Pomp Podcast #385: Michael Saylor On Buying Bitcoin With His Balance Sheet

Happy to be here. Let's start.

Okay. I grew up in an Air Force family, lived on military bases my entire life. I went to MIT on an Air Force scholarship. I got a degree in astronautical engineering, studied spaceship design while I was there. I got another degree in the history of science. I studied the structure of scientific revolutions and paradigm shifts, and became very fascinated with how new technologies get introduced. I learned to fly in the Air Force, but I never went active duty because just as I was about to graduate, the Cold War ended, the Reagan Star Wars buildup won it. One day my commanding officer walked into the room and said, 'We paid for your education, you're on the hook for five years active duty, but if you want to join the Reserve you can do that. If you want to go active duty, you're going to wait two years before you get called up.' The choice would be to get paid three times as much in the civilian world or serve in the Reserve. This was an easier choice for me because I was going to be a pilot, and in my final semester I was diagnosed mistakenly with a benign heart murmur, and it disqualified me from flying combat jets. My hopes dashed of being a fighter pilot, I decided I did not want to wait around, so I joined the Air Force Reserve and became a civilian unexpectedly in the final month of my undergraduate career. I thought I wanted to be a professor. I got into a PhD program but I had no money, so I decided I would go work for a year, then apply for a fellowship, and then go back and get my PhD. I worked for the first six months, the company I worked for blew up. I ended up working at DuPont, building computer simulations for DuPont. Around the 18-month point I tendered my resignation to go back to MIT. I was building computer simulations to predict the return on billion-dollar capital investments in the petrochemical industry, and the computer model was going to be used to justify a $1.5 billion investment. The executive that wanted the money, I'm sure he said to his staffers, 'Tell the kid we need him to finish the job.' I was 24, living in an apartment with milk crates for bookshelves, spending $700 a month. I knew I didn't want to stay and be a corporate bureaucrat, so I said no. The executive said, 'Give whatever he wants.' I said, 'When I was in high school I wanted to be a rock and roll star, and that was dashed. When I was in college I wanted to be a fighter pilot astronaut, and those hopes were dashed. My third idea was to be a professor, and that's what I'm going to go do. There's only one last thing on my checklist: I'd like to be a CEO of my own company. So if you want me to stay, you're going to have to let me start my company. I want a quarter million dollars in cash, a $2.5 million contract, let me hire ten people from DuPont, give me free office space and computer equipment for the first two or three years.' They said, 'We can't give you the money up front, you're just a 24-year-old.' I said, 'You got to, because this is the only time this negotiating strategy ever works. You got to give me the money because I have no money.' They went back to their boss and they did this deal that you would never ever do, but I just happened to be the one guy on the East Coast that could make their computer program work, and the guy was 12 weeks from getting a billion-dollar check from a mega corporation. So they gave me the money. I thought, 'Holy crap, I have $250,000. This is enough capital to last me for seven years.' So at age 24, I started MicroStrategy with the thought that I didn't want to work for anybody else, and when it failed I would go back to college. It never failed. In the first year we did 10 people, then 20, then we were $5 million, then $10 million, then $20 million, then $40 million, then $80 million. We came to the market in the '96, '97 time frame, the dot-com revolution was going crazy, everybody was clamoring, 'You got to go public.' So we came public in 1998, and then there was no going back. I got on the roller coaster. That's how I started MicroStrategy. I didn't mean to. I kind of fell off the turnip truck and hit my head on a pot of gold, and I'll keep it.

Here's an irony: I never got that PhD. I'm just a silly MIT undergraduate. I remember I was competing in my early years with this professor from MIT who had umpteen degrees and was so much more educated. I would be running a million-dollar company, he's got a million-dollar company. He said, 'What are you doing?' I said, 'I'm building these computer simulations on a Macintosh.' He said, 'All the experts say the Macintosh is going to die, that's a bad idea.' Eventually I ported it to Windows. The next time I saw him, the company's $5 million and we're working on Windows. He goes, 'What are you doing?' I said, 'I'm building executive information systems on Windows machines using this thing called Wings, this new spreadsheet with a programming language.' He said, 'Experts say Wings will never work, Excel's going to dominate the spreadsheet market.' He was still running the million-dollar consulting company giving advice. I said okay. It turns out he was right, and in a year we flipped the company and rebuilt the product on Visual Basic, and we doubled again. He said, 'What are you doing?' I said, 'Now we're doing this executive information decision support system.' He goes, 'That won't work on Visual Basic, you're going to use C++.' He stayed at $1 million and we were like $20 million. Then we started building decision support systems on relational databases. 'That'll never work, that's too slow.' It kind of worked until we got to $40 million. Then along came the web, and we flipped it again, put a web interface on it, and that got us to $80 million. Every two or three years there's something new that was simultaneously an existential threat that's going to kill us, or an opportunity if we embrace it. We're always inventing the next thing. Eventually we found ourselves in the business intelligence business. We created business intelligence, web intelligence, relational intelligence. I had three big competitors: Business Objects, Cognos, Crystal Reports. We got to 2007, 2008, and conventional wisdom was they all had to sell out. All three of them sold: one to Oracle, one to SAP, one to IBM. We were still standing. We accrued some more customers and kept motoring on. Then along came the iPhone. The first iPhone in 2007 was kind of a toy, had no cut and paste, no app store. In 2009, the iPhone actually started looking pretty interesting. I became very enamored with the mobile wave. What happens when software leaps off of a PC from under your desk? The computers were rocks under your desk, ugly, with lots of cables coming out of them. I thought, what if the software is running in your hand, and what if that phone's in your pocket? It's like software going from solid state, a block of ice, to liquid, a laptop, and then to vapor state. The vapor state was on the phone. Instead of going to the office to sit down at a desk and run your software, maybe you have the software at your kid's soccer game on a Saturday afternoon. We started doing mobile stuff and implemented mobile intelligence, and that took us to the next level. Along the way, I was always a tech inventor at heart, an entrepreneur. Back in '96 when the internet hit, you needed an email domain, so we bought microstrategy.com. But I was too lazy, so I thought, why do I have to type microstrategy.com? Why don't we buy strategy.com? We bought it for like $50,000. Then I thought, why don't we just start buying words? So we bought wisdom.com, usher.com. By the way, do you know who owns 'hope' in the world? I own hope.com. I bought speaker, alert, angel, alarm, voice. My thinking was, there are all these search engines. If you go online and search for 'voice', you get 2 billion hits on Google. If you want to launch a company named 'Voice' and you own voice.com, you go to the top of the list. If 5 billion people go to school and learn how to spell 'alert' or 'emma', isn't that good for a brand? I started thinking about branding. I launched a business, alarm.com. We eventually spun it off. It's a multi-billion dollar publicly traded company on the Nasdaq today. We made some money, not billions, but a lot of money, like $30-40 million. Then we launched another company called Angel. Angel was an early version of Siri, an interactive voice response from any telephone, like an angel on your shoulder. We eventually sold that for about $100-120 million. What I learned was it's easier to invent things. You can invent something, you can even get it to scale. But can you maintain it and can you commercialize it? A lot of people find you can buy that boat, but can you afford to maintain that boat? That's harder. Are you really going to enjoy that boat? The analogy in business is just because you can buy it doesn't mean you can make it competitive, and even if it's competitive doesn't mean you can make a profit from it. Eventually I learned you can't keep inventing stuff)Skip. We streamlined and sold those off. I got to 2020. In 2019, I sold voice.com. I'll tell you that story in a bit. I got to 2020 and we had a portfolio of domain names sitting there. I appreciated digital scarcity. I thought these are unique in the universe, only one person can own the word. By the way, you know who owns michael.com? Please tell me it's you. And you know who's lazy? I thought, what if someone just wants to type in 'mike' about that too? I'm waiting for Michael Jordan to call me up. Why wouldn't you own michael.com?

Two million bucks. Let's call it low single-digit seven figures, a million, two million, three million, back in the '90s. I just sat on them because I figured the English language is going to be around for a while.

We made like $35 million in the alarm transaction and more than $100 million in the angel transaction. But we had commercialized businesses with them, so we sold the domain and the business with them as part of it. Voice was the first naked domain sale that was material. We did that one for $30 million, and we just sold the domain, nothing else.

At some point I said to my marketing people, 'Why don't you make a list of all of our premium domains?' My definition of a premium domain is a domain where if you hit the Google search you will get 500 million hits or a billion or 5 billion hits when you typed it in the search engine. They're all just ideas like wisdom and hope. I said, 'Why don't you make a list of them and send them out to everybody we know and see if they're interested in them?' We sent out the letter and we heard back nothing. Maybe I got like two venture capitalists called me, but nothing ever went anywhere. I was like, 'Forget that, go back running my own business.' With voice, this is how it goes down. I'm sitting at my desk one day and one of my junior 20-something business development reps walks in and goes, 'Hey, some broker called us and they offered us like $150,000 for this domain, voice.' I looked at it and I'm like, 'Look, I've been waiting for 20 stinking years. $150,000 isn't going to do much for me. Tell them no.' Nothing goes on. Then they come back, they offered us $300,000. I said, 'Tell them no, don't bother me.' I waited. The next day they come back and they doubled it to $600,000. I said, 'Nope, still not interested. Tell them it's going to have to be something north of $10 million. I'm just not interested.' They offered $1.2 million, then it went to $3 million, then to $6 million. When it got to $10 million, I've got all these other people lobbying me, sales people sitting like jackals, 'You have to sell this, you have to sell this.' Selling intangible assets like anything, artwork, it all comes down to how much are they worth to you. If you needed the $10 million, you would have taken the $10 million. But at this point, I have $500 million of cash in the bank. I love my things. I would rather own it and not have the $10 million than sell it for that. I said no. They went up to $22 million. I said, 'I'll sell it for $30 million.' The only price I ever put on the table was $30 million. I didn't sell for $30 million because I thought that's what it was worth. I think the word 'voice' in the English language is worth $100 million. I've seen people drop $100 million on an ad campaign, and you want to drop $100 million on an ad campaign with a voice.net type domain? I thought it was worth more, but I needed to create some kind of market comp for it, so we'll do $30 million. I told them $30 million. They said they'll give you $22 million. I said no, but tell them I'll talk to them. Around $22 million, I agreed to get on the phone. I'm talking to a broker and a lawyer. All through this, I'm like, 'Who's the buyer? Who's the buyer?' Not some somebody. If someone had said, 'We're a startup and we've got $12 million in the bank and we'll give you all of our cash,' maybe they might have swayed me. But I just had a whale on the other end of the line that wouldn't identify themselves. I thought, 'Okay, well that's the case, I'm just going to wait until they hit my bid.' If you had an acre in Central Park and someone wanted to buy it from you, the price is the price. You would wait. I got another decade, I'm not going anywhere. Somebody's going to eventually want to commercialize 'voice'. Eventually they got on the phone. I'm talking to a broker but I hear a click click and there's other people eavesdropping on the line. I'm kind of just talking to myself. They said, 'We're authorized to go to $22 or $23 million.' I said, 'Go to the Google search engine and type in 'voice' right now. You'll notice it's more popular than WhatsApp with a billion users. It's a better brand than Oracle or SAP or the hundred billion dollar plus companies. This is how I value it. This is like my daughter. I'll marry her off, but only to a man that's going to treat her better than I will treat her. If you guys really value this, give me the $30 million. Otherwise, I'm keeping it.' At some point they came up to $30 million.

No, I never knew who it was. I sold it in the blind, basically saying no from $150,000 up to $30 million. Then finally they did it. I still didn't know who it was until after the transaction closed. Then I hear it's some crypto company, and that's the end of it for me. That's my introduction to crypto.

It was amusing.

Can I tell you the truth? I got an iPhone back in the day. I installed Twitter on it and it used to be really fun. I used to really enjoy reading the news and tweeting stuff. There are certain people on Twitter that still seem to enjoy just tweeting out whatever the heck they want. I was in that stage and I had a lot of opinions. I tweeted a thousand things. I forgot all the things I tweeted. Eventually I realized it's probably better for my communication effectiveness if I limit my tweeting to stay on brand. I have a company, MicroStrategy. If I have something intelligent to say about MicroStrategy, I say it. I have a non-profit foundation, the Saylor Academy, that gives away free education to hundreds of thousands of people. We're giving away a free college degree. If I have something that I can do to help them, I say it. Whenever anybody else does anything that I might have an opinion on, I keep my mouth shut now because I've realized it's just an opinion and I've lived long enough to be wrong on a lot of things. Coming back to that specific tweet, I really am ashamed to say I didn't know I tweeted it until the day that I tweeted that I bought $250 million worth of Bitcoin. Then I discovered the hive mind, crypto Twitter consciousness. All of a sudden they all went through all my tweets, they found it, they reminded me of it, they compared it. I'm like, 'Oh my god, I literally forgot I ever said that.' I took it as kind of ribbing. I didn't get all worked up. I'm like, 'You're right, I was wrong. What an idiot I was. I wish I could go back and do it again.'

I would not say it's a bet-the-company decision. We looked at it. Before I made that decision, before I was able to convince anybody on the board or the executive team to agree that was the right idea, we all needed to collectively be of the opinion that we were going to be generating cash at infinitum. There's a journey that we went through corporately over the past year and a journey that Bitcoin went through over the last seven years. If we focus upon our journey, we had $500-600 million in cash. We were buying our stock back a bit, then we were thinking maybe we'll need to buy another company, need it for a rainy day, or maybe something really bad will happen and we'll really need the money. One of my heroes is Steve Jobs. He had a near bankruptcy experience, and I did too. I lived to see my stock go from $333 a share to 42 cents.

It's not something I like to brag about because it's not something you want to be proud of, but I will tell you that two of my bragging rights are: I am pretty much the longest-lived public company CEO in my industry because I've been a public company CEO for 22 years. The second thing is I'm pretty sure I'm the only public company CEO that ever presided over a 99.8% drop in the stock price and kept his job.

It's another story. I learned a lot of lessons. The short lesson there is: don't run out of money, always have cash on the balance sheet, and don't spend more money than you're taking in. I feel like an idiot to give that advice to anybody, but it's still good advice. Let's fast forward back to 2020. We had the money. We were very conservative, no debt, ready for a rainy day, ready to seize the opportunity, buying our stock back. COVID hits, the pandemic hits. Our equities are in the tank. We're losing momentum. The first thing that happens in Q1 is all shock and awe. In Q2, the question is how does this impact my customers, our business, our product, our value proposition? Everybody gets impacted differently. If you're running a cruise line or a theater, it's different. In our case, we sell enterprise software that helps you think better. We sell business intelligence to lots of government agencies, massive banks, global 2000 companies. Even the ones that get impacted, like the national airline, they can't go out of business. That's our customer base. We realized our software kept working, demand was still there, everything is smooth. The great thing about software is you can ship it over the internet. All of our services went remote. Our value proposition is intact. The surprise for us is our productivity went through the roof and our cost structure compressed. All of a sudden, $20 million a year flying around in airplanes went away, $10 million worth of trade shows, $20 million worth of marketing things went away, but the customer demand didn't go away. We found we were much more efficient. Bottom line, we got that black swan event, but that black swan event actually kicked us into high gear productivity. On the P&L side, we realized we were going to generate more cash. There was no real rational business plan where I take $200 million and I spend it to make the business better. I can burn it, but I can't spend it to make the business better. Simultaneously, we got a gift from the Fed on the macroeconomic side. While we're trying to figure out what happens on the P&L, all of a sudden we see the long bond index goes up 22%. If you would ask me what's the investment that you do not want to make, I would never in a million years buy a 30-year bond that yielded 2% interest. Never ever. And yet that was a winner this year. If you bought a 30-year bond at 2% interest when the interest rates go to 1.2%, you've actually got a massive spike. Equities spiked, big tech spiked, bonds spiked. We looked at our cash and I had to listen to a litany of talking heads. Ray Dalio said cash is trash. Every podcaster that trolled Ray Dalio said cash is trash. I went to school at some point after I realized I had a problem. I listened to you describe the plight of the working man. I go to work, I get paid $500,000 a year, I save $50,000, I put it in my piggy bank, I have $500,000 in cash in the bank, I have kids and a future. Then all of a sudden I realize the cost of a college education is going up at 8% a year and my cash is yielding zero. The Pomp Podcast is telling me I'm crazy to work for dollars and save my cash. If you take the $500,000 in the plight of the lawyer with the two kids when I send them to Harvard, and the $500,000 of cash in the bank yielding zero, and now you multiply everything by a thousand, that's me. I have a $500 million company, we're making $50 million a year, I got thousands of people working as hard as they can possibly work, we're sacrificing right and left, we're squirreling our pennies away, putting it into the bank account. In 2019 and before, we worried about the unknowable and thought maybe we'll use it for something. I'm a bit older than you. I remember when you got 5% interest overnight on your money. It wasn't that long ago that the risk-free interest rate was 5% before the Great Financial Crisis. I'm like, 'I'm going to make $25-30 million a year on this.' I kept hoping and waiting for those good times to come back. I was the guy that when the 30-year T-bill started to go to 3.5%, I thought, 'Finally, they're going to go to 4%, then to 5%, and go back to normal.' Hope was dashed. It went the other way. Asset inflation goes through the roof. This entire conversation of inflation is really twisted because everybody talks about consumer prices, CPI. CPI inflation, we're not getting enough inflation. You're not getting inflation on YouTube, Netflix streaming videos, candy bars manufactured by robots in factories, or Domino's Pizza. You're getting inflation on everything you want. If you wanted an Ivy League education, a beachfront house in Miami, an apartment in New York, anything scarce, everything you want is going up 7%. That's asset inflation. If I want a bond that's going to yield $50,000 a year, it used to cost a million bucks. This year it cost $10 million. The cost of the asset good went up by 2%? No. I have a house in Miami Beach, a nice house built in the 1930s. I have the deed of sale for the house, $100,000 for that house in 1930. It's gone up in price by a factor of a hundred. No inflation? Kind of inflation, but it's asset inflation. I didn't really think about it until I got slugged in the face with the 2x4, which happened around March or April when Main Street shut down, the economy shut down, and bonds went through the roof. Municipal bonds went up while every city is bankrupt. Apple stock and every other public tech equity went up, the multiples blew out, and the economy went to the worst place I've seen in 30 years. At that point you start having a thought with yourself: what is the true inflation rate? We should probably coin a different term. If you looked at asset inflation on a good year for the last decade, it's 7% a year normal. This year you could make an argument it was 25%. If you look at the long bond index and these equities, you can make an argument that the asset inflation rate was between 25% and 30%. What does that mean to me? Here's how I felt. I felt like I had $500 million of cash in the bank safe, yielding 2-3%, ready for a rainy day. Then every month some banker sends me a note saying the interest went down, down, down. Now there is no interest. Then someone took my cash out of the bank and put it in the backyard on pallets. Then they open my back gate and every month someone comes along and starts burning 2% of the money. I started thinking, in 12 months, 25% of the money's going to be gone. What is the point of all this? What am I doing wrong? The answer is you can't hold cash. So what do you do with it?

When times are good, everybody's busy. If you're in love with the iPhone, the answer to everything is iPhone. If you're in love with your Apple Watch, Twitter, the answer is that. When times are good, everybody focuses on that and there's only limited time. I think I was closed to the possibility, it's just there's so many other things going on. When the COVID crisis hit, everybody got sent home and we all had to contemplate ideas that we had previously rejected and embrace ideas that were very foreign to us. How do I discover crypto? First, I have a mega, mega, mega problem. The mega problem is I have a lot of cash and I'm watching it melt away. I'm helped to realize I have a mega problem by this insane V recovery in the bond market and the equity market and all of the talking heads. After that, I have an opportunity: I've got a cash-generating business. Then I've got one more problem: the outside investment community. If you go to them and say, 'We're a great enterprise software company and we've got all this cash,' their answer is, 'We don't really value the cash.' They're smarter than I am. They knew before I knew that cash is trash and you're a fool to sit on the cash. If the natural asset inflation rate is 10%, it means that every time I generate $50 million in operating income, I burn $50 million in purchasing power on the cash. We're just running as hard as we can to stand still. We weren't getting any credit for the cash. We didn't need the cash. Ergo, we need to do something. What is the thing you're going to do? When we started working through it, what do you do if you have $500 million of cash you don't need? You can buy your own stock back. There's a limit to how fast you can do it. If you go into a market in a thinly traded stock and you're buying 20% of the float every day, that's going to take about four years. If your ice cube is melting 15-20% a year, you don't have four years. Inflation is going to do a better job. That didn't really make sense. We got kicked into high gear like everybody got kicked into high gear this year. If you didn't know how to use Zoom, you started.

On a Monday morning with one video conferencing technology we discarded it. I'm not going to say which one. We discarded it for another one by 11 a.m. By 2 p.m. we're using Zoom. By 4 p.m. the CEO sends out an edict: 'Zoom is now the corporate standard. Everyone will switch over to Zoom starting tomorrow.' That's how. And by the way, the same CEO that said 'I don't believe in remote work, you got to show up to the office or else you're not working for me' and I would have sworn up and down I hated remote work until the COVID crisis hit. Flip. And so that same idea happened with the balance sheet. They're all these strongly held views: 'You've got to be conservative, you've got to invest in cash and short-term T-bills and you don't contemplate anything else.' And then all of a sudden you contemplate other things. So I mean, you're an expert. You tell me, if you had 500 million dollars of cash right now, where would you invest it?

Okay. And so if you didn't know what you know but you were an intelligent person and you watched YouTube and you watched everything else, what would be your laundry list of assets to consider investing in?

Right. Okay, so let's take through them. Commercial real estate. How do you go buy 500 million dollars worth of commercial real estate at a fair price that's not an impaired asset by something happening in the economy right now? How many people want to sell you commercial real estate at a fair price right now that is not impaired? They all think it's still worth what it was worth in January. Okay, so that's kind of difficult. So what's my next thing? Go buy – I'm not so silly as to go buy like 20th century stock. Go buy Apple, Amazon, Facebook, Twitter. Oh, by the way, back in 2012 I wrote 'The Mobile Wave.' You know what I said in 'The Mobile Wave'? I said go buy Facebook, Amazon, Apple, Twitter. It was a good idea in 2012. If you had done it then, you would have made 10 times your money. Very good idea. Not the same idea this week, right? I mean, at this point, is Apple Computer going to go up by a factor of 10 from here? Right? Maybe it might double, it might be cut in half, but you're with the best equity in the world. You've got equal upside and downside.

And so when you started to look at this, did you look at real estate, precious metals, and bitcoin? Or what was on the menu, if you will, for evaluation?

I am completely oblivious to any previous opinion I had than the before. But I didn't follow bitcoin all through the 2017 Bitcoin Cash or any of the fireworks that were very colorful. I missed it all, right? So I show up with a clean slate in 2020. And I'm reading about this history. I'm looking at Andreas's videos and your videos and Dan Held's videos. I'm reading 'The Bitcoin Standard' by Saifedean and I'm reading Parker Lewis's essays. You got indoctrinated by the bitcoin community. You got hit with all the content. And all the maximalists? I'm seeing Max Keiser and I'm sorry, I'm like 'I'm starting to figure out there seems to be some interesting drama here.' But it's more entertaining for me. And here's the thing that really just kicks you over the edge: when you go to real bitcoin dominance and you look at bitcoin, then bitcoin cash, then the next one, you're always – okay, bitcoin is 92% of everything and the next competitor is 2% and then the next competitor is 1.5%. The number one knock on bitcoin is 'well maybe it's the MySpace to Facebook.' It's like: absolutely not. If you know anything about MySpace, you realize that MySpace was never worth more than a billion dollars. MySpace was 200 times smaller than bitcoin is right now. It was never that case. There's never an example of a 100 billion dollar monster digital network that was vanquished once it got to that dominant position. So all you got to do is see that chart. And then you think about the dynamic and the network effect and you're like 'this is already one. It's been tested.' And by the way, the hard forks, I think, are a big advantage. The fact that bitcoin went through it and we saw what happened and we saw that the community would defend bitcoin – that's what gives a person like me to invest hundreds of millions of dollars in bitcoin. I don't want to hear that you've got a new idea and you're upset over transaction fees and you would like to implement smart contracts so you got to change everything. I don't want to hear that. I want to hear that you're going to defend the network to the death against someone that's going to break it or compromise it in any way, shape, or form.

I started assigning them homework. And they all know you, so they've all watched a variety of your podcasts. They all know Andreas. They are all required to watch the debate between Erik Voorhees and Peter Schiff on gold versus fiat versus bitcoin – what is better money? And then a nonstop stream of essays on macroeconomics and bitcoin theory, and the litany of people you've interviewed. When Alden publishes her piece, it goes to my board. The bullish case for bitcoin goes to the board. All of those things. Between them, the general counsel, the CFO, and myself, we're all basically going down the rabbit hole and following that with a series of discussions. One-on-ones with everybody. Everybody goes off and does their own homework. We all come together with lots of group discussion. We all split. The CFO goes off to organize and start to consult with arrays of accountants. The general counsel goes off to consult with arrays of attorneys. We go off and consult with arrays of financial advisors. Then we consult with arrays of bankers. Then we come back together again, share, deliberate some more, and think very carefully about what is the appropriate and prudent way to begin to move forward with or affect the strategy here. All right. So the first purchase is 250 million dollars. You announced today that you did another 175 million, so you're now at 425 million dollars, which is almost all of that 500 million dollars of cash, or a good portion of it. Walk us through – I've got a ton of questions around what I'll call operationally investing hundreds of millions of dollars. How do you think about entering the market and trying not to move price? How do you think about OTC desks? Obviously for those listening, Michael and the team are not going on Coinbase and letting a 400 million dollar market order rip. So there are very thoughtful things that go into this. Let's talk first about how do you actually acquire this much bitcoin without moving price.

Before we get there, I'll make one more point. We had 500 million in cash. We wanted to buy our own stock back with it or put it into some asset like bitcoin. Our first step is to announce that we're thinking that through. Our second step is to announce a tender offer for our stock: 250 million. That took place the same day we announced that we bought the 250 million in bitcoin. Then we have a 20-day period where we wait for our shareholders to decide if they're going to tender and how much. When we got done, we actually bought 60 million dollars worth of our stock – that hit the wire in the last few days, too. Our real goal was to invest it all. So it was 250 in bitcoin, the tender ends up being 60 million or so, you're at like 310. And then you had another 175 million that you could play with and still keep some cash in the bank.

Now, regarding acquiring that much bitcoin: first of all, I can't give you exact blow-by-blow details because I've got security issues and the world is watching. But what I can do is describe to you, if you were running a company, how you should think about this. If you were in my position, you're going to audition a bunch of institutional grade exchanges, work through and look for institutional grade custodians. You look at all the security issues, all the technology issues, etc. You think about the team, build a relationship with them. And then, you're going to buy it in thousands or tens of thousands or 100,000 plus small transactions day and night, minute by minute, over the course of many, many days. It's not like we're going in – I'll sit and watch this happening. I've got a great team, excellent professionals. They are brilliant geniuses at what they do. But let me tell you, they've got great technology too. You got to have the right technology, the right team, and then you have to be very patient. Very, very patient. I'll watch people walk in on Monday morning and some dude just got up at 9:00 a.m. and decided to buy some bitcoin and the price spikes. Whenever I see that, I think 'that guy won't be in the market very long.' No one that really wanted to buy a lot of bitcoin would be so silly as to spike the price so hard. I can tell you this: we bought 425 million dollars worth of it and we never ran the price – not a dollar.

Yeah, it's pretty impressive. If I'm in the market, you wouldn't know that I'm trading against you because that's not how you get stuff done. Let the market come to you. So the good news is if you want to buy hundreds of millions or sell hundreds of millions, you can do it and not be seen. You can do it without moving the market materially or panicking anybody. But you have to have the right team, the right tools, and the right discipline. You can't be in a hurry.

Well, first of all, I think this is a year where every CEO is busy minding their own business. They've either got a business that has serious solvency issues or struggle, or they've got a business that's being digitally disrupted or twisted one way or the other, or they've got all sorts of employee care and feeding issues. So this is not the year where a lot of CEOs are sitting around shooting the breeze about what's happening this year. Everybody's all hands on deck, working hard. The people I do speak to though, I would say everybody has had a lot of their assumptions shaken this year. Assumptions about how the market will behave, assumptions about regulations, assumptions about international business, assumptions about their balance sheet. Things that were inconceivable last year – Oracle, TikTok – all sorts of interesting things. People just nod, not even a second thought, like 'oh yeah, that's happening.' All those things are being considered this year to a much greater degree. So I do have people coming to me and they want to know how we think about it, why we do it, and they're all starting to think: what's their angle on this now? So I think it's catalyzing people to be much more open-minded.

I think it's like the four-minute mile. I think people told themselves they couldn't do it, then someone does it, and then in the next year dozens and dozens of people do it. In this particular case, there's a lot of stuff that I've done in my career that was a lot harder than this. I will say any entrepreneur that ever successfully launches a business and gets to profitability will have accomplished something much harder than what we did. So it's a challenging project, but it's not beyond the capability of any management team. I think a lot of people just had a mental block. They just dismiss it, don't even consider it, get focused on something else. My own experience: on the day that I decided I wanted to buy bitcoin, if I decided on that day as an individual, you go to these high-end exchanges, it's going to be six weeks to get through the KYC for an individual. If you're a private company and you had your team all around you, from the point that you thought it was interesting, you're 12 to 18 weeks to get through the hoops. If you're a nimble publicly traded company, I think you're looking at six months. And if you're a good rational publicly traded company, put on the docket, you would do it in nine to 12 months. So I think people were kind of oblivious to the need, slash the role, of bitcoin and the bitcoin narrative of digital gold. This is the ultimate inflation hedge. It's not 10x better than gold, it's 100x. Maybe it's a thousand x better. We could go on for hours why I think it's a thousand x better than gold, but let's just assume since we're preaching to the choir that it's a thousand x better than gold. Once you realize that, from that point it's minimum 12 weeks if you went like a bat out of hell, and probably six months. And I kind of feel that if people were waiting to see if this was possible, well they saw our announcement in August. So the six-month clock starts in August. If they were perfectly configured and had all the same characteristics as us, then they start focusing on this in May or June. Nobody's thinking about this in March or April – I was just so busy trying to keep the doors open and their bells getting wrong. So take August, say August, September, October, December, January, February. I think over the next two, three, four months, you're going to see something interesting. And the other point that's not lost upon me: there are 3,500 publicly traded companies, there's 5 trillion dollars in their treasuries, and it's all melting. At some point you have a fiduciary obligation to not lose the money. It used to be acceptable to be conservative, but that was before the asset inflation rate went from 6% to 30%. When the inflation rate goes to 30%, it's not necessarily something you can ignore. So I think a lot of people are getting catalyzed right now. I think it has to be CEO/CFO led because it is an innovative thing. But I think we've shown people how to do it and we've shown them that it's possible and straightforward. Once it's like anything – if I tell you it's possible, go figure it out on the internet or go through it on YouTube, you can figure it out yourself. All you got to know is that it's possible. It's possible to run 52 miles in a single day. Go figure it out – you're going to go Google '52 miles in a single day' and then all of a sudden fall down the rabbit hole. So I think people now know it's possible, but I don't think you can expect them to move in less than six months. Reasonably, in a year.

Well, first of all, I think the volatility is falling. All you got to do is look at the chart. There's a narrative – everybody wants to say they know something about crypto, so they jump up and say 'well you know it's volatile.' Well, it was volatile in 2017 when individuals were trading it on their mobile phone. But think about what I just said about how we acquired it. We buy 175 million dollars. I'm in the market every minute of the day for multiple days in a row. I'm damping the volatility. One person like me, every trading day that I'm in the market, I'm damping it to the upside and the downside with large sums of money. How many institutions does it take before they damp it? I'm like 'okay, I'll pay an extra whatever, but stop this thing. I'm holding it for a hundred freaking years.' I'm not the day trader guy that's worried about it. So I think as the institutions come in and buy bigger amounts, they're damping the volatility. That's my first observation. My second observation is crypto trades 168 hours a week. Every other asset trades 35 hours a week at best, sometimes less on holidays. I look at this thing in awe when I look at these exchanges on Saturday night at 9:30 p.m. and I'm watching the things stream. I'm like 'this is the most magical, hardest working security in the history of the world.' I would think everybody ought to be in awe that the thing's not going haywire. It's remarkably non-volatile in that regard. In my opinion, you could go into the market and liquidate 50 or 100 million dollars worth of this stuff in a matter of an hour, any hour of the day, any day of the week, on a holiday, and maybe you take a 3% haircut. Go try to liquidate 100 million dollars of gold on a Saturday afternoon in Istanbul on the street side. So my answer is I don't think it's that volatile. But my other answer beyond this is: let's be honest, there's a negative real yield on everything else I can buy. Gold's got a negative 3, 4, 5% real yield in my opinion. We talked about why bonds have a negative real yield. It's just a question – we're debating whether it's 7% asset inflation or 15% or 3%. But it doesn't really matter. Every other non-volatile asset has a negative real yield, which means everything else is lifeblood draining out of my veins. So if my choice is to accept some volatility and live, or have non-volatile cash that bought 30% less in a matter of eight weeks – at that rate, you're not going to make it through the decade. So volatility is just something you got to live with. But I really think there's a group of crypto enthusiasts who lived through the last 10 years, and they are the result of their experience. They lived through a difficult time and they're heroes, and I respect them. But if you look through volatility, I think the next 10 years are not going to look like that. I think the next 10 years have people coming in that are moving hundreds of millions of dollars in and out of the market. They're going to tend to damp all the volatility, and the institutions are going to dampen it because it's in their interest. So if there is any, it's just going to be to the upside for the good of everybody, and otherwise not a big problem for me.

It's not crazy. Gold is a great narrative, but to say that this is much better than gold undersells it, because the truth is if you look at these treasuries, there's something like 200 trillion dollars worth of debt instruments and other treasury instruments that have a negative real yield. Precious metal is just one of them. So if you're looking at 10 trillion dollars in gold, there's easily a hundred trillion dollars of – what is the shadow money? 75 trillion of sovereign debt, 50 trillion of other stuff. So you're really looking at 200 trillion or more of negative real yield. The only debate is how negative it is. And bitcoin is the only thing I could find that is positive. You know, I could find a thing – we'd be talking about it. No-brainer.

You're going to hate me for this, but it's 'The Moon is a Harsh Mistress.' Robert Heinlein was my favorite author growing up. I'm a rocket scientist. And it's about a protagonist computer whose name is Mike who saves the moon. I like that a lot. I grew up with it – it was very inspirational.

I think they're out there. There are so many stars, galaxies, and planets. Statistically, it just seems impossible that somewhere there isn't somebody.

Jack Dorsey has a one-word Twitter bio, and that one word is 'bitcoin.' And he's also got 10 billion dollars in cash and cash equivalents between Twitter and Square. And to my knowledge, none of it is invested in bitcoin. Either Square or Twitter – you want to help me try to persuade Jack to break off a small 500 million or billion dollars and go buy some bitcoin? Because I know he loves the community and he's doing as much as he can to help, but the single most useful thing he could do to help is lead on the corporate treasury side. If he bought a billion dollars worth of bitcoin, what do you think happens the next day?

Oh no, no. Look, I absolutely think – again, this is me speaking my opinion, I've never talked to Jack about this, I don't have any inside information – I would guess that if it was his choice and he had sole power, he would absolutely do it. But you kind of pick your battles sometimes. When Elliott Management is knocking on the door and basically has a target on your back as the CEO, the first thing you don't want to propose in the board meeting is 'hey, why don't we take 500 million dollars and go buy bitcoin?' But that doesn't mean that wouldn't be the right thing to do. You just got to pick your battle. If we can get the crypto community to give them some air cover or go wage a charm offensive – what we need is for the bitcoin community to meme Elliott Management to death, and then they'll back off and leave him alone. I don't know.

Yeah, well, I guess I would end by saying that I find the entire bitcoin community to be inspirational. I did note in our press release that one of the key drivers of our belief in the success of this is the community ethos. It's a pretty amazing group of people. All of the thinking and all of the initiatives I just find to be extraordinary. I think we wouldn't be doing what we're doing without everybody that's ever passed through this podcast.

MicroStrategy is microstrategy.com. I'm @michael_saylor at Twitter. You can probably Google me and you'll get every single one of my contacts.

Well, thanks for having me.