00:00 - 00:05
every Bitcoin you buy today is probably
00:01 - 00:07
worth $13 million in US dollar in 21
00:05 - 00:10
years I'd love to tell you I understood
00:07 - 00:12
all this for years ago if I boil down
00:10 - 00:15
everything you learn in business school
00:12 - 00:18
to one sentence it's keep do you get
00:15 - 00:21
nervous when bitcoin price
00:18 - 00:23
drops maybe you're more bearish the bare
00:21 - 00:27
case would be only 3 million a coin and
00:23 - 00:30
the bull cases the way I made money in
00:27 - 00:33
big Tech Investments is I find something
00:30 - 00:36
everybody needs nobody can stop and most
00:33 - 00:39
people diversification doesn't make
00:36 - 00:42
sense if your life depends upon making
00:39 - 00:44
the one right choice are you repelling
00:42 - 00:47
money are you scaring it
00:44 - 00:49
away or are you attracting
00:47 - 00:52
it but Bonnie that will make you
00:49 - 00:54
interesting interesting means there's
00:52 - 00:56
this point where you you either going to
00:54 - 00:59
have a a fast death or slow death or
00:56 - 01:02
take a risk Taiwan semiconductor it does
00:59 - 01:04
something that nobody understood what's
01:02 - 01:06
really going on here is a revolution in
01:04 - 01:08
thinking the way you make a lot of money
01:08 - 01:16
is got the crypto world
01:12 - 01:20
going theen of the ging crypto like it's
01:16 - 01:23
her to fame if you want success Take a
01:23 - 01:28
Away hey nice to meet you Bonnie
01:30 - 01:34
as I Was preparing for this conversation
01:32 - 01:36
I came across some really interesting
01:34 - 01:38
things about you online and I want to
01:36 - 01:40
ask you how accurate this is okay so I
01:38 - 01:42
read that you spend your childhood
01:40 - 01:45
living in different countries around the
01:42 - 01:47
world and that you enjoy comic books but
01:45 - 01:49
you know your parents encourage you to
01:47 - 01:52
read regular books by offering you a
01:49 - 01:55
dime for each book you finish and that
01:52 - 01:57
sparked your interest in reading and I
01:55 - 02:00
want to know how accurate these stories
01:57 - 02:03
are yeah that's a true story
02:00 - 02:05
um yeah so I I grew up in an Air Force
02:03 - 02:08
on Air Force basis my father is in the
02:05 - 02:11
Air Force his entire career and um we
02:08 - 02:14
lived in Japan and we lived in New
02:11 - 02:18
Zealand and we lived all all through the
02:14 - 02:21
west and um and in Florida and Virginia
02:18 - 02:24
so so that was a nice upbringing but I
02:21 - 02:27
remember that when I was around first
02:24 - 02:30
grade I had this uh serious love of
02:27 - 02:35
comic books and I think they call cost
02:30 - 02:37
25 cents at the time and uh I couldn't
02:35 - 02:41
afford them but uh my first grade
02:37 - 02:42
teacher had a reading competition and uh
02:41 - 02:45
you know there's competition to see how
02:42 - 02:48
many books you could read and my parents
02:45 - 02:49
told me they would give me one dime 10
02:49 - 02:56
book and I was very competitive at the
02:52 - 02:59
time uh probably just just I was really
02:56 - 03:02
into Silver Surfer or you know fantastic
02:59 - 03:04
for comic books so I I discovered I
03:02 - 03:07
could go to the library and I could
03:04 - 03:09
check out seven books at a time and so I
03:07 - 03:11
was looking for books and I checked out
03:09 - 03:14
a bunch of science fiction
03:11 - 03:17
books and uh so I get seven of them and
03:14 - 03:20
I read them all and then I would get the
03:17 - 03:23
70 cents and then I would go back and
03:20 - 03:26
get uh seven more and I'd read them and
03:23 - 03:30
uh then as fast as I read the books I
03:26 - 03:32
would be buying comic books and uh I
03:32 - 03:37
summer uh I read some you know
03:35 - 03:39
ridiculous number of books like like
03:37 - 03:42
normally one book a day for the entire
03:39 - 03:44
summer but something like 70 or 80 books
03:42 - 03:46
during the summer of this competition
03:44 - 03:48
and I did it primarily to fun M comic
03:46 - 03:52
book habit but by the time I finished
03:48 - 03:56
the summer I actually enjoyed reading I
03:52 - 04:00
mean you know and uh I got really uh
03:56 - 04:03
into science fiction and I discovered uh
04:00 - 04:06
Robert heinlin and Arthur C Clark and
04:03 - 04:09
Isaac azimov and many of the Great
04:06 - 04:11
Inspirations uh that Define the rest of
04:09 - 04:14
my life and and and by I'm sure by the
04:11 - 04:17
time I was in third grade I'd read all
04:14 - 04:19
of those works and then I proceeded to
04:17 - 04:21
reread them and I think that really
04:19 - 04:23
accelerated my intellectual development
04:21 - 04:25
so thank you to my parents for that
04:23 - 04:28
little trick it worked that's amazing do
04:25 - 04:32
you still read comic books at
04:28 - 04:32
all not so Much
04:32 - 04:39
Anymore um okay you know um Taiwanese
04:36 - 04:41
people we love to invest in US Stock
04:39 - 04:43
Taiwanese stock and I want to ask you
04:43 - 04:47
strategy before that just to make sure I
04:45 - 04:50
have all the numbers right micro
04:47 - 04:54
strategy currently holds
04:50 - 04:56
22,2 120 Bitcoins that's correct and
04:54 - 05:01
based on what you announced four years
04:56 - 05:05
ago you personally hold 17 ,
05:01 - 05:07
732 Bitcoins is that correct a bit more
05:05 - 05:10
than that now but that's what I
05:07 - 05:13
announced four years ago yes
05:10 - 05:16
okay um you know when it comes to
05:13 - 05:18
finance we've been taught to diversify
05:16 - 05:22
but that doesn't seem to be the strategy
05:18 - 05:26
micro strategy or you have followed what
05:22 - 05:28
inspired you um to go this route and how
05:26 - 05:31
did you initially convince the board and
05:28 - 05:34
the investors to be on board with
05:31 - 05:38
it yeah I think
05:34 - 05:40
um first of all the idea of
05:38 - 05:43
diversification it makes sense if you
05:40 - 05:46
have an array of options all of them
05:43 - 05:49
risky and most of them poorly
05:46 - 05:51
understood and so if I give you 500
05:49 - 05:55
companies and it takes you a 100 hours
05:51 - 05:58
to understand each company and you don't
05:55 - 06:01
have $100 time 500 to understand the
05:58 - 06:04
companies then simply buying the entire
06:01 - 06:09
portfolio of all 500 of them is not an
06:04 - 06:12
irrational idea but uh diversification
06:09 - 06:15
doesn't make sense if your life depends
06:12 - 06:19
upon making the one right choice so if
06:15 - 06:21
you're if you're on a sinking ship and
06:19 - 06:23
there are 10 lifeboats and one of them
06:21 - 06:27
uh is functional and in the water and
06:23 - 06:29
floating and the other nine have a hole
06:27 - 06:31
in them and and you can see that they a
06:29 - 06:33
hole in them and they're not going to
06:31 - 06:35
get deployed then simply putting the 10
06:33 - 06:37
kids each one of them in a different
06:35 - 06:40
boat isn't a wise thing it's better to
06:37 - 06:44
put all your family into the boat that's
06:40 - 06:46
floating and often it's the same with a
06:44 - 06:49
car or any kind of Technology you
06:46 - 06:51
understand um uh and many times you
06:49 - 06:53
can't even afford right like the the
06:51 - 06:56
city can have one
06:53 - 06:58
Bridge the city can't afford 10 Bridges
06:56 - 07:02
to it can't afford to diversify and have
06:58 - 07:05
10 bridges over the same river it
07:02 - 07:08
doesn't make things better it will make
07:05 - 07:10
the city bankrupt and so sometimes you
07:08 - 07:12
just have to come to the right choice
07:10 - 07:14
and the last point is if you're in an
07:12 - 07:15
economy with hyperinflation and the
07:14 - 07:17
currency is going to zero and
07:15 - 07:20
everybody's going to starve to death
07:17 - 07:21
then choosing to leave half your family
07:20 - 07:23
in the country and take the other half
07:21 - 07:24
out of the country because you want to
07:24 - 07:29
Diversified is just foolish right if
07:26 - 07:31
your house is on fire you should take
07:29 - 07:33
the entire family out of the house you
07:31 - 07:36
shouldn't leave half the kids in the
07:33 - 07:39
house and half the kids in the backyard
07:36 - 07:41
outside the house in order to be safe
07:39 - 07:44
right you're not safer if there's a
07:41 - 07:46
problem yeah you know so the the the
07:46 - 07:50
diversification is appropriate when you
07:48 - 07:52
don't know the right answer and you're
07:50 - 07:56
placing a bunch of bets across a bunch
07:52 - 07:58
of different Alternatives but when you
07:56 - 08:02
actually have math and physics and
07:58 - 08:05
common sense to guide you then nobody
08:02 - 08:09
diversifies you know you you choose the
08:05 - 08:11
the best outcome and you do that so uh
08:09 - 08:13
why micro strategy discovered Bitcoin
08:11 - 08:17
when we had $500 million of cash it was
08:13 - 08:19
generating 0% interest the cost to
08:17 - 08:21
Capital was 15 to 20% and we were
08:19 - 08:23
basically looking at a situation where
08:21 - 08:26
the company was going to lose as much
08:23 - 08:29
money holding the cash as it made uh
08:26 - 08:30
through its operations each year and
08:29 - 08:33
there therefore we were failing as a
08:30 - 08:35
business the company was going to die
08:33 - 08:38
and so we had to find something to do
08:35 - 08:39
with the money how how do you invest the
08:38 - 08:41
money in something that will return more
08:39 - 08:43
than the cost of capital the cost of
08:41 - 08:46
capital and the traditional dollar
08:43 - 08:49
economy is the is the S&P return it's
08:46 - 08:52
maybe 12 to 14% a year um if you're
08:49 - 08:54
returning 0% you're losing 12 to 14% of
08:52 - 08:57
your capital a year and if you're
08:54 - 09:00
returning 24% you know you're you're
08:57 - 09:03
adding 24% nominally or 12% in real
09:00 - 09:07
terms every single year so Bitcoin turns
09:03 - 09:11
out to be the only uh commodity in the
09:07 - 09:12
world that that is actually a scarcity
09:11 - 09:15
it's the only commodity that's good
09:12 - 09:17
investment over the long period every
09:15 - 09:20
other commodity will underperform the
09:17 - 09:22
S&P index because they're not scarce
09:20 - 09:25
Bitcoin will overperform the S&P index
09:22 - 09:28
because it is scarce and so it's Unique
09:25 - 09:30
as the only commodity that actually is
09:28 - 09:32
good investment and it's all Al the only
09:30 - 09:35
digital commodity an asset without an
09:32 - 09:38
issuer and that gives it regulatory
09:35 - 09:41
superiority for a publicly traded
09:38 - 09:43
company because public companies uh in
09:41 - 09:45
the US can't hold more than 40% of their
09:43 - 09:49
balance sheet in a security they have to
09:45 - 09:52
own property or a commodity so micro
09:49 - 09:55
strategy was you know facing a quick
09:52 - 09:59
death or a slow death or or uh innovate
09:55 - 10:01
try a new idea and so we tried the new
09:59 - 10:05
idea idea and that's what got us on the
10:01 - 10:08
path uh to becoming a Bitcoin
10:05 - 10:10
company was it difficult to convince
10:08 - 10:13
people though because 2020 people were
10:10 - 10:16
still arguing if Bitcoin was a scam yeah
10:13 - 10:19
it was a very methodic uh process first
10:16 - 10:22
I had to convince myself uh in 2013 I
10:19 - 10:23
thought it was going to fail uh that
10:22 - 10:26
what we say is that everybody's against
10:23 - 10:28
Bitcoin before they're for it and
10:26 - 10:30
bitcoin's on a need to know basis so if
10:28 - 10:33
you don't need need it if your life
10:30 - 10:36
didn't depend on it you would dismiss it
10:33 - 10:39
as a nuisance or an oddity of some sort
10:36 - 10:41
it's like electricity or a new thing
10:39 - 10:44
like a motor if you didn't expect to
10:41 - 10:45
find clean silent power then you
10:44 - 10:48
wouldn't know you need to redesign your
10:45 - 10:50
factory in 1700 for electricity you
10:48 - 10:53
wouldn't look for it if you had a
10:50 - 10:56
factory in 1900 and you're going out of
10:53 - 10:58
business because your competitor is
10:56 - 10:59
producing faster and cheaper than you
10:58 - 11:01
and your choice was to go out of
10:59 - 11:04
business go bankrupt and lose everything
11:01 - 11:06
and be on the street or check out the
11:04 - 11:08
new electricity thing you would go and
11:06 - 11:10
check out the new electricity thing you
11:08 - 11:12
had everything to gain nothing to lose
11:10 - 11:13
and that's how that's how Paradigm
11:12 - 11:16
shifts take place and that's how
11:13 - 11:19
Innovation takes place throughout human
11:16 - 11:21
history Bitcoin is digital energy people
11:19 - 11:23
are afraid of fire until they realize
11:21 - 11:25
that fire might be a good thing or
11:23 - 11:27
they're afraid of electricity until they
11:25 - 11:30
realize electricity is a good thing so
11:27 - 11:33
we start by convincing ourself and then
11:30 - 11:34
after that educating the management team
11:33 - 11:36
and after that educating the board of
11:34 - 11:38
directors and after that educating the
11:36 - 11:41
Auditors and the accountants and after
11:38 - 11:43
that educating the shareholders and
11:41 - 11:46
after that uh
11:43 - 11:49
progressively uh upgrading the company
11:46 - 11:51
and evolving and finding new sets of
11:49 - 11:53
shareholders and so it really is an
11:51 - 11:56
evolutionary process it's like um
11:53 - 11:59
concentric circles of
11:56 - 12:02
consensus and each of them requires
11:59 - 12:04
hours or tens of hours of uh
12:02 - 12:07
contemplation and dialogue how long did
12:04 - 12:11
it take for you to convince yourself or
12:07 - 12:13
like was it a process of you learning
12:11 - 12:16
about Bitcoin as well I have a little
12:13 - 12:18
hierarchy I think everybody's born a
12:16 - 12:20
skeptic and so after the first hour
12:18 - 12:22
you're a skeptic and you think maybe
12:20 - 12:24
it's too good to be true or the
12:22 - 12:28
government will ban it or it'll get
12:24 - 12:30
hacked or it's a gimmick and then after
12:30 - 12:34
you you start to believe oh it's an
12:32 - 12:36
asset maybe it's a good asset or a bad
12:34 - 12:39
asset but then you get upgraded from
12:36 - 12:41
kind of skeptic to a Trader and you'll
12:39 - 12:43
tra like if it's cheap I'll buy it and
12:41 - 12:45
if it's expensive I'll sell it but I'm
12:43 - 12:48
just going to trade it at something like
12:45 - 12:52
soybeans or like oil or like bushels of
12:48 - 12:54
corn at the $100 point you think you
12:52 - 12:56
become an investor at that point you
12:54 - 12:58
think wow this is like Facebook for
12:56 - 13:02
money like a bank in cyers space where
12:58 - 13:05
people can put their money or I I can
13:02 - 13:08
send money from New York to Tokyo
13:05 - 13:09
without an intermediary or I can put
13:08 - 13:11
money there and leave it there for 30
13:09 - 13:13
years you know I made a lot of money on
13:11 - 13:15
Apple or I made a lot of money on Amazon
13:13 - 13:18
or if you made money on Microsoft or
13:15 - 13:22
Google and if I said hey this is the big
13:18 - 13:24
Tech digital monetary Network it's just
13:22 - 13:26
another big Tech investment after about
13:24 - 13:27
$100 you're like okay well that sounds
13:27 - 13:32
idea my my belief belief is uh I mean
13:30 - 13:34
the way I made money in big Tech
13:32 - 13:37
Investments is I find something
13:34 - 13:39
everybody needs nobody can stop and most
13:37 - 13:41
people don't understand if you bought
13:39 - 13:43
Amazon stock in 2010 it was everybody
13:41 - 13:45
needs it nobody can stop it but
13:43 - 13:47
everybody disagreed with you if you
13:45 - 13:50
bought Amazon stock in
13:47 - 13:51
2020 everybody needed it everybody
13:50 - 13:53
understood it and everybody agreed with
13:51 - 13:55
you you see the difference you don't
13:53 - 13:57
want to buy it when everybody
13:55 - 14:00
understands it and everybody agrees with
13:57 - 14:02
you you want to buy Apple in 20
14:00 - 14:04
when everybody's going to need it and
14:02 - 14:07
nobody can stop it but most people think
14:04 - 14:09
the iPhone's only going to be worth $60
14:07 - 14:11
so so that's the investor idea you get
14:09 - 14:14
there about 100 hours and then in a
14:11 - 14:17
thousand hours we say you become a
14:14 - 14:20
maximalist at that point you say wait a
14:17 - 14:22
minute this is uh it's not a company
14:20 - 14:24
it's better than a big Tech investment
14:22 - 14:27
because it's not a security you're not
14:24 - 14:29
supporting Apple or Google you're
14:27 - 14:31
providing property rights to 8 million
14:29 - 14:35
people you're providing Freedom
14:31 - 14:38
Integrity property rights uh to 300
14:35 - 14:40
million companies every country every
14:38 - 14:42
person on the planet you know rich
14:40 - 14:46
people in New York own buildings but
14:42 - 14:49
taxi cab drivers in Nigeria don't own
14:46 - 14:52
buildings in New York City if I had
14:49 - 14:56
$137 in Nigeria I can't even buy
14:52 - 14:58
$137 worth of a New York building so you
14:56 - 15:00
can see the rich New Yorkers have an
14:58 - 15:04
advantage over the working class in
15:00 - 15:08
Africa but with Bitcoin if you buy $237
15:04 - 15:10
of Bitcoin in Nigeria you have the same
15:08 - 15:12
property rights as a billionaire in New
15:10 - 15:13
York or London that buys a billion of
15:12 - 15:17
Bitcoin you're
15:13 - 15:19
paru you uh you're not a limited partner
15:17 - 15:21
you don't own a security you own the
15:19 - 15:24
actual property if you went and you
15:21 - 15:27
bought $10 million worth of uh real
15:24 - 15:30
estate in Zambia central Africa there's
15:27 - 15:32
nothing that I'm going to do in the
15:30 - 15:34
United States that's going to increase
15:32 - 15:37
the value of your property in Zambia
15:34 - 15:39
central Africa but on the other hand if
15:37 - 15:42
you bought $10 million of Bitcoin in
15:39 - 15:44
Zambia central Africa then somebody in
15:42 - 15:47
Singapore with a Bloomberg terminal
15:44 - 15:50
who's trading2 billion doar a weekend is
15:47 - 15:52
driving up the value of your property in
15:50 - 15:55
Zambia central Africa so when you join
15:52 - 15:56
the Bitcoin Network you're getting the
15:55 - 15:59
you're getting the highest com
15:56 - 16:02
denominator the smartest richest person
15:59 - 16:05
anywhere in the world is working to make
16:02 - 16:09
you wealthier and when you buy a a
16:05 - 16:12
building a warehouse in Alabama or when
16:09 - 16:15
you buy a building in rural China that's
16:12 - 16:18
the lowest common denominator there's
16:15 - 16:20
0.001% of the people in rural China that
16:18 - 16:22
might do something that might make your
16:20 - 16:25
building more valuable but nobody else
16:22 - 16:27
cares and so when you get to a thousand
16:25 - 16:30
hours you think wait a minute this is
16:27 - 16:32
this is an ethical imp imperative right
16:30 - 16:34
this is an instrument of economic
16:32 - 16:38
empowerment for everyone on Earth every
16:34 - 16:40
company on Earth every country on Earth
16:38 - 16:43
every institution on Earth every family
16:40 - 16:44
on Earth it is really uh a singularity
16:43 - 16:47
because it's the first time in human
16:44 - 16:50
history where you can convey actual
16:47 - 16:53
property rights to an individual that uh
16:50 - 16:56
that cannot be taken from them via force
16:53 - 16:59
and I think that's a profound idea I
16:56 - 17:01
love what you said and if I want to buy
16:59 - 17:03
asset that lasts for Generations I would
17:01 - 17:04
want to choose something that the
17:03 - 17:07
government cannot print more of like
17:04 - 17:10
Bitcoin and although self- custody is
17:07 - 17:12
great there is this news that came out
17:10 - 17:15
yesterday an onchain record shows that a
17:12 - 17:19
wallet likely belonging to the US
17:15 - 17:21
government was hacked for 20 mil so what
17:19 - 17:24
do you think the best way to store
17:21 - 17:26
Bitcoin is yes I want to keep it for
17:24 - 17:28
Generations but with all the options I
17:26 - 17:31
have right now what's the best way to
17:28 - 17:36
store it I think there's no one best way
17:31 - 17:40
I think that um the longer your time
17:36 - 17:42
Horizon right uh the more you want to
17:40 - 17:45
keep your options open let's take the
17:42 - 17:49
short end right which is if you're 75
17:45 - 17:52
years old and uh you've got a stock
17:49 - 17:54
broker and uh you've got no one to help
17:52 - 17:56
you and you can make a phone call to the
17:54 - 17:59
stock broker and say why don't you buy a
17:56 - 18:01
Bitcoin in the form of an ETF from from
17:59 - 18:03
uh you know a big company like Fidelity
18:01 - 18:06
or black rock or if you're in China you
18:03 - 18:08
would buy it through a Chinese provider
18:06 - 18:10
and Hong Kong if you're at that stage of
18:08 - 18:12
your life and you're thinking well this
18:10 - 18:14
will just go into my estate and it will
18:12 - 18:16
pass through my trustees and attorneys
18:14 - 18:20
to my children's children or something
18:16 - 18:23
like that you probably would do it um
18:20 - 18:25
with uh with a a form of wrapped
18:23 - 18:29
custodial Bitcoin in the form of a
18:25 - 18:31
security if you were a company
18:29 - 18:33
a big company Mega
18:31 - 18:36
corporation uh and you have a lot of
18:33 - 18:38
rules um about what you can do and can't
18:36 - 18:40
do if you're a regulated Corporation you
18:38 - 18:43
would probably want to buy the Bitcoin
18:40 - 18:46
not the ETF you would prefer the
18:43 - 18:48
commodity the property and then you
18:46 - 18:50
would very carefully choose a regulated
18:48 - 18:53
custodian if you're in China you need a
18:50 - 18:55
Chinese one if you're in Australia maybe
18:53 - 18:59
that if you're in Europe you might use
18:55 - 19:01
that if you're in Argentina or Korea
18:59 - 19:04
right you probably use a custodian
19:01 - 19:06
acceptable to your regulator but you
19:04 - 19:08
would own the underlying Bitcoin because
19:06 - 19:10
you want the option to change custodians
19:08 - 19:12
you never know or you might want the
19:10 - 19:14
option to take self- custody into your
19:12 - 19:18
own company if you build up that self-
19:14 - 19:21
custody right if you are um an
19:18 - 19:23
individual if you live in an unstable
19:21 - 19:26
country if you live in a country where
19:23 - 19:28
the currency is collapsing or the banks
19:26 - 19:29
are untrustworthy or the government is
19:29 - 19:34
then you probably want to own the
19:32 - 19:37
Bitcoin you either want to own it
19:34 - 19:40
through a offshore entity outside of
19:37 - 19:41
your country like a lot of people in
19:40 - 19:44
certain countries will actually do
19:41 - 19:47
business with another another custodian
19:44 - 19:50
or exchange outside of their country or
19:47 - 19:51
you want a self- custody if you're in a
19:50 - 19:54
complete chaotic
19:51 - 19:56
situation uh where you can't really
19:54 - 19:59
trust anybody then you would self-
19:56 - 20:02
custody self- custody is better for
19:59 - 20:05
someone who's capable and willing to do
20:02 - 20:07
it there are certain individuals that
20:05 - 20:09
can't and there are certain corporations
20:07 - 20:12
where like if you said to your staff
20:09 - 20:15
let's do it the staff would all quit so
20:12 - 20:19
I think it depends upon uh The Entity is
20:15 - 20:21
it an individual is it a family is it a
20:19 - 20:23
church by the way it's like is it a
20:21 - 20:26
union is it an association or
20:23 - 20:29
cooperative um or is it the city the
20:26 - 20:33
mayor or is it the state or is it the
20:29 - 20:34
government or is it um a bank if you're
20:33 - 20:36
a bank you're definitely going to self
20:34 - 20:38
custody because that's what banks should
20:36 - 20:40
do right but um so it depends on the
20:38 - 20:43
type of entity and then it depends upon
20:40 - 20:45
the Nexus like are you in a war zone are
20:43 - 20:48
you in a stable country and by the way
20:45 - 20:49
it also depends on your time Horizon if
20:48 - 20:51
you want to give this to your
20:49 - 20:53
granddaughter and you think your
20:51 - 20:55
granddaughter might live in a country
20:53 - 20:56
other than the country you're in right
20:55 - 20:59
now then probably you want to have a
20:56 - 21:01
situation where where they have total
20:59 - 21:03
control over it and your self- custody
21:01 - 21:05
over the long term but but I don't think
21:03 - 21:09
you can really tell people exactly how
21:05 - 21:10
to do it some people can't there they
21:09 - 21:12
have Parkinson's they can't even read
21:10 - 21:14
the keyboard yeah so they they're not
21:12 - 21:16
going to self- custody because they
21:14 - 21:18
technically can't and then sometimes
21:16 - 21:20
it's held in trust for a person that's
21:18 - 21:24
not even born if you represent the
21:20 - 21:27
firemen's Union of 800,000 firemen maybe
21:24 - 21:29
the 800,000 firemen don't want you or
21:27 - 21:31
you and two other people in the office
21:29 - 21:33
to keep all their money right they might
21:31 - 21:36
think it should be with a regulated
21:33 - 21:39
custodian so it really depends upon uh
21:36 - 21:42
circumstances and time Horizon but as a
21:39 - 21:44
general rule uh you want to keep your
21:42 - 21:46
options open if I boil down everything
21:44 - 21:49
you learn in business school to one
21:46 - 21:51
sentence it's keep your options open and
21:49 - 21:53
so the way you keep your options open is
21:51 - 21:56
uh you own the Bitcoin itself and you
21:53 - 21:58
know how to self custody and you know
21:56 - 22:01
how to change custodians and then you
21:58 - 22:03
very carefully consider that uh if you
22:01 - 22:05
have the means there are some really
22:03 - 22:09
impressive numbers so the past year
22:05 - 22:14
Bitcoin has gone up 97% TSM Taiwan
22:09 - 22:17
semiconductor 116% and Nvidia
22:14 - 22:20
222% micro strategy
22:17 - 22:24
45% so we want to talk about Bitcoin and
22:20 - 22:28
micro strategy 97% versus
22:24 - 22:30
45% how should investors look at this
22:28 - 22:32
and what if that rationale behind micro
22:30 - 22:35
strategy stock trading at a premium
22:32 - 22:37
compared to the underlying asset it's
22:35 - 22:40
like the difference between investing in
22:37 - 22:44
a barrel of oil or oil and investing in
22:40 - 22:47
an oil company if the oil company has a
22:44 - 22:49
billion dollars of oil then it's
22:47 - 22:52
definitely worth a billion dollars but
22:49 - 22:56
if the oil company has a Refinery that
22:52 - 22:59
produces kerosene and gasoline and and
22:56 - 23:01
toline and 27 different
22:59 - 23:03
you know petrochemical products and if
23:01 - 23:05
there are customers that want to buy
23:03 - 23:09
those petrochemical products then the
23:05 - 23:14
oil company is worth the sum of its oil
23:09 - 23:15
reserves and its uh its oil refinery so
23:15 - 23:20
strategy it's a it's a Bitcoin treasury
23:18 - 23:22
company it's a it's a Bitcoin company it
23:20 - 23:25
owns $17 billion doar worth of bitcoin
23:22 - 23:27
so that's worth something but the other
23:25 - 23:29
thing that micro strategy does which is
23:27 - 23:32
not very well understood
23:29 - 23:35
is micro strategy securitizes the
23:32 - 23:37
Bitcoin so micro strategy creates a
23:35 - 23:40
security or a family of
23:37 - 23:43
Securities that appeal to Capital
23:40 - 23:45
markets investors that don't want to own
23:43 - 23:48
crude Capital they don't want to own raw
23:45 - 23:51
Bitcoin for example uh if I wanted to
23:48 - 23:53
own the raw Bitcoin a mainstream
23:51 - 23:57
traditional Financial investor I would
23:53 - 24:00
probably buy ibit or fbtc the basically
23:57 - 24:02
the spot ETFs and that's basically just
24:00 - 24:05
like you know a barrel of Bitcoin and a
24:02 - 24:08
wrapper right but if you wanted high
24:05 - 24:11
performance right you you don't put raw
24:08 - 24:13
um crude oil in your jet engine you put
24:11 - 24:15
kerosene because if you put crude oil in
24:13 - 24:17
the jet engine the plane doesn't fly the
24:15 - 24:20
engine blows up you don't put crude oil
24:17 - 24:23
in a car you put gasoline because
24:20 - 24:26
otherwise the engine clogs right so uh
24:23 - 24:29
cars and jets don't operate on crude oil
24:26 - 24:32
and and um if you look at the capital
24:29 - 24:36
markets um a lot of investors they don't
24:32 - 24:39
want 1X performance they want 1.5x
24:36 - 24:42
leverage so micro strategy actually
24:39 - 24:45
levers up its Bitcoin more like 1.5x and
24:42 - 24:49
so if Bitcoin performs 50% ARR we
24:45 - 24:52
generate 75 to 80% AR and if Bitcoin is
24:49 - 24:56
50 volatility we're 70 or 80 or 90
24:52 - 24:59
volatility so high volatility high
24:56 - 25:01
performance Bitcoin is an interesting
24:59 - 25:03
thing if you're a Bitcoin maximalist
25:01 - 25:06
what do you want do you want 100%
25:03 - 25:08
Bitcoin or 150% Bitcoin if you believe
25:06 - 25:10
bitcoin's going up and not down you want
25:08 - 25:12
150% Bitcoin well what if you think it's
25:10 - 25:14
going down well those people don't buy
25:12 - 25:17
our stock it's like uh well what if you
25:14 - 25:18
think wood is better than kerosene for
25:17 - 25:20
your jet well I mean the people that fly
25:18 - 25:24
the Jets want kerosene they don't want
25:20 - 25:26
wood I mean they want to fly fast so
25:24 - 25:27
what you have in the capital markets is
25:26 - 25:29
one group of people that want high
25:27 - 25:31
performance Bitcoin then there's another
25:29 - 25:33
group of people they don't want one and
25:31 - 25:35
a half times Bitcoin they want 3x
25:33 - 25:38
Bitcoin so there are actually some
25:35 - 25:42
derivatives called mstu and
25:38 - 25:44
mstx they are actually two times micro
25:42 - 25:46
strategy and so they're 2X micro
25:44 - 25:50
strategy that makes them 3x
25:46 - 25:53
Bitcoin those two ETFs uh they uh they
25:50 - 25:56
gathered 1.1 billion in capital in a
25:53 - 25:58
couple of weeks so billion dollars of of
25:56 - 26:01
money is invest well if you like Bitcoin
25:58 - 26:03
don't you like 3x Bitcoin yes right it's
26:01 - 26:04
like I don't want to go in first gear I
26:03 - 26:06
want to go in third gear there there's
26:04 - 26:10
some people that want to go very fast
26:06 - 26:13
then there's the 10x the the Traders
26:10 - 26:15
what if you wanted 10x leverage and you
26:13 - 26:17
don't want it for 10 years you want 10x
26:15 - 26:21
leverage for the next 12 weeks when you
26:17 - 26:24
go by a call option on micro strategy so
26:21 - 26:27
micro strategies options Market is more
26:24 - 26:31
than $40 billion of open interest so you
26:27 - 26:34
see um on one side you've got just
26:31 - 26:36
straight call it normal voltage Bitcoin
26:34 - 26:38
and then you've got higher voltage micro
26:36 - 26:41
strategy and even higher voltage
26:38 - 26:43
derivatives and then 10x super high
26:41 - 26:47
voltage uh super high
26:43 - 26:49
volatility um above that spot and then
26:47 - 26:52
the way that micro strategy creates that
26:49 - 26:54
Leverage is we sell fixed income type
26:52 - 26:56
instruments we sell Securities that
26:54 - 26:59
offer lower voltage what if you want
26:56 - 27:02
half the return of Bitcoin coin but 5%
26:59 - 27:05
of the risk how do I buy Bitcoin at the
27:02 - 27:09
all-time high but not take any downside
27:05 - 27:12
risk how okay you buy a convertible bond
27:09 - 27:15
from micro strategy like four weeks ago
27:12 - 27:18
we sold a convertible Bond uh for a a
27:15 - 27:20
billion dollars I think the stock was
27:18 - 27:23
140 and the bond was struck at 185 or
27:20 - 27:24
something and so what that meant was uh
27:23 - 27:27
you're going to get your principal
27:24 - 27:29
protected and if the stock is below 185
27:27 - 27:31
when the bond expires you get all your
27:29 - 27:33
money back and if the stock goes above
27:31 - 27:37
185 you get all the upside in the stock
27:33 - 27:40
okay so that bond is trading 145 150 so
27:37 - 27:43
the bond is up 45% in four weeks
27:40 - 27:47
Bonnie 45% in in a month right so think
27:43 - 27:48
about the ARR so what did you have you
27:47 - 27:52
had all of the upside well you had you
27:48 - 27:54
had upside but then you had downside now
27:52 - 27:55
how do you create that well you have to
27:55 - 28:01
Bond senior in a capital structure of
27:58 - 28:05
Bitcoin right the only way to create a
28:01 - 28:08
uh a a Bitcoin convertible bond is say I
28:05 - 28:11
have uh$ 20 billion of capital or in
28:08 - 28:14
this case 16 billion of Bitcoin well
28:11 - 28:18
then the bottom four billion can be over
28:14 - 28:21
collateralized 4 to1 in Bitcoin and over
28:18 - 28:23
collateralized 10 to one in market cap
28:21 - 28:26
so you're actually buying a bond which
28:23 - 28:28
is four to 10 times over collateralized
28:26 - 28:31
that's how you as an investor get the
28:28 - 28:33
security you'll get your principal back
28:31 - 28:38
but now you want the upside so for
28:33 - 28:41
example if if my company had um 12
28:38 - 28:44
billion in cash in treasury bills and 4
28:41 - 28:47
billion in Bitcoin and convertible
28:44 - 28:50
bonds you wouldn't be getting the upside
28:47 - 28:51
because the 12 billion in treasury bills
28:50 - 28:53
isn't going to double when Bitcoin
28:51 - 28:56
double you can't create the security
28:53 - 29:00
that gives you half the upside but 5% of
28:56 - 29:03
the downside unless the collateral that
29:00 - 29:07
you use is Bitcoin so you need to be
29:03 - 29:12
100% Bitcoin and so micro strategy's
29:07 - 29:14
treasury operation is we hold 100%
29:12 - 29:17
Bitcoin which means our Equity trades
29:14 - 29:21
150% Vol of Bitcoin and
29:17 - 29:23
150% performance of Bitcoin and that
29:21 - 29:26
means that when we actually sell you the
29:23 - 29:28
convertible Bond we give you over
29:26 - 29:30
collateralized protection on the
29:28 - 29:33
downside and partial participation on
29:30 - 29:35
the upside there was a point a few weeks
29:33 - 29:37
ago where you could get like 90% of the
29:35 - 29:40
upside of micro strategy 10% of the
29:37 - 29:41
downside by buying the bond and I would
29:40 - 29:43
scratch my head I'm like well why
29:41 - 29:45
wouldn't everybody buy that Bond because
29:43 - 29:48
why would you want 100% of The Upside
29:45 - 29:51
and 100% of the downside when you could
29:48 - 29:55
just lever the bond 1.1 and have 100% of
29:51 - 29:58
The Upside and 11% of the the downside
29:55 - 30:00
right and so so these are all unique
29:58 - 30:03
Securities micro strategy in essence we
30:00 - 30:05
can issue fixed income securities that
30:03 - 30:07
tap into the market to want yield you
30:05 - 30:09
either give you a bit better yield with
30:07 - 30:12
better credit or we give you better
30:09 - 30:14
conversion rights and upside and when we
30:12 - 30:16
do that we create leverage on the equity
30:14 - 30:19
and that creates leverage for these
30:16 - 30:23
derivatives and that creates leverage
30:19 - 30:25
for the options market and that creates
30:23 - 30:27
trading right now micro strategy is has
30:25 - 30:30
super high liquidity like the other day
30:27 - 30:32
we traded $5 billion in equity in the
30:30 - 30:35
day so we're trading sometimes more than
30:32 - 30:38
Apple or more than Amazon but super
30:35 - 30:40
volatility and these other big companies
30:38 - 30:42
Bonnie like they can have more money
30:40 - 30:44
than us but the trick is not to have $50
30:42 - 30:48
billion in treasury bills because
30:44 - 30:51
treasuries have a v of five and Bitcoins
30:48 - 30:55
a all of 50 you have to have the capital
30:51 - 30:57
in high volatility Bitcoin form in order
30:55 - 31:01
to drive the trading and drive the
30:57 - 31:02
liquidity and drive the option value and
31:01 - 31:04
the option value and the Vol and the
31:02 - 31:06
liquidity and the volatility is why we
31:04 - 31:09
can borrow a billion dollars for 62
31:06 - 31:11
basis points it's because the people
31:09 - 31:13
that are loaning us the money want the
31:11 - 31:15
volatility but if we took the billion
31:13 - 31:18
dollars Bonnie and if we bought treasury
31:15 - 31:21
bills with it if you sold an instrument
31:18 - 31:24
that's backed by an 80v equity and you
31:21 - 31:26
bought a five ball Bond then you would
31:24 - 31:28
put the fire out it's like spraying
31:26 - 31:31
water on your bond fire fire or it's
31:28 - 31:34
like another way to say it is some
31:31 - 31:36
people are afraid of volatility but
31:34 - 31:39
volatility is you know is like a fire in
31:36 - 31:41
the engine and it's like saying your
31:39 - 31:44
engine is running hot can you make the
31:41 - 31:47
engine in the car not be hot and I'm
31:44 - 31:48
like well you know if I I can turn it
31:47 - 31:51
off but the car is not going to go
31:48 - 31:54
anywhere if you want to go fast you need
31:51 - 31:56
the engine to be hot right so yeah so
31:54 - 32:00
what we've done is we put this Bitcoin
31:56 - 32:03
engine volatility motor in the middle of
32:00 - 32:05
our company and that's what drives the
32:03 - 32:08
value creation of the company and that's
32:05 - 32:12
the part that's not very well understood
32:08 - 32:14
do you get nervous when bitcoin price
32:12 - 32:15
drops no because when it drops it drops
32:15 - 32:21
lot well yeah you know actually the the
32:18 - 32:23
fact that it's it's first of all I
32:21 - 32:27
know it there's a difference between
32:23 - 32:29
volatility and risk M volatility is when
32:27 - 32:32
things AR oscillate or when they when
32:29 - 32:36
they move around a lot risk is when you
32:32 - 32:39
expect it to go to zero right so uh
32:36 - 32:42
Bitcoin is volatile and it's volatile
32:39 - 32:45
because it's useful on Saturday night if
32:42 - 32:47
you needed to if you wanted to sell a
32:45 - 32:49
billion dollars of something with 10
32:47 - 32:51
times leverage you could post a 100
32:49 - 32:52
million of collateral sell a billion of
32:51 - 32:54
Bitcoin and we would give you the
32:52 - 32:56
billion and then if you on Sunday
32:54 - 32:58
morning if you wanted to reverse the
32:56 - 33:01
trade and buy back the billion you could
32:58 - 33:04
do that as well and you could do that
33:01 - 33:06
with $100 million of collateral even 50
33:04 - 33:08
million of collateral so Bitcoin the
33:06 - 33:11
network is offering you extreme
33:08 - 33:12
liquidity and extreme leverage at all
33:11 - 33:14
times if you think about the other
33:12 - 33:15
assets like gold if you wanted to sell a
33:14 - 33:17
billion dollars of gold on Saturday
33:15 - 33:20
night you couldn't if you wanted to sell
33:17 - 33:22
a billion dollars of real estate in you
33:20 - 33:24
know your hometown on Saturday night you
33:22 - 33:26
couldn't if you wanted to borrow a
33:24 - 33:28
billion dollars with 100 million
33:26 - 33:31
collateral you couldn't and so there
33:28 - 33:33
isn't any leverage and there there's no
33:31 - 33:37
CR we'll call it credit there's no
33:33 - 33:39
credit and there's no liquidity in all
33:37 - 33:41
these other markets I mean so the reason
33:39 - 33:43
they're not volatile is they're not
33:41 - 33:45
useful right when they're panicked when
33:43 - 33:48
you think there's a missile crisis or a
33:45 - 33:50
war or a disaster you want to sell
33:48 - 33:52
that's the only thing you can sell and
33:50 - 33:54
then when you're exuberant and you want
33:52 - 33:58
to buy it's the only thing you can buy
33:54 - 34:00
so that volatility is like the Heat in
33:58 - 34:02
the middle of a turbine in a jet engine
34:00 - 34:05
it's like don't put your hand in the jet
34:02 - 34:08
engine that would be stupid am I afraid
34:05 - 34:10
of the fact that the jet engine screams
34:08 - 34:12
when it spins up and the fact that it
34:10 - 34:15
blows you know hot air out the back it's
34:12 - 34:17
like I'm not afraid of it I just
34:15 - 34:20
recognize if I want to fly from New York
34:17 - 34:21
to Tokyo I'm going to need a jet engine
34:20 - 34:24
on the airplane because otherwise I'm
34:21 - 34:28
not going to make it to my destination
34:24 - 34:31
and that volatility in Bitcoin that is
34:28 - 34:34
uh a manifestation of the energy the E
34:31 - 34:36
the financial energy in the system and
34:34 - 34:39
that's what drives Superior performance
34:36 - 34:40
well that's a great analogy okay so
34:39 - 34:42
please correct me if I'm wrong
34:40 - 34:45
convertible Bond holders they can choose
34:42 - 34:47
to convert their bonds into shares of
34:45 - 34:49
micro strategy later on what happens
34:47 - 34:53
when micro strategy has to start paying
34:49 - 34:56
back the principes when the bonds reach
34:53 - 35:00
maturity well for example right now uh
34:56 - 35:03
the first Bond we issue was struck at at
35:00 - 35:05
what would be about $39 a share you know
35:03 - 35:07
in today's term and we blew past that
35:05 - 35:09
and we eventually just converted to
35:07 - 35:12
equity when it was
35:09 - 35:13
350% of that so so the people that
35:12 - 35:15
bought that Bond made billions and
35:13 - 35:17
billions of dollars of capital gains and
35:15 - 35:19
it became Equity all but like one of the
35:17 - 35:22
bonds we've currently
35:19 - 35:24
issued um are already pass their strike
35:22 - 35:27
point if they were to come due tomorrow
35:24 - 35:29
they would all just equitise so for the
35:27 - 35:30
most part we expected all the bonds will
35:29 - 35:32
just convert to equity we don't expect
35:30 - 35:35
to ever pay them back one Bond was
35:32 - 35:39
struck at 140 another Bond was struck at
35:35 - 35:41
149 a third bond has struck at 180 that
35:39 - 35:44
is crazy you know uh a fourth bond has
35:41 - 35:47
struck at 200 I think there's one at 240
35:44 - 35:48
so when the stock goes uh above 240
35:47 - 35:51
they're all pretty much equity
35:48 - 35:54
instruments with with varying degrees of
35:51 - 35:56
of downside protection right and and the
35:54 - 35:59
truth is the problem is not paying them
35:56 - 36:01
back uh because they'll just equitise
35:59 - 36:03
and the reason they'll equitise Bonnie
36:01 - 36:06
is cuz bitcoin's been going up 50% a
36:03 - 36:08
year if you know my long-term forast is
36:06 - 36:11
Bitcoin goes up 29% of year on average
36:08 - 36:13
over 21 years but it's going up faster
36:11 - 36:15
than that right now if I'm bearish I'm
36:13 - 36:17
like well maybe Bitcoin will only go up
36:15 - 36:20
20% a year if if you have an asset going
36:17 - 36:24
up 21% a year you're doubling every 3
36:20 - 36:26
years so the duration of that debt is is
36:24 - 36:29
like five years or you know normally we
36:26 - 36:32
issue six year bonds or something so as
36:29 - 36:35
long as the duration is like in the
36:32 - 36:36
six-year time frame normally whatever
36:35 - 36:39
you bought you're going to double and
36:36 - 36:42
double again and it'll be volatile but
36:39 - 36:46
you know all the bonds are struck you
36:42 - 36:49
know 40% premium so normally in 24
36:46 - 36:51
months they're all equitized and we've
36:49 - 36:54
got a a tapered set of strikes and a
36:51 - 36:57
tapered duration latter
36:54 - 37:01
duration so we can always refinance or
36:57 - 37:03
roll forward or equitise something so
37:01 - 37:05
the problem is not paying off the bonds
37:03 - 37:08
the bonds are just selling Equity
37:05 - 37:11
forward at a premium the problem is the
37:08 - 37:13
delevering the problem is when they all
37:11 - 37:16
equitise we don't have enough leverage
37:13 - 37:18
and we don't want to be not unlevered
37:16 - 37:20
because if we're unlevered then we start
37:18 - 37:22
to approach the volatility of Bitcoin
37:20 - 37:26
and the performance of Bitcoin and our
37:22 - 37:28
investors are Bitcoin maximalists so
37:26 - 37:32
what would you rather have a real estate
37:28 - 37:34
company that borrows $4 billion for 1%
37:32 - 37:37
interest to in you know and has 1
37:34 - 37:39
billion in equity and and has five
37:37 - 37:43
billion in in Investments or a real
37:39 - 37:46
estate company that you know has $5
37:43 - 37:48
billion dollar in equity and no no
37:46 - 37:50
leverage you see just about everybody
37:48 - 37:52
would rather have the former rather than
37:50 - 37:55
the latter because you're using someone
37:52 - 37:58
else's free money in order to make an
37:55 - 38:01
investment you're like if you think that
37:58 - 38:03
real estate is going up more than 1% a
38:01 - 38:06
year than you want the former if you
38:03 - 38:08
think real estate's going down you want
38:06 - 38:11
the latter but of course nobody invest
38:08 - 38:14
in a company that doesn't believe in the
38:11 - 38:16
underlying strategy of the company so
38:14 - 38:19
ultimately what we'll do is we'll just
38:16 - 38:21
continue to uh to equitise those bonds
38:19 - 38:22
as they come do and replace them with
38:22 - 38:27
duration more leveraged instruments of
38:25 - 38:30
different types and your ultimate goal
38:27 - 38:32
is to increase Bitcoin per share is that
38:30 - 38:35
correct yes uh the number one goal of
38:32 - 38:38
the company is to acquire more Bitcoin
38:35 - 38:41
in in a creative fashion and a creative
38:38 - 38:44
meaning in a way that increases Bitcoin
38:41 - 38:45
per share for our shareholders you can
38:44 - 38:48
acquire Bitcoin in a dilutive fashion
38:45 - 38:52
but that would be stupid right so so uh
38:48 - 38:56
the way that we keep our s focused is we
38:52 - 38:59
calculate the metric BTC yield and BTC
38:56 - 39:04
yield is the rate of increase in Bitcoin
38:59 - 39:08
per share so in a given year if I say if
39:04 - 39:14
I say well we added uh 50,000 Bitcoin
39:08 - 39:16
and we generated a 18% BTC yield that
39:14 - 39:19
says we got a lot of Bitcoin but we also
39:16 - 39:22
increased the Bitcoin per share by 18%
39:19 - 39:24
so you as a shareholder were not diluted
39:22 - 39:27
you were actually accreted you were
39:24 - 39:29
benefited through the operation
39:27 - 39:32
if if I were to say hey we added a bunch
39:29 - 39:35
of Bitcoin but the btco was minus
39:32 - 39:37
10% well that was we did stupid things
39:35 - 39:40
to get the Bitcoin and even though it
39:37 - 39:42
looks like we're bigger you're actually
39:40 - 39:44
poorer we diluted the shares every
39:42 - 39:46
company has an objective to grow and
39:44 - 39:50
they have a metric assets under
39:46 - 39:52
management or revenue or or ebit dah
39:50 - 39:55
okay but it's really the earnings per
39:52 - 39:58
share right it's it's the metric per
39:55 - 39:59
share that matters if you're duding then
39:58 - 40:03
you're doing the wrong thing so the
39:59 - 40:05
beauty for us is BTC yield is a very
40:03 - 40:08
simple metric it's just uh it's our bit
40:05 - 40:10
our Bitcoin divided by our fully diluted
40:08 - 40:12
share count the rate of change of that
40:10 - 40:15
and we report that when we uh do major
40:12 - 40:17
deals like you know we do a billion
40:15 - 40:19
dollar deal and we'll report what was
40:17 - 40:22
the yield on that and we report at the
40:19 - 40:24
end of each quarter and we also provide
40:22 - 40:26
forward guidance or targets for our
40:24 - 40:28
shareholders you know in the future so
40:26 - 40:31
they know that we're going to continue
40:28 - 40:33
to generate positive yield for them very
40:31 - 40:35
hard for general public to come to these
40:33 - 40:39
numbers and thank you for explaining
40:35 - 40:42
earlier you said Bitcoin will go up 21%
40:39 - 40:44
for the next 21 years how high do you
40:42 - 40:47
think the price of Bitcoin could go in
40:44 - 40:49
the mid to long term so let's say how
40:47 - 40:52
many Bitcoin should someone aim to
40:49 - 40:57
accumulate to live comfortably in the
40:52 - 40:58
next 10 years 20 years 30 years well it
40:58 - 41:06
my target uh my my base case right my
41:02 - 41:10
expectation is uh Bitcoin will continue
41:06 - 41:12
to grow as digital Capital it'll serve
41:10 - 41:16
as a long-term store of value for the
41:12 - 41:18
world right now it's 0.1% of the world's
41:16 - 41:22
assets it's about $1.4
41:18 - 41:24
trillion out of 900 trillion it's big in
41:22 - 41:27
crypto economy but it's fairly small in
41:24 - 41:28
mainstream economy I think the ENT the
41:27 - 41:31
ENT entire worldwide addressable market
41:28 - 41:34
for store of value for for long-term
41:31 - 41:39
capital is about $450
41:34 - 41:42
trillion so 1.4 out of 450 trillion and
41:39 - 41:45
uh I expect Bitcoin will grow
41:42 - 41:46
progressively to be 7% of the assets of
41:45 - 41:51
the world not
41:46 - 41:55
0.1% and when it gets to 7% it'll be 13
41:51 - 41:57
million a coin so 13 million and that's
41:55 - 42:01
over 21 years so by the year
41:57 - 42:03
2045 and I think um right now it's been
42:01 - 42:06
growing uh for the last 4 years it's
42:03 - 42:08
been up about 50% a year and it's
42:06 - 42:11
gradually decelerating its growth rate
42:08 - 42:15
because as it gets bigger and as it gets
42:11 - 42:17
uh more uh more widely adopted and the
42:15 - 42:19
law of large numbers kicks in it should
42:17 - 42:21
decelerate if you look back over the
42:19 - 42:25
last 100 years the US dollar money
42:21 - 42:28
supply expands about 7% a year so I'm
42:25 - 42:32
just thinking it'll continue on for the
42:28 - 42:34
next 20 or 30 years at that Trend uh and
42:32 - 42:37
once you crank in that number and some
42:34 - 42:41
assumptions about uh inflation and
42:37 - 42:43
Technology the conclusion is um all the
42:41 - 42:46
other asset classes will grow plus or
42:43 - 42:49
minus a few percent equity will grow a
42:46 - 42:50
bit faster real estate about the same
42:49 - 42:54
perhaps gold
42:50 - 42:57
slower Bitcoin will grow faster because
42:54 - 42:59
uh because it is demonetizing gold
42:57 - 43:02
demonetizing real estate demonetizing
42:59 - 43:05
certain Equity indexes and
43:02 - 43:07
demonetizing corporate bond portfolios
43:05 - 43:10
these are all things that wealthy people
43:07 - 43:13
store their wealth in in order to just
43:10 - 43:18
keep it and so if you see Bitcoin is
43:13 - 43:22
going 50% to 45% growth to 40% growth to
43:18 - 43:23
35% growth to 32% growth to 30% to 28%
43:23 - 43:28
25% at some point it's approaching the
43:26 - 43:31
returns of the S&P P index or Equity
43:28 - 43:33
indexes and and they've been like 12%
43:31 - 43:35
you know 10 to 12% and so Bitcoin is
43:33 - 43:37
moving toward that those companies are
43:35 - 43:40
going to buy Bitcoin and as they buy
43:37 - 43:43
Bitcoin they're going to actually merge
43:40 - 43:45
and so these two these two lines of what
43:43 - 43:48
we'll call traditional Capital which is
43:45 - 43:51
Diversified Equity portfolios and
43:48 - 43:54
digital Capital which is what Bitcoin is
43:51 - 43:57
they're moving toward each other the
43:54 - 43:59
volatility of uh conventional Corp
43:57 - 44:02
operations is is the vix if you study
43:59 - 44:04
the vix and it's like 15 16 and the
44:02 - 44:07
volatility of Bitcoin is what we call
44:04 - 44:10
Devol you can it's like
44:07 - 44:14
55 the Devol is moving toward the vix
44:10 - 44:17
and and when Bitcoin is A2 trillion doll
44:14 - 44:22
asset class you know maybe the the
44:17 - 44:24
Bitcoin volatility is 20 and the vix is
44:22 - 44:26
15 bitcoin's always going to be a bit
44:24 - 44:27
more volatile it's always going to be
44:26 - 44:31
performing a bit
44:27 - 44:35
more because it's Global open 247 pure
44:31 - 44:36
digital capital and it's it strips away
44:35 - 44:39
the risk factors of companies
44:36 - 44:42
corporations and it strips away the risk
44:39 - 44:43
factors of property right of real estate
44:42 - 44:46
and so that's why it's going to
44:43 - 44:48
outperform and and I've explained why
44:46 - 44:51
it's more volatile because it's always
44:48 - 44:53
going to be more tradable more Global
44:51 - 44:56
some guy can can short it with 100x
44:53 - 44:58
leverage in Singapore at midnight that's
44:56 - 45:00
illegal in New York to do with Equity so
44:58 - 45:02
the point is there are some things you
45:00 - 45:03
can do with Bitcoin you'll never do with
45:03 - 45:08
assets but when you crank all that in
45:07 - 45:11
and I did it in a model it's called the
45:08 - 45:14
Bitcoin 24 model you can Google Bitcoin
45:11 - 45:16
24 and if you Google it you'll find a
45:14 - 45:18
link to GitHub and you can go download
45:16 - 45:21
the Bitcoin 24 model and you can put in
45:18 - 45:23
all your own assumptions for all these
45:21 - 45:26
macroeconomic factors and all these
45:23 - 45:28
technical factors and you can run your
45:26 - 45:31
own micro model for your family and your
45:28 - 45:32
corporation and your country so you know
45:31 - 45:35
don't take my word for it try it out
45:32 - 45:38
yourself but if you download Bitcoin 24
45:35 - 45:41
or you look at my assumptions my
45:38 - 45:43
assumptions are basically you know those
45:41 - 45:45
things and the result that pops out is
45:43 - 45:47
Bitcoin you know on average over the 21
45:45 - 45:49
years has an annualized rate of return
45:49 - 45:56
29% and that 29% just uh it grows with
45:53 - 45:58
volatility up to 13 million in Bitcoin
45:56 - 46:00
so you can if you wanted to figure out
45:58 - 46:02
how much will you have in 10 years you
46:00 - 46:04
could download the model and put in your
46:02 - 46:06
assumptions and look at the 10year point
46:04 - 46:08
maybe you're more bearish the bare case
46:06 - 46:11
would be only 3 million a coin and the
46:08 - 46:14
bull case is 49 million a coin everyone
46:11 - 46:16
can have their own assumptions but I you
46:14 - 46:17
know I think if you want something
46:16 - 46:20
simple if you want to reduce to a simple
46:17 - 46:22
sentence I would say if you're a young
46:20 - 46:25
person every Bitcoin you buy today is
46:22 - 46:27
probably worth $13 million in US dollars
46:25 - 46:30
in 21 years so so if you can get five
46:27 - 46:33
Bitcoin you would have 65 million now it
46:30 - 46:37
won't buy as much in 21 years as it buys
46:33 - 46:39
today but it'll buy a lot it'll buy a
46:37 - 46:42
you know it'll buy a lot I mean consumer
46:39 - 46:45
products will will appreciate it two or
46:42 - 46:47
three% a year or they'll get cheaper
46:45 - 46:49
because of technology and on the other
46:47 - 46:52
hand Palm Beach real estate if you want
46:49 - 46:54
a beach house in the Hamptons or Palm
46:52 - 46:56
Beach or or you want the best condo in
46:54 - 46:57
the middle of the biggest city that's
46:56 - 47:02
going to go up
46:57 - 47:04
7% you know six s% so you know you you
47:02 - 47:08
kind of you want to beat the 7% if you
47:04 - 47:10
want to buy Rich things expensive things
47:08 - 47:13
you want to beat the 2% if you want to
47:10 - 47:15
buy the cheap things and I think Bitcoin
47:13 - 47:17
kind of Beats everything so that's why
47:15 - 47:21
it's a pretty good idea do you think
47:17 - 47:23
Bitcoin is to keep the rich rich or to
47:21 - 47:25
empower the poor because you see a lot
47:23 - 47:28
of stories of you know um people with
47:25 - 47:30
really low paying J jobs and they came
47:28 - 47:33
across Bitcoin all of a sudden there are
47:30 - 47:36
this you know really rich kid living in
47:33 - 47:40
Dubai and people love these
47:36 - 47:45
stories I think Bitcoin Bitcoin Powers
47:40 - 47:48
the future so the answer is it's going
47:45 - 47:50
to empower the 8 billion people on the
47:48 - 47:53
planet and the working class to a
47:50 - 47:56
greater degree than any other financial
47:53 - 47:57
asset ever invented there's no other
47:56 - 48:00
asset that you can can put on an Android
47:57 - 48:03
phone and Buy $40 a week worth of that
48:00 - 48:05
gives you the same property rights as a
48:03 - 48:07
megail billionaire you you have better
48:05 - 48:09
property rights than than the richest
48:07 - 48:13
person on Earth than a Jeff Bezos or
48:09 - 48:17
than an Elon Musk or Bill Gates you have
48:13 - 48:19
better performance than they have and
48:17 - 48:23
you can buy and sell it and it's liquid
48:19 - 48:26
to you at all times so you know there's
48:23 - 48:28
nothing better than that um and on the
48:28 - 48:33
the wealthy people that
48:30 - 48:35
reject empowerment for everybody else
48:33 - 48:37
that they reject the crypto economy and
48:35 - 48:38
they reject Bitcoin they're going to get
48:37 - 48:40
poor right they're going to be invested
48:40 - 48:46
89% the the really conservative ones
48:42 - 48:49
will get 7% return the normal ones will
48:46 - 48:53
get 10 to 12% return the people that
48:49 - 48:56
buying a Bitcoin or 29% right so so the
48:53 - 48:58
rich will probably still say rich but
48:56 - 49:01
they will lose Lo uh they'll lose
48:58 - 49:03
position the smart money the wealthy
49:01 - 49:06
people that embrace the future that
49:03 - 49:09
embrace the digital economy they'll get
49:06 - 49:12
wealthier but they will also boost the
49:09 - 49:14
working class and the poor that get on
49:12 - 49:17
that train with them right they're
49:14 - 49:18
basically all working together right in
49:18 - 49:24
coalition so I think um I think Bitcoin
49:21 - 49:27
is going to drive the digital
49:24 - 49:30
transformation of the Capital Market
49:27 - 49:33
and that means that you know everybody
49:30 - 49:35
that buys any security that's backed by
49:33 - 49:36
Bitcoin is going to get better yield
49:35 - 49:37
they're going to get better upside
49:36 - 49:41
they're going to get better performance
49:37 - 49:43
so so indirectly uh Bitcoin benefits
49:41 - 49:45
Pension funds
49:43 - 49:50
retirees I think uh you know people that
49:45 - 49:53
hold hold uh stock or exposure to
49:50 - 49:56
bitcoin or micro strategy 250 million
49:53 - 49:57
people have something right now that's
49:57 - 50:02
uh exposed directly to bitcoin and that
49:59 - 50:05
will eventually spread to a billion so
50:02 - 50:07
everybody in the world benefits
50:05 - 50:10
indirectly it's like you been benefit
50:07 - 50:13
indirectly by owning any asset that has
50:10 - 50:15
Bitcoin exposure you benefit directly if
50:15 - 50:21
Bitcoin and then if you want to really
50:18 - 50:23
make a lot of money the way you make a
50:21 - 50:25
lot of money Bonnie is uh you take your
50:23 - 50:27
podcast and you say we're going to be
50:25 - 50:31
the Bitcoin podcast
50:27 - 50:33
and then you uh and the the podcast is
50:31 - 50:34
worth $2 million I don't know what it's
50:33 - 50:37
worth but we're just going to pick a
50:34 - 50:39
number indulge me $10 million higher or
50:37 - 50:40
lower you you tell me what what you know
50:39 - 50:42
10 million you want to go higher or you
50:40 - 50:44
want to go lower let's do 10 okay 10
50:42 - 50:48
million so the podcast is worth 10
50:44 - 50:50
million so then you go to a uh um a
50:48 - 50:53
venture capitalist that believes in
50:50 - 50:57
Bitcoin and once part of the digital
50:53 - 51:01
future and you sell them2 5% of the
50:57 - 51:04
podcast as participating preferred stock
51:01 - 51:05
and they give you two and a half half uh
51:04 - 51:07
actually they give you more whatever
51:05 - 51:10
three what what's the pre-money
51:07 - 51:13
valuation of 10 two and a half gives
51:10 - 51:16
them 20% so $3 million or something they
51:13 - 51:18
give you $3 million you buy $3 million
51:16 - 51:22
of Bitcoin with it and now Bitcoin
51:18 - 51:23
doubles every three years and now you
51:23 - 51:33
80% you know 80 80 75 to 80% of the
51:29 - 51:35
upside and they get 25% of The Upside
51:33 - 51:36
and Bitcoin doubles every three years
51:35 - 51:40
and so in three years you have six
51:36 - 51:41
million another three years you by the
51:40 - 51:44
way when you have six million in three
51:41 - 51:47
years your podcast is is probably going
51:44 - 51:50
to be valued at 15 million and now you
51:47 - 51:53
raise another 5 million and you buy more
51:50 - 51:56
Bitcoin and now you have about 10
51:53 - 51:59
million in Bitcoin and then it doubles
51:56 - 52:01
and then you have 20 million and
51:59 - 52:04
sometime in about 10 years you have
52:01 - 52:07
about uh 30 or 40 million in Bitcoin and
52:04 - 52:10
it's going up 20% a year and you're
52:07 - 52:12
making $10 million a year and then you
52:10 - 52:16
take your company
52:12 - 52:19
public and then you raise $50 million
52:16 - 52:21
and or 20 million $30 million and then
52:19 - 52:23
you have $100 million of Bitcoin and
52:21 - 52:26
then you're making 20 million a
52:23 - 52:28
year and you've got three people working
52:26 - 52:30
for the podcast and you've got a company
52:28 - 52:32
basically a $100 million company you got
52:30 - 52:37
20 million $30 million a year in
52:32 - 52:39
earnings growing 30% or 20% right and
52:37 - 52:41
then you know looking out 20 years
52:39 - 52:44
you're a billionaire it's not bad right
52:41 - 52:47
so what's the idea the idea there is
52:44 - 52:50
aggressively levered long so the the
52:47 - 52:52
thing that you can do is you know if
52:50 - 52:55
you're a passive participant and it's 5%
52:52 - 52:57
of your portfolio you know you get 100
52:55 - 53:01
basis point more return if you're a
52:57 - 53:03
buyer and it's uh 50% of your assets
53:01 - 53:06
you're getting 20 to 30% uh return on
53:03 - 53:08
your assets if you're a private company
53:06 - 53:11
and you've got uh and you sweep all your
53:08 - 53:13
cash flows into Bitcoin then your
53:11 - 53:16
profits will double or triple over what
53:13 - 53:18
they would have been otherwise if you
53:16 - 53:21
can raise money you're 10x and if you
53:18 - 53:22
can go public you're 100x but by the way
53:21 - 53:24
what I've described is not any different
53:22 - 53:27
than how you get rich in the real estate
53:24 - 53:29
business if you're a real EST broker I
53:27 - 53:30
would say well you know first you scrape
53:29 - 53:32
together a million dollars and then you
53:30 - 53:34
go Barrow $9 million or you raise 5
53:32 - 53:35
million in equity and then you go borrow
53:34 - 53:38
20 million from the bank and you buy a
53:35 - 53:40
$25 million building and it goes up 7% a
53:38 - 53:42
year the problem is it takes you 10
53:40 - 53:44
years for the building to double at 7%
53:42 - 53:45
so then you got a $50 million building
53:44 - 53:47
and then you borrow another 20 million
53:45 - 53:48
from the bank and you buy another
53:47 - 53:51
building and you and you get 200 million
53:48 - 53:53
of real estate and after about 20 25
53:51 - 53:55
years maybe you've made yourself a
53:53 - 53:58
hundred couple hundred million dollars
53:55 - 54:00
with a combination of equity leverage
53:58 - 54:02
and debt leverage but you have to choose
54:00 - 54:04
the right buildings and you have to wait
54:02 - 54:06
and the thing about Bitcoin is you don't
54:04 - 54:08
have to choose the buildings and Bitcoin
54:06 - 54:12
is moving faster and it's a simple idea
54:08 - 54:14
all you have to do is uh is invest your
54:12 - 54:16
Equity invest your debt invest your cash
54:14 - 54:18
flow in Bitcoin and don't sell the
54:16 - 54:22
Bitcoin wow would you say that is what
54:18 - 54:23
an average person could potentially do
54:22 - 54:25
well I think the average person has a
54:23 - 54:27
hard time starting their own company for
54:25 - 54:29
the average person my advice would be
54:27 - 54:31
take the capital that you want to invest
54:29 - 54:33
for more than four years if your time
54:31 - 54:35
Horizon is more than four years if you
54:33 - 54:36
want to hold it for 10 years if you want
54:35 - 54:39
to give it to your children take a
54:36 - 54:40
portion of that money long-term capital
54:39 - 54:43
and buy Bitcoin with it and if you're
54:40 - 54:46
not sure how much to buy you know then
54:43 - 54:48
allocate 10 or 20 hours to read the
54:46 - 54:52
Bitcoin standard and study Bitcoin
54:48 - 54:54
podcast buy 10% put 10% in or or 15% and
54:52 - 54:57
then the more time you spend the more
54:54 - 55:00
allocation you can create the Maxis
54:57 - 55:03
would put 80% in or something but but
55:00 - 55:05
other people would only put 5% in but
55:03 - 55:07
for the average person I would say study
55:05 - 55:09
Bitcoin and decide what portion of your
55:07 - 55:11
long-term capital you want to invest for
55:09 - 55:13
more talented people they can start a
55:11 - 55:15
company the entrepreneurs start a
55:13 - 55:18
company and when you raise money for the
55:15 - 55:20
company instead of raising 2 million to
55:18 - 55:23
pay your operating expenses Bonnie raise
55:20 - 55:25
10 million and invest 8 million in
55:23 - 55:27
Bitcoin and use the 2 million for your
55:25 - 55:29
operating expenses then I would say if
55:27 - 55:31
you're able to raise another round of
55:29 - 55:33
capital raise 20 million after that and
55:31 - 55:36
put it all in the Bitcoin and if you're
55:33 - 55:38
able to go public by all means go public
55:36 - 55:40
raise 40 million more put Bitcoin on the
55:38 - 55:43
balance sheet here's an important Point
55:40 - 55:46
conventional Financial wisdom is uh says
55:43 - 55:48
that um volatility is bad you shouldn't
55:46 - 55:49
take risk volatility equals risk you
55:48 - 55:52
shouldn't take risk you shouldn't
55:49 - 55:54
Embrace volatility you should be safe
55:52 - 55:56
with your balance sheet and then you
55:54 - 55:58
should risk your p&l you should work
55:56 - 55:59
really really hard to make money in the
55:58 - 56:02
operating business but don't risk the
55:59 - 56:05
balance sheet that probably made sense
56:02 - 56:06
20 30 40 years ago that made sense when
56:05 - 56:08
you were growing up when they wrote all
56:06 - 56:10
the textbooks for Harvard B School
56:08 - 56:13
finance that made sense because Bitcoin
56:10 - 56:15
didn't exist and Bitcoin wasn't an
56:13 - 56:18
Institutional asset but really
56:15 - 56:21
volatility isn't risk volatility is
56:18 - 56:24
Vitality or another way to look at it is
56:21 - 56:26
it's like the RPM if I spend um an
56:24 - 56:28
engine maybe a Balsa would kids
56:26 - 56:31
propeller and I spend at 90 RPM it's
56:28 - 56:33
just a kids toy and if I spend a 5B
56:31 - 56:35
weight at 90
56:33 - 56:39
RPM then it's a weapon but if I take a
56:35 - 56:40
20 ton flywheel and I spend it at 90 RPM
56:40 - 56:47
turbine okay so if you Embrace Bitcoin
56:45 - 56:51
and you Embrace volatility and you put
56:47 - 56:53
$20 million of Bitcoin on your balance
56:51 - 56:56
sheet and it's very volatile you will
56:53 - 56:58
make or lose more money on your balance
56:56 - 57:00
sheet every day than you'll make in the
56:58 - 57:03
podcasting business every year so it'll
57:00 - 57:05
be 365 times as volatile but Bonnie that
57:03 - 57:08
will make you interesting interesting
57:05 - 57:10
means I'll want to trade your stock it
57:08 - 57:13
means I will want to buy and sell your
57:10 - 57:16
options you know the the basic principle
57:13 - 57:18
of Finance is if you have an interest in
57:16 - 57:20
something if you own it you'll read
57:18 - 57:23
about it and you'll want to buy and sell
57:20 - 57:25
it if I'm if you're not interesting I
57:23 - 57:27
don't care about you the truth is if
57:25 - 57:29
everybody wa makes up and they decide
57:27 - 57:31
you're overvalued by 5% and people sell
57:29 - 57:34
$100 million of your stock tomorrow
57:31 - 57:36
morning then 3 days from now they'll
57:34 - 57:39
wake up and realize you're undervalued
57:36 - 57:42
by 20% and they'll buy $200 million of
57:39 - 57:46
your stock that morning and so the
57:42 - 57:50
volatility drives the liquidity and that
57:46 - 57:53
drives the optionality and that attracts
57:50 - 57:54
capital and that means that once you
57:54 - 58:00
volatility and performance more than the
57:57 - 58:02
S&P index instead of being negatively
58:00 - 58:06
polarized toward Capital are you
58:02 - 58:08
repellent Bonnie or are you attractive
58:06 - 58:09
are you repelling money are you scaring
58:09 - 58:15
away or are you attracting it um when
58:12 - 58:17
you're using us treasuries as your
58:15 - 58:21
Capital asset you're negatively
58:17 - 58:23
polarized toward capital and then you
58:21 - 58:26
can't raise money the cost of capital is
58:23 - 58:29
10 to 15% a year or more when you
58:26 - 58:32
actually flip the switch and you own
58:29 - 58:36
BTC you're positively polarized and you
58:32 - 58:37
can raise infinite money because the
58:36 - 58:39
more money you raise the more profitable
58:37 - 58:42
you get and your returns are always
58:39 - 58:43
greater than the cost of capital they're
58:42 - 58:48
greater than the S&P
58:43 - 58:51
index so you can see if you're capable
58:48 - 58:52
of creating a company and raising
58:51 - 58:54
capital I mean you have to be very
58:52 - 58:56
talented to run a company then you have
58:54 - 58:58
to be more talented to raise capital
58:56 - 59:00
then you have to be smart enough to flip
58:58 - 59:04
the polarity on your balance sheet to
59:00 - 59:07
bitcoin so it's it's high volatility
59:04 - 59:09
positive return capital and then you
59:07 - 59:11
will grow very rapidly and you want me
59:09 - 59:14
to give you an example of how rapidly
59:11 - 59:17
micro strategy had a uh market cap of a
59:14 - 59:22
billion dollars uh four years ago and it
59:17 - 59:25
had an Enterprise value of 666 million
59:22 - 59:29
and it had 500 million in cash dead
59:25 - 59:31
money we flipped the switch we've raised
59:29 - 59:35
9.5 billion doar
59:31 - 59:37
$99.75 billion technically in those 48
59:35 - 59:40
months the Enterprise value of the
59:37 - 59:44
company went from 600 million 666
59:40 - 59:47
million to be precise to 55 billion and
59:44 - 59:51
of course the stock went up by a factor
59:47 - 59:54
of 17 it went from $10 a share well it
59:51 - 59:56
was $9 a share at the bottom of covid
59:54 - 59:59
and it's whatever it is today
59:56 - 60:03
220 I haven't looked at the price but
59:59 - 60:07
it's 2 35 I think you understand the the
60:03 - 60:09
the strategy is don't reject volatility
60:09 - 60:15
volatility don't negatively polarize
60:12 - 60:19
your capital structure positively
60:15 - 60:21
polarize it think different right you
60:19 - 60:23
know most people don't want to think
60:21 - 60:25
different if you go and ask a 100 B
60:23 - 60:27
School professors what should you do
60:25 - 60:29
with the $10 million that you raise from
60:27 - 60:31
the Venture Capital they'll say oh be
60:29 - 60:33
safe invested in short-term treasury
60:31 - 60:35
bills don't lose the money it's the
60:33 - 60:37
totally wrong thing to do because if you
60:35 - 60:40
raise 10 million and you invested in
60:37 - 60:43
Bitcoin even if the business fails you
60:40 - 60:47
will have 20 million 40 million you will
60:43 - 60:51
have a$ hundred million business growing
60:47 - 60:54
20% a year in 10 years if the business
60:51 - 60:56
fails if you invest in Bitcoin and so
60:54 - 60:58
their advice
60:56 - 61:01
is invest the 10 million and lose a
60:58 - 61:03
million every single year guaranteed in
61:01 - 61:05
shareholder value and over 10 years burn
61:03 - 61:07
it all right that their advice is burn
61:05 - 61:10
it all slowly for
61:07 - 61:13
certain and my advice
61:10 - 61:16
is create a $100 million bit but think
61:13 - 61:19
it through Bonnie it's a 100 million in
61:16 - 61:22
10 years growing 20% Which means it's
61:19 - 61:23
200 million in 14 years which means it's
61:23 - 61:28
million in 17 years which which means
61:26 - 61:30
it's a it's a billion dollars in 21
61:28 - 61:33
years you're a billion dollar business
61:30 - 61:37
generating 200 million in income every
61:33 - 61:41
year growing 20% in 21 years and that's
61:37 - 61:43
if the that's if the p&l fails so you
61:41 - 61:45
see what's really going on here is a
61:43 - 61:48
revolution in thinking everybody thinks
61:45 - 61:50
the balance sheet is a liability and I
61:48 - 61:53
should take no risk on the balance sheet
61:50 - 61:56
and I should try to invent new stuff on
61:53 - 61:57
the p&l and work myself to death but
61:56 - 61:59
it's kind of like just saying work
61:57 - 62:02
yourself to death and beat all the
61:59 - 62:05
competition and cut your cost and work
62:02 - 62:08
harder but by the way invest your money
62:05 - 62:10
poorly and lose it all for certain and
62:08 - 62:13
I'm just saying maybe that's not such a
62:10 - 62:16
good idea that was eye opening it really
62:13 - 62:18
hit home because Taiwan is built on top
62:16 - 62:21
of a lot of small and medium
62:18 - 62:23
manufacturing companies and that is what
62:21 - 62:26
they're doing right now you know you got
62:23 - 62:29
to be conservative and
62:26 - 62:31
you know as manufacturing move to other
62:29 - 62:34
countries what what are you going to do
62:31 - 62:36
now so thank you for that can I can I
62:34 - 62:39
give you another metaphor I mean you're
62:36 - 62:41
just describing zombie companies uh and
62:39 - 62:43
you know out of the 50,000 publicly
62:41 - 62:45
traded companies
62:43 - 62:47
49,500 are probably zombie companies
62:45 - 62:49
like that they they've got a business
62:47 - 62:51
it's a good business they make money but
62:49 - 62:54
they can't grow and they become
62:51 - 62:57
uninteresting and they're trapped and
62:54 - 62:58
they're staring at inid and Google and
62:57 - 63:00
Tesla and they're looking at these big
62:58 - 63:02
Tech trillion dollar companies are going
63:00 - 63:04
to crush them to death and it's like how
63:02 - 63:07
do you compete with app Apple and Google
63:04 - 63:10
and Microsoft and Nvidia and Tesla and
63:07 - 63:12
Amazon right that's the plight of most
63:10 - 63:14
businesses small midsize even big
63:12 - 63:17
businesses if I was in your board
63:14 - 63:19
meeting Bonnie and you said hey we've
63:17 - 63:21
got a great company in taiw in Taiwan
63:19 - 63:23
and it's uh generating 500 million in
63:21 - 63:27
revenue and it's like growing 2% a year
63:23 - 63:29
but we're worried what should we do
63:27 - 63:31
and I was a brilliant investment banker
63:29 - 63:33
I would say well I think you need to do
63:31 - 63:36
a transformational
63:33 - 63:39
acquisition you know I'm I've found a
63:36 - 63:42
company which is $250
63:39 - 63:44
million and you have $ 250 million in
63:42 - 63:47
cash or you can borrow 250
63:44 - 63:49
million I found a $250 million company
63:47 - 63:53
and it's
63:49 - 63:55
growing 50% a year right now but I think
63:53 - 63:58
it's it's going to grow between 20 and
63:55 - 64:01
40% % a year for the next 20 years and
63:58 - 64:04
it's a monopoly in its space and it's
64:01 - 64:05
Unstoppable and it's got this product
64:04 - 64:09
that everybody
64:05 - 64:11
needs nobody can stop but you know what
64:09 - 64:13
all the other big tech companies all the
64:11 - 64:17
other investors they've been uh ignoring
64:13 - 64:19
it because they're just you know
64:17 - 64:23
arrogant and ignorant or they don't
64:19 - 64:24
really think they need it and so I can
64:24 - 64:30
you and and you know eventually it'll be
64:28 - 64:32
worth 10 billion dollar growing at you
64:30 - 64:35
know 20% a year and it's going to 10A
64:32 - 64:37
your stock price and save your company
64:35 - 64:39
and uh you know make your employees Rich
64:37 - 64:42
make your shareholders Rich would you
64:39 - 64:43
like to buy that thing and then the
64:42 - 64:44
board would go well of course we want to
64:43 - 64:46
buy that thing but it's probably too
64:44 - 64:50
expensive like what do they want like 10
64:46 - 64:52
times revenue or 20 or 30 times Revenue
64:50 - 64:55
we can't come up with 20 billion dollars
64:52 - 64:57
to buy this thing or 10 billion so and I
64:55 - 65:01
would say well you know uh I'm a friend
64:57 - 65:03
of uh the owner and he just wants to
65:01 - 65:04
sell to you he'll sell it to you for one
65:04 - 65:10
Revenue you want to buy a $250 million
65:06 - 65:11
company growing more than 20% a year for
65:10 - 65:14
the next 20 years and you can buy it for
65:11 - 65:15
one times revenue and then you'll say
65:14 - 65:18
well maybe it's going to be hard to
65:15 - 65:20
integrate right I mean do all the
65:18 - 65:22
employees do they are they arrogant and
65:20 - 65:25
you know what's the catch there must be
65:22 - 65:26
a catch of am I going to get sued and I
65:25 - 65:28
say well no there's no employees you
65:26 - 65:30
know there's no payroll well do I have
65:28 - 65:31
to put in more money no you don't have
65:30 - 65:33
to put any more money you're like well
65:31 - 65:35
it must be too good to be true what is
65:33 - 65:38
this thing and I say well this thing is
65:35 - 65:41
Bitcoin it's like you can buy $250
65:38 - 65:43
million of Bitcoin growing 20 to 40% a
65:41 - 65:45
year at one times Revenue integrate it
65:43 - 65:48
with your company you know well what if
65:45 - 65:49
I change my mind well you can reverse
65:48 - 65:52
the transaction and sell it wait a
65:49 - 65:54
minute this is the universal Hightech
65:52 - 65:57
high growth merger partner but you know
65:54 - 65:59
will it be trapped in Taiwan I want a
65:57 - 66:00
global company that's selling to New
65:59 - 66:02
York and Paris and London yeah the
66:00 - 66:04
people that buy Bitcoin live in New York
66:02 - 66:07
and Paris and London so you're telling
66:04 - 66:08
me I get a global technology company
66:07 - 66:11
well it's actually better there's no
66:08 - 66:14
company so Bitcoin is the universal
66:11 - 66:16
merger partner to all these companies if
66:14 - 66:18
you want to globalize your business
66:16 - 66:21
increase the growth rate of your
66:18 - 66:25
business increase the appeal of your
66:21 - 66:27
stock it's not that hard you just have
66:25 - 66:31
to think different open your mind Bonnie
66:27 - 66:33
I kind of feel like it's it's like 1900
66:31 - 66:34
a bunch of you know a bunch of people
66:33 - 66:37
with factories in Taiwan and they're
66:34 - 66:39
like well you know it's getting harder
66:37 - 66:41
to manufacture stuff and costs are
66:39 - 66:42
coming down and I show up and I said
66:41 - 66:44
well you know I got this new thing
66:42 - 66:46
called electricity I think you ought to
66:44 - 66:47
yeah but I I heard my friend he put
66:46 - 66:50
Electric in his house and his house
66:47 - 66:52
burned down or I I have another friend I
66:50 - 66:54
read a story that someone touched it and
66:52 - 66:56
it shocked them yeah I mean there there
66:54 - 66:58
are some houses the burned down and some
66:56 - 67:00
people did get shocked but you know I
66:58 - 67:03
can't see it I don't think it's real now
67:00 - 67:04
trust me it's real I don't understand it
67:03 - 67:06
well I understand but if you kind of rip
67:04 - 67:08
out the steam engines and you rip out
67:06 - 67:11
the water wheels and you actually put
67:08 - 67:13
electric motors yeah I get a good idea
67:11 - 67:15
why don't you actually create electric
67:13 - 67:17
appliances why don't you actually put it
67:15 - 67:19
in the products and the hair dryers and
67:17 - 67:21
the washing machines put it in your cars
67:19 - 67:24
and you might even create a television
67:21 - 67:25
with it or a radio I don't understand
67:24 - 67:29
yeah I know you don't understand that's
67:25 - 67:32
why it's new it's technology you know so
67:29 - 67:34
you want to revitalize the business I
67:32 - 67:37
mean Taiwan semi-conductor it does
67:34 - 67:40
something that nobody understood right I
67:37 - 67:44
mean you need to actually do something
67:40 - 67:46
new and at some point there there's this
67:44 - 67:48
point where you you either going to have
67:46 - 67:51
a a fast death or slow death or take a
67:48 - 67:53
risk the problem with most companies is
67:51 - 67:54
they're they're dying a slow death it's
67:53 - 67:56
like they're definitely going to become
67:54 - 67:58
irrelevant over 30 years but nobody
67:56 - 68:01
wants to take a risk because they feel
67:58 - 68:04
like it's better just to die slowly or
68:01 - 68:07
go with a a whimper instead of a bang
68:04 - 68:09
and of course you know my my message to
68:07 - 68:11
everybody in your country and it's the
68:09 - 68:14
same as my message to everybody in the
68:11 - 68:16
world we've harnessed digital energy you
68:14 - 68:18
know once the world changed because of
68:16 - 68:20
electromagnetic energy John D
68:18 - 68:22
Rockefeller changed the world with
68:20 - 68:24
chemical and liquid energy the
68:22 - 68:28
difference between us and the Apes is
68:24 - 68:30
fire it's material energy right if you
68:28 - 68:33
want to catapult your nation or your
68:30 - 68:37
company or your family kids are freezing
68:33 - 68:40
and starving to death try fire right
68:37 - 68:43
bitcoin's digital energy you can use it
68:40 - 68:47
to revitalize your company or your
68:43 - 68:49
products micro strategy done both right
68:47 - 68:52
we put it on our balance sheet and now
68:49 - 68:55
instead of 500 million of zero earning
68:52 - 68:58
money we have 17 billion going up50 % a
68:55 - 69:01
year but we also created a treasury
68:58 - 69:03
operation we create Securities that feed
69:01 - 69:06
the fixed income market and the options
69:03 - 69:09
market and that's uh that creates a huge
69:06 - 69:11
amount of shareholder value I I I'd love
69:09 - 69:14
to tell you I understood all this four
69:11 - 69:16
years ago it's just like the first dude
69:14 - 69:19
that like trips over fire and he's like
69:16 - 69:22
fire it's bright oh it's hot huh I can
69:19 - 69:24
use it to cook food uh I can also use it
69:22 - 69:27
to clear the trees and burn down 100
69:24 - 69:29
acres and Farm I can also use it to
69:27 - 69:32
scare away the wild animals I can also
69:29 - 69:35
use it to sharpen the spear tip or to
69:32 - 69:36
create things with you know and
69:35 - 69:38
eventually we figure out how to use fire
69:36 - 69:41
to create steel and we created
69:38 - 69:44
skyscrapers right so so nobody figured
69:41 - 69:46
it out at the same time but the point is
69:44 - 69:48
you want to advance as the civilization
69:46 - 69:50
you got to embrace technology you got to
69:48 - 69:53
learn new things and you can't be afraid
69:50 - 69:55
of them you should be inspired by them
69:53 - 69:57
if you're in Taiwan if you're in Africa
69:55 - 69:58
if you're in South America because they
69:57 - 70:01
don't have the ability to invest in
69:58 - 70:03
American high-tech or American Property
70:01 - 70:05
you know with the same property rights
70:03 - 70:07
if you go to Europe and you ask ask the
70:05 - 70:09
people that run tether is there any
70:07 - 70:12
demand for digital Euros they would say
70:09 - 70:15
no 99% of the demand in Europe is for
70:12 - 70:17
digital dollars what's a Epiphany is the
70:15 - 70:19
Europeans don't want Euros nobody wants
70:17 - 70:21
any currency other than the dollar
70:19 - 70:23
nobody wants property other than the us
70:21 - 70:26
nobody wants companies other than
70:23 - 70:30
primarily corporate you know big tech
70:26 - 70:33
companies in the US so the US is kind of
70:30 - 70:35
the Apex you know Financial Network in
70:33 - 70:36
the world and if you're outside the US
70:35 - 70:38
you don't have direct access you're
70:36 - 70:41
already a disadvantaged but the only way
70:38 - 70:44
to upgrade that up is is to basically
70:41 - 70:47
move from us Network to bitcoin Network
70:44 - 70:50
which is an upgrade from the US so
70:47 - 70:53
Bitcoin represents a chance for people
70:50 - 70:56
outside the US to not only access the
70:53 - 70:59
best Market but to leave frog it and
70:56 - 71:02
access a market that's even better than
70:59 - 71:04
the best market and I have a lot of Hope
71:02 - 71:06
for them remember I said it's on a need
71:04 - 71:09
to know basis a lot of people in the US
71:06 - 71:10
are rich and kind of arrogant they're
71:09 - 71:13
comfortable and they don't feel like
71:10 - 71:15
they need to know but if you feel
71:13 - 71:19
insecure feel left out then I have a
71:15 - 71:21
need and so you can tap into that need
71:19 - 71:24
and if you can kind of tap into that
71:21 - 71:27
nerve I mean touch that nerve for people
71:24 - 71:31
whatever is the security they have and
71:27 - 71:34
then you can attach Bitcoin as the
71:31 - 71:36
solution to the problem I mean bitcoin's
71:34 - 71:38
like the universal solution but the
71:36 - 71:39
problem is a lot of people in the world
71:38 - 71:41
the rich powerful don't know they have a
71:39 - 71:43
problem they're arrogant and they have
71:41 - 71:45
too much power too much money so you got
71:43 - 71:47
to find people that know they have a
71:45 - 71:50
problem then you got to hand them the
71:47 - 71:52
solution and uh that's why somebody in
71:50 - 71:54
Argentina or Nigeria they could sit
71:52 - 71:55
before someone in the US but I think
71:54 - 71:57
you're perfectly positioned to be the
71:55 - 71:59
messenger and so I wish you the best and
71:57 - 72:01
i' like to be helpful wow honestly
71:59 - 72:03
Michael thank you so much for being so
72:01 - 72:07
generous with your time and the Insight
72:03 - 72:09
because I came into this podcast or this
72:07 - 72:13
recording expecting a great conversation
72:09 - 72:15
but this is I think life-changing and if
72:13 - 72:18
I go through with what you mention I'm
72:15 - 72:23
I'm going to repeat this multiple times
72:18 - 72:23
I'll name the building I buy the Sailor
72:23 - 72:30
building you can name it the Satoshi
72:25 - 72:32
building too right right um okay Satoshi
72:30 - 72:35
versus sailor
72:32 - 72:37
building and I'd honestly love to have
72:35 - 72:40
you back sometime in the future to
72:37 - 72:43
continue this amazing conversation and I
72:40 - 72:46
I know you need to go and thank you so
72:43 - 72:50
much I'll look forward to next time and
72:46 - 72:50
thank you Bonnie for having me
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