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I lived through seeing our stock go to $333 and I watched it go to $0.42. In 2000, you lost $6 billion.
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 $0.42. Calculate this, like a 99.8% drawdown. Michael Saylor, the founder and executive chairman of MicroStrategy. The world's largest corporate holder of Bitcoin and a leading voice in the future of digital capital markets. Sell the kid lately, but keep the Bitcoin. The Bitcoin is a stronger form of capital preservation than your house, a 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. Do you still believe the same?
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. Human civilization settles upon the highest powered money, and Bitcoin is the most thermodynamically sound because it's worth like $1.5 trillion. Where do you think the Bitcoin price would be trading today if Michael Saylor never had his aha moment and didn't dedicate his life to buy as much Bitcoin as possible?
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.
You know, I generally feel pretty good most days.
How do you do that? Tell us.
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.
Yeah, I think so lately, certainly. Get some exercise, have a cup of coffee, and then do something constructive and cheerful with my life.
What kind of exercise do you do?
Oh, a mix of running and calisthenics and pull-ups and light weights.
Okay, nice. Is it something you've done all your life or something you've started?
Yeah, as long as I can remember.
Nice. If you had to explain what it is you do and why you do it to Rick, a 40-year-old Uber driver who has been working hard for a decade but can't seem to make enough to buy a house and raise a family, what would you say?
I'm the chairman of a publicly traded company named MicroStrategy. 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 worth of capital. And then we use that capital in order to issue credit instruments. And we sell a credit instrument called STRC, that is a preferred stock, and it pays an 11 and a half percent 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 very low volatility. A little bit more volatility than a money market, but much less volatility than a common equity stock. And you collect 11 and a half percent and you defer the taxes on it until you've collected all the principal you've invested. So, you invest a hundred dollars, you collect a hundred dollars 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 and a half percent 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 and a half percent tax deferred, instead of the traditional money market that pays you three and a half percent and is taxable.
What's your advice to Rick?
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 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, 40% vol. 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, you'll get 200 basis points after tax. It's not very compelling either. 2% isn't 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.
Who are you?
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 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, 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 convertible bonds in the world. Then, when we outgrew that market, we became an issuer of preferreds. 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 would say I'm an innovator. I've always wanted to make a constructive contribution. I didn't want to be stuck in a box. 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, 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.
You said you wouldn't have heard of us regarding MicroStrategy.
Well, actually, I did. Because in 2015, I built a small business intelligence consulting company, consulting and implementation, because it was the beginning of this Microsoft cloud push, Power BI, all that stuff. And I was like, this is a massive opportunity. And so we're going to sell these services to Selfridges in London. And they told us, "Ah, we have this business intelligence software called MicroStrategy." So, that was 2016. So, my life's work for 30 years before Bitcoin. I invented and designed it. We created version after version and we sold it everywhere in the world. I'd probably 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. 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 Power BI, 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.
There's a common pattern among my guests. They have something that happened in their life, sometimes a childhood trauma, that explains their exceptional achievements and success. What happened in your life that explains the fire in the belly that you still have at 61 years old?
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 100 books. 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, Isaac Asimov, and Arthur C. Clarke, and I became very inspired. I mean, the same authors that inspire Elon Musk and Jeff Bezos. And one of Heinlein's books, "Have Spaceship, Will Travel," which I think I read in third grade. For people who are not from the US, third grade you're like 9 years old. So, I read it, you know, in third grade, I'm 9 years old, and the hero wins a competition and 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, 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 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, if the idea is MIT was where you go if you're gallivanting across the universe and you saved the world from bug-eyed monsters, 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 to your mother because my mother thought, you know. I remember when I was, my first job was I was a paperboy. I delivered 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 around with like 40 pounds of paper and you deliver the paper to every door and you get paid like a dollar and 62 cents. 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 paperboy in Dayton, Ohio. And my mother thought I should enter that competition. And she told me I was going to be the best thing ever and I was going to conquer the world. And I think I ended up number two in the competition, not number one.
Best would be the one who delivers the most papers?
You know, you had to put together this book of academic achievement and musical achievement and character and community service. And they're all, you know, they're all these things. And so, I can imagine my mother is grooming her son to be the greatest paperboy in Dayton, Ohio. And she's telling me, whispering in my ear, "You're going to great things, you know, you're going to conquer the world." And I kind of had 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 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, had inspirational figures, and I was inspired by literature, and that led me to think, yeah, I can do things, and I'm going to do things.
You're going to conquer the world. Have you?
Well, you know, I got older and I realized that the world's a 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, 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, you 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 gets 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. I wrote it down because I heard it in your last podcast. When did you learn that? Because there's probably a time in your life where you have this crazy ego and you think you can do everything.
Yeah, in my 30s. In my, you know, in your 20s, you're in business. You're first, you're like, "Oh, I like a job, right?" And they're like, "Okay, I got a job. I like a good job." And they'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 want it to be a good company. Now, I want it to grow." And so at some point, you go through this passage. And in my life, by my early 30s, I had a company, it 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.
Just when you mean successful in your 30s, the business going well, what does that mean? I mean, it's public, what's the kind of market cap?
A 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. We launched it, then we spun it off. And what I discovered is I can't manage the two and I would hinder 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 a hundred million dollars. But we couldn't grow it. I had some singles, I had some doubles. I had some strikeouts. I launched some businesses that just did not work. 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. And there are a few people that have done it. Elon Musk has done it. But 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 eight 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 in 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, yeah, 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 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 3-year-old son will achieve everything that my older son did not achieve." Well, the 3-year-old son is 18 years from disappointing you. 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 relationships 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, you know, the imaginary future business is always more fun than struggling with the existing mature business. So, I would say in my 30s, I expanded. In my mid-30s to mid-40s, and then we did all of these things. And most of them, they didn't end up being more successful than the original MicroStrategy. So, I get to 2020, and I'm back to the original business. And we all spend 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, work up 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, at 35, you can do anything. At 45, it's not quite working. I'm just going to go back to the one thing. At 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 and a half billion, and now it's $8 billion. 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 you had got to the end of your 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 okay. At least I found a mission at some point in my life.
I am 34, so I'm going to listen to the advice and laser focus and not try a billion different things.
I tell it to a lot of people, but believe me, most just nod and they're like, "Yes, but..." They don't. It's like when I was 34, people older and wiser gave me advice, which I just probably 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.
You mentioned before, I want to find the Facebook of money. So, basically, you're thinking in terms of heuristics and previous experiences. And it doesn't come out of nowhere. You have previous experiences. In the 1990s, you said, "I didn't really understand scarcity until I found Bitcoin." But you actually understood digital scarcity in the 1990s already when you bought some domain names, at least part of it.
Yeah, I understood valuable property. For example, you know, '94 we all started using email or something like that, and the web was coming along between '94 and '96. And we got the domain MicroStrategy. So, I was like, sailor@microstrategy. And everybody misspells MicroStrategy. They call it MicroStrategies, what you know, or microstrategy, or whatever. They can't spell it, they can't remember it. And so I thought, wouldn't it be better if we just used an English word, "strategy"? So, I said, "Hey, see if you can buy strategy.com." And so we went off and they said, "Yeah, we can buy it." It's like, I don't know, $50,000 or something. Not that much money, but a lot of money back then, but not much now. And then I thought, wouldn't it be great to buy words in the English language that everybody knows how to spell and they can remember? So, I said, "Go find all of the good words in the English language." And so we bought wisdom.com, and we bought usher.com, and we bought speaker.com, and we bought voice.com, and we bought angel.com, and alarm.com. And then I thought, "Hey, go buy Mike.com." And I said, "Is michael.com?" And then I bought michael.com. So, like today, my website is michael.com. And I thought, I didn't ever think I would be famous enough to need it. I kept waiting for Michael Jackson or Michael Jordan to want to buy it from me. But you know, eat your heart out, guys. Now I'm michael.com. And so I bought emma.com, you know? I bought frank.com. And my idea was, you know how those amazon.com, you know, it's like, yeah, you pick an easy word. A word that people can... Apple.com. Yeah. You've got how many billion people learn English? And my thinking was, English is a protocol. Everybody learns it. They spend like 12 years learning what the words mean and how to spell the word. And so the best brand, if you want to brand a business, is... Oh, I bought hope.com. You know, how do you feel when I say hope.com? You probably feel good, right? Hope is a good word, right? And so I thought, well, these would be kind of, they're good intellectual property, and maybe one day we'll put businesses on them, or maybe somebody will buy them from us. And eventually, I sold voice.com for like 30 million bucks.
Bought for how much?
A few hundred thousand. And it was, you know, so we made some money. And we sold angel.com like a hundred ten million dollars. And alarm.com we spun off for a large amount of money. So, some of them paid off. The others I still have. I still got Mike, and I still got Frank, and I still got Emma, and I still got wisdom. And we still got a lot of these. And yeah, you know, Elon Musk when he bought Twitter, he rebranded it X.com. And he had the X for like 20 years. He's like, I want to use X. One letter. I mean, very powerful. Like, how do you spell it? I think I know how to spell it. And I think, you know, I understood that. And I understood monopolies, right? If you watch Apple, one thing I had was, I was a tech investor. So, I invested in, yeah, my first fortune that I made was building MicroStrategy and we came public. I became wealthy. And then I had some money to invest. And then I invested in Apple, Google, Facebook, and Amazon. And I thought, you know, one day a billion people are going to use the iPhone. So, everybody else thought it was a computer techy device, and the handsets were going to be worth $50 and get commoditized because the Nokia phones were like really dirt cheap.
Mhm.
And I thought, it's going to be jewelry, and it's sexy, and people sleep with it next to their head. And if it becomes like jewelry, it's like LVMH Birkin bags or something. And so I was a big believer. And I thought they're going to build this digital monopoly. And they did.
What made you feel that this would become jewelry? There's this super famous video from 2012 where you basically say exactly that, right? But what made you feel or understand this is going to be a monopoly and this is going to be a premium brand and therefore it's going to become a compounding machine, when as part of a few other stocks, when all the rest is literally noise?
Yeah, because I had a couple of thousand employees and we had Dell computers under every desk, and they were big and heavy and noisy and ugly and cheap. And commodity. You know, and nobody cared. And then we had like the iPhone. And my nieces or my friend's girlfriends, they're like, "Okay, well, what gift should I get them?" And they're like, "Well, get me the pink iPhone." Or get me the pink... I'm like, "What? Like I don't..." Yeah, and you know what? Apple would come out with the normal iPhone, and then the next year they would have the pink one. And my sister's like, "You know, your nieces, they want like the pink iPhone for Christmas." So I have to like pay an extra thousand dollars for a phone that's pink instead of a phone that's gray. Like, all their friends have it. And so like every year Apple would like, you know, remember Apple had orange computers. And they had the... And here's the thing, it's like, you're holding it, and it's like a status symbol. And it's just like, with Birkin bags, if you spend enough money, you might get permission to be able to buy one for $4,000. It's like, what? Well, you know, a handbag is like 5,000-year-old technology, and somehow in the year 2026, people struggle to pay thousands of dollars for a 5,000-year-old device because it's a status symbol. And the difference is, if you hold it, if you sleep next to it, if you've got it with you all the time, if it's part of your identity, and by the way, it's not irrational. I mean, you can't carry a Dell computer around in your purse. It's too heavy. But you don't need to. So, if it's a desktop thing and it's hidden in the background, you're not going to invest in miniaturization and style. But with the iPhone, it was clear the battery matters, the style matters. Is it sexy? Is it cool? Is it orange? Is it... They had the red ones, remember? That when red was really big, and Bono had a red iPhone, and if you were cool and you cared about the world and the climate, you needed to buy the red one. And I, here's the big idea, which is people have plenty of money. I mean, everybody can spend $1,000 a year on something. The issue is that I spend it on a new shirt, new pair of shoes, a new iPhone. Here's what you're not doing. You're definitely not like replacing the industrial electrical plug underneath your work desk every year just to be hip. And so, when I saw that, it occurred to me. I had this other observation too. I'm going to make this point, which is I saw software dematerializing to the mobile devices. So, does the software run on your work desk computer and you use it from 9:00 to 5:00? Or does the software run on a piece of jewelry? Does it run on your watch? Or does it run on your phone, and you're using it at 9:00 p.m. on a Friday night when you're out on a date? Or are you using it at a baseball stadium watching a baseball game? If the software is running at the baseball game, or if it's running when you're out on a date, and if it's running when you're in a car and you're on the move, right? It's kind of like software went from solid state to vapor state. And at that point, it becomes so... What good is it for you to be able to book a restaurant reservation at 9:00 a.m. on Monday if you need to go out to dinner on Saturday night? You want to book it on Saturday morning while you're at the gym. And so what happened during the mobile wave is people rethought software, and software became a consumer phenomenon, and it became a 24/7/365 phenomenon, and it became a real-time thing. It's like you want your software to wake you up. Or like Uber, back to your Uber driver. You know, we didn't used to have Uber, and the thing that made Uber possible was the smartphone. Because without the smartphone to call the Uber, and without the smartphone to link the Uber driver to the passenger, that doesn't exist. And so, during the mobile wave, the software leaped from underneath the desk, and it leaped onto your person, onto your clothing, and it became part of you. And when it became part of you, you started to prioritize quality, you know, battery life, look, feel, you know, all the way you think about your shoes you wear, the purse you carry, the belt you wear, the suit you wear. And it became a consumer good. So, when I saw those things, it occurred to me that there's going to be a billion-person network, a mobile network. And Apple, the other thing I saw is all the rich, all the rich, powerful people were using iPhones. And so, when you see that, the affluent have this network, it's like, how much is it worth to own that network? Quite a lot. And then we saw the same thing with Microsoft forming a business network. And then Amazon formed a retail network, that last mile to hundreds of millions of households. And Google formed their network. And then Facebook. Facebook became the network, and nobody used any other network because everybody's on Facebook. And what occurred to me was, if there's a monetary network, you know, what happens when all the wealthy people and the money all join the network? And they're not going to put 20 friends on the network, they're going to put $20 million on the network. And there's going to be a massive Newtonian network effect because billionaires are going to put a billion dollars on the network. It's like, when Rupert Murdoch joins Facebook, he's bringing 50 friends. But if Rupert Murdoch joins Bitcoin, he's bringing $50 million. And so, I thought, man, what a great network to be part of. And you just got to find the one that's going to be the winner. And once you find the one that's a winner, then the network effects kick in.
When did you first discover the concept of scarcity and low time preference?
I think I've always understood the idea of a long time horizon because at MIT, I built non-linear dynamic computer simulations and I studied engineering and control theory. And in those non-linear dynamic systems, there are feedback loops. 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 an algae bloom? And so the time constant or the life cycle, you know, 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 it was, I wrote my thesis at 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 or 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 in on a computer and I actually showed all the dynamic patterns under which a political economy melts down or whether it thrives. And, you know, 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. And it's like, and he checks you in 12 weeks and fires you if you haven't got costs down and the ratings up in 12 weeks. 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 what anything you're doing in life or business, you have to have the right time horizon. And, of course, you know, 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.
Scarcity.
Oh, scarcity, yeah. Scarcity, I didn't understand nearly so well before I discovered Bitcoin. Right? I mean, I had… the truth is I'm not a stupid guy, right? I was first in my class and I was at the top of my class at MIT, but I didn't really understand money, and I didn't really understand monetary scarcity or true scarcity until I discovered Bitcoin. So, I was given a gift in 2020 because when the Federal Reserve lowered the interest rates to zero, they literally took the interest rate to zero and they said, "We're not even thinking about raising interest rates." I had $500 of cash. And what happened is cash became not so scarce. Currency was not scarce. It's like the banks could print money, the Fed was going to print money. We printed money to fund everything while we shut down the economy. And that was jarring. That's a very disturbing situation, and that shook me out of my lethargy and it forced me to think really hard about what is money. And I recorded this podcast with Robert Breedlove in late 2020, and his question to me was, "What is money?" And I thought we talk about it for an hour. We ended up talking about it for like 25 hours. It became a long-running series of discussions. And you can't really understand scarcity until you've seen actual engineered scarcity. So, you think about money, the sound money was gold for thousands of years. And gold is not really scarce because it's relatively scarce. That is, it's harder to make gold than it is to print paper or seashells or glass beads. But it is actually inflating at 2% a year. And so that means that every 35, 36 years, you double the supply. And so, in theory, gold actually, in a way, is inflating much more than, say, beachfront property in South Florida. Like, if you look at Palm Beach real estate, they're not doubling the length of... every 36 years. And when you think about money, our currency, over 100 years, we're increasing the currency supply in dollars about 7% or more. I didn't realize that. I didn't think about it. And then when the lockdowns came and when interest rates went to zero, I had all this money. And it's like if you had a building and someone was paying you $25 million a year rent, and a politician said, "We just rent-controlled your building. Now you're going to offer the building for free, and you're going to pay zero dollars in rent for the next decade or so, and you're going to like it." You'd be irked. You'd be like, "What? I used to make 25 million a year, and now I make 0 million a year because I'm supposed to do... I'm supposed to do it for the good of the people?" You would probably sell the building and go take your money somewhere else where you're allowed to charge rent. Okay? And that's kind of what happened to us. We were making 25 million a year, and then all of a sudden we're making zero a year. And the Federal Reserve is saying you're going to make zero a year forever. And that forced us to look for something to buy. And we thought maybe we should buy some gold, or maybe we should buy some real estate. But eventually, I thought, maybe digital gold. I wanted something that was as good as gold, but like a big tech monopoly. Can I find like the Facebook for money, or the Google of money? And that was Bitcoin. So, I thought, well, Bitcoin is the dominant digital monetary network. And I started studying it, and it turns out that Satoshi put this one clause in the Bitcoin protocol, which is its hard cap to 21 million. I mean, it didn't have to be. They could have said it increases at 2% a year. And if they increased at 2% a year, it would double the Bitcoin supply over 36 years. But it hard-capped. It increases zero a year. And here's the big aha moment. This is the only commodity in the history of the world that actually was absolutely scarce. Silver's not, gold's not, palladium's not, diamonds aren't. Even land isn't. If you study a map of land in Boston, they added half of it. If you look at Miami Beach, half of Miami Beach is reclaimed swampland. We actually built the land. So, I'd never seen absolute scarcity before Bitcoin. And then when I saw it, though, I had an education as an aeronautical engineer. I knew thermodynamics. I knew what it means to have a closed energy system, an adiabatic system. I understood adiabatic lapse. And then I said, well, this is a thermodynamically sound, conservative energy system. There is no heat loss. There is no energy loss. And then I realized, once I saw that, it became obvious to me why that's rational. Because in engineering, you can't solve a problem unless you assume an adiabatic system. You have to assume a closed energy system. And so, in all of my engineering days, they would say, "Design an aircraft wing and analyze its performance assuming adiabatic system, right? A closed system." An open system, by the way, is, you know, your plane's working fine, and then I shoot it with a laser beam or I zap it with a lightning strike. You can see why that's a special thing. Or, if I have a leak in this room, that's because all the oxygen drains out of the room, and when it does, we all freeze to death and suffocate. We probably suffocate before we freeze to death. So, when you're designing this studio, you're thinking, I really kind of want a closed system that doesn't have heat loss, because otherwise we're going to suffocate or freeze to death. So, it's kind of common sense. You don't want to freeze to death. But people take it for granted. So, now, once I saw Bitcoin, I said, "Hey, that's actually a monetary network that doesn't lose 2% of its energy a year like gold." And then I thought, well, wait a minute. That means that the dollar is losing 7% of its energy a year. Now, I know what half-life is. Half… if you're losing 7% of your money a year, that means the half-life of your money is… you divide 7 into 70, it's 10 years. You're losing half of your energy in 10 years. Your half-life in gold is 36 years. Your half-life in the dollar is 10 years. Your half-life in a weaker currency might be 5 years. What's your half-life of your wealth if there is no lapse, if there is no leakage? It turns out it's infinity. The difference between 2% inflation and 0% inflation is 72 divided by 2 equals 36 years, or 72 divided by 0… infinity. And so the question is, do you want to live forever? Or do you want to live for… half of you is dead in 36 years? And I, do you want to live 100 years or do you want to live forever? And at that point, that was the big lightbulb moment when I was like, "Oh my, this is not just a little bit better than gold. Gold is a lot better than cash, but this is infinitely better than every other capital asset or monetary asset invented in the history of the world." And I thought, "This is a revolution in economic thinking." And once you understand that, it's kind of like… I give you electricity. Electricity is colorless and odorless and incredibly powerful, and it runs this, and it runs that, your lights, and it works your washing machine. And try to imagine a world before we could transmit like clean, infinite, silent, efficient power. It's like… go back to 1500 and imagine being an author and trying to describe energy when you'd never seen electricity. Well, every economist had never seen Bitcoin. So, how do you understand economics if you never saw perfect money, perfect economic energy, where Bitcoin means you can move economic energy through time and space with zero energy lapse? Right? Like light, electricity. It's a beautiful thing. But no one had ever seen it, and so Aristotle couldn't imagine it. I mean, did Aristotle imagine electricity? Why didn't he write about it? You never seen it, but after you've seen it, it's obvious. And you know, then you can't unsee it. It turns out that you have to have some… with a paradigm shift, they say there has to be some near-death experience, right? There has to be a war or a near-death experience or like the older generation. I think Max Planck said, "Science advances one funeral at a time." Right? The old guard never will appreciate the new thing. They won't get the paradigm shift. They don't need to. If you've got money and power and fame and success and respect, why do you need to embrace a new idea? The people that need the new idea are the 20-somethings, the 30-somethings. It's young people that have everything to gain, nothing to lose. And by the way, if you do it the way your parents did it, you're going to fail. Well, that's what we're talking about. Rick's a 40-year-old Uber driver, but actually, our entire generation, right? They're 25, 30, 35, can't afford houses. Like this is the entire problem here. And that's exactly what we're talking about.
You mentioned before that your parents wanted you to be well-read and offered you a dime for every book you read. How did that influence you?
Well, my parents wanted me to be well-read, so when I was in first grade, they offered me a dime for every book I read. Now, I had a comic book addiction, and comic books cost 25 cents, so I couldn't buy them unless I earned the money. I discovered that if I read books quickly enough, I could make enough money to buy a comic book. One summer, I read about 100 books. I'd go to the library, get 10 books, and just spend all my time reading. Through reading, I discovered science fiction and authors like Robert Heinlein, Isaac Asimov, and Arthur C. Clarke. They were incredibly inspiring. In fact, they inspired Elon Musk and Jeff Bezos too.
So, these authors fueled your ambition.
Absolutely. One particular book, Robert Heinlein's "Have Spaceship, Will Travel," read in third grade – that's around age nine – really stuck with me. The hero wins a competition, gets a beat-up spacesuit, fixes it, and then, by squawking to the heavens, attracts an alien spaceship. He's whisked away to save the human race from bug-eyed monsters. Upon returning, he's rewarded with a full scholarship to MIT. As an impressionable kid, that was a powerful message: if you save the world, you go to MIT. I figured if it worked for him, it could work for me. I decided I'd go to MIT and design spaceships. That's where my inspiration to engineer things began.
That's a fantastic origin story. And you also mentioned your mother's influence.
Yes, my mother played a crucial role. I recall my first job as a paperboy. It involved getting up early, carrying heavy stacks of papers, and delivering them to every door. It paid very little. There was a competition for the best paperboy in Dayton, Ohio, and my mother encouraged me to enter. She constantly told me I was going to do great things and conquer the world. While I only came in second in that competition, her belief in me was incredibly impactful. She instilled in me the idea that I was expected to be successful, even though at that age, she had no real basis for that expectation. It was that early programming, that belief from my parents, combined with my literary inspirations, that led me to believe I could achieve anything.
It sounds like a potent combination of early inspiration and a strong belief system. So, you set out to conquer the world. Have you achieved that ambition?
Well, as I got older, I realized the world is far more complex than I imagined, with thousands of challenges. Today, I believe the key is to identify one specific contribution you can make. There are countless issues – health, politics, religion, geopolitics. I can't fix them all, nor should I try. I'm particularly interested in fixing the money. So, I've chosen to laser-focus on that one area. Humility dictates that if you dedicate your life energy to one thing and become an expert, helping enough people, that will be sufficient.
That focus on "one thing" is a powerful principle. You mentioned the "laser eyes" on your X profile, which relates to this idea of laser focus.
Exactly. The meme is about being exceptional at one thing. You don't need to be the best at everything. When people's ambition becomes too broad, they sometimes think that success in one area grants them the ability to excel in many others. My advice, which I learned the hard way, is: "Just because you can do a thing, doesn't mean you should do a thing."
I wrote that down too, when I heard it on your last podcast. It really resonates. When did you learn that lesson? Because I imagine there was a time when you felt you could do it all.
[Laughing] Yes, that was in my 30s. In your 20s, you're focused on getting a job, then a better job, then working for yourself, then starting a company, then making it successful. By my early 30s, MicroStrategy was successful and public. I achieved that. Then the question became, "What's next?" I launched several other businesses: Alarm.com, Angel.com, which became a public company and was sold for a significant amount. But I discovered I couldn't effectively manage multiple ventures simultaneously. Some, like Alarm.com, thrived after being spun off, while others, like Angel.com, were sold but didn't reach their full potential. I had some singles, some doubles, and some strikeouts. I kept thinking I was going to create 10 successful businesses, like Elon Musk has.
But even Elon Musk is an outlier. The sheer scale of his achievements is almost unprecedented.
Precisely. The human race has one Elon Musk. For the other billions of people, trying to replicate that by spreading oneself too thin can be counterproductive. I realized that when an existing business starts to get difficult, it's tempting to launch a new one from scratch. It feels aspirational. But it's like having a difficult son and deciding to have another, hoping the new one will be perfect. The truth is, you're the common element. The real challenge is working on existing relationships and existing businesses. My entrepreneurial mistake in my 30s and early 40s was diluting my focus. I was launching new ventures because the existing ones became challenging.
So, in essence, you were trying to escape the difficulty of maturity by chasing the novelty of a new beginning.
Exactly. The imaginary future business always seems more fun than the struggle of a mature one. In my 30s and 40s, I expanded, but none of those ventures surpassed MicroStrategy. By 2020, I was back to the original business, refining it, making it more efficient. However, competing against a global digital software monopoly like Microsoft was incredibly challenging. By 55, I was humbled. At 35, you feel invincible. At 45, things aren't quite working out, and you realize you need to focus. By 55, you're wishing you had focused more earlier. Then came Bitcoin. It was someone else's billion-dollar idea, Satoshi's. I humbled myself, embraced the crypto ethos, and plugged it into MicroStrategy. That became another billion-dollar idea. Then came convertible bonds, equity registrations, AI, and digital capital. In 2025 alone, we launched multiple billion-dollar IPOs. It was as if, after a career of learning and being humbled, ideas that were once out of reach became accessible. It was only when I put my ego aside and embraced new technologies like digital capital and intelligence that these things became possible. In the last 12 months, we've done more interesting things than in my entire career. I guess I'm a late bloomer, like the Colonel Sanders of crypto, but it's okay. I found my mission.
That's a powerful lesson about humility and focus. Shifting gears slightly, you mentioned scarcity and low time preference. When did you first grasp these concepts?
I believe I've always understood the idea of a long time horizon. At MIT, I studied non-linear dynamic computer simulations and control theory. In these systems, feedback loops are crucial, and the time constant of that feedback is a key parameter. For instance, consider algae in a pond doubling daily. If it fills the pond on day 30, when do you notice it? That's the concept of a time constant. I even wrote my MIT thesis on a mathematical model of a Renaissance Italian city-state, simulating Machiavelli's discourses on government dynamics. I programmed how different time constants for legislative and executive branches affect a system's stability.
So, you were already thinking about time constants and their impact on systems.
Exactly. I understood that if your time horizon is longer than your boss's, you're in trouble. You can't have a four-year plan if your boss expects results in 12 weeks. This concept of time preference and horizon is fundamental to anything you do in business or life. My own time horizon is typically four years, but I consider that short. Most great businesses take a decade of dedicated effort. So, I had a good grasp on time.
And scarcity?
Scarcity, however, was something I truly understood only after discovering Bitcoin. I'm not unintelligent; I was top of my class at MIT. But I hadn't grasped the true nature of monetary scarcity until then. In 2020, when the Federal Reserve lowered interest rates to zero and signaled they wouldn't raise them soon, my cash holdings effectively became less scarce. The Fed and banks were printing money to fund everything. This was a jarring realization, forcing me to deeply question what money truly is.
This led to your extensive discussions with Robert Breedlove on the nature of money, right?
Yes, exactly. We ended up talking for about 25 hours, exploring that fundamental question. You can't truly understand scarcity until you witness engineered scarcity. Gold, for millennia, was considered sound money. It's relatively scarce, harder to produce than paper or shells, but it still inflates at about 2% annually. This means the supply doubles roughly every 36 years. Even land, like beachfront property in South Florida, isn't truly scarce in that sense. And our own currency, the dollar, has seen a supply increase of 7% or more annually over the past century. This debasement is significant when compounded.
When you encountered this debasement, especially during the lockdowns, how did it impact your perspective on your own wealth?
It was a profound moment. Imagine owning a building that generates $25 million annually in rent, only to have a politician declare it's now rent-controlled, free for a decade. You'd be furious. That's how I felt. My cash was losing value, and the Fed was signaling this would continue indefinitely. I started looking for alternatives – gold, real estate – but then I considered "digital gold." I wanted something as robust as gold, but with the advantage of a tech monopoly. I was looking for the "Facebook of money."
And that search led you to Bitcoin.
Precisely. I realized Bitcoin was the dominant digital monetary network. I studied its protocol and discovered Satoshi's ingenious hard cap of 21 million coins. This wasn't an arbitrary number; it was a deliberate choice for absolute scarcity. Unlike gold, which inflates, or even land, which can be created, Bitcoin's supply is fixed. I had never encountered absolute scarcity before. As an aeronautical engineer, I understood thermodynamics and closed energy systems. Bitcoin, with its zero energy loss and fixed supply, presented a thermodynamically sound, conservative system – like an adiabatic process in engineering.
So, you saw Bitcoin as an analogy to a perfect, closed energy system, unlike anything else in the world.
Exactly. In engineering, we assume adiabatic systems to solve problems. Bitcoin operates on a similar principle of absolute scarcity. And this is where the true revelation occurred. If gold has a half-life of 36 years due to its 2% inflation, and the dollar has a half-life of roughly 10 years due to its 7% inflation, then a system with 0% inflation, like Bitcoin, has an infinite half-life. It doesn't lose value over time. This wasn't just marginally better than gold; it was infinitely superior. I recognized it as a revolution in economic thinking. It was like discovering electricity for the first time. Before electricity, it was hard to conceive of silent, efficient power. Similarly, before Bitcoin, it was hard to conceive of perfect money, perfect economic energy that could move through time and space with zero loss.
It's fascinating how you draw parallels between engineering principles and economic systems. You mentioned the idea of "buying domain names" in the 90s as an early understanding of digital scarcity. Can you elaborate on that?
Certainly. In the mid-90s, with the rise of email and the web, we acquired the domain MicroStrategy. I realized many people misspelled it. I thought, "Wouldn't it be better to use a simple, recognizable English word?" So, I instructed my team to find and purchase good English words. We acquired domains like Wisdom.com, Usher.com, Speaker.com, Voice.com, Angel.com, and Alarm.com. I even bought Michael.com, which is now my personal website. My thinking was that these easily memorable words, with billions of people learning English, would be valuable intellectual property. English itself is a protocol, much like mathematics or computer networking.
So, you understood that valuable digital real estate, like a prime domain name, could hold significant value.
Precisely. It was about leveraging a universal protocol. I recognized that a brand built on a universally understood and remembered word would have immense leverage. We later sold Voice.com for a substantial profit and Angel.com for over $100 million. This demonstrated the value of scarcity in the digital realm. While these domain names weren't scarce in the same way as Bitcoin, they represented unique, valuable digital assets. It was an early lesson in the economics of digital scarcity and network effects.
This experience with domain names, combined with your observations of tech giants like Apple, must have informed your understanding of monopolies and compounding value. Can you elaborate on your investment thesis for Apple?
Absolutely. My experience as a tech investor after MicroStrategy's success allowed me to invest in companies like Apple, Google, Facebook, and Amazon. With Apple, I saw something beyond just a computer. I realized the iPhone was more than a device; it was going to be jewelry. While others saw it as a commodity, I recognized its potential as a status symbol. My nieces and girlfriends would ask for specific colored iPhones, even if it meant paying a premium. This signaled to me that Apple was creating a premium, desirable product, not just a functional one.
You foresaw that the iPhone would become a fashion statement, a luxury item.
Exactly. It was about its sexiness, its coolness. Apple consistently introduced new colors and styles each year, making it a continuous status symbol. This was analogous to luxury goods like Birkin bags, where demand and exclusivity drive value. Unlike a desktop computer that stays put, the iPhone is personal, carried everywhere, and becomes part of one's identity. This personal integration meant that aesthetic appeal, battery life, and overall user experience became paramount, transforming it into a consumer good.
And this led you to believe it would become a compounding machine, a monopoly.
Yes. I saw the shift of software from desktop computers to mobile devices. Software that was once tied to a desk was now accessible on a piece of jewelry, on your watch, on your phone, used 24/7, in real-time. This mobile wave forced a re-evaluation of software. Think about Uber; it wouldn't exist without the smartphone. This seamless integration made the iPhone a device of personal identity. Coupled with the observation that affluent individuals were adopting iPhones, I realized this would create a powerful, billion-person network. Networks with significant financial backing, like those built by Microsoft, Amazon, Google, and Facebook, tend to become dominant.
So, you applied the principles of network effects and scarcity to the digital world, much like you would with Bitcoin.
Precisely. I understood that a monetary network, especially one adopted by wealthy and influential individuals, would experience a massive network effect. When billionaires join a network, they don't bring a few friends; they bring significant capital. This amplified adoption is what creates a true monopoly. Bitcoin, in my view, is the ultimate monetary network, and its scarcity and network effects are unparalleled.
You mentioned that Bitcoin is a lifeboat. Can you expand on what that means, especially for someone living in a hyperinflationary economy?
Imagine living in Africa, where currencies rapidly lose value, and banks are unreliable. If you're an Uber driver, and someone pays you in Bitcoin, that Bitcoin is likely to appreciate by 20-30% annually against the US dollar. Meanwhile, your local currency might be losing 10% a year. If your currency is collapsing at 20% annually, the half-life of your money is about three years – meaning it's worthless in a decade. In such scenarios, you can't rely on traditional currencies, credit instruments, or even real estate, as they are derivatives of that collapsing currency.
So, in a collapsing economy, all traditional assets become risky.
Correct. We've seen hyperinflation in countries like Brazil and Argentina, and virtually every African currency has collapsed. Even the US dollar, the most successful currency of the last century, has lost 99.9% of its value over 100 years. That's the best-case scenario – your $1,000 becomes $1. Imagine the impact when currencies collapse more rapidly, like in Germany or Japan after wars, losing 99.9% of their value in 20-30 years.
How does Bitcoin offer a solution in these dire economic circumstances?
The problem is finding a trustworthy store of value. When the economy collapses, you can't trust banks. You need a trustworthy form of money, and that means scarce money. Historically, people turned to gold or art. But physical assets are vulnerable. You own them at the pleasure of those more powerful than you. If they dislike you for any reason – your race, religion, wealth, or opinions – they can seize your property. History is replete with examples of minorities and targeted groups losing their assets.
So, the key is finding a store of value that cannot be seized.
Exactly. Bitcoin offers exactly that: a bank in cyberspace, controlled by no one, owned by no one, untouchable by governments or corporations. It provides money that is scarce – 21 million coins, 100 million satoshis per coin. You control your own wealth. When you need to move, you take your money with you. If you don't trust a custodian, you can self-custody. And if you pass away, you can even take your private keys to the grave. This is an absolute property right, unique in human history. All other economic rights are privileges granted by the ruling class, which can be revoked. Bitcoin offers true economic sovereignty.
This concept of absolute property rights is incredibly powerful. You've spoken about how Bitcoin is the "crown jewel" of capital preservation. Can you elaborate on that analogy?
Think about royal families throughout history – the British monarchy, the Emperor of Japan, the royals in the UAE. They still own significant assets, like Windsor Castle or Buckingham Palace, because these are assets with enduring value, worth more centuries from now than they are today. Similarly, you wouldn't sell Central Park in New York City for a quick dollar. Bitcoin, I believe, is even more valuable than the most desirable real estate on Earth. It is "cyber Manhattan." Your descendants, 10 generations from now, could be wealthy if you hold onto it. If you sold your Bitcoin today for a Ferrari, you'd essentially be selling your descendants' future wealth for a fleeting pleasure. It's like my great-great-great grandfather wanting velvet in his horse and buggy to impress a girl. Dude, sell the horse and buggy, keep the Bitcoin.
That's a vivid illustration of long-term versus short-term thinking. So, what is the end game for MicroStrategy with its significant Bitcoin holdings?
Our end game is to function like a reserve bank. Our reserve asset is Bitcoin. We've accumulated billions of dollars worth of Bitcoin. We then strip the risk and volatility from Bitcoin, which has about 40% volatility and high performance, and offer the world a low-volatility alternative. Most people want a bank account that pays 10 or 11%, not a roller coaster that pays 40% but requires a decade of commitment. The market for stable, comfortable returns is vastly larger than for high-volatility, long-term gains.
So, you're essentially creating a "digital money market" for those who believe in digital assets.
Exactly. We create digital credit for every dollar of Bitcoin equity capital we hold. For every dollar of digital capital, we can create 10 to 20 cents of credit. We've already sold billions in credit and plan to grow that significantly. Our long-term vision is to have trillions of dollars in Bitcoin capital, enabling us to offer hundreds of billions in digital credit. This credit, yielding around 10%, becomes the fuel for a digital money economy, encompassing DeFi and traditional finance.
This is a massive market. How does this strategy amplify returns for MicroStrategy's common shareholders?
By providing this low-risk, high-yield digital credit to creditors, we create amplification for our equity. Our common shareholders, MSTR holders, should outperform Bitcoin. If Bitcoin averages 20% annual returns long-term, we aim for 30% or 40%. We become the biggest buyer of Bitcoin, driving up its price and creating wealth for our shareholders. We're not just buying Bitcoin; we're powering the entire network and its ecosystem, from yield coins to DeFi protocols and even traditional finance.
You mentioned that working hard is the worst advice you can get. Can you explain that?
[Laughing] There's a quote by Robert Heinlein: "You don't win wars by dying for your country; you win wars by making the other guy die for his country." Similarly, I don't want to be a martyr; I want to be a winner. It's better to work smart, not hard. Think of it this way: would you rather be a strong man with a shovel or an ordinary person with a forklift? The moral of the John Henry story is that working yourself to death isn't the answer. In today's era, you need to work smart. I've worked thousands of hours a year for a decade, and sometimes made little progress.
So, it's about leveraging tools and technology rather than brute force.
Precisely. Consider AI. It can compose Shakespearean sonnets, translate languages instantly, and write entire books. If you want to learn Chinese and Japanese to distribute your podcast there, it would take you 10 years and cost a fortune. AI can do that in seconds. It’s about using technology to achieve more with less effort. It's not about not working, but about working more effectively. Imagine building a warehouse: you wouldn't use shovels; you'd use robots. If you're creating content, harness AI to produce better content and distribute it more efficiently.
That's a profound shift in how we think about productivity and value creation. You also stated that there's no second-best crypto asset, only Bitcoin. Do you still hold that belief?
I do. Bitcoin is the dominant digital monetary network. Human civilization settles on protocols – mathematics, language, and now, money. We use Arabic numerals because they're the best. We speak English because it's the language of power and influence. Similarly, Bitcoin is the most thermodynamically sound and powerful digital capital asset. It's worth $1.5 trillion because the smartest, most powerful people chose it. It's like container shipping: all containers are standardized because it creates massive network effects. Once a protocol reaches critical mass, it's nearly impossible to replace without a cataclysmic event.
So, Bitcoin is like the standardized shipping container of the financial world.
Exactly. It's the winner because it's the best-suited protocol. Its lack of functionality and stability became its strength, making it the ideal digital capital network for the world. This lock-in, due to massive network effects, makes it nearly impossible to supplant. Therefore, the advice to my children, and to everyone, is to learn Arabic math, English, and Bitcoin. If you want to be wealthy and powerful, align yourself with where the money and power are. Bitcoin is digital capital, and there is no second best.
Thank you for listening to this Podhoc podcast.