Michael Saylor: Why Hard Work Won't Make You Rich (But Bitcoin Will): | E172

I lived through seeing our stock go to 333 and I watched it go to 42.

That wasn't the worst of it. That was just in one day. The worst of it was a couple years later when the stock had gone from $100 down to 42. Calculate that. It's like 99.8% drawdown.

The Bitcoin is a stronger form of capital preservation than your house, bar of gold, a bunch of silver. When it comes time to sell something, sell something else. Don't sell the thing that will make your children's children wealthy. I could have been the richest guy in Florida, but my great great great grandfather wanted velvet in his horse and buggy. Dude, sell the horse and buggy. Keep the Bitcoin. There's no second best crypto asset. There's only one crypto asset and that's Bitcoin.

I do. Human civilization settles on protocols. We're speaking English because all the rich powerful people speak English. There is no second best language. The human civilization settles upon the highest powered money. And Bitcoin is the most thermodynamically sound because it's like worth $1.5 trillion.

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.

Awesome.

No, I generally feel pretty good most days.

Get out in the sun, enjoy the sunlight. We live in sunny southern Florida and so on a day when the sun's shining, that's a good day, which is pretty much every day here. It's pretty amazing.

Get some exercise, have a cup of coffee, and then do something constructive and cheerful with my life.

A mixture of running and calisthenics and pull-ups and light weights.

Yeah, as long as I can remember.

I'm the chairman of a publicly traded company named Strategy. I founded it when I was 24. We went public on the NASDAQ in 1998. We're the world's largest holder of crypto assets. We're the largest holder of Bitcoin in the world. We own about 818,000 Bitcoin. So the company itself is akin to a reserve bank for Bitcoin. We have something depending upon the given day of the week 65 to 70 billion dollar worth of capital and then we use that capital in order to issue credit instruments and we sell a credit instrument called Stretch or STRC that is a preferred stock and it pays 11.5% dividend yield right now as a monthly cash payment and it's a return of capital which means that you're buying an instrument that trades close to $100 a share with, you know, very low vol a little bit more volatility than a money market, but much less volatility than a common equity stock. And you collect 11.5% and you defer the taxes on it until you've collected all the principle you've invested. So you invest $100, you collect $100 of dividends over the course of about nine years. You defer the taxes on it. And so that makes it I think one of the most interesting credit instruments in the world. It's become the most successful preferred stock in the world. It's the fastest growing credit instrument in the world. And it's built on Bitcoin. The only reason we can create a credit instrument that pays 11.5% is because we have the highest performing capital asset in the world to power it. So in essence we're in the business of creating digital credit and that digital credit is meant to be an alternative to people that believe in digital assets that want the equivalent of a digital money market that pays them 11.5% tax deferred instead of the traditional money market that pays you 3.5% and is taxable.

My advice would be that you want to buy assets that are going to outperform the monetary inflation rate. So if you're getting paid more than 7%, which is about the US dollar debasement rate over a 100 years, then you're going to get wealthier. If you're getting paid less than 7% on your investments, you're getting poorer. If you're looking for something, if you want to outperform dramatically, there are different ways to do it. One way to do it is digital capital. You can buy Bitcoin. It's about 40% ARR. It's like getting on a roller coaster, but people have made more than a trillion dollars on that roller coaster over the past five years. So, it's been a very big wealth generator for crypto investors. Another thing you can do is you can buy digital credit. I mean, I wouldn't hold my money in a bank that pays me 0%. That's not very compelling. I think if you put your money in a money market and you'll get 200 basis points after tax, it's not very compelling either. 2% is not going to get you anywhere. So, I would look at digital credit, or some digital credit strategy if you want to compound your wealth in a comfortable fashion.

I grew up in an Air Force family. My father was a career non-commissioned officer, chief master sergeant. I lived on military bases my entire life. I lived in Japan. I lived in New Zealand. I lived in Nebraska. I was born in Lincoln, Nebraska, dead center of the United States. I lived in Florida. I kind of went to high school in Ohio. I was first in my high school class. I got a scholarship from the United States Air Force to go to MIT. I couldn't afford to go to college if I didn't have the scholarship. So I appreciate that the United States government financed my education. I went to MIT. I got a degree in aerospace engineering. Studied spaceship design. I also studied the history of science. I was very interested in computer simulation. I got a job for a couple of years after I left MIT as a consultant. I started my own company MicroStrategy. We took it public as I was saying about eight years after we started it. We became the world leader in business intelligence software. We sold software to help corporations think better everywhere in the world. You wouldn't have heard of us because it was kind of an enterprise offering, but we got to be about a billion dollar company doing that. With about 2,000 employees. And then in 2020 when COVID hit, when the lockdowns hit, we became very frustrated and desperate because we thought that our business would eventually be amalgamated or bought by or overrun by Microsoft and we didn't find a way through. And because of our frustration and desperation, we started looking for a way out of the box. We discovered Bitcoin. We bought $250 million of Bitcoin. Then we bought another 250 million and then we raised a billion and then two billion and then eventually we bought $62 billion of Bitcoin and we bridged the enterprise, the traditional Wall Street markets of equity and bonds and credit instruments with the crypto economy and we became the world's biggest Bitcoin proxy. I think right now about 100 million people are beneficiaries of MSTR common stock and they kind of got their Bitcoin investment exposure through MSTR common. We became the biggest issuer of bonds of convertible bonds in the world. Then when we outgrew that market, we became an issuer of preferred. We became the biggest issuer of equity in the United States. And then we became the biggest issuer of preferred equity in the United States. So I, you know, I would say I'm an innovator. I've always wanted to make a constructive, you know, contribution. I didn't want to be stuck in a box. You know, I didn't want to hit a dead end. And I've tried lots of things. Some of them worked, some of them didn't work. But ultimately, you know, when we discovered Bitcoin, we found a solution to our problem. I call Bitcoin hope. Bitcoin is hope and I think we found a solution to billions of other people's problems. And so today I'm a very enthusiastic advocate of Bitcoin, a very enthusiastic advocate of digital assets, digital technology, digital transformation, digital intelligence. I used AI in order to create these digital credit instruments. And I'm kind of on a mission to advocate and educate the world on digital assets and how they can empower everyone everywhere to live a better life.

That was my life's work for 30 years before Bitcoin I invented and designed it and we created version after version and we sold it everywhere in the world. I'm probably circle I used to circle the world every six months I would fly to 25 different cities and we would meet with everyone and it was a good business it still is by the way we still operate it it's a profitable business it's just not a hyper growth business it's very hard to grow 20 or 30% a year when you compete against Microsoft and they have PowerBI every customer on earth is their customer they can bundle your product into their product or they can create features and I think a lot of people discovered it like Zoom discovered it and Slack discovered it and the like and so it is what it is. We all have to find a way through you know and overcome our challenges.

Well, I guess two things. One, my parents wanted me to be well read. And so when I was a child in first grade, they offered me a dime, 10 cents for every book I read. And I had a comic book addiction. And it cost me 25 cents to buy a comic book. And I could not buy comic books unless I actually got money. And so I discovered that if I read books quick enough, I could generate enough money to buy a comic book. And I think one summer I read like a hundred books. The summer I would go to the library and I'd get 10 books and I would just spend all my time reading. And when I was reading I discovered science fiction and I discovered Robert Heinlein and Isaac Asimov and Arthur Clarke and I became very inspired. I mean the same authors that inspire Elon Musk and they inspire Jeff Bezos and one of Heinlein's books Have Space Suit Will Travel which I think I read in third grade.

Third grade you're like nine years old.

So I read it in third grade. I'm 9 years old and the hero is he wins a competition and he gets a beat up spacesuit and he has to fix it. So he fixes his beat up spacesuit and he's standing outside in his backyard and he starts squawking to the heavens and then he gets an answer and another alien spaceship lands in his backyard, picks him up and says, 'We have to run. You know, we're being attacked by the bug-eyed monsters.' And he gets hauled across the universe. He goes to alien worlds. He eventually has to advocate for the human race against the bug-eyed monsters. And he saves the entire human race with his virtue and his hard work. And then when he comes back to the earth, having saved the world from the bug-eyed monsters, his reward is a full tuition scholarship to MIT, the best tech school in the United States. And I was a very impressionable kid. If you're an impressionable kid at that age, you know, if the idea is MIT was where you go, if you're gallivanting across the universe and if you save the world from bug-eyed monsters and I figured it was good enough for him, it's good enough for me. I'm going to go to MIT. I'm going to design spaceships. So, I kind of got this idea, this inspiration to engineer things when I was young from the books I read. And then I think I would also give half credit you know you got to give credit to your mother because my mother thought you know I remember when I was my first job was I'm a paper boy. I deliver papers you know it used to be people actually bought papers and someone had to deliver the paper and they were very heavy you know before the digital revolution. So you get up at 6:00 in the morning and you walk along with like 40 pounds of paper and you deliver the paper to every door and you get paid like $162 like nothing, right? So of course it's kids that do that. So that was the job that a kid could get. So I got that job and there's competition for the best paper boy in Dayton, Ohio. And my mother thought I should enter that competition and you know I entered it and she told me I was going to be the best thing ever and I was gonna conquer the world and I think I ended up number two in the competition. Not number one but best would be the one who delivers the most paper. You know you had to put together this book of academic achievement and musical achievement and character and community service and they're all these things. And so I can imagine my mother is grooming her son to be the greatest paper boy in Dayton, Ohio. And she's telling me, whispering, 'You're going to do great things. You know, you're going to conquer the world.' And I kind of had got this idea in my head that I guess I was expected to be successful. And looking back on it I realized she really had no reason to think that I was going to be exceptional at that age but she imbued it in my head and she programmed me and you know whatever your parents tell you you can be or what you should be you start believing and so I guess my parents believed in me I had inspirational figures and I was inspired by literature and that led me to think yeah I do. I can do things and I'm going to do things.

Well, you know, I got older and I realized that, you know, the world's pretty complicated place and there's thousands of challenges to the world. And I would say today what I realize is you should choose the one contribution you can make. Like there's a hundred things not perfect about the world. I'm particularly interested in fixing the money, right? And so I'm thinking, I can't fix every other problem. A lot of health problems, political problems, religious challenges, geopolitical challenges. You know, we'd all like to fly, you know, teleport and live forever. And someone else will work on those issues. I think that if you're lucky enough to be put on Earth with a mission and you feel like you can make a contribution, do one thing, you should laser like focus on the one thing. And humility dictates that if you put all of your life energy, all of your focus on making a contribution, doing one thing, become the expert in the world on the one thing, and you help enough people, that will be enough. And you should be happy and satisfied that you're able to make a contribution. If you go to my X profile, you see I've got laser eyes. And the meme is, you know, there's something you can do if you're going to be a good professional baseball player. It's enough to be a good baseball player. You don't have to be the world's best soccer player, basketball player, gambler, politician, actor, and singer. Right? And I think when people's ego get too wide and their ambition gets too broad, they think I did one thing and I'm making a contribution. I'm good at one thing. That means I can do nine other things and I should. And my phrase I leave you with is just because you can do a thing doesn't mean you should do a thing.

Yeah. In my 30s. In your 20s, you know, you're in business. You're first you're like, I'd like a job, right? And they're like, okay, I got a job. I'd like a good job. And you're like, okay, I'd like to get paid more. And then you think, I don't want a job working for someone else. I want to work for myself. And then you think I want to start a company and then you think well I wanted to be a good company now I wanted to grow and so at some point you go through this passage and in my life by my early 30s I had a company that was successful we had a good product we came public and at that point you start thinking well what's the next hill to climb and so after I did that I created a second product a third product another company I created alarm.com I created strategy.com. Then I created alert.com. Then I created emma.com. Then I created wisdom.com. Then I created usher.com. And the short of it is I tried to launch 10 other businesses because I had 10 other ideas.

Public company worth a billion dollars, you know, making 50 million a year or something. Thousands of employees. And so after I'd done that, I could have focused 150% of my energy on cultivating that one business. Instead, I thought, well, I'll just launch this next thing. Alarm.com, by the way, is a public company today. A multi-billion dollar public company. I launched it, then we spun it off, and what I discovered is I can't manage the two, and I would fuck its growth unless I let go of it. So, it went off on its own. I created a business angel.com. We sold it for about $100 million, but we couldn't grow it. So I had some singles. I had some doubles. I had some strikeouts. I launched some businesses that just did not work, right? And I kept thinking, well, I'm just going to launch, you know, I'm the guy that's going to create 10 businesses and they're all going to be successful, you know? And there are a few people that have done it, right? Elon Musk has done it. Like the problem is, okay, the human race has one Elon Musk that did SpaceX, Starlink, and Tesla and X, but then again, there's like four billion other alpha males in the human race and 8 billion other people and they didn't do that. And so sometimes you learn the wrong lesson from the most famous successful person. But the bottom line is here's a theme I see a lot of times. Entrepreneurs struggle in their 20s and then their 30s or maybe their 40s. They get that first big dose of success and then very often they think well now I've done this. I'm going to do six other things and they go off and they start doing other things. And the problem is you dilute your focus. You get distracted and then you realize that it's kind of like the existing business is difficult and you know all of the challenges and it's painful to work on it. So you want to imagine you want to create a new business because when you're launching the new thing it's not difficult. It's aspirational. It's like you're a father and you have a 25-year-old son and you're struggling and he's struggling and you're like okay well my son's difficult. I'm going to have another son. My three-year-old son will achieve everything that my older son did not achieve. Well the three-year-old son's 18 years from disappointing you know right? I mean, the truth is you're still the father, right? You're the common element. So, if you have three grown kids and two young kids, the right thing to do is to fight really hard to work on those relationship with all your children. And the entrepreneurial mistake is I have a successful business now. It's getting hard. I'm just going to launch another business, reboot, start from scratch. Now, I have no customers, no competitors, no problems. I just imagine it will be better and of course the imaginary future business is always more fun than struggling with the existing mature business. So I would say in my 30s I expanded and mid 30s to mid 40s and then we did all these things and most of them they didn't end up being more none of them were more successful than the original MicroStrategy. So I get to 2020 and I'm back to the original business and we all we spent eight years working on the original business to make it better and refine it and make it more efficient and we do a thousand things and work thousands and thousands of man years but ultimately at that point you've got this global digital software monopoly that you're competing against and it's very challenging. So I think I had been humbled by the time I was 55. You know, it's like 35 you can do anything. 45 it's not quite working. I'm just going to go back and do the one thing. 55 you're like gosh, I wish I'd focused more when I was 35 and then I got the Bitcoin thing and all this and here's the great irony. I had a billion-dollar idea in my 20s and we realized it with MicroStrategy. Then I had 10 other ideas that I thought would work and they didn't work. And then when I was 55, we discovered Bitcoin and that was somebody else's billion-dollar idea. That was Satoshi. So then I took someone else's idea, not my idea. I humbled myself and I absorbed the crypto community and the ethos of Bitcoin. And then when we plugged that into our company, that became another billion-dollar idea. And then we found And then what we had was a third billion dollar idea with convertible bonds and a fourth billion dollar idea with equity registrations. And then we get to 2025 and we had AI and we had digital capital. So digital intelligence and digital capital. And in 2025, we launched a billion-dollar IPO with Strike in January. Launched another billion dollar IPO with Strife. Two months later, launched a third billion dollar IPO. Two months after that with Stride, launched another IPO with Stretch, which became two half billion. And now it's 8 billion. And so in that one year, it's like billion dollar billion dollar billion dollar billion. All of a sudden like five or six billion dollar ideas are coming like this. After I had got to the end of my career been humbled and realized that you can't do it by yourself. You can't lift yourself with your ego. You have to humbly submit yourself to the world and you have to say, how do I latch on to some other energy and the crypto community, the Bitcoin network, the digital transformation of assets and capital. And then when you put your ego second and you embrace what's new, digital capital, digital assets, digital intelligence, now you can actually do things. And of course, we're doing more interesting things in the last 12 months than I did in my entire career. And so I guess I'm a late bloomer. I'm like the Colonel Sanders of crypto. But it's okay. It's okay. It's at least I found a mission at some point in my life.

I tell it to a lot of people, but believe me, most just they nod and they're like, 'Yes, yes.' It's like when I was 34, people older and wiser gave me advice which I just promptly ignored. It's very difficult, but the truth is it is the best advice I can give you, which is if you've got something that's working, focus.

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's 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 algae right and so the time constant or the life cycle in dynamic systems how long does it take for deer or wolves to breed how long does it take 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 in MIT a mathematical model of a Renaissance Italian city state where I actually created a computer simulation of Machiavelli's discourses and the discourses describes the dynamics of government when you have a judiciary branch, a legislative branch and an executive branch and 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 that was interesting to me. It 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. It's like and he checks you in 12 weeks and fires you if you haven't got cost down and the ratings up in 12 weeks. It's hopeless. 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. And 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 in 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.