“People Have No Idea What's About To Hit Bitcoin" - Michael Saylor Bitcoin Interview

A concept that Nicholas Taleb popularized, he called it the Lindy effect. And he said that if a restaurant had been around in New York City for a decade, it's likely to be around for a decade more. If it's been around for 50 years, it'll be around for 50 years more. So, when you've seen a business do its thing for a year, then a skeptical investor is like, well, maybe if it's been around a year, we're just going to assume it'll go on for one more year, and we'll be kind of skeptical. And once you understand the Lindy effect, that products get exponentially more valuable as they get Lindy-er, as they get longer-lived, then what you just see is a bunch of rational actors in the capital market absorbing information, taking risk, and allocating assets based upon all of the information and the durability of the business model over time.

You know, I think we enjoy keeping everybody guessing. It definitely makes X a lot more interesting. Our view is business as usual here. We're kind of matter-of-fact about this. The goal of the company is to drive Bitcoin per share and to increase its Bitcoin and increase the enterprise value continuously forever. We'll make decisions about how we fund our liabilities week by week, day by day. Sometimes we make them minute by minute to tell you the truth. We set algorithms where we're looking at what is most long-term advantageous to the company. Are we managing our credit risk? Are we creating Bitcoin per share? And are we best off to pay a liability with cash or to pay a liability by issuing equity or to pay a liability by issuing credit or to pay a liability by selling Bitcoin? We've done a lot of multivariate models and in all the models what we find over the long term is that by far the best thing for the company is to engage in a mixture of those four instruments. Any model that we put together that's limited only to equity or only to credit or only to Bitcoin always underperforms. So, ultimately, the way to think of it is seven years out we would like to have maximized our Bitcoin per share. And what is it that we should be doing now that's going to maximize and optimize the company's performance so that we maxed out Bitcoin per share seven years from now. And I think it's not unlikely that we'll sell some Bitcoin between now and the end of the year. I don't know how much. We still consider these things. But it's also likely that we'll sell a mixture of equity, a mixture of credit, you know, we'll manage our USD, our cash positions. And where we do it in a very thoughtful, programmatic fashion where we're running our multivariate models and we're literally running them. We're making trading decisions to say every minute might be an understatement. We oftentimes make trading decisions every second and we'll continue to do that.

I'm really excited and impressed by what Strive has accomplished. I'm thrilled to see them bringing a daily dividend digital credit instrument to market. I'm also impressed at how rapidly they did it. I think it's quite an extraordinary thing for the space. I believe it's actually great for them. It's great for the digital credit space. It's great for Bitcoin. It's great for us that they're able to bring that instrument to market. It's obviously working very, very well right now. They've been sitting around par for the last week or so. And so that it's working in the market. I don't feel like we need to steal their thunder. I actually wouldn't mind seeing them get 10x bigger than they are right now as they actually use Saylor as the engine to drive growth at Strive. And you know, I think we're all in a cooperative relationship there. We're a Delaware company, they're a Nevada company. We have different corporate governance requirements than they have. We're also 100x bigger in terms of scale. And so I think it behooves us to move forward deliberately. And right now for us, going from monthly to semi-monthly is a bold and I thought think a very progressive step. I think that that will play out over the course of the next four weeks. We have a shareholder vote coming up in early June. I think that will dramatically improve the performance of STRC. Once we've gotten to semi-monthly, then I think the market will have a daily credit instrument from Strive and a semi-monthly credit instrument from Strategy. I think it's quite possible that the market will benefit by having the two different frequencies. I'm humble enough to know what I don't know. And I'm looking forward to seeing how the market trades STRC, how it trades XCAD. If both of them reach their full potential, that's great. We'll watch that performance and over time, if it turns out that there's overwhelming demand from our own shareholders to go to daily, then that's something we'll consider. But I don't really think that we need to copy what they've done. I almost would rather have them be the only instrument in the world doing that because that's insanely good publicity for them, insanely good publicity for digital credit. And for those people that absolutely need that, that's going to be a great market expanding innovation.

I think the first thing that we do is make sure that we illustrate to the equity holders, to the common shareholders that we can increase Bitcoin per share. So, Bitcoin BTC yield last year was 20% plus. BTC yield this year so far is 12% plus. So, I think putting a healthy BTC yield or an increase Bitcoin per share this year, last year, and show them how we're going to do it going forward. I think that's the first thing. You're demonstrating that the business model can generate more Bitcoin per share. Once you've done that, then it's an education process to go and educate the equity capital markets. If the company hypothetically can generate 10% BTC yield a year, you can double Bitcoin per share over 7 years, and that's worth a premium to NAV. But if the company can generate 20% BTC yield, you can double Bitcoin per share in 3 years. That's a much faster growth rate. That's worth a higher premium to NAV. You know, when the market sees BTC yield, right? That's sort of the dividend yield for someone on the Bitcoin standard. So if you're Bitcoin maxi on the Bitcoin standard, you're saying, 'Okay, well, 20% would be a 20% dividend yield.' And then the question becomes, 'Okay, have you embraced the Bitcoin standard?' If not, you don't recognize that as being valuable at all, right? But if yes, then yeah, that's 20%. Now, the second question is, 'How durable is the business model?' So if I thought that would last for 10 years, I might put a P/E of 10 on it, and I might say, 'I'm going to multiply 10 * 20 and give you a 200% premium to your Bitcoin holdings.' That works out to an MNAV of three. If on the other hand, I thought that was going on for 20 years, right? If I was really very confident, the P/E might stretch out further. You could say, 'When you see a business model that the equity capital markets are hyper enthusiastic about,' I'll give you an example. Apple, when people thought the iPhone was going to get commoditized, it got a P/E of eight. And then, when people thought everybody's going to use the iPhone, it's the best thing ever, the P/E went to 30. And so, when the market embraces the business model, the P/E expands. And right now, we're in embryonic state. I mean, the business model's dynamically evolving. It was convertible bonds about a year ago, a year and a half ago, and now it's digital credit, and digital credit is 10 months old, and for the last 3 months, the digital credit business last month was a $24 billion annualized run rate. And 12 months ago, it was a $0 annualized run rate. So, we have to go out, and we have to communicate the power of stretch digital credit to create BTC yield. And then, the question becomes, 'Explain the stretch thing again. How much of this can you sell? How does it work with the Bitcoin? How does it work with the capital?' And now, an equity investor, they have to consider the business model fit to consider how durable it is, and based upon that, they'll put a multiple on the key metrics. So, our plan to drive MNAV to three, four, five, or six is kind of simple. First, make sure that the business can generate Bitcoin per share, the more the better, right? The faster we generate Bitcoin per share, the higher the BTC yield, the higher the premium that is warranted. But second, we need to build the machine so that we can keep doing this consistently over the next decade. So, it can't be a one-and-done. And so, first, you build the machine, then you make the machine capable of running the marathon and running hard for the next decade. And then third, you have to go communicate that to the marketplace and explain it to them. They're rational investors. When they understand how you create shareholder value, and then when they understand the risks associated and the unique capabilities the company has, then they will decide, 'Yeah, I'm going to put a PE of five on that.' At a five, then they give you 100% premium. 'Maybe I'll give you a 10.' Maybe that's a 200% premium. 'Maybe I'll give you a 20.' Right? And that's a 400% premium. And then, of course, we got to perform. And so, I think we're simultaneously doing things: make the credit better, sell the credit, manage the balance sheet, strip the credit risk, and then we're communicating things, and the market is digesting and absorbing a revolutionary new business model. Digital capital is a new asset class. Digital credit is a new asset class. Digital equity is a new asset class supported by the digital treasury model. And a treasury company is like a reserve asset bank. You know, like the Bank of England was founded to buy a bunch of gold and issue credit against the gold 300, 400 years ago, whatever, 300 years ago. And so, here we are. We're creating a Bitcoin reserve bank of sorts, and we're buying Bitcoin, issuing credit against it. You can't blame an equity investor for looking at it and saying, 'Gosh, this looks new and different and strange, and I've never seen this before.' And there's a concept that Nicholas Taleb popularized. He called it the Lindy effect. And he said that if a restaurant had been around in New York City for a decade, it's likely to be around for a decade more. It has been around for 50 years, it'll be around for 50 years more. So, when you've seen a business do its thing for a year, then a skeptical investor is like, well, maybe if it's been around a year, we're just going to assume it'll go on for 1 more year and we'll be kind of skeptical. And once you understand the Lindy effect, that products get exponentially more valuable as they get Lindy-er, as they get longer lived, then what you just see is a bunch of rational actors in the capital market absorbing information, taking risk, and allocating assets based upon all of the information and the durability of the business model over time.