E172: Michael Saylor: How To Get Rich With Crypto (Without Working Hard)

29:52People say yes, yes, yes, they'll still trade and then after one, two, three years they realize, oh shit, had I just bought and held, I'd have so much more Bitcoin right now. When did you first discover the concept of scarcity and low time preference? I think I've always understood the idea of long time horizon because at MIT I built nonlinear dynamic computer simulations and I studied engineering and control theory and in those nonlinear dynamic systems there are feedback and one of the most important parameters is the time constant of the feedback. So there are certain, like for example, algae in a pond, if it's doubling every day and it fills up the pond on day 30, when will you notice you have any allergy, right?

30:43And so the time constant or the life cycle, you know, in dynamic systems, how long does it take for deer or wolves to breed? How long does it take for, for algae to grow? How long does it take a virus to spread in your body. All of those things figure prominently in sophisticated dynamic simulation models. So that idea of time constant is important. And I wrote my thesis at MIT, a mathematical model of a Renaissance Italian city-state, where I actually created a computer simulation of Machiavelli's discourses. And the discourse describes the dynamics of government when you have a judiciary branch, a legislative branch, and an executive branch.

31:32And if the judges serve for life, they have a long time constant. And if you change the legislative branch every two years, it's a short time constant. And if you have the Senate and it's every six years, it's a longer, more conservative time constant. And if the executive is a ruler, a king, and rules for life, that's a very long time constant. But if they're elected for four years, it's a shorter time constant. So I actually programmed that on a computer. And I actually showed all the dynamic patterns under which a political economy melts down or whether it thrives. And, you know, and that was interesting to me.

32:09It was always with me. I understood if you, for example, if you have a longer time preference or a lower time preference, but a longer time horizon than your boss, you're doomed. Like say you're running a company and you want it to be successful over four years. And your boss gives you 12 weeks. and he checks you in 12 weeks and fires you if you haven't got cost down and the ratings up in 12 weeks. You can't have a four-year plan when your boss has a four-week plan. So you have to learn about time preference and time horizon and anything you're doing in life or business. You have to have the right time horizon.

33:04And, of course, the traders have a time horizon of four days or four weeks. And anything that I do, I think four years is short. And business, I've never seen a good business that was successful in less than four years. And generally, most great businesses, they worked on them for a decade, like very hard. So I kind of had a good feel for that. What was the second half of the question? You asked me about time preference. Scarcity. Oh, scarcity, yeah. So scarcity, I didn't understand nearly so well before I discovered Bitcoin. Right? I mean, the truth is, I'm not a stupid guy, right? I was first in my class and I was the top of my class at MIT, but I didn't really understand money and I didn't really understand monetary scarcity or true scarcity until I discovered Bitcoin.

33:58So I was given a gift in 2020 because when the Federal Reserve lowered the interest rates to zero, they literally took the interest rate to zero. And they said, we're not even thinking about raising interest rates. I had$500 million of cash. And what happened is cash became not so scarce. Currency was not scarce. It's like the banks could print money. The Fed was going to print money. We printed money to fund everything while we shut down the economy. And that was jarring. You know, that's very disturbing situation. And that shook me out of my liturgy. And it forced me to think really hard about what is money.

34:40And, you know, I recorded this podcast with Robert Breedlove in late 2020. And he had and his question to me was, what is money? And I thought we'd talk about it for an hour. We ended up talking about it for like 25 hours. It became a long-running series of discussions. And you can't really understand scarcity until you've seen actual engineered scarcity. So if you think about money, the sound money was gold for thousands of years. And gold is not really scarce because it's relatively scarce. That is, it's harder to make gold than it is to print paper or seashells or glass beads. But it is actually inflating at 2 % a year.

35:29And so that means that every 35, 36 years, you double the supply. And so, you know, gold actually, in a way, is inflating much more than, say, beachfront property in South Florida. Like if you look at Palm Beach real estate, they're not doubling the length of beach in Palm Beach every 36 years. And when you think about money or currency, over 100 years, we're increasing the currency supply in dollars about 7 % or more. I didn't realize that. You know, I didn't think about it. And then when the lockdowns came and when interest rates went to zero, I had all this money. And it's like if you had a building and someone was paying you$25 million a year in rent and a politician said, we just rent controlled your building.

36:20Now you're going to offer the building for free and you're going to pay$0 in rent for the next decade or so and you're going to like it. You'd be irked. You'd be like, what? I used to make$25 million a year and now I make$0 million a year because I'm supposed to do it for the good of the people. you would probably sell the building and go take your money somewhere else where you're allowed to charge rent. OK. And that's kind of what happened to us. We were making twenty five million a year and then all of a sudden we're making zero a year. And and the Federal Reserve is saying you're going to make zero a year forever.

36:56And that forced us to look for something to buy. And we thought maybe we should buy some gold or maybe we should buy some real estate. But eventually I thought maybe digital gold. I wanted something that was as good as gold, but like a big tech monopoly. Can I find like the Facebook for money or the Google of money? And that was Bitcoin. So I thought, well, Bitcoin is the dominant digital monetary network. And I started studying it. And it turns out that Satoshi put this one clause in the Bitcoin protocol, which is it's hard cap to 21 million. I mean, it didn't have to be. They could have said it increases at 2 % a year.

37:34And if it increased to 2 % a year, it would double in Bitcoin supply over 36 years. But it hard capped and increases zero a year. And here's the big aha moment. This is the only commodity in the history of the world that actually was absolutely scarce. Silver's not. Gold's not. Palladium's not. Diamonds aren't. Even land isn't. If you study a map of land in Boston, they added half of it. If you look at Miami Beach, half of Miami Beach is reclaimed swampland. We actually built the land. So I'd never seen absolute scarcity before Bitcoin. And then when I saw it, though, I had an education as an aeronautical engineer.

38:20I knew thermodynamics. I knew what it means to have a closed energy system, an adiabatic system. I understood adiabatic lapse. And then I said, well, this is a thermodynamic. sound a conservative energy system, there is no heat loss. There is no energy loss. And then I realized, once I saw that, it became obvious to me why that's rational. Because in engineering, you can't solve a problem unless you assume an adiabatic system. You have to assume a closed energy system. And so in all of my engineering days, they would say, design an aircraft wing and analyze its performance, assuming adiabatic, you know, system, right?

39:03A closed system. An open system, by the way, is, you know, your plane's working fine. And then I shoot it with a laser beam or I zap it with a lightning strike. You can see why that's a special thing. Or, you know, if I have a leak in this room, that's because all the oxygen drains out of the room. And when it does, we all free, you and I freeze to death and suffocate. We probably suffocate before we freeze to death. So when you're designing this studio, you're thinking, I really kind of want a closed system, you know, that doesn't have a heat lapse because otherwise we're going to suffocate or freeze to death.

39:40So it's kind of common sense. You don't want to freeze to death, but people take it for granted. So now once I saw Bitcoin, I said, hey, that's actually a monetary network that doesn't lose 2 % of its energy a year, like gold. And then I thought, well, wait a minute. That means that the dollar is losing 7 % of its energy a year. Now, I know what half-life is. If you're losing 7 % of your money a year, that means the half-life of your money is, you divide 7 into 70, it's 10 years. You're losing half of your energy in 10 years. Your half-life in gold is 36 years. Your half-life in the dollar is 10 years.

40:21Your half-life in a weaker currency might be five years. What's your half-life of your wealth if there is no lapse, if there is no leakage? It turns out it's infinity. The difference between 2 % inflation and 0 % inflation is 72 divided by 2, 36 years. or 72 divided by zero, infinity. And so the question is, do you want to live forever or do you want to live for, well, half of you is dead in 36 years. Do you want to live 100 years or do you want to live forever? And at that point, that was the big light bulb moment when I was like, oh my, this is not just a little bit better than gold. Gold is a lot better than cash, but this is infinitely better than every other capital asset or monetary asset invented in the history of the world.

41:27And I thought this is a revolution in economic thinking. And, you know, once you understand that, you know, it's kind of like I give you electricity. Electricity is colorless and odorless and incredibly powerful. And it runs this and it runs that. your lights and it works your washing machine. And try to imagine a world before we could transmit like clean, infinite, silent, efficient power. Go back to 1500 and imagine being an author and trying to describe energy when you'd never seen electricity. Well, every economist had never seen Bitcoin. So how do you understand economics if you never saw perfect money, perfect economic energy, where Bitcoin means you can move economic energy through time and space with zero energy lapse, right?

42:27Like light, electricity. It's a beautiful thing, but no one had ever seen it. And so Aristotle couldn't imagine it. I mean, you know, did Aristotle imagine electricity? Why didn't he write about it? You've never seen it. But after you've seen it, it's obvious. And, you know, then you can't unsee it. It just, it turns out that you have to have some, with a paradigm shift, they say there has to be some near-death experience, right? There has to be a war or a near-death experience or like the older generation. I think Max Planck said, he said, science advances one funeral at a time, right? The old guard never will appreciate the new thing.

43:08They won't get the paradigm shift. They don't need to. If you've got money and power and fame and success and respect, why do you need to embrace a new idea? The people that need the new idea are the 20-somethings, the 30-somethings. It's young people that have everything to gain, nothing to lose. And by the way, if you do it the way your parents did it, you're going to fail. Well, that's what we're talking about. I mean, Rick is 40 years old Uber driver. but actually our entire generation, right? 25, 30, 35, cannot afford houses. This is the entire problem here. And that's exactly what you're talking about.

43:49You mentioned before, I want to find the Facebook of money. So basically, you're thinking in terms of heuristics and previous experiences. And it doesn't come out of nowhere. You have previous experiences. in the 1990s? You said, I didn't really understand the scarcity until I found Bitcoin, but you actually understood digital scarcity in the 1990s already when you bought some domain names, at least part of it. Yeah, I understood valuable property. For example, you know, 94, we all started using email or something like that. And the web was coming along between 94 and 96. And we got the domain micro strategy.

44:34And so I was like, sailor at micro strategy. And everybody misspells micro strategy. They call it micro strategies, you know, or micro strategy or whatever. They don't say it. They can't spell it. They can't remember it. And so I thought, wouldn't it be better if we just used an English word strategy? So I said, hey, see if you can buy strategy.com. And so we went off and they said, yeah, we can buy it. It's like, I don't know,$50 ,000. I don't know. not that much money, but a lot of money back then, but not much now. And then I thought, you know, wouldn't it be great to buy words in the English language that everybody knows how to spell and they can remember?

45:15So I said, go find all of the good words in the English language. And so we bought wisdom.com and we bought usher.com and we bought speaker.com and we bought voice.com and we bought angel.com and alarm.com. And then I thought, hey, go buy Mike.com. And I said, is Michael.com? And then I bought Michael.com. So like today, my website is Michael.com. And I thought, you know, I didn't ever think I would be famous enough to need it. I kept waiting for Michael Jackson or Michael Jordan to want to buy it from me. But, you know, eat your heart out, guys. Now I'm Michael.com. And so I bought Emma.com, you know.

45:55I bought Frank.com. And my idea was, you know how there's Amazon.com? You know, it's like you pick an easy word, a word that people can say, Apple.com? Yeah. You got how many billion people learn English? And my thinking was English is a protocol. Everybody learns it. They spent like 12 years learning what the words mean and how to spell the word. And so the best brand, if you want to brand a business, is I bought Hope.com. How do you feel when I say Hope.com? Probably good, right? I mean, Hope is a good word, right? And so I thought, well, these are good intellectual property, and maybe one day we'll put businesses on them, or maybe somebody will buy them from us.

46:45And eventually I sold Voice.com for like$30 million. Bought for how much? a few hundred thousand. And it was, you know, so we made some money and we sold angel.com like$110 million and alarm.com we spun off for, you know, a large amount of money. So some of them paid off. The others I still have. I still got Mike and I still got Frank and I still got Emma and I still got Wisdom. And I, you know, we still got, you know, a lot of these. And, you know, Elon Musk, when he bought Twitter, he rebranded it x.com and he had the X for like 20 years. He's like, I want to use X, one letter. I mean, very powerful.

47:26Like, how do you spell it? I think I know how to spell it. And I think, you know, I understood that and I understood digital monopolies, right? If you watch Apple, one thing I had was I was a tech investor. So I invested in, you know, my first fortune that I made was building micro strategy. And when it came public, I became wealthy. And then I had some money to invest. And I invested in Apple and Google and Facebook and Amazon. And, you know, and I thought, you know, one day a billion people are going to use the iPhone. So everybody else thought, you know, it was a computer techie device and the handsets were going to be with 50 bucks and get commoditized because the Nokia phones were like really dirt cheap.

48:10And I thought it's going to be jewelry and it's sexy and people sleep with it next to their head. And if it becomes like jewelry, it's like LVMH Birkin bags or something. And so I was a big believer and I thought they're going to build this digital monopoly. And they did. What made you feel that this would become jewelry? There is this super famous video from 2012 where we basically say exactly that, right? But what makes you feel or understand this is going to be a monopoly and this is going to be a premium brand and therefore it's going to become a compounding machine as part of a few other stocks when all the rest is literally noise?

48:47Yeah, well, because I had a thousand employees and we had Dell computers under every desk and they were big and heavy and noisy and ugly and cheap and commodity, you know, and nobody cared. And then we had like the iPhone and, and, you know, my nieces or, you know, you know, my friend, my girlfriends are like, okay, well, what gift should I get them? And they're like, well, give me the pink iPhone or get like, give me the pink. I'm like, what? Like, I don't, yeah. And you know, Apple would come out with the normal iPhone. And then the next year they would have the pink one. And, you know, my sister's like, you know, your nieces, they want like the pink iPhone for Christmas.

49:35So I have to like pay an extra thousand dollars for a phone that's pink instead of a phone that's gray. Like, well, all their friends have it. And so like every year Apple would like, you know, remember Apple had orange computers and they had and and here's the thing. It's like. You're holding it and it's like a status symbol and it's and it's just like, you know, with Birkin bags, If you spend enough money, you might get permission to be able to buy one for$4 ,000. It's like, what? Well, you know, a handbag is like 5 ,000-year-old technology. And somehow in the year 2026, people struggle to pay thousands of dollars for a 5 ,000-year-old device because it's a status symbol.

50:17And the difference is if you hold it, if you sleep next to it, if you've got it with you all the time, if it's part of your identity. And by the way, it's not irrational. I mean, you can't carry a Dell computer around in your purse. It's too heavy, but you don't need to. So if it's a desktop thing and it's hidden in the background, you're not going to invest in miniaturization and style. But with the iPhone, it was clear the battery matters, the style matters. Is it sexy? Is it cool? Is it orange? Is it, you know, they had the red ones. You remember that when red was really big and, you know, and Bono had a red iPhone.

51:01And if you were cool and you cared about the world and the climate, you needed to buy the red one. And I, you know, here's the big idea, which is people have plenty of money. I mean, everybody can spend a thousand dollars a year on something. The issue is, did I spend it on a new shirt, new pair of shoes, a new iPhone? Here's what you're not doing. You're definitely not replacing the industrial electrical plug underneath your work desk every year just to be hip. And so when I saw that, I had this other observation too. I'm going to make this point, which is I saw software dematerializing to the mobile devices.

51:43So does the software run on your work desk computer and you use it from 9 to 5? Or does the software run on a piece of jewelry? Does it run on your watch or does it run on your phone and you're using it at 9 p.m. on a Friday night when you're out on a date? Or are you using it at a baseball state, watching a baseball game? If the software is running at the baseball game or if it's running when you're out on a date and if it's running when you're in a car and you're on the move, right? It's kind of like software went from solid state to vapor state, you know. And at that point, it becomes like what good is it for you to be able to book a restaurant reservation at 9 a.m.

52:29on Monday if you need to go out to dinner on Saturday night? You want to book it on Saturday morning while you're at the gym. And so what happened during the mobile wave is people rethought software and software became a consumer phenomena and it became a 24-7, 365 phenomena and it became a real time thing. It's like you want your software to wake you up or like Uber, back to your Uber driver. You know, we didn't used to have Uber. And the thing that made Uber possible was the smartphone. because without the smartphone to call the Uber and without the smartphone to link the Uber driver to the passenger, that doesn't exist.

53:10And so during the mobile wave, the software leaped from underneath the desk and it leaped onto your person, onto your clothing, and it became part of you. And when it became part of you, you started to prioritize quality, you know battery life look feel you know the way you think about your shoes you wear the purse you carry the belt you wear the suit you wear and it became a consumer good so when I saw those things it occurred to me that there's going to be a billion person network a mobile network and Apple that the other thing i saw is all the rich all the rich powerful people were using iphones and so when you see that the affluent have this network it's like how much is it worth to own that network quite a lot and then we saw the same thing with microsoft formed a business network and then amazon formed a retail network that last mile to hundreds of millions of households and google formed their network.

54:18And then Facebook became the network and nobody used any other network because everybody's on Facebook. And what occurred to me was if there's a monetary network, what happens when all the wealthy people and the money all join the network? They're not going to put 20 friends on the network. They're going to put$20 million on the network. And there's going to be a massive Newtonian network effect because billionaires are going to put a billion dollars on the network. You know, it's like I said, when Rupert Murdoch joins Facebook, he's bringing 50 friends. But if Rupert Murdoch joins Bitcoin, he's bringing$50 billion.

54:59And so I thought, man, what a great network to be part of. And you just got to find the one that's going to be the winner. And once you find the one that's a winner, then the network effects kick in. Bitcoin is a lifeboat tossed on a stormy sea offering hope. our favorite word, to anyone in the world that needs to get off their sinking ship. Those are your words. Can you explain? If you live in Africa, there's not a single currency that works, that holds its value, and the banks don't work very well. So if you're the Uber driver in Africa and someone wants to give you$50, dollars. If they give you$50 of BTC, it's going to appreciate probably 20%, 30 % a year against the US dollar.

55:51And when your local currency loses 10 % a year against the US dollar, if you give that, you know, when your currency is collapsing 20 % a year, the half-life of your money is three years. So whatever I gave you is worthless in 10 years. So if you want to store economic energy, you have to get out of that collapsing system. You can't buy any currency in a collapsing system. You can't buy a credit instrument or a bond in a collapsing system. You can't buy the real estate either because the real estate is a derivative of the currency and if no one's got any money in a collapsing economy, they want people to pay the rent and the real estate won't have that much value.

56:33So you see this hyperinflation. It's come to Brazil. It's come to Argentina. But once every 25 years, every single currency in Africa has collapsed. The German currency collapsed a couple of times. Most currencies collapse. The most successful currency in the last 100 years is the US dollar. the U.S. dollar has lost 99.9 % of its value over the 100 years, and that's the best one. An acre of land in Miami Beach used to cost$10 ,000. The same acre of land cost$10 million today, maybe$20 million. So if you do the math, that's north of 7 % collapse a year. And by the way, 7 % doesn't sound that bad.

57:31But when you compound it over 100 years and I tell you, you're going to start with$1 ,000 and you're going to end with$1. That's the best it's going to get. Now, if that's the best it gets, imagine what it's like when you lose the wars. In Japan and Germany, they lost a war. In those cases, it's not 99.9 % in 100 years. It's 99.9 % in 30 years or 20 years. So how do you get off that sinking ship? You have to find a trustworthy bank. Well, there isn't a bank you can trust when the economy collapses. You have to find a trustworthy form of money. Well, the only form of money that's going to hold its value is scarce money.

58:11And so what you buy, you know what they bought in the Renaissance? They bought gold and they bought paintings. but then you better be able to get the paintings and the gold out of the country and try to walk through the airport with a lot of gold or a lot of paintings and maybe you'll get allowed and maybe you won't so the problem with physical assets as a store of value is that you hold them you know at the pleasure of someone more powerful than you everything you own in the physical world you own at the pleasure of someone more powerful than you. And if they decide that they don't like you because of your race or your religion or because you have more money than them or because you say something they don't like or you're politically different than them, they just take all your stuff away.

58:59And that is the story of history. 10 ,000 years, 10 ,000 examples, right? Thousands and thousands and thousands of examples, you know, Muslims being disenfranchised, Jews being disenfranchised, The Christians, the Protestants being disenfranchised by the Catholics, the Catholics being disenfranchised by the Protestants. Every place, everywhere, the minority finds that their property is seized at some point. So the issue really is where are you going to put your money? And the answer is you put it in cyberspace, a bank in cyberspace that's owned, that's controlled by nobody, that's owned by nobody, that no government can stop, that no politician can interfere with, that no company can corrupt, and that offers you money that's scarce, that, you know, 21 million coins, 100 million satoshis a coin.

1:00:00You buy what you want. But when it's time to leave, you take your money with you. When you exit the country, when you exit the city, when you exit the state, you can have it with a custodian, but when you don't trust the custodian, you give it to a different custodian. When you don't trust anybody on earth, you take self-custody. And when you're ready to depart this earth, when you die, you can take the money with you too. If you have your private keys, you can literally take your private keys with you and you can take it to the grave with you. That is a property right that is absolute and profound and unique in the history of humanity.

1:00:43You've never had that economic right, not in 100 ,000 years, not in any place, not at any time, not with any other strategy. Every other economic right is a privilege you hold at the pleasure of the ruling class of wherever you live. And when they decide to remove that privilege, you will be impoverished. And I won't go into the details. I say read history. The more history you read, the more examples you will read of that having happened to somebody. And so, you know, I see Bitcoin as that lifeboat. it's available to anybody anywhere right for the first time in history and that's what makes it so inspirational the only use of time is how do i buy more bitcoin take all your money to buy bitcoin then take all your time to figure out how to borrow more money to buy more bitcoin then take all your time and figure out what you can sell to buy bitcoin and if you absolutely love the thing that you're doing and you don't want to sell it, go mortgage your house and buy Bitcoin with it.

1:01:52And if you've got a business that you love because your family works for the business, it's in your family for 37 years and you can't bear to sell it, mortgage it, finance it, and convert the proceeds into the hardest money on earth, which is Bitcoin. Buying Bitcoin with cash was not enough for you. You had to go to the next level and issue shares and debt and find every way to accumulate more dollars to buy more Bitcoin. And then you have to onboard the world with you. Why?

1:02:26If you're living in a hyperinflationary economy and the currency melts down, the bank fails. It happened in Germany. It happened in Argentina. It happened in Brazil. It doesn't matter how hard you work. People were basically bringing wheelbarrows of money,$20 billion to 20 billion marks to buy a bar of soap. So working hard and not thinking about monetary theory and not understanding money isn't a solution. The ruling class would like you to work hard and not think about these things, right? But if you want to create wealth or preserve wealth, it's not enough to just work yourself to death. you know and i can give you lots of examples of that now if you look at the wealthy you know a wealthy real estate investor they would go and get a loan and they borrow money at five or six percent and they invest it in a building and they would generate a ten percent return and they would capture the difference and you know if you want to make a billion dollars you borrow a billion dollars

1:03:47you use it to build a building. You keep 80 % or 100 % of the equity. You put the rest 80 % of the building as debt. So maybe you have$1.1 billion building and you find a way to raise$100 million of equity and you have$1 billion of debt. And then the money supply expands at 7 % and the building increases at 7 % a year. And that means after 10 years, the value of the building is doubled. So in 10 years, you have a$2.2 billion building, right? And maybe you've paid a few hundred million dollars in interest, but you've now made$400 million in equity. And so you made$400 million in 10 years or$40 million a year with other people's money, right, with intelligent financing.

1:04:41every real estate developer who's ever been successful anywhere that you've read about use debt financing to do that it's it's almost never an example where you see someone that says oh yeah i just kind of used equity and i just paid for it with my own money um with bitcoin bitcoin's been appreciating about 40 a year for the past six years in 2020 2021 you could have got a 30-year mortgage for 2.7 % or two and a half, people got two and a half percent mortgages. So imagine the government wants to give you money for 2.5 % and you can invest the money at 40%. If you could borrow a million dollars, then you're getting 37.5 % of a million dollars a year.

1:05:27Okay. So you're getting paid$375 ,000 a year to do what? To borrow money from the government and buy a scarce asset. Okay, so how many people can make$375 ,000 a year after tax? How hard do you think you have to work, right? You have to make$700 ,000 a year in New York or $800 ,000 a year in New York. So you can either work yourself very hard to make the money or you can be an intelligent financier and the government just gave you that. And the world's full of examples of this. Another example, like if you lived in Argentina, you know, the peso went from one peso to the dollar to a thousand pesos to the dollar over like 20 years.

1:06:23So if you had a million dollars and you kept it in pesos, right, you would have lost 99.9 % of your money. So your million becomes$1 ,000. You managed to take a million dollars with the pesos and make it$1 ,000. Or if you just converted your pesos to dollars, swap the collapsing currency for the stronger currency, you've got a million dollars, which looks like it appreciated by a factor of a thousand in local terms. So oftentimes, financial intelligence consists of trading the weaker capital asset for the stronger capital asset. And there are a lot of people that look like geniuses in South America, and people say, well, what's your strategy?

1:07:16Oh, yeah, I just bought US dollar assets. It's like you go to Miami, all these apartments, they're like owned by Venezuelans and Argentinians and Brazilians. They're like, what are they doing? They're converting their local currency to a US dollar asset. And they're not really making, they may make money on the real estate investment, they may not, but they're making a huge amount of money by avoiding the currency debasement in a weaker currency. So I think generally the idea is you want to have a lot of assets. You want to invest your assets in a very strong capital that's appreciating. And then if you have access to cheap credit, right, cheap mortgages, subsidized credit, something like that, then you can avail yourself of that.

1:08:05And that's like a leverage buyout or that's just like leverage property development. And if you're not using cheap credit, then you're just working hard. And working hard is difficult because you have to get paid. You have to get 7 % more after tax each year to keep up, to just stay constant, right? You're running on a treadmill. And the problem is, say you get a 10 % raise each year. Well, the tax rate, the tax bracket you're in keeps going up. You're getting taxed on that income. So I guess if you, you know, you can basically hold your standard of living by getting paid 10 % more each year, but that's a real, you know, rat race.

1:08:54or what you can do is you can buy an asset that's just going to be 7 % more valuable or 15 % more valuable or with Bitcoin, 30 % or 40 % more valuable every year while you do nothing. It's like, do you want to be 7 % richer every year by doing nothing? Or do you want to work 10 % harder every year to not be richer? Which of those two do you want? The one is an operating business, by the way. An operating business has to work 10 % harder to stand still. A property business gets 7 % to 10 % richer doing nothing. And so you can see you can compound your wealth much more when you're asset rich than when you're labor.

1:09:45Asset intensive versus labor intensive. Over the last six years, you and MicroStrategy have spent more than$60 billion buying more than 800 ,000 Bitcoin. Mark Twain famously said, it's not what you don't know that gets you into trouble. It's what you know for sure that ain't so. How much time do you spend thinking about this when it comes to your 60 plus billion dollar and growing by the day Bitcoin bets? Thousands of hours a year. There's a famous phrase by Warren Buffett, put your eggs in one basket, but watch that basket. So what does that mean to me? It means that I get encouraged to diversify into a different business, a different line of business, or a different asset every week for five years.

1:10:38And we always say no. Well, why don't you buy this? Why don't you buy that? Why don't you buy this? is because we don't know those businesses, right? We could enter into any of a thousand different businesses. We could buy any of a thousand different things. We could, and we could diversify. But I would rather intensely understand one thing, Bitcoin, obsessing over it, obsessing over the first order nuances, the second order nuances, the third order nuances, the fourth order nuances, the reflexivity. Right. I obsess over that. And we do it all the time. We talk to everybody. We have a risk model.

1:11:22And we have a stochastic risk model. We publish it to our website. You can take all of our credit instruments and then you can plug in the price of Bitcoin and you can plug in your forward volatility estimate and you can plug in your forward price estimate. And then you can adjust all the parameters and it spits out the risk and the fair credit spreads and it updates every 15 seconds. I look at it every day and we calculate every metric. And you know what? If you said put some silver in there, put some gold in there, put some real estate in there, it totally breaks the model, right? Like I would have to become an expert.

1:12:03What is the risk of Miami Beach real estate? Well, you know, that's different than New York real estate. And New York real estate got different after the last election. So my view is the world's full of a lot of opportunities and a lot of assets. And I'm not going to say that other people won't make money understanding those other assets. They do make money. People make money trading Nvidia stock or trading Mag7 or trading equities or trading commodities, trading other crypto assets. What I would say is that it's in your interest, a laser-like focus. The world doesn't care whether I'm a good manager of 100 different things.

1:12:48The world wants me to be the best manager of one thing. And you should aspire to be the best in the world at the one thing you do, right? And if you're not the best in the world, you want people to say, well, there's like five superstars in the basketball, or two or three. You want to be on the short list of the superstars. You do not want to be the guy that's like, oh, he's Michael Jordan, but he also plays a little bit of poker, and he also plays a little bit of baseball. And I hear he's a good race car driver, but I'm going to trust him with my money. Because, I mean, people just don't – you don't need the jack of all trades.

1:13:30It's like, I just want, if I'm going to watch someone or, or trust someone, like, it's like, you ever get in an airplane? You're like, do you give a crap that the pilot's a good father and he's really good at baseball coaching and he has interesting political opinions and he can juggle, you know, fire torches? Or do you just want him to land the plane? You know, it's like, and if I hear that the guy spends half his time doing the other stuff, I'm like, eh, I don't know about this one. And so we know what we don't know. We stay in our lane. We focus on it. You know, everything, anything in the world that might have an impact on Bitcoin, I care about.

1:14:17But I'm not going to opine on who's going to win the Oscars and whether that was a good movie and tell you what your political views or your religious views ought to be or delve into geopolitics. I'm not even going to give you, you know, there's 10 ,000 other businesses. You know, well, this will, how's this going to work? You know, it's like, you know, there's someone else that knows the business better that has more skin in the game. It's like we have$62 billion invested in BTC. We have skin in the game. We have soul in the game. This is what we do. I don't expect you to care about my opinion on any of 10 ,000 other things.

1:14:52I might share them with my friends and family. It's not a professional opinion, right? It's a personal opinion. And I think in your professional context, strive to be the acknowledged expert in the world. And if you're not, if you utter an opinion, make sure you put in the work and you've made the investment and have the skin in the game to deserve to be considered. If you deserve someone's attention because you've made the investment, that's all you can ask for. And I think that's where humility will keep you from getting yourself in trouble. Quick shout out to the legendary team at Jupyter, the DeFi super app.

1:15:36Anything you want to do on chain, from trading to earning yield, you can just use Jupyter. Personally, I recommend getting the Jupyter wallet on either your phone or your laptop. 10 times faster and 10 times cheaper than the competition. You're gonna love it. Thank you to the awesome team at Athena for backing today's conversation. Athena is one of the fastest growing projects in DeFi with over$7 billion in stablecoin supply and an average 11 % APY on SUSDE. And importantly, zero DPEGs since launch, which is exactly what you want from a stablecoin. Go check them out by following the link in the description down below.

1:16:16The acknowledged expert in the world of Bitcoin said, sell the kidney if you have to, but keep the Bitcoin. This one went crazy viral. you know if you if you if you say non-controversial you know if i um if i were to post you know there's some storms over the over the caribbean and like one in a thousand of them becomes you know a storm in miami and occasionally some of those storms create floods and you know if that happens you might want to think about it but probably won't make a difference and meanwhile there are a lot more important things in the world than this. No one's going to retweet that.

1:16:58If I say there's a storm over the Caribbean that's going to put a 20 foot wall of water over Miami and we're all going to drown, that gets retweeted. And also online, if you want to make a point, sometimes you have to be colorful or people want you to be a little bit witty or I need some quotable quotes. You need to be entertaining or you need to be a little bit edgy. And so believe me, I think you should keep your kidneys. But really, the message I have really is the Bitcoin is a stronger form of capital preservation than your house, than a bar of gold, than a bunch of silver, than a stock, than an index, than a credit instrument, than a, you know, a stack of currency.

1:17:48All of those things are weaker. And when it comes time to sell something, sell something else, whatever the something else. You probably have crap in your life. You know, I'll see someone and they're like, I have a sexy sports car. You know, that's got a half-life of seven years. You know, Bitcoin will keep you, you know, you've got$200 ,000. You bought a sports car. Good for you. You'll be wealthy for a decade. you have$200 ,000, you buy Bitcoin, you'll be wealthy forever. So when it comes time to sell something, sell the thing that has a half-life of seven years or two years or 10 years or 20 years.

1:18:27Don't sell the thing that will make your children's children wealthy. Bitcoin is going to have economic value 500 years from now. It's the crown jewel. Like the royal family of Britain, they still own the center of Britain, you know. The emperor of Japan still owns the middle of Tokyo, and the royals in the UAE, they own all the good property. So own the stuff that's going to have value in 1 ,000 years. They would never sell Windsor Castle, Buckingham Palace, you know. Just like you're a New Yorker, don't sell Central Park. I'm going to sell Central Park to make a dollar. It's like, Jesus, it's worthwhile a thousand years from now.

1:19:14You might want to cultivate it. And Bitcoin, I think, is even more valuable than the nicest, most desirable real estate in your favorite place on earth. Bitcoin is going to be around. It's Cyber Manhattan. A thousand years from now, your children's children's great, great, great 10x grandchildren will be rich if you kept it. and if they kept it and if you sold it to buy a Ferrari you know it's like oh yeah my great great great great great grandfather had a very sexy horse and carriage I could have been the richest guy in Florida but my great great great grandfather wanted velvet in his horse and buggy and he wanted a nice little bridle because he wanted to impress a girl I'm like dude sell the horse and buggy keep the bitcoin keep the kid keep the kidney as well yeah keep the kidney

1:20:14what what's the what's the end game for strategy our end game we're like a reserve bank we have a reserve asset you know uh bitcoin so we've accumulated$60,$70 billion of Bitcoin. We will sell credit. We are stripping the performance and the risk off of the Bitcoin. Bitcoin's got 40 vol and it's got high performance, but most of the world wants zero vol. They want a bank account that pays them 10 or 11%. They don't want a roller coaster where they're pulling Gs and throwing up that pays them 40%, but they have to wait a decade. You said the market is 100 times bigger for people who want the 10 % a year versus the 40 % that is volatile, right?

1:21:03Yeah. So if you walk down the street and ask 100 people, what do you want? Do you want to work hard for a decade and be rich at the end of the day? That's like being a doctor, right? Do you want to go to med school and work hard for nothing for a decade and stay up all night and stress out that you're going to flunk out, but then at the end of 10 years, you'll be comfortable? Or do you just want to be comfortable now? And most people, they want the bank account that pays them the 10%. They want to live happily ever after. Or another way to say it is they want to compound their wealth comfortably.

1:21:41If you want to be more aggressive, it's like, okay, well, give me the 10 % and I'll lever it up three to one and I'll get 25 % yield like in DeFi. But I want to preserve my principle. And the general idea is people, if they have a certain amount of wealth, they don't want to risk it all in order to make more. They want to put it to work in a responsible way. And they want to comfortably compound their wealth. They want to manage it. And so our end game is to create that digital credit for every dollar of equity capital, of Bitcoin that we have, we call it digital capital. for every dollar digital capital, you can create 10 to 20 cents of credit.

1:22:24And so we've sold about$10 billion of credit. We've created$10 plus billion of digital credit. We'll create$20 billion of digital credit over the next year or more. Then we'll grow that 30 % to 50 % a year. So$20 billion to$40 billion to$60 billion to$80 billion. And what's the long term? say we have a trillion dollars of Bitcoin, of capital. Well, we can have$200 billion to$400 billion of credit, and that then pays a fraction, 10 % yield of the performance of the capital. Long term, the capital should be going up 20 % a year, and then the credit could be paying 10%. And so what we're doing is we're creating this digital credit, and that becomes the basis, the fuel of the money economy of digital money, digital yield, DeFi, TradFi.

1:23:33How big is the market for 10 % return of capital dividends on an investment-grade credit instrument? There's$300 trillion credit. And that$300 trillion of credit gives you after tax about 350 basis points. So what if I could give you three times that much? Okay, so is there$30 trillion market there? Yeah, the addressable market is trillions and trillions of dollars. So our endgame is create that credit and strip away. We strip away the risk. We're stripping the currency risk. We're stripping the economic risk. We're stripping the volatility. We're distilling the yield, compressing the duration.

1:24:19And we're handing people that want to invest their capital and credit this very low volatility, call it like a digital money market fund for people that trust digital assets and believe in digital capital. Right. And then because we're doing that, that creates amplification for the equity. So our common shareholders, MSTR shareholders, they outperform Bitcoin. So if Bitcoin does 20 % over the long time term, they would do 30, we would expect, or 40. And right now, say Bitcoin has been, it did 40 % a year for the past five and a half years. And our common stock is 60 % a year. So we give amplified Bitcoin to the equity holders.

1:25:08We give damped, low-risk Bitcoin with cash flows to the creditors. And then because we're actually raising that money, we're the biggest buyer of Bitcoin. So we're powering up the Bitcoin network. And if you're a capital investor in Bitcoin, well, the Bitcoin price was$10 ,000 when we started. It's$80 ,000 now. There's a trillion dollars of wealth that's been created. We're not the only actor, but we're an actor. So our job is to power up the Bitcoin network and keep driving that network. And I think we'll buy it at$100 ,000. We'll buy it at$200 ,000. We'll buy it at$500 ,000. We'll buy it at$1 million,$2 million,$4 million,$8 million.

1:25:51So it's a very simple business, which is just drive Bitcoin to millions of dollars, expand the capital network to$100 trillion, hundreds of trillions of dollars, create trillions of dollars of digital credit, and then create a lot of money for our common stock shareholders. And then the last point I'll make is there's a thriving ecosystem. Right now, if you look downstream of us, corporations are using our credit to power them. People are using our credit to power the ETFs. Companies like Apex and Saturn are creating yield coins, like stable coins that pay you 8 % or 10 % or 15%. And those tokens or yield coins are going into DeFi protocols, and people will loop that and generate 25 % or 30%.

1:26:41So there are yield products, investment products, yield coin products, digital tokens, public funds. At some point, I think a bank. wouldn't it be nice if your bank just said we'll just give you eight percent on your money instead of zero percent or three percent you know why why not right and so at some point we will power bank accounts we will power crypto accounts we will power uh yield coin tokens we'll power a defi and and finance and trading and of course we'll power the people that don't trust any of it, like let's say you hate all of it and you don't trust corporations and you don't trust crypto, you just want to hold the Bitcoin, hold your own keys, be self-sovereign, we're powering you up too, right?

1:27:30You're going to own Bitcoin that's worth a million dollars a coin and you're not going to have to trust anybody. So everybody kind of gets what they want. And we're even powering the TradFi people like investors that buy private credit or junk bonds or investment grade bonds. They're buying illiquid, low yielding, risky instruments, and we're going to give them something twice as good or three times as good. So we're really just in the business of fixing the money and digitally transforming the capital markets. And we're creating this digital equity class, MSTR, digital capital, BTC, and digital credit, STRC.

1:28:10And I don't know why that just can't continue year after year at a bigger and bigger scale. You said when we started, the Bitcoin price was 10 ,000. Now it's 80 ,000. You said we'll buy at 500, a million. Where is Bitcoin price when strategy and Michael Saylor's job is done? um first of all my job will be done when i can't do it anymore and i will gracefully retire and move on but strategy is a corporation with an infinite life expectancy you know the next generation of leadership is is the ceo fong lee and and andrew kang and cj and they're much younger than me and they'll be going for 10 20 30 years after i am and then they'll pass the torch to someone else you know lloyd's of london has been around for hundreds of years you know and so i don't know why the company can't continue for hundreds of years its job will always be done and its job will be to create the credit from the capital you know in order to create an on-ramp a low volatility highly liquid on-ramp for people to create their digital money digital currency digital yield, and all the other derivative products.

1:29:26It's a mission. And, you know, why wouldn't you just keep doing it as long as the civilization needs the money fixed? Where do you think the Bitcoin price would be trading today if Michael Saylor, our savior, never had his ha-ha moment and didn't dedicate his life to buy as much Bitcoin as possible? I don't know the exact number. My view is Bitcoin would have been successful without me and without our company. And if we hadn't done it, someone else would have stepped into that role. But, you know, presumably somewhere between$10 ,000 and$80 ,000. It wouldn't be as high as it is right now. We've spent$62 billion to support the network, and we've spent a lot of time advocating it.

1:30:12I don't know, halfway between. Maybe it would be$40 ,000 or$50 ,000 instead of$80 ,000. And it's hard to know, but generally it'd be a little bit lower than it is right now. But on the other hand, the other theory, the counterfactual is maybe somebody else would have become the strategy. And if we left the vacuum, they would have done everything that we did. And so that's always possible. The beauty of a decentralized network is there's always a vacuum to be filled and there's millions of companies and everyone has the ability to plug into that network and add value to it wherever they see a vacuum or a niche.

1:30:54So, you know, maybe, you know, maybe there would be someone else that would have done it, done it better than us and Bitcoin would be higher and maybe no one would have done it and it would have not grown as fast, but there's probably somewhere in between that. You mentioned STRC. The world is going crazy about this STRC instrument that you invented last year. Explain Stretch, STRC, to my mom, who is 65 years old, is retired, and has accumulated$500 ,000 after a lifetime of hard work. Sure. STRC is a preferred stock. It's targeted to trade around$100, between$99 and$100. It's senior to the common stock, so it has liquidation preferences.

1:31:41And the companies, it is a preferred stock with about$8.5 billion outstanding and an enterprise that has$85 billion of enterprise value. So you could think of the senior 10 % of the enterprise is stretch. And the mission of stretch is to pay a monthly dividend such that it trades around 100. And so right now, that variable monthly rate is 11.5%. We pay that each month. It was like 95 cents or something, 90 something cents last month. It's a return of capital dividend. and what that means is that when you receive the dividend, you reduce your basis in the investment by the amount of the dividend.

1:32:27So if we pay you$10 in dividends on$100 share, you reduce your basis to$90 but you pay no tax. And then the next year you reduce it to$80 and you pay no tax. And after 10 years of$10 a year, you would reduce it to$0. At that point, it would become a qualified dividend distribution. So you would start paying long-term capital gains tax on it. But the way to think of it is it's tax-deferred fixed income. And the company uses all of its resources to strip the volatility to make it trade pretty close to$100. If it trades below$99, we'll raise the dividend or we'll raise capital or we'll do something to get it back to$100.

1:33:15and when it trades at$100, we sell that security in order to raise capital. So we wouldn't sell it at$99.99. We won't sell it. But at$100 and one penny, we sell it to the market in order to allow other people to access it without overpaying. We never want someone to pay more than$100 and a penny for it. and uh you know you could think of it as it's like a a digital money market like instrument it's not a pure money market it's a little bit riskier it's a little bit more volatile than a money market but but it is a stable instrument and it's designed to generate three times you know the performance of a money market for people that believe in digital assets.

1:34:11It's the most tax-efficient credit instrument that you can buy because if you buy bonds, you pay ordinary income. You have to pay 40%, 50 % tax on a corporate bond. If you bought a bank preferred stock, it's qualified dividend distribution. You'd pay long-term capital gains tax at the federal and the state level. But with stretch, you get these two big advantages for generational wealth. One advantage is when you buy a$100 share, you get$100 of dividends tax deferred and you can reinvest them and it compounds. And then if you pass the share to your heir, if you give it to your daughter or you give it to your son in your will, they get a step up in the basis to$100 and they collect another$100 worth of dividends tax deferred.

1:34:59So your family might very well collect dividends for 20 years, all tax deferred, which you can reinvest. And you can't do that with a bond and you can't do that with a normal preferred stock. And so it's a very interesting way to preserve wealth if you don't want to see your principal fluctuate, you don't like volatility, and you aren't really pleased with the bank providing you with zero or a money market where you get like 2 % after tax. So my mom has her$500 ,000 in savings and she sees I can make 10 % a year, 50K. That's amazing. Should she invest her entire 500K savings into STRC? I think allocation is a decision that everybody has to make And it all comes down to, you know, how comfortable are you with the risk you're assuming?

1:35:58So probably the answer is not. Probably not overnight. You wouldn't want to. A Bitcoin maximalist, you know, a person that's got a lot of money in Bitcoin and they believe in Bitcoin, they might very well prefer to put most of their working capital, the money they need in the next four years, they might put that into STRC or digital credit because they're a Bitcoin maximalist. The average investor would probably say, I want to have my investments across two, three, four different sources of credit. And I really just think it depends upon what's your time horizon and how comfortable are you with Bitcoin.

1:36:42And you have to basically, you have to trust Bitcoin and you have to trust the issuer. So the issue is, would you put all your money in one bank called strategy? And then would you trust that the Bitcoin network is robust and is not going away? And, you know, that's a statistic decision. So probably some portion, depending upon how comfortable they are with digital assets and digital capital.

1:37:11How do you manage to always come up with new ways to raise dollars to buy more Bitcoin? You said before I use AI. In my question, do you have an aha moment where you take a shower? Do you have an entire department of strategy that works on that? How do we raise more US dollar to buy more Bitcoin? How does it work concretely? Well, I mean, first of all, the history of the human race is challenge and response. You have a challenge. You're hungry. Where do you get food? You have a challenge. It's raining. Where do you get shelter? You have a challenge. Winter came. You're freezing. How do you warm up?

1:37:47You know, you have a challenge. The fire went out. How do you restart the fire? It's always a challenge. In business, it's always a challenge. So we have worked to overcome challenges for the past. I mean, ever since I went in business, right? like bam bam i could give you if i was writing the book it would be 99 chapters and every chapter would end with a cliffhanger and a near-death experience and by the time you got to the you wouldn't get to the 99th chapter because you got to the 17th chapter you'd be fatigued i just can't how many movies have 17 chapters and each one is brutal and painful it's like normally three So the history of the company is 99 chapters and every one of them was a challenge to be overcome.

1:38:36And if we didn't overcome it, it's the end of the company. But if you look at us starting in 2020, the challenge was how do you buy Bitcoin with cash? Then how do you buy Bitcoin with a tender offer? Then how do you buy Bitcoin with equity? And then how do you buy Bitcoin with a convertible bond? Then how do you buy Bitcoin with a senior bank bond or a senior bond? and then how do you buy Bitcoin with an asset-backed loan and then how do you buy Bitcoin with an equity ATM or shelf registration and as we went through each of those we discovered things that worked well and things that did not work well and I have this phrase from Winston Churchill he says you know the Americans they'll do the right thing after they've tried everything else and so you know how do we get to say stretch well we tried everything else like sailor will do the right thing after he's tried everything else right so we're working our way through and it's like what do you want to try i'm going to do this i'm going to do this and after we did we did senior bonds we're like that doesn't work there are too many covenants and that's a yoke around our neck We can't grow.

1:39:49So we have to repay that. We did an asset-backed loan. We borrowed money from a bank, Silvergate Bank. Crypto crashed. The bank failed. We bought back the loan at a discount. We're like, oh, that doesn't work. We won't do that anymore. Then we did the converts. We became the biggest issue of converts in the world. And we learned a lot about the convertible bond market. But they all traded cheap. They were all undervalued. And we basically maxed out the capital. And the market had no more capital. We outgrew the market. So why did we go to the next thing? Well, we got too big. It's like, OK, you're a developer in Key West.

1:40:26And pretty soon, you've developed half of Key West. And why did you move to Miami? Well, I just got too big for the market. So no one wanted to greenlight a 50-story building in Key West. And so what do I do? I better go to another place. And so we found the preferred stock market because we realized we needed to tap into larger pools of capital. and then you know we did strike and that was moderately successful and we did strife and that was double more successful and we did stride that was even more successful but you know it's like there are always little problems like it's too volatile like stride it pays me an extra five percent but sometimes the principal trades down five percent like do you want to get paid five percent more over a year but lose 10 percent of your principal in a week scary so we're like we kept thinking well how do we perfect the credit instrument how do we find the perfect instrument people said well pay us monthly make all the volatility go away make a trade at 100 maybe you know if it trades plus or minus two dollars make a trade plus or minus a dollar make a trade plus or minus 50 cents make a trade plus or minus quarter make it better better better better it's It's like, you know, with John D.

1:41:43Rockefeller, he called the company Standard Oil. Most people focus on the oil part. But he thought, he referred to his company as the Standard. And it was Standard Oil because they took crude oil and they distilled it into kerosene. But if the kerosene had impurities, it might blow up your heater or blow up your lamp or your house might catch fire or it might corrode the engine, right? Rocket. You know what rocket fuel is? It's kerosene. What's jet fuel? It's kerosene. You know why we don't put gasoline or diesel in jets? Blows out the engine. We can't run it. We needed super pure. And so they kept working to distill super pure oil, right?

1:42:33Perfect. The highest form of petrochemical or distilled crude oil is kerosene. It's rocket fuel. It's literally what you use if your life depends on it, and you need the maximum energy per unit. And so, you know, what's our engine? Well, we kept trying to make it better, and sometimes we had a success, but we outgrew the market, so now we have to invent our way out of the box. You run a box, innovate your way out of the box. And along the way, we took every good idea, public stock ticker, good idea. When I was going to do the preferred, my friend Eric, he says, I said, you know, maybe I should make it MSTR.P or something.

1:43:17He said, no, four-letter ticker. Not five-letter, four-letter ticker. It must be a four-letter ticker. You know all the other preferreds? They're like five, six, seven letters. You can't search them. you can't remember them you can't find them how are you supposed to buy it right so we wanted the right name the right ticker on the nasdaq we wanted it to sell to everybody with robin hood and schwab accounts 80 of stretch is held by retail it's got to be a it's consumer product take the keyboard away right and you know just like the iphone so we kept incrementally improving it And what were our tools?

1:44:00I mean, the thing that really accelerated our growth, digital capital. Bitcoin is digital capital. You have a block of pure digital economic energy. You can carve out anything you want from that, just like a barrel of crude oil. We get Lycra, and we get kerosene, and we get gasoline, and we get naphtha out of a barrel of crude oil. You get a lot of stuff out of a barrel of crude oil, right? You eat it, you burn it, right? You wear it. Most people don't think that. It's all in the barrel of oil. And the entire petrochemical industry downstream is all about extracting that thing of value from the barrel of oil.

1:44:41We use digital energy, digital capital. And now if you combine that with digital intelligence, AI is just digital intelligence. You can create a credit instrument, digital credit. This is 40 vol, 40 ARR fluctuating. What if you want 10 % in dollars with one vol? I can create that. I can create some of that. I can't create, if I have$100 billion of this, I can't create$100 billion of perfect high-grade one vol, but I can create a billion dollars of it probably. What if I want 6 % in yen that's 20x over collateralized with investment-grade risk? I can create that from this. So what we did, I want you to imagine I have a block of Lexan plastic, just a big block of it or a block of marble.

1:45:41And I have a computer and a computer-generated milling machine. I'm like well I want a picture of a beautiful woman I want you to carve it out of a block of marble I want a picture right of a cherub you know or a unicorn carve it out of the lexan or the clear plastic so what we're doing is we're chiseling out a financial instrument out of pure economic energy and

1:46:16And you couldn't do this before you had digital capital. So we discovered Bitcoin first. And after a few years, we realized it's digital capital. You couldn't do it without digital intelligence. And in 2023, it didn't quite work. So it was really 2024, 2025 when digital intelligence got really smart. AIs are really smart now. We couldn't do it without the concept of digital credit. We invented that using the AI, using the capital. And then we distribute it on digital channels, right? All of these broker-dealers everywhere in the world, it's just flying. And right now, it's being distributed as digital tokens on DeFi, digital finance exchanges, and digital credit networks everywhere in the world.

1:47:05and of course we communicate it with digital media like what I'm doing here you know I used to fly around the world took me a month I would take a month spend a million dollars and I would talk to 2 ,000 people in the month 100 people in 20 different cities 20 times 100 people I get to 2 ,000 people it takes me a month that I burn a million dollars of jet fuel and you know you're going to release this thing, right? And I'm going to communicate to orders of magnitude more people after a 15 minute drive to your studio. And so it's like people used to retire. I'm going to retire. I'm going to teach college.

1:47:45Okay. Well, you're going to teach 200 people a year for 20 years. And after 20 years of work, right, you're going to have educated or taught 4 ,000 people. you know i got a a lex friedman podcast it's run like 11 or 12 million times it's like while i'm sleeping we get to more people on a residual than if i devoted 30 years of my life to teaching so it's all digital digital communication digital distribution digital capital digital intelligence digital credit and and we're just very lucky to be born to live when we live and be able to do what we do because everything I've described, you know, you roll the clock back five years, just couldn't have done it.

1:48:33I wouldn't have done it. I couldn't imagine it. It's just, you know, we have been catapulted into a new digital world of digital transformation, you know, sometimes kicking and screaming by COVID. You know, by the way, I used to, if you'd said, I want to work remotely and let's like use Zoom or a video call, I would have fired you in 2019 i was like no way everybody showed up to the office and then in 2020 we all got locked down it's like okay guess what kicking and screaming i guess i have to embrace zoom and video and and you know by 2021 you know we're all doing podcasts and we just realized okay well this is like a million times more efficient way to communicate or get stuff done you're experiencing insane swings, crazy volatility.

1:49:23Sometimes you're up$30 billion. Everyone calls you a god. Sometimes you're down a couple of billion dollars and people come out and ridicule you or mock you. So you oscillate between the god and madman status at the pace of Bitcoin volatility. How much do you personally get affected by all the fud around you and strategy when the price goes down a lot? It doesn't bother me that much. sometimes I pay attention to read the room so I can figure out what to tweet but you know I had a difficult life like I went to MIT and it was really hard it was the smartest people in the country and I came from a public school and we worked Monday, Tuesday, Wednesday, Thursday, Friday, Saturday, and Sunday, 16 hours a day, seven days a week, except sometimes we got four hours off on Friday night, and we got very angry that there were tools and nerds that were working on Friday night, and we weren't.

1:50:28And it was just utterly, brutally difficult, and it was pretty much, here's the hardest problems in the world, and you figure it out, and if you can't figure it out, you know, you can't, that's just you, you're failed. And so when I left MIT, I worked 70 hours a week, 50 weeks a year, 70 hours a week, 3 ,500 hours a year for 10 years straight while we were building our business. That wasn't hard. People ask me, was that hard? I'm like, no, that was really easy compared to MIT. MIT was so much harder than working 70 hours a week, 50 weeks a year. I got to actually ask for help from other people.

1:51:08Like I had other people in the company and we worked with tools at MIT. It was like they drop you into the Amazon rainforest, you know, with a rusty knife and a piece of rope. And they say, we'll come back in four years if you're alive. Right. And you just figure it out. It's like, well, can I actually take a useful tool with me? No, you have to build everything from scratch. And so I lived through that. And then in our business, you know, you start a company. We had a boom and bust. I lived through seeing our stock go to$333 a share, and I watched it go to$0.42. Okay, so I've had volatility. I read that in 2000, you lost$6 billion of paper wealth.

1:51:55Is this what you're talking about? Yeah, well, that wasn't the worst of it. That was just in one day, right? That was one day, a bad day. No, the worst of it was a couple of days. years later when the stock went from, you know, it had gone from$100 down to$1 down to$0.80, $0.60,$0.50,$0.48,$0.46,$0.42. And we were, you know, three days from bankruptcy failing. So, you know, that's by the way, that's like, calculate that's like 99.8 % drawdown. So like, When people are like, oh, yeah, you're down 20%, are you stressed out? I'm like, no, I'm not stressed out. You know, on October 6th, Bitcoin hit an all-time high.

1:52:46Okay, that's October, November, December, January, February, March, April. We're seven months, one week. Seven months. You know how long it takes? Okay, so seven months ago, we were at an all-time high, and everybody's losing their mind and throwing in the towel and giving up, you know how long it takes to make a baby?

1:53:11It's like you can't even make a baby in seven months. Okay, you can't get through college, right? To get through college, it takes four years for an undergraduate degree. It takes 16 years starting from first grade. And, you know, you want to be a doctor, you want a master's degree or a PhD. So what I said was four years is very fast for success. 10 years is normal. Seven months is a blink. And I think what we have to keep in mind is that one of the great features of crypto is there's news every day, every minute. It's like on Saturday morning, there's a crisis. On Sunday morning, it's resolved.

1:53:53People have already gone through a year's worth of gains and losses between Saturday and Sunday. And it's just very volatile, very anxiety inducing. But that's the feature. That's what makes it interesting. And that's because it's generating a 24-7, 365 news cycle. It's sucking all the auction out of the room. It's the most interesting thing in the world. It's the most liquid, most tradable thing in the world. You live in Singapore, you know, you see bad news. You lever a short trade 27 to 1 and the crisis gets resolved. You go long 50 to 1 and no one's trading Upper East Side real estate during that time frame.

1:54:34No one's trading art. No one's trading the S &P. And And so volatility is vitality. This kind of anxiety or jitteriness is actually just indicative of the world's most global free capital market. Bitcoin's volatile because it's useful. Because a guy in China who's worried about a government decision in China that you've never heard of that you don't know about, they can trade Bitcoin based upon that. It's reacting to things that have nothing to do with Miami real estate or New York or fill in the blank, Renaissance Italian art. And so does it bother me? Not at all. I think you have to be energized by it.

1:55:23It's a benefit. The only reason you're talking to me, the only reason that you're interested or anybody else is interested is because I strapped myself, you know, to the crypto reactor, right? The crypto roller coaster. And, and this thing is interesting to 500 million people in the world. And, you know, stuff that's stuff that's boring. Like, what do you think about the value of, of real estate in New York Central Park? Do you care? No. Why? the English word for interest the classical definition is I have an investment in the thing if I have an investment in the thing and I might make or lose money I'm interested so the secret to the Wall Street Journal is they only wrote stories about publicly traded things that you could buy or sell or you might own if I write stories about things you can't own oh yeah the The value of the emperor's family's real estate in Tokyo has gone up or down.

1:56:30What do I care? I can't buy it. I can't sell it. I can't short it. I can't bet on it. It's not interesting. Bitcoin is the most interesting thing in the world because everybody can have an interest in it either directly or indirectly through a derivative. You have to embrace that. You have to revel in that. That is the feature. That is not the bug. And the last point I'll make is you're an investor. You should have a four-year time horizon. If you're not willing, if you won't hold it for four years, you know, you're a trader. You're not an investor. And ideally, you should be thinking 10 years.

1:57:12The famous quote from Buffett is, if you wouldn't hold it for 10 years, you shouldn't hold it for 10 minutes. And if you have a four-year time horizon, then the question is, well, so what's the, you know, the weighted 200-week moving average? You know, and how is that moving? Look out that way. If you want to be jittery and focus on where it moves every week or month or day, you are a trader. You're doing it for entertainment. If you're a good trader, you know it. If you're not a good trader, you're a fool, right? You either know you know what you're doing or you're just a fool. And so I would never give advice to anybody that they should trade this stuff with a less than four-year time horizon unless they are an expert and they know more than me.

1:58:01And if they do, they know they do. And otherwise, it's like sit back, enjoy the ride. If you want to have the vol, then expect 40 vol in four to 10 years. and if you don't want that fall, if you don't want, you know, if you want that, you got to be prepared to pull the G's, right? If you want the jet engine, you pull the G's. You want the roller coaster, be ready for that. If you don't want that, but you still believe in crypto and Bitcoin, buy the credit, buy stretch and you'll get a comfortable ride, right? Because like MSTR is like the F-16, you know? And Bitcoin is like this barnstorming plane and then stretches like the passenger airliner.

1:58:50It's like the passenger jet. Maybe it's better to say, MSTO is like the rocket and Bitcoin is like the fighter jet and then stretches like the 777 or the Airbus passenger jet and you decide how you want to travel. It's not that complicated. You used a few metaphors with babies and children? Do you have children? I do not. Why? I'm unmarried. I guess I never found the right woman. I have family members. They have children. I have siblings. I'm inspired by them. I am, I guess, singularly married and devoted to my business and professional interests. And I have been. I continue to be. You said something in a podcast recently that working hard is the worst advice you can get.

1:59:50You don't want to make money by being talented or working hard. Can you explain? Heinlein had a quote. He said, you don't win wars by dying for your country. You win wars by making the other guy die for his country. You could also say, I don't want to be a martyr. I want to be a winner. You could also say, better to work smart, not hard. You could also imagine, you know, do you want to be the dude, you know, the six foot six inch tall, 300 pound Hercules with a shovel? or do you want to be, you know, the ordinary person with a forklift? You know, and the moral of John Henry, if you remember, John Henry was the strongest worker on the railroad and he worked himself to death and his heart burst.

2:00:51And at some point, don't try to outwork a forklift. So when you look at the modern era right now, you want to work smart, not hard. I've worked hard. I've worked 3 ,000 hours a year, 10 years in a row, done everything possible, and I have beat my head against the wall and made no progress. So I've lived it, you know? And you want to do it? Go take a shovel and start digging ditches, you know? And don't get a caterpillar tractor and don't use machines. You can just start walking across the country right now, too, instead of using a car. is like, I guess I would say, you know, don't run fast, drive your car, right?

2:01:36And today the issue is the AIs can compose Shakespearean sonnets and poetry. You can go back to school and you're a podcaster, right? So you want to be successful in China and Japan? And do you speak Japanese? Do you speak Chinese? what if you said to me Mike I'm going to go to school and I'm going to learn to speak fluent Chinese I'm going to learn to speak fluent Japanese and every time I do a podcast I'm going to do it three times over and I'm going to sub I'm going to dub it in Chinese and Japanese it'll take me about 10 years and it's going to cost me like five hundred thousand dollars but I want to actually distribute it in Japan and China and I would say you know the AIs can translate this to Japanese in like split second and they can also translate to Chinese and you know you can actually create a routine that will cause the AI to take this and translate it to Portuguese, Spanish, French, German, Japanese, Chinese, Russian, Ukrainian, the British dialect, you know, everything you want.

2:02:44I'm like, but you go ahead and go back to school and like learn to speak because that's just, yeah, working hard, but you'll be, it'd be very impressive if at your age you mastered 10 languages. I'd be impressed, but I don't think it's a good business decision. It's like, it's just like the AIs can, you know, you got a book. Everybody's like, I'm going to write a book. Guess what? The AIs will write the book for you. You know, the AIs will write the book. The AIs will write the book in 100 languages. Okay, it's not, it is not a differentiating contribution to the civilization anymore. You could give me, you could literally give me any topic and I could go to my AI and I could say, take this one paragraph prompt and write a 10 chapter book in a hundred languages.

2:03:41I'll be back. Click. And I could walk away. so there's a lot of content look Voltaire was the greatest thinker right of his age the age of Voltaire Will Durant literally named the book about the 1700s the age of Voltaire and if you look at the works of Voltaire they would fill a shelf across this room and that guy was a hyper genius and it used to be that being able to spit out perfect prose in French on any topic made you a genius it's just not so useful today right the robots are going to do all the work the cars are going to drive themselves the ais are going to draft 100 page legal documents so when i say that i don't mean don't work i mean if you work in a warehouse use the forklift if you own a warehouse you probably want to create a hundred robots to do all the work and if you're in the business of creating content you know maybe you want to be thinking about how i harness the ais to create better content and distribute it better yeah these things are a million times more productive you know like when i when i'm doing work i go to the ai i'm like I want to do this and I want to do it this way.

2:05:05You know, I said, well, what about this? Then I say, well, the lawyers told me I couldn't do it. How do I explain that? You know, are they right? And then I say, draft me a briefing so I can explain to my team why this makes sense. Make it a little bit more elaborate. And I get 25 page document. And then I send it, I say, this is what we're going to do. And this is why we're going to do it. And you know, I could also just go back to law school. But the point is really, you know, I could go back to law school and I would be one-tenth as effective in a decade after spending a million bucks, or I could humble myself and ask the AI for help, and it gives me the answer in two minutes.

2:05:48And so everybody ought to be thinking, how do I use technology? Digital technology, digital assets, digital capital, digital intelligence, digital media, digital something to create a product or a service your parents didn't have, they couldn't create. Nobody imagined it back then. It's only possible now, but it's 100 times or 1 ,000 times better than the stuff we used to use. And that's the way to think. if you want to get ahead. Because in general, the AIs are demonetizing labor. It's like, you know, people used to work in farms pulling plows or something, right? You know, it's like they just won't, right?

2:06:35I mean, all of the things that people used to do, we're just not going to do them anymore. So figure out what we didn't used to do that you can do now that has value to the civilization. Almost certainly, it's with tools that didn't exist 20 years ago. Conventional wisdom will be don't do it. We didn't do it. We don't do it that way. We never did it like that. You know, that's conventional wisdom. If you want to be successful, then you have to break conventional wisdom. You have to think for yourself. You have to be an innovator and creative. And the world's full of examples of people that are doing that.

2:07:12You see Elon Musk rethinking things, rethinking the auto industry. You see lots of people. You see Palmer Luckey, you know, think different, right? And the way you'll know they think different is they invent some cool new thing that no one ever showed you before. And then you try it and it works. And so we're going to see more and more of that. That's the secret. Last one. Because I have to. There is no second best crypto asset. There's only one crypto asset and that's Bitcoin. This is one of the top Michael Saylor memes. do you still believe the same? I do. I think Bitcoin is the dominant digital monetary network of the world.

2:07:59Human civilization, it settles on protocols. For example, with mathematics, there was Babylonian math, 360 degrees, 60s, 12, 24 hours. There was Greek math. There was Roman math, Roman numerals. So Arabic wasn't the first protocol. It was just the best. Arabic math, zero. It wasn't Greek. It wasn't Roman, right? Why are Christians in Northern Europe using Arabic math? Because it was a better protocol, right? And that's been good for a thousand years. There is no second best math protocol, right? If you look at language, we're speaking English. Why? Because all the rich, powerful people speak English.

2:08:54Because the British won the Napoleonic War. If Napoleon had won, we'd probably be speaking French. If the Russians had won, we'd be speaking Russian. Billions of people speak English. If you speak English, you'll get your message across better. You'll sell something at a higher price. You'll buy things at a lower price. More people will listen to you. You'll make more money. There is no second best language. It's the best language. That's why this podcast is in English, even though my mother tongue is definitely not English. It is what it is. And with Bitcoin, Bitcoin is digital capital, right?

2:09:31You've got glass beads. You've got bales of tobacco. You know, in the biblical times, they used ox, cows, cattle as capital. You know, bushels of wheat. We've used bars of silver. For a while, I think NDA was on the silver standard. Then there was the gold standard. And at the end of the day, the human civilization settles upon the highest powered capital asset, the highest powered money. And Bitcoin is the most thermodynamically sound. And so how do you know? Well, because it's like worth$1.5 trillion. Okay. Well, how did it get to be worth that? Well, the smartest people with the most money and the most power, they had to choose a protocol.

2:10:20And they could have chose any protocol. There were 10 ,000 protocols. They could have chose all the Bitcoin forks. They chose this one. How do you know they chose it? Because they have the most money and the most power. And it's literally the most powerful and it has the most money in it. Now, what happens when all of the powerful, wealthy, influential people choose? A numerical protocol, an electrical protocol, a language protocol, a mathematical protocol, or an economic protocol, right? Or even like computer protocol, networking protocol, TCPIP. I can give you 10 other ways to do it. There are 10 other languages.

2:11:08There are 10 other maths. There's 10 other whatever. But at the end of the day, there's a massive network effect. You see this in the history of technology, and I studied technology at MIT. I studied the history of science. So the railroad track gauge, it's like the Roman war chariot, carves grooves we create railroads the same width if you have that width you want to manufacture the train cars that width right just like why is every container the same size because they're all modular because i can move them from a container ship to a truck to a plane to a train well what if you want to make it six inches wider it doesn't fit well couldn't you make it narrower or wider a different shape.

2:11:54You could, but all of the rich, powerful people picked the one format. And how do you know? Because if you look at the port of Miami, there's like ships and they're stacked up with these containers and every port in the world, whether it's the Chinese or whether it's the Russians or whether it's the Europeans or whether it's the Americans or the Europeans, they have the same format and it just is what it is. And why? Because people aren't stupid. And at some point, why don't we create cars that are 32 feet wide? You could. You could. They don't fit in the parking space and they won't get in the garage and they won't drive down the road.

2:12:35And so humans create machines that work, that are compatible with protocols because once a protocol hits critical mass, there's a massive network effect and all of the money and the power and the influence of the world falls. How many companies have manufactured a car that's like this wide? How many of them agreed on language and religion and politics? None of them. But they all can agree on make the car a certain width. And so Bitcoin is the winner. Why? Because it was the best suited protocol. You could have made it 2 % inflationary. You could have made it different. You could have made it more functional.

2:13:19It turns out the lack of functionality and the stability was the feature. It was the best suited to be a digital capital network for the world. That's what it's become. And once something locks in like that, you know, it's nearly impossible to replace that protocol. You have to have some cataclysmic, you know, death of all the dinosaurs due to an asteroid strike 80 million years ago type event. It's like, well, the world goes dark for a million years and then a million years later, maybe something else comes back. That's how we replaced the dinosaurs, right? Mammals became the apex predators instead of the dinosaurs after an asteroid strike.

2:14:06But I'm not expecting an asteroid strike. And so the logical thing to do and the advice to give your kids is learn Arabic, Matt. Reading, writing, arithmetic. Learn to read English. Learn to write the English language. Learn to work with Arabic numerals. Learn Bitcoin. If you want to be wealthy and powerful, because that's where all the money is. That's where all the power is. And why? Like, I really wish people spoke, you know, Swahili. I know you wish it and you were born speaking Swahili. But the point is, that's not where all the money and the power is. So you can either be the richest, most powerful dude in a little pond, or you can accept the rest of the world as it is and decide that you want to be a participant in the global digital economy.

2:14:58And the global digital economy is going to run on digital capital and Bitcoin is digital capital. There is no second best. thank you so much Michael for doing that that was fantastic and from all of us the cyber hornets thank you for carrying us the whole industry on your shoulders for the last six years through great times and through bad times we would certainly not be here without you and I would not be either so from all of us thank you well thank you you're kind I appreciate being on the mission and on the journey with each and every one of you as you probably know by now I host some of the biggest names in Bitcoin and crypto on my podcast.

2:15:38But a lot of the best stuff never makes it on air. The Shift newsletter is where I share that raw behind the scene alpha, the insights, stories and lessons straight from my guests that you won't hear anywhere else. If you want the real inside take on Bitcoin and crypto, join my newsletter, The Shift, in the description down below.

2:16:04You