhuman. The pace of modern work can be relentless. You're getting a constant influx of messages from a ton of different apps. You haven't closed all your browser tabs in a year. Everything seems urgent, and staying on top of it all feels like an impossible task. Superhuman Go is an AI chat that's always there when you need it, already aware of what you're doing and doesn't ask you to start from zero. Superhuman Go, from the makers of Grammarly, help you be the best version of yourself at work. It handles the repetitive stuff so you can focus on the work that only you can do. Whether you need to summarize an endless email thread or prep for a meeting that's happening in five minutes, Superhuman Go works inside the tools and sites you already

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• 16:52Scott Galloway?

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• 18:09Scott Galloway?

  Welcome back. Here's our conversation with Michael Saylor, the chairman and CEO of MicroStrategy.

• 18:17Scott Galloway?

  Michael, where does this podcast find you?

• 18:19Speaker 03

  I'm in Annapolis.

• 18:20Scott Galloway?

  Let's bust right into it. I would love for you just to give us your view on the state of play in the crypto market right now. Give us your sense for the dynamics in the market and how you see this playing out.

• 18:35Speaker 03

  Well, you know, I mean, first, the macroeconomic situation is this is the worst financial crisis of 50 years. So I feel like you got to go back to the 70s to see something which is, feels somewhat comparable.

• 18:48Speaker 03

  Everywhere in the world, we're in turmoil. You know, there's a struggle about the future of everything. The future of cities, the future of big tech, the future of countries, the future of politics, the future of culture. So the crypto saga is taking place against that greater backdrop. And I think if you look at the crypto industry, the first decade was the Wild West entrepreneurial, no-holds-barred stage. And that kind of peaked, I guess, when it hit the two and a half or three trillion-dollar market valuation. And I think the next decade is a decade of public company, institutions, onshore,

• 19:33Speaker 03

  adult supervision, and maturity. And we're kind of right in the middle of that turmoil right now. Let's take the five things that I think are innovations that are good for the world over the next decade. And I don't know that Gary Gensler, the chairman of the SC, would disagree with me on this, or many people. So one thing is digital property. The idea that you can instantiate something that has scarcity in the digital realm. And Bitcoin is the most famous example of a digital property. Before Bitcoin, you know, you have money, but you're trusting Visa or Amex or PayPal to keep the ledger. So you have a bank or you have an intermediary.

• 20:17Speaker 03

  After Bitcoin, you got rid of the intermediary. So that's the first innovation. The second innovation is digital currency. Everybody wants dollars on digital rails. And the people that want it the most right now are, say, the Argentines. Let's take an example. Argentina, the official exchange rate, 130 pesos to the dollar. The blue market or the black market exchange rate, 230 pesos to the dollar. This weekend, the Tether exchange rate, 255 pesos to the dollar.

• 20:47Speaker 03

  Okay, why do people want Tether? Well, you know, the banks won't sell me dollars and I don't trust the banks. And I don't trust the peso. So if I'm in Turkey, or am I in Argentina, or Afghanistan, or Iraq, or like Nigeria, or take Zimbabwe where the currency just crashed and they're dollarized. They want digital currency, they want it on Android phone. And they want to move it back and forth, just like they want a message on WhatsApp. So that's the second innovation. It's not just about Bitcoin, it's also about currency. And you know, right now, the big macroeconomic thing, Scott, is every currency in the world is collapsing against the dollar. The euro is down to a dollar three. Remember when the euro was a dollar forty, right?

• 21:29Scott Galloway?

  I do.

• 21:29Speaker 03

  The euro is failing. The yen is failing against the dollar. It's like twenty percent weaker. Uh, you know, the Chinese currency would fail against the dollar, but it's illegal to move money out of China. They have capital controls. And, uh, and the Argentine exchange rate isn't a real exchange rate, it's a manipulated exchange rate. If you look at the chart, they simply click it up one percent every couple of days for the last two years, totally manipulated. So the third thing, uh, and those are the two obvious things. Those are the big ideas, the trillion dollar ideas. The other three things that are exciting in crypto is digital securities. The idea that I can spin up a token and I can issue it to people and I can move it

• 22:14Speaker 03

  on a Saturday afternoon. Uh, and I, I want to do that quick and cheap. So a public, uh, the twentieth century security idea is expensive and slow and cumbersome. And there's like four thousand public companies. But of course, there's twenty thousand crypto tokens. So people have this idea that it shouldn't cost you thirty million dollars to go public. It shouldn't cost an army. I got a hundred lawyers and accountants to keep my company public. So it's too expensive and they want it cheaper. Okay? The fourth idea is, uh, digital rights. I mean, NFT is a digital right. Like, can I transfer an ownership of something from me to you with cryptography instantly?

• 22:58Speaker 03

  And then the last idea is digital exchanges. And by here, I mean 24/7, 365 global exchanges. You know, on Memorial Day, it's not a holiday in Saudi Arabia. So why is it that we expect the Emiratis to shut down on Sunday just because we shut down on Sunday? So the crypto exchanges, they solve that. So those five things, those are the virtues. Now, let's talk about devices. Devices are 20,000 unregistered securities. Like, just because you don't want to spend $20 million a year to disclose your risk factors, doesn't mean that you don't need to disclose your risk factors. So you have a lot of bad behavior.

• 23:43Speaker 03

  You have a lot of unregulated behavior. The crypto banks, you know, Voyager, Celsius, BlockFi, they've taken insane amounts of risk and they're unwinding. Some of the crypto hedge funds took insane amount of risks. And let's take Luna and UST. That was $50 billion worth of something, and there might have been a billion of equity, maybe two. So it was 25x levered something without disclosure or risk factors. And the worst part about it is not just the $30 billion of Luna, which was an unregistered security with no disclosure, that went to zero. But the $18 billion of UST, which people characterized as a stablecoin competitive

• 24:28Speaker 03

  to Tether, and Tether competitive to Circle. Well, if Circle's got one-for-one cash equivalents as the collateral backing it, if Tether has something they say is 100% backing, but they haven't disclosed it completely, and if UST was backed by a nickel for every dollar, the three were not comparable, and one of them, the UST, went to zero. So you have the positives, you have the negatives. There's a tension between the 20th century and the 21st century. The regulators, the SEC, the CFTC, are kind of slow to give concrete guidance.

• 25:11Speaker 03

  The concrete guidance would be, what's a commodity? What's a security? What's a currency? Right? We already know that the SEC doesn't like crypto exchanges. And that the manifestation of that is they keep denying the Bitcoin spot ETF. But the truth is, what they need to do is simply find a way to get the crypto exchanges to register with them. And so we're, the crypto industry cannot evolve past where it is until there is a clear understanding of how do I get my token designated a commodity? And then the second clear, there is no way to do it. Right? I mean, Gensler went on CNBC and said Bitcoin's a commodity. I won't speak to anything else.

• 25:55Speaker 03

  Well, that leaves 20,000 other things twisting in the wind.

• 25:58Scott Galloway?

  But didn't he say, I'll just press pause there, because my sense is, I thought the most bullish thing that's happened for Bitcoin was that interview with Gensler where he said everything, all of these coins are unregistered securities, which implies to me, he's saying they need to be registered and they need to start reporting risks and capitalization. But he carved out Bitcoin, which says to me, I mean, any of these things, I would say all but a handful of them, if they all of a sudden have the obligation and the costs that are incumbent or linked to SEC registration, they're out of business, as far as I can tell. So wasn't that, wasn't he, isn't he basically culling the market and saying that it's going to be Bitcoin and a few other well-capitalized coins?

• 26:43Scott Galloway?

  But overnight, if they demand these 20,000 coins register with the SEC, don't 19,9 of them go away?

• 26:52Speaker 03

  Yes. You're astute. Now, that's not a unique, it's not new, what he said, Scott. He's been saying that consistently, under congressional testimony and in the media for the past year and a half. And if you go back to, hey, the course he taught at MIT in 2018, you look at it on YouTube, he didn't say anything different then. So he's remarkably consistent. What you had was the crypto industry not wanting to hear. What he's been saying and being intentionally confused like nobody wants to understand what he keeps trying to say it and he's trying to be kind, he's trying to take a kinder, gentler approach of pointing out to people that, you know, if you want to be a commodity,

• 27:35Speaker 03

  you can't have an issuer. So you're right, you got your finger on it. The summary is, there's got to be a rationalization and there's going to be a 99% failure rate and the debate is, is 99% the failure rate or is it 99.9% the failure rate? That's the rationalization. And the other question is, over what time period?

• 28:00Scott Galloway?

  So I want to back up to this notion of trustlessness, which I hear a lot. I've always had an issue with because it seems to me that just as middlemen emerged in the traditional securities markets, whether it's Charles Schwab or Robinhood or American Express, we've had the same middlemen pop up because we can't connect and don't want to connect to the blockchain on our smartphones. So middleware pops up, whether it's Coinbase charging greater commissions than Schwab, whether it's FTX, there are new middlemen that say, it's not that we're not being asked to not trust people, we're just asking, being asked to trust new people. And these exchanges to me actually end up, it ends up, well, you can't trust them as much because they're not backed by the FDIC. They have

• 28:43Scott Galloway?

  very little, they don't, they aren't stress tested by Sarbanes-Oxley. So one, is this notion of trustlessness really, a trustless world really accurate? And two, I would love for you to just go through the exchanges and tell me kind of what's going on there because every day you hear about a new exchange that lent money to someone else and it's creating this domino effect. That strikes me as the most frightening part of all of this right now is what's happening to the exchanges. So I apologize for the long-winded question. Trustlessness is a concept and then break down the exchanges.

• 29:16Speaker 03

  The question you've got to ask yourself is: Why do those things exist at all? Why do those wildcat banks exist? And the reason is, we're in a new asset class, and JP Morgan's not offering to custody my Bitcoin. In fact, it's worse than that. There's only two companies in the space, Silvergate and Signature, that were even considered to be Bitcoin-friendly or crypto-friendly. Everybody else won't touch it. So the regulators, by moving slow, they created this opportunity for these entrepreneurs to get into space. The entrepreneur pitch is, "We'll just give you a big interest rate,

• 30:00Speaker 03

  or better yet, we'll give you a 0% loan." Okay, it sounds really good, but the problem, of course, is those are unregistered securities, and they're not making full and fair disclosure. You know, there's a joke, Scott, and we used to have this joke in the software industry. What's the difference between a used car salesman and a software salesman? The difference is, a used car salesman knows when he's lying. And the idea was, software's so complicated, the salespeople don't even know when they're lying to you. They're just enthusiastically selling. And if you look at the crypto industry, I think you could apply the same exact idea, which is, most of these banks didn't even know the risks they're taking. And the customer, you know,

• 30:45Speaker 03

  they don't realize that they're taking that risk. Or the customers were enticed, you know, to put money into an institution with counterparty risk. And they're not sophisticated enough to know that there's an 8% chance a year of the entire thing failing, right? So if I'm paying you 8% interest, and there's an 8% chance of failure, your net is nothing, right? And of course, it's worse than nothing, because I'm paying you 8% interest taxable. Year after tax is 5%. There's an 8% chance of failure. And probably statistically, the chances of failure were more like 35% or 20%. So the counterparty risk offsets the yield. Now...

• 31:29Speaker 03

  Were those things regulated? No, I mean, they were in violation of 37 states laws. I mean, BlockFi got fined by the SEC, Voyager, Celsius, all of those things, all of those banks, they were already under enforcement actions at the time, but so are 50 cryptos under enforcement actions. Enforcement actions are very slow. And so, you know, if you wanted to fix it, you have to actually fix it at the exchange level. The reason that this stuff propagates is because the exchanges let you trade it and the regulators don't really have any, they have not taken control of the exchanges, either

• 32:13Speaker 03

  onshore or offshore. So the volatility is, I think, in large part due to the immaturity of the business. The reason that the, that the consumers are forced to even do business with all these companies is because they don't have so many regulated options. And then there's just a lot of actors in the space that are, again, lacking adult supervision.

• 32:40Scott Galloway?

  What's your relationship with the SEC? Do they see you as an ally, an enigma? Do they want your help shaping legislation? Do they see you as, what is your relationship with these regulatory agencies?

• 32:52Speaker 03

  I, I think that they all, you know, they all drive their own agenda, right? And there, there's a lot of very smart people. I mean, after all, Gensler literally taught the course in this, right? He was the professor at MIT in this. So, so they understand the crypto industry as well or better than anybody in the industry right now.

• 33:18Scott Galloway?

  That's interesting. The fact that you would say that is really interesting because I constantly hear from other quote unquote crypto luminaries that the SEC doesn't get it, which is Latin for usually trust me, not the government.

• 33:31Speaker 03

  If you sit in a room of seven, of 100 crypto business people, 75% of them, you know, fear the SEC. And that's because the entire premise of the industry, Scott, is that they're all trading as though these are commodities, but they're not. Ninety-nine percent of them are securities. So if they're securities, then exchanges can't decide what to list and what not to list, right? The NASDAQ doesn't decide to list private equity. If you want to list your company, you have to first submit a registration statement to the SEC.

• 34:13Speaker 03

  Then you have to go through an iterative process, and the SEC has to say you now can go active. Then the investment bank can kick in. Then the NASDAQ can trade the stock. Then the market makers can get involved. So imagine a world where you simply get to take the place of the SEC, the NASDAQ, and the market makers, and you can also invent the token, and you can also own the token. But the facts are much more straightforward. All you've got to do is go on YouTube and Google Gary Gensler Blockchain and Money, and then watch. In 2018, before he was the head of the SEC, he basically spent 30 hours breaking down

• 34:53Speaker 03

  this entire industry, laying out the difference in technology, the significance, the innovations, how you determine a security versus a commodity. And he did it without prejudice, without even knowing he was ever going to be head of the SEC. And everything he's done since then is consistent with that.

• 35:12Scott Galloway?

  We'll be right back.

• 35:16Scott Galloway?

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• 36:53Scott Galloway?

  So I sat off mic and I should point out, I think it's worth pointing out again. We did this podcast two years ago and for all of the people always, it's just natural instinct to anchor off the highs. So all the media is about the crash in Bitcoin. Bitcoin's actually still higher than when you and I did this podcast last, two years ago. It's still up from when we did this podcast. Also, MicroStrategy stock has been a roller coaster, but I believe your stock is up from where it was pre pandemic. So it's not.

• 37:24Speaker 03

  Our stock is up. Our shareholders have benefited. Our employees have benefited. Our turnover is down and.

• 37:31Scott Galloway?

  And so just so I don't come off too much as a sycophant, I know, I said this off mic. I know, I don't know you well, but I know you. And my sense is you are a good actor. You want other people to succeed. You have voted with your feet. You're not out there promoting something and then selling. There's been some carnival barkers talking about SPACs on CNBC, just as they were calling their brokers and selling. So you may be wrong, but your heart's in the right place. The question I would have for you is kind of throughout this, you have been an evangelist to the point of telling people to to go out and buy a lot of Bitcoin. Do you wish you'd been more tempered? In those proclamations around Bitcoin, given the volatility in the marketplace?

• 38:15Speaker 03

  No, I, I think that um. My job is to educate the public on the benefits of digital property. And it, for example, Scott, I'm, I'm not promoting my own company. Like if you go and read my Twitter feed, you won't find a single sentence in years where, maybe ever, I think, where I ever said, uh, buy MicroStrategy.

• 38:42Scott Galloway?

  Buy MicroStrategy, right.

• 38:44Speaker 03

  Okay, so the, the world is full of a hundred thousand securities and properties, and they all have counterparty risk, right? And you know, you can have at them one way or the other. I happen to feel that, uh, that there's um, a moral hazard to unmitigated promotion of a security. Right, there, there's the obvious, uh, legal hazard, right? There are SEC laws, there are securities laws, which is why if you ask me, you know, what do I think, will MicroStrategy stock go up forever? No, I'm not going to say that, right? Should people own it? Not going to say that. And uh, our stock has a hundred pages of risks, risk factors and disclosures.

• 39:28Speaker 03

  And if you want to criticize it, then have at it, criticize it. I think the reason that I feel comfortable and I, almost I feel imperative to promote Bitcoin is because it's a commodity, not a security. If I were to take an equivocating stand, if I were to say that Bitcoin is the moral equivalent to any other crypto. I would be doing a disservice to the public because it's not the moral equivalent. You know, a commodity is a moral is superior ethically and morally to a security. So I wouldn't equate Bitcoin as the moral equivalent to Apple stock or the moral equivalent to any other crypto token.

• 40:10Speaker 03

  I would say it's more like the moral equivalent to silver or gold. And if you say you like gold or you like silver, I mean, I'll engage in a debate with you why I think Bitcoin is better than gold or silver, right? And you do whatever you're going to do. But the, but the difference is silver doesn't have an issuer, gold doesn't have an issuer, Bitcoin doesn't have an issuer. I'm not promoting a company. I'm promoting an ideology. And the ideology is, wouldn't it be a better world if all eight billion people on the planet had ownership of their own money, could save it and, and, and could custody it without being abused by bad actors? Right?

• 40:55Speaker 03

  That, that's the idea. The crypto industry didn't have a public company willing to stand up and say, we will buy this and we will hold it. It turns out that the most credible counterparties in the world are United States publicly traded companies. They're, they're, they're the most credible counterparties for borrowing and they're trusted. And the reason they're trusted is because I have an army of lawyers and accountants looking over my shoulder and I know that I have civil and criminal liability if I lie. That's why they're trusted.

• 41:28Scott Galloway?

  Well, you've de facto brought regulation to one small part of this crypto. By virtue of buying these assets under the auspices of a publicly traded, regulated company, you've, you've, to a certain extent, you've brought some regulation into the environment. So I want to, you've been very enthusiastic.

• 41:44Speaker 03

  So the reason I'm enthusiastic is I can do a good thing, Scott.

• 41:46Scott Galloway?

  Right?

• 41:47Speaker 03

  I mean, I can do a good thing.

• 41:49Scott Galloway?

  I hope so.

• 41:50Speaker 03

  Maybe, you know, the world will benefit from a monetary protocol and the world is held back by the fact that you can't move money at the speed of light and you can't effectively store it in the digital realm.

• 42:03Scott Galloway?

  Yeah, well, your point around, look what's happening in Turkey. I mean, people's life savings are being wiped out. It's something we take for granted with the USD. But I want to just pivot because I know you have to run to, to something more personal. I'll start with a personal anecdote. I've gotten crushed a couple of times and I think you have too. You, I would describe you as not only as someone who's obviously, you know, got domain expertise and, uh, you know, thinks on a different plane, so to speak, but you are the American consumer of risk. I've always seen you like running into the fire as long as I've known you. You are not afraid of risk. I own three stocks, Apple, Amazon and Airbnb. And I thought, I'm bulletproof.

• 42:45Scott Galloway?

  And I borrowed 30%, you know, I took 30% margin loans at 1%. I'm like, that's free money. And I went out and I did other investments. And what you're finding out in Ukraine as well as the markets is even the generals get shot, right? Airbnb, which I think is just an amazing company. I love the leadership. I love the concept. If you'd looked just at the earnings report last quarter, you'd think the stock would be up. It's off 55%. And I get that call from Goldman saying, Scott, you need to find collateral and put it in your account. I get the margin call. I haven't had a margin call since 2008 and I promised myself I would never have another one. And I'm like, fuck, I'm just so disappointed in myself. I mean, I really rattled me, Michael.

• 43:29Scott Galloway?

  You've gotten, I don't know if you've gotten specific margin calls, but you've had to shift shit around to avoid margin calls. I'm just very curious, like what the last six months have meant for you from a stress standpoint and how you manage that stress.

• 43:44Speaker 03

  If you look at my Twitter profile, I have laser eyes. And, uh, and the constructive thing you can sort of say about laser eyes is, is the message is focus, be humble. When I have a hundred opinions, but there's only one opinion that's constructive for me to share, which is Bitcoin is good and can make the world a better place. So the way I think that I maintain, uh, morale, uh, and, uh, enthusiasm is I just focus on what I can do. You know, with regard to financial management, you know, the key there, I think we've all learned is, uh, keep your leverage to a low level.

• 44:27Speaker 03

  Now, 30% would be low before 2020, but after 2020, I guess you gotta say.

• 44:34Scott Galloway?

  Thank God I had other shit. Yeah. I mean, I, I, I was shocked. I thought that was, I thought that was really conservative.

• 44:40Speaker 03

  Yeah. Yeah. I think from a point of view of if you think about about finance, you kind of want to be able to last through the volatility and you know, you're going to get jerked around, right?

• 44:54Scott Galloway?

  Yeah, you never want to be a forced seller. But my question more, Michael, is more personal, and that is, hasn't the last six months been really rough on you? And how do you manage stress? I have, I have certain hacks around when I know I'm stressed out, you know, it's exercise, time with my boys, times, time with my dogs, I find very therapeutic. I just can't imagine the last six months haven't been a shit show for you.

• 45:15Speaker 03

  You know, you get a lot of energy from the community.

• 45:21Speaker 03

  Right? I mean, for, for example, the most passionate community I, in the world that I've ever met are the Bitcoiners. They're much, they're very committed. I mean, sometimes it's to a fault where, where they're criticized for that, for being,

• 45:37Scott Galloway?

  or they criticize others. There, there, there isn't a lot of nuance in this community, Michael. I can have a nuanced conversation with you about this. I find when I go on Twitter and I question the value of Com Rocket or something, that I just get massively attacked. I, I, I find this community is actually, it goes beyond evangelism. It's got this sort of Taliban feel to it. Is that fair?

• 46:00Speaker 03

  Yeah, I think on Twitter, especially in the, in crypto, Twitter and the like, you start to disparage somebody else's token or someone else's equity. You know, they say like, don't, don't break a man's rice bowl, you know, Japanese, never mess with that.

• 46:19Speaker 03

  But with regard to the issue of stress, I think eat well, sleep, exercise, curate your surroundings, right? All of those are useful.

• 46:30Scott Galloway?

  Curate your surroundings.

• 46:32Speaker 03

  I think the other thing is, I don't wade into toxic discussions on Twitter or, or the like, right? There's a hundred things you can fight about, you know, with, with passion that'll get you upset and get everybody else spine up, spine upset. I don't do that. My one thing I learned in business after many, many years is cheerful and constructive, right? You don't accomplish as much, you know, as you stray from that. So I keep my comments cheerful and constructive. I don't react to negativity with more negativity. I think you just, you know, you reap what you sow, especially online.

• 47:14Scott Galloway?

  I'm going to do a quick lightning round. First things that come into your mind. Last piece of media that you binge watched or read?

• 47:23Speaker 03

  Last piece of media that I binge watched? I watched The Boys.

• 47:29Scott Galloway?

  The Boys.

• 47:30Speaker 03

  The Amazon television show. I think it's pretty funny.

• 47:34Scott Galloway?

  Most important or influential relationship in your life growing up?

• 47:40Speaker 03

  Um, my mother.

• 47:42Scott Galloway?

  Best piece of advice you've received?

• 47:45Speaker 03

  Focus.

• 47:47Scott Galloway?

  Thing you'd want to most change about yourself or that you're working on?

• 47:52Speaker 03

  Be a better communicator.

• 47:55Scott Galloway?

  A piece of advice, if you had just five or 10 seconds to give a young person a piece of advice, professional advice, what would it be?

• 48:02Speaker 03

  Focus.

• 48:04Scott Galloway?

  What is the place where you find flow or what gives you flow?

• 48:09Speaker 03

  Nature.

• 48:12Scott Galloway?

  And what now in terms of your approach to relationships versus your approach to relationships as a young man, how have they changed?

• 48:20Speaker 03

  I think it's, I realize it's more important to be cheerful and constructive, to make them all constructive relationships. There's no point in negative or toxic relationships or confrontational ones.

• 48:33Scott Galloway?

  And what would be, what does success look like for you, say, 10 years out?

• 48:41Speaker 03

  Contribute as best I can to the commercialization of Bitcoin.

• 48:49Scott Galloway?

  And if you couldn't be doing this, what would you be doing?

• 48:56Speaker 03

  Something constructive to make the world a better place at some scale.

• 49:02Scott Galloway?

  Michael Saylor is a chairman and CEO of MicroStrategy, a publicly traded business intelligence firm that he founded in 1989. He's also the founder of Alarm.com, a named inventor on 40-plus patents, and the author of The Mobile Wave. He joins us from his home in Annapolis. Michael, I really appreciate your time. You're always super generous with me. Every time I call you or ask you for something, you're always just not only gracious, but you're very agreeable. So I appreciate, I don't want to call you a friendship, but I just appreciate how, for lack of a better term, how civil and gracious you are.

• 49:34Speaker 03

  Yeah, thanks for having me.

• 49:45Scott Galloway?

  Okay, algebra of happiness, the supply chain. We've been hearing about it a lot. We didn't realize how optimized and how little slack there was in the supply chain. And the supply chain has literally brought the global economy to its knees. And we didn't realize how vulnerable we were to this boring thing called the supply chain. How one commodity gets produced into an item and how that item gets shipped, assembled, distributed, retailed, and then supported. And the supply chain, if you will, there were weak links everywhere. And when you're about to fly from New York to Miami, you find out you have to reroute over the Atlantic or through Texas because the air traffic control professionals didn't show up at the Louisville Air Traffic Control Center,

• 50:28Scott Galloway?

  such that it was no longer capable of guiding people through their airspace. And all of a sudden, flights all over the nation are being rerouted around the southeast. It just feels as if there are a million different weak links making this chain vulnerable, if you will. But, long-winded intro, saying, what is this supply chain for a rewarding life?

• 50:50Scott Galloway?

  What is the path? What is the route? What are the things that if they break, kinda it all comes crumbling down? In some, and I'm speaking kind of, I'm obviously distilling this down to some very basic things, but I think early as a young man or woman, you want to establish certification and get to a city. You want to be seen as somebody who stands out on LinkedIn. You want to be, you want to have some currency in the marketplace such that you can make a good living. You might decide that you want to work to live and live somewhere beautiful, but you still need that certification, that training, that domain expertise to offer yourself the opportunities you're gonna want. The second thing you're gonna want to do, and you're gonna want to do this concurrently, but I think you're gonna want to focus on relationships, making sure that your parents

• 51:32Scott Galloway?

  are well taken care of, investing in friendships, ideally finding somebody that you want to mate with and hopefully have kids with, which I still, unexpectedly for me, became the most rewarding part of my life. I don't think you need that to be happy, but I think it is something wonderful if and when it happens. And then what do you want? If you're fortunate to have some level of economic security and good relationships in your life, you want to lean into your emotions. And that's where I find that the supply chain is breaking down for a lot of my friends. And that is, they have been taught their whole life to be so disciplined, they have been taught their whole life to be so manly and so stoic that they don't lean into their emotions. And without leaning into your emotions, you can't feel anything, or you're not as

• 52:13Scott Galloway?

  cognizant or as in touch with your feelings, which kinda makes the previous two things, certification, economic security, and relationships, a lot less meaningful. Lean into what makes you happy. Try as hard as you can, when you find things are funny, to laugh out loud. When you feel yourself getting emotional, cry. When you're inspired by something, when you see a piece of work or someone performs at work really well, tell them you're inspired by them. Tell other people what moves you, what inspires you. When you get outraged and angry and upset at something, Be upset and angry and then share with someone else while you're upset and angry.

• 52:54Scott Galloway?

  Don't keep it to yourself. The whole fucking point of this shooting match, the whole blink, the whole speck of sand on an eyelash that's blinking, that is your life, your duration here in the universe, is to feel something, to get those things, to get economic security, to get relationships, and then to not feel real joy, to not feel real happiness, to not really fucking miss somebody. I mean, have your heart ache for someone, to not feel heartbreak, to not feel the pride and the emotion when you see your son graduate from middle school, to not lean into that emotion through some fucked up notion of what it

• 53:37Scott Galloway?

  means to be focused or disciplined or to be masculine, is to cheat yourself. That's when the supply chain breaks down. None of that shit matters if you don't lean into your emotions and feel something. That is the whole point. Feel something. Lean into your emotions.

• 53:58Scott Galloway?

  Our producers are Caroline Shager and Drew Burrows. Claire Miller is our associate producer. If you like what you heard, please follow, download, and subscribe. Thank you for listening to the Prop G Pod from the Vox Media Podcast Network. We will catch you next week.

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