Why Michael Saylor Went ALL IN On Bitcoin

If you would ask me, Anthony, like 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 two percent 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. So equity spiked, big tech spiked, bond spiked. And we looked at our cash, and I had to listen to a litany of talking heads. Ray Dalio on doubt. You know, if Ray Dalio didn't say cash is trash, every podcaster that trolled Ray Dalio said Ray Dalio says cash is trash. Cash is trash. And then I went to school at some point on this, probably after I realized I had a problem. And I listened to you describe the plight of the working man. I go to work, I get paid. I'm okay. This is not working. This is a working lawyer. I get paid five hundred thousand dollars a year. I save fifty thousand dollars. I put it in my piggy bank. I have five hundred thousand in cash in the bank. I have kids and I have a future. And then all of a sudden I realize that the cost of a college education is going up at eight percent a year and my cash is yielding zero. Now at that point, we've got the pomp podcast telling me I'm crazy to work for dollars and save my cash. And if you take the five hundred thousand dollars in the plight of the lawyer with the two kids where I send them to Harvard and the five hundred thousand of cash in the bank yielding zero, and now you multiply everything by a thousand, that's me. I have a 500 million dollar company. We're making 50 million dollars 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. We're putting it into the bank account. There it is. And in 2019 and before, we worried about the unknowable and we thought maybe we'll use it for something. But I'm a bit older than you. I remember when you got five percent interest overnight on your money, and it wasn't that long ago that the risk-free interest rate was five percent before the great financial crisis. And I'm like, well, I'm gonna make 25, 30 million dollars a year on this. And I kept hoping and waiting for those good times to come back. I was the guy that when the interest rates, when the 30-year T-bond yield started to go to three and a half percent, like finally they're going to go to four and then go to five and they're gonna go back to normal, right? Normal interest rates. And then of course hope was dashed. It went the other way. And what happens next? Well, asset inflation goes through the roof. And this entire conversation of inflation, it's really twisted because everybody talks about consumer prices, CPI, CPI inflation. We're not getting enough inflation. We're not getting enough inflation. Okay. Well, you're not getting inflation on YouTube and Netflix streaming videos and candy bars manufactured by robots in factories and Domino's Pizza. You're getting inflation on everything you want. If you wanted an Ivy League education, if you wanted a beachfront house in Miami, if you wanted the apartment in New York, if you wanted anything scarce, everything you want is going up seven percent. And that's asset inflation. Well, if I want a bond that's going to yield fifty thousand dollars a year, it used to cost a million bucks. And this year it cost 10 million dollars. The cost of the asset good went up by two percent. No, I have a house in Miami Beach. It was a nice house built in the 1930s. And I have the deed of sale for the house. A hundred thousand dollars for that house in 1930. It's gone up in price by a factor of a hundred. So no inflation, kind of inflation, but it's asset inflation. So I didn't really think about it until I got slugged in the face with the 2x4, which kind of happened around March or April when Main Street shut down, the economy shut down. And bonds went through the roof when municipal bonds went up while every city is bankrupt. When Apple stock and every other public tech equity went up, why? And 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, which is, what is the true inflation rate? And we should probably coin a different term. If you looked at asset inflation on a good year for the last decade, it's seven percent a year, normal. This year you could make an argument it was 25. I mean, if you look at the long bond index and if you look at these equities, you can make an argument that the asset inflation rate leaked between 25 and 30, depending. And now what does that mean to me metaphorically? Well, here's how I feel. I felt like I had 500 million dollars of cash in the bank, safe, and it was yielding two, three percent, and I'm ready for a rainy day. And then I'm starting to do stuff with it. And then every month some banker sends me a note saying the interest went down. It went down. Now there is no interest. And then someone took my cash out of the bank and they put it in the backyard in pallets. And then they opened my back gate. And then every month someone comes along and starts burning two percent of the money. And then I started thinking, well, in 12 months, 25 percent of the money is going to be gone. And then I started thinking, what is the point of all this? What am I doing wrong? And of course the answer is, you can't hold cash. So what do you do with it?

You know, when times are good, everybody's busy. If you're in love with the iPhone, then the answer to everything is iPhone. If you're in love with your Apple Watch, when you're in love with Twitter, the answer is that. So when times are good, everybody focuses on that, and there's only limited time. So I think I was closed to the possibility. It's just there's so many other things going on. And when the COVID crisis hit, everybody got sent home, and we all had to contemplate ideas that we had previously rejected, and we had to embrace ideas that were very foreign to us. So how do I discover crypto? Well, first I have a mega, mega, mega problem. And the mega problem is I have a lot of cash and I'm watching it melt away. And 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. So after that, then I have an opportunity, which is I've got a cash generating business. And then I've got one more problem, which is the investors, the outside investment community. If you go to them and say, hey, we're a great enterprise software company and we've got all this cash, their answer is, well, we don't really value the cash. What I mean, because they're smarter than I am. I'm not joking, I'm being serious. They are smarter than me. 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, and we're just running as hard as we can to stand still. So we weren't getting any credit for the cash. We didn't need the cash. Ergo, we need to do something. So what is the thing you're gonna do? When we started working through it, what do you do if you have 500 million dollars of cash you don't need? You can buy your own stock back. And then all of a sudden you contemplate other things. I mean, you're an expert. You tell me, if you had 500 million dollars of cash right now, where would you invest it?