WBD268 Audio Transcription

Bitcoin in the Boardroom with Michael Saylor

Interview date: Tuesday 13th October

Note: the following is a transcription of my interview with Michael Saylor. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.

In this interview, I talk to Michael Saylor, the CEO of MicroStrategy. We discuss their Bitcoin purchase, where his conviction in Bitcoin came from, Square buying Bitcoin and the process of adding Bitcoin to a public companies treasury.

“I realised I’m on a melting ice cube of $500 million worth of money, the purchasing power is dwindling at 10% to 20% a year, I have to do something.”

— Michael Saylor

Interview Transcription

Peter McCormack: Michael, how are you, man?

Michael Saylor: Awesome; it's a double-awesome day.

Peter McCormack: Well, lots to talk about but, listen, really appreciate you coming on.  I know you wanted to save your favourite Bitcoin podcast to last, so appreciate that, man, and yeah, we've got a massive thing to talk about, haven't we?  Like, what timing!  A huge announcement that Square hasn't invested any money in Ethereum?

Michael Saylor: Yeah, I woke up this morning and I saw that and it made reading Twitter worthwhile for the year.  It was just an extraordinary piece of news.

Peter McCormack: Why do you think they haven't put any money into Ethereum?

Michael Saylor: Well, I think in the crypto industry, there are two competing narratives and two competing schools of thought.  You can describe crypto as Vegas in cyberspace, or you can describe crypto as the savings and loan at the end of the universe.  And, if what you wanted was the savings and loan at the end of the universe, you want Bitcoin.  It's about trust, reliability, put it there, leave it for 30 years, and you don't really want lots of exciting things happening.

And, on the other hand, the entire DFI movement and the Ethereum movement is all about smart people doing complicated things in a hurry in order to get some edge on some other smart person, and it's a little bit too much of a Wild West.  And so, if you're attracted to the one thing, if you're a trader, then maybe you like that; but, I'm not a trader.  I mean, corporate treasurers aren't traders.  They're looking for the savings and loan at the end of the Universe.

Peter McCormack: All right, man.  Well, listen, it's a strange one because, obviously, you made a huge bet on Bitcoin, right; we'll call it a bet for now.  Square have a much bigger balance sheet but have put $50 million in.  But in some ways, it's also just as a warning, because that's a signal to Silicon Valley, that's a signal to other Fortune 500 companies, right?

Michael Saylor: Well, I think it's more important because, first of all --

Peter McCormack: I didn't want to say that.

Michael Saylor: Jack is such an iconic figure and such a leadership figure in the world.  I mean, he's a worldwide leader.  He represents something to everybody.  And second, they didn't make this move as just a financial gesture; they don't need the money; they have more money than God.  $10 billion in cash that's sitting around, but the market caps of Twitter and Square together are $150 billion, or closing in on $200 billion, or something.  So, this is not about money.  This is about empowerment. 

If you read their press release, what they said is, "We believe the crypto currency, and Bitcoin specific, is going to empower an entire class of people all around the world to live a better life".  And I think that that's incredibly powerful, because now you have two different reasons that you might want to invest in Bitcoin.  One reason, we think it's a good treasury reserve asset and it's safe and it's financially responsible.  The second reason is, there are 932 million people in those 20 countries with collapsing countries that have no chance at a decent life, and this is a lifeboat for them, right.  As I said, it's like an Ark of encrypted energy to escape the flood of a currency collapse.

I think Square, they wrapped that entire move with the agenda of, make the world a better place.  Who wants to stand against that?

Peter McCormack: Who, exactly.  So, I imagine you woke up, you saw that and first went, "Yes, amazing!"  And then, I imagine you also checked out the Bitcoin price.  But, I haven't checked it and confirmed it, but I did see someone say on Twitter that the MicroStrategy stock price went up 5%; is that true?

Michael Saylor: I believe it's up today.  I am not allowed to comment on the stock price going up, nor going down, so I don't make a practice of that.

Peter McCormack: Well, I can.

Michael Saylor: I'm delighted that Bitcoin price is up, and I'm delighted that this is injecting positive, constructive, inspirational energy into this space, you know, and I think only good things are going to come from that.

Peter McCormack: Well, I didn't see any MicroStrategy news today, so it's that thing where MicroStrategy is like a Bitcoin ETF now.  I mean, you can't comment on that, but I can!  Well, look, that's an amazing start to the day.  I know you're aware of Parker Lewis and his writing, but it's like that Gradually, Then Suddenly.  It's just like it's another one, but this is such a big one. 

I do wonder whether this will signal out to Silicon Valley, because do respect Jack Dorsey and firstly, I wonder whether Twitter themselves will also themselves make an investment; but, I wonder whether the likes of Facebook will be looking, or other Silicon Valley companies are thinking, "Look, we're sat on all this cash; why are they doing it; should we consider it?" because, even though at $50 million, it was actually a very small percentage of what they have on their balance sheet?

Michael Saylor: Yeah.  Well, I think there's a parade of wonderful that can follow this.  For example, there are a lot of people that will look to Square as an extraordinarily progressive, successful company, which they are.  It's just extraordinarily successful.  They're going to want to copy this, because who wants to argue with success, especially technology progressive success. 

There's another group of people that are going to stop and say, "What did he mean when he said, 'Bitcoin is a tool for empowering those in the world that don't have other options'?  What does this empowerment message mean?" and they're going to start thinking about it, and they're going to realise that people in sub-Saharan Africa can't buy Apple stock and wire it to their loved ones in order to avoid being beaten to death by a collapsing currency, right? 

And that's the difference.  Nobody's going to buy a T-Bill, they're not going to buy bars of gold, they're not going to buy stocks, they're not going to buy real estate in order to avoid having the currency collapse and being impoverished or starved to death.  But in fact, the real news from yesterday that I tweeted about was, "Bitcoin hits an all-time high in Turkey", which is meaningful for 90 million people, and there was an awesome story on Medium about the other 19 countries where the currencies are also collapsing.

So, when people are thinking about an investment that's going to change the life of 1 billion people and then they start thinking, well what's the next billion people that are going to have their currency collapse?  And then they start seeing, there is a fundamental difference between buying Amazon stock and buying Bitcoin, because Amazon stock's not going to fix the problem for 1 billion people in the world, and I think that that's awesome to bring that to people's attention.

I think the third thing, the third wonderful thing that's going to come from this is that, if Jack does it, there's a whole raft of other billionaires that are sitting on other companies with treasuries and they start thinking, "Well, if it's the right thing to do for the world, and if he did it in a courageous fashion, then why shouldn't we do it in a courageous fashion, because it's the right thing to do for the world?"

And that takes us to the fourth wonderful.  The fourth wonderful is, all of the hedge fund and fast money dudes on Wall Street just sitting around talking about how to front run all the non-traders.  I'm not a trader.  I buy it; I'm thinking I'm going to hold it until you rip it from my cold, dead fingers, right?  If I don't fail in whatever else I'm doing in my life, it's going to be passed on to my heirs and my heirs' heirs.  And, if I run into a crisis or problem, I'm going to take some out of my piggybank and I'm going to convert it to fiat to solve the problem.  That's the view of a long-term investor; that's the view of someone with conviction.  That's why it silly to talk about, "I sold it this week so I could buy it cheaper next week".  You look pretty silly on a day like today.

So, there's that group of people, but there's another set of fast-money traders on Wall Street and they're hedge fund guys.  And they're thinking and obsessing over the shape and the bend of the reaction curve, you know.  They're trading gamma and they're thinking, "I'm going to short it to buy it to short it to buy it", and now they're thinking, "Well, maybe we can get ahead of the guy that's about to follow Jack Dorsey's lead?"

So, Jack did it, then there's someone who's just as greedy, right.  They just want to make the money.  They're going to get in between the front run, the next decent, committed investor, and that creates its own self-perpetuating thing.  And of course, then you have just a raft of publicity and news stories, and you have a whole set of boardroom conversations and corporate conversations, both not just in public companies, but in private companies. 

And in those private companies, they're thinking, "Well, this is not even a …"  You know, 1% means it's immaterial, which means that you probably don't have to go to the board and get -- you don't have to go through a whole set of approvals that you would need if it became 10% or 20% or 50%, right?  What we did, we wanted to telegraph, because it's not 1%.  But, 1% makes a difference.  And, if you're a private company, you don't have to worry about that, you just move. 

And so, I think there's just an avalanche of wonderful things that happened and all of them add up to this simple observation: Bitcoin's a good thing and it's a safe thing and you might want to get some in case it catches on.  That's enough and that's a pretty good story.

Peter McCormack: But, there's another interesting news story that came out.  Somewhere I saw on Twitter today, I don't know if you noticed, but Argentina's heading to its tenth default; but, there was a tweet by Professor Steve Hanke who, by the way, is not a Bitcoin believer, but this was interesting.  He put, "Argentina's net liquid foreign reserves have evaporated and the peso is tanking again.  Argentina has no strategy".  And, Argentina was really interesting, because I always talk about, like, if I try and talk to my friends, go down the pub, and they're like, "Pete, tell me about this Bitcoin thing", and it's always hard to explain it.

When I was out in Uruguay, I was sat down with a couple of people from Argentina.  It was so easy to explain; they just get it.  You just explain, "It's money the government can't steal, they can't inflate away, and they can't seize".  They're like, "Oh, how do I get some?"  So, to see that news on that same day…

Michael Saylor: I feel for Argentina and I have business in Argentina.  In fact, we are the number one business intelligence company in Argentina.  We've got a great business there and I've got great employees there.  But, you want to hear two good Argentina stories from a non-bitcoiner, okay?

Peter McCormack: Yeah, tell me.

Michael Saylor: Here's my first.  I had $1 million in Argentina ten years ago and a bank account, and I read the news and there was no Bitcoin.  So, I did the best thing I could; I said, "Put it in a Bank of America in Buenos Aires.  Good.  Now, move it into a US dollar account.  Great, because I don't trust the peso.  The peso is trading 1 peso to 1 dollar.  It's pegged".  And I said, "I'm reading all this news that they might go off the peg, so put it in dollars".  And then I said, "Can you just wire it back to the US?" and they said -- my lawyers go, "No, that's illegal; capital controls".  So I said, "So, I can't get my money out?"  "No".  "Okay, well put it in Bank of America in Buenos Aires.  Great".

So, in rapid succession this happens.  Press release, "All US dollars in Argentina are here by law required to be converted to pesos".  So $1 million became 1 million pesos.  The next day, "The peso peg is broken and now the peso trades 10 pesos to the dollar", and I had $100,000 worth of pesos in 24 hours.  And after being beat to death a couple of months later, it's like, "Now you can wire out your money if you pay a 20% or 30% fee".  So, my $1 million became about $80,000 in short order; and, that was my first experience.

And we were a wealthy company, right, so it just irked me.  But, I had money elsewhere.  If that was the only $1 million in the world and you took 90% of it, it crushes you.  So, I felt for the Argentines there, but we kept doing business, and we do business in pesos, and bla bla.  Ten years go by, nine years go by, the year is 2019, I still don't know Bitcoin.  I start reading the Wall Street Journal.

Peter McCormack: Hold on.  Are you telling me 2019, you still didn't know Bitcoin?

Michael Saylor: I was an idiot.

Peter McCormack: No, that's just interesting.  I'm going to come back to that.

Michael Saylor: You got it in 2013, I forgot about it, I got wrapped up into the rest of the world, I was busy doing my thing.  There are a lot of reasonable people that are just busy doing other things, so they don't focus.

Peter McCormack: No, it's not a criticism; it's how quickly you moved then when you found out?

Michael Saylor: You know, wars have a way of opening people's minds to new ideas.  If you read, The Structure of Scientific Revolutions by Thomas Kuhn, he talks about paradigm shift.  The message is, people don't embrace new ideas until they die.  And, you have to wait for the entire generation to die.  Intelligent people don't embrace new ideas until they die, unless there's a war.  And the war is the one exception.

World War II comes along and you get some new ideas or, as Trotsky said, "You may not be interested in war; war is interested in you" and when there's a war on COVID, or there's a war on currency and you get slugged in the face, or when the currency collapses by 90%, then not being aware of something flips to, "Oh, my house is on fire; where was the fire extinguisher thingy again that I didn't think about?"  So, I think this is a year that opened a lot of people's minds.  But, enough of that.

Peter McCormack: Yeah, we'll come back to that.

Michael Saylor: 2019, I still don't know Bitcoin.  I read the paper; the peso is crashing again and I start having anxiety about our cash.  I'm like, "How much money do we have in Argentina.  My finance people are like, "I think $1.5 million".  We had $600 million elsewhere, so they're like, "It's not that much".  Their answer was, "It's not that much".  I'm like, "Tell me how much again?"  "$1.5 million, maybe $2 million".  I'm like, "Well, tell me exactly how much; I still care?"  "Well, $1.6 million". 

I said, "So, can we repatriate it?"  "Well, no, there are capital controls, we don't know how to do that".  I said, "Can you buy gold with it?"  "No, we can't buy gold with it".  I said, "Can you buy anything with it and carry it out the country?"  "Well, we don't think you can".  Okay, this is true, I literally said to my finance person, my treasurer, with my general counsel in the room, I said, "Can we buy a yacht with it and sail the yacht to the Caribbean?"

Peter McCormack: Please tell me you did that!

Michael Saylor: They looked at me like, you can't tell your boss that he's batshit crazy, but they're like, "We don't think we can do that".  Peter, I said, "I'm deadly serious.  Buy a boat and sail it to the Caribbean; get the money out of the country".  They said, "We don't think we can do that".

And so, that was an example of me just not winning an argument, or not winning a discussion.  The final result, or the resolution was, we bought some sovereign debt, something, from the Argentine Government that we could legitimately move out after we took a 20% haircut.  And so, that was my two Argentina stories.

Now, if I had to do it again today, the question I would have asked, instead of saying, "Can you buy a boat and sail it to the Caribbean?" would be, "Can you buy Bitcoin?"

Peter McCormack: Yeah, of course.  Oh, man, the country's such a basket case; I mean, a lot of places in South America are.  Uruguay's one of the places I've been that's okay, but I went out to Venezuela earlier this year.  Again, these places are such a basket case.  But, explaining Bitcoin to them is really easy.  Anyway, listen, we've got a lot to get through.  I can't remember, because we spoke before; did I tell you about that time you first messaged me?

Michael Saylor: Tell me. 

Peter McCormack: So, on a day that --

Michael Saylor: I knew you.  You and I were on a first-name basis.  I had listened to 10 or 20 hours of you and what Bitcoin did before you'd ever heard of me.

Peter McCormack: I hope you listened to more of that than you did of Pomp!  But, look.  My DMs are open, right, and I get a lot of messages, and a lot of them are just nonsense, so you have to filter them very quickly.  On the day your news came out, you messaged me, or DMd me, but you didn't send me a message; you just sent me a link to the tweet and I was just like, "Whatever, I don't care, whatever", and just ignored it.  And then I saw, I think it was someone like Nic Carter tweet about it and I was like, "What's this?" and read the story and was like, "Oh, that's cool.  I should try and talk to the CEO, try and get him on the podcast".  

Then I was googling MicroStrategy, MicroStrategy CEO, and it comes up, Michael Saylor, and I'm like, "Okay".  So, I click on the link in the Google search results, it comes up with you, and I'm like, "Oh, his DMs are open".  I click on your DMs and there it is, and there's the message we were on and I'm like, "Oh, shit, you messaged me", so big confession there.

Michael Saylor: Well, Peter, I didn't know anybody in the Bitcoin community and they didn't know me.  I was a non-person.

Peter McCormack: You're a sniper.

Michael Saylor: I made a list of the 12 or the 10 most influential people in the Bitcoin space and I thought, well maybe if I message each of the 10, one of them will notice it and they'll post it, because no one's following me.  So, I was doing the best I could with the tools that I had at my disposal.

Peter McCormack: Well, my mistake.  Well, listen, we got here in the end.  You've been busy now this last few weeks, right, in the Bitcoin space?

Michael Saylor: Yeah, we're pretty busy doing a lot of things, working hard.

Peter McCormack: No, I mean, in the Bitcoin space, you've been doing a lot of interviews, you've become known.  So, confession number 2; I haven't listened to any of your other interviews yet, and I did that on purpose.  I tend not to listen to other Bitcoin podcasts, because if I know if I'm going to interview the person, I don't want to be distracted, but this one I purposely …

Michael Saylor: They're deadly boring and I kept all the really good stuff for you, Peter.

Peter McCormack: Well, of course.  Like I said, it's your favourite podcast.  But, no, I haven't listened to the others.  I do know you've talked about your career history.  I know you talked about that with Pomp, so we won't bother doing that, but there is a bunch of stuff to talk about.

Firstly, though, how are you finding it, because you said 2019.  That's really interesting.  So, you discovered it, obviously went deep down the rabbit hole quick, pulled the trigger, which is amazing, but how are you finding navigating the space, because it can be great and it can be unforgiving; but, how are you finding it?

Michael Saylor: I like bitcoiners, right.  I love everything about them, right.  I love the Austrian economic sect and I love the libertarian sect and I love the people that have read science fiction and Robert Heinlein and The Moon is a Harsh Mistress and There Ain't No Such Thing as a Free Lunch and The Citadel People; I love that.  And, I love the people that are focussed upon how we empower the billions of people, bank the unbanked, and I love the techno-enthusiasts and I love the progression of it.  And I love the refreshing contrarians and the sceptics and the like.

It's an interesting community with people with a lot of passion.  Some of them can be, like people can be bent out of shape over the smallest thing.  You'll trigger them and if you were to say something little, you know; once somebody thinks that their encryption is better, they're like, "Bitcoin's not encrypted", you know.  Or, once somebody believes that their transactions are faster, they're like, "Bitcoin's too slow".  Or, once they think, you know, the ones that want to bank the unbanked get kind of upset that maybe people with money might get a benefit from it and they're like, "We can't have the interest you've shown hijack this thing".  And so, there's a lot of people that wear their heart on their sleeve.

But, I'd rather have it that way than the other way.  I mean, the other way is just a bunch of mercenaries that don't give a damn about anything.  The guy that buys Bitcoin so that they can make a 3% trading yield, and sells Bitcoin; that's too mercenary for me.  I don't want to be in a world full of mercenaries that are just looking at me as a one-night stand.

Peter McCormack: Okay.  Before we get into it, like I say, we've got a lot to get through.  The one thing I did want to talk to you about is, how much exposure have you had to how the kind of open-source dev world works, because one of things I was going to -- I know it's a bit cheeky, but I was going to pitch it at you as that, you've already made a massive investment, but have you considered, or would you consider dev sponsorship; have you spent much time looking at that stuff?

Michael Saylor: You know, as I got in the Bitcoin community, I realised that the real unsung heroes of this space are the developers that are working on the software, especially things like Bitcoin Core.  If it doesn't get upgraded and maintained, we all have a problem.  And, if it gets upgraded too enthusiastically, we still have a problem.  And so, then I started thinking, who's paying all those people to keep the heart and the soul of Bitcoin beating?  And, that's a rabbit hole that I'm moving down right now.

I've been on a journey to get more educated as to how Bitcoin Core and how Bitcoin software in general gets maintained, tested, developed; started to understand the consensus mechanisms, etc.  And I would say the conclusion I'm coming to is we need to support it.  So, Peter, I think you've convinced me. 

Our company's going to start by supporting a Bitcoin developer.  I've got to figure out which Bitcoin developer, but we're going to start by supporting one and I think we'll evolve and increase our support over time, because the unsung heroes of this space, the keepers of the flame, are the developers, right?  So, if you want this thing to last for 30, 40, 50, 100 years, we actually need passionate developers that are going to maintain this.

So, yeah, it seems like I should be supporting that effort, the company should be supporting that effort.  I probably took that --

Peter McCormack: Very cool.

Michael Saylor: -- for granted when I started, but now I'm not.  I'm appreciating the need for it.

Peter McCormack: That is so cool, because it does rely on …  It's like one of these weird things with Bitcoin, like you can own it, but some people have a sense of responsibility to support it in other ways, and there are a lot of people supporting the developers.  The fact that you would do that is very cool.  We'll have that conversation offline, because I guess we have to think about who would be the best person to speak to about who you would want to consider supporting.  And you might want to figure that one out yourself, but that's very cool; I will help you out with that.  That's very cool, well done, man, that's amazing.

Okay, so the first area I want to go into is that, and interestingly Square came out with their announcement today and also talked about releasing almost like a guide for people who wanted to invest in Bitcoin; so, I thought it would be interesting also just to go through your experience as well, cover that, before we get into some of the juicy details about what you think about Bitcoin, some of the interesting topics where I'm sure we'll battle on some of them. 

But, can you just talk me through the timeline of how this happened; so, you discovered it in 2019; what the timeline was up until the point when you, not the internal one, but you'd made the decision to think, "Do you know what; we need to do this"; can you talk me through that timeline?

Michael Saylor: I think the world undergoes this -- enters into this pandemic and all the geopolitical reaction to the pandemic starting mid-March.  By mid-April, it's pretty clear to me that there's going to be a K-shaped recovery, that what we've got is a massive Fed intervention which has inflated the value of fixed income securities and stocks back to all-time highs, or on the way to all-time highs, as though there was no pandemic and as though there's no lasting consequence, or economic consequence, to the pandemic.

And then, on the other hand, main streets are shutting down and there's what they say on TV and then there's what you think.  And what I thought was, everybody on television is being optimistic, you know.  We started with 15 days to stop the spread; and then it became, maybe by Easter; and then it became, well not quite yet; and then it became, one thing after the other.  So, by April, it's pretty clear there's a disconnect, and that disconnect causes you to question all the things you thought you knew about money, and all the things you thought you knew about the economy.

If you believed that inflation is less than 2% and the Fed is managing this really well, then maybe you would have noticed that interest rates just started jumping back up to 5%, and they're 2.5% and you're thinking, "Well, maybe we'll get there to 5%", and it's like a 2% thing.  When interest rates go from 2% to zero in a matter of days, and then when their sentiment becomes, "Well, I'm not thinking about raising interest rates and I'm not thinking about thinking about raising interest rates for many, many years", then you realise assets are going up, cash is not going up in value; inflation in theory is not here, but asset inflation is obviously here. 

So, if there is no inflation, how come I can't afford to buy anything that's going up in price so rapidly if there's no inflation?  And, from that point, you start to reassess your views about the intervention of the central bank and the impact of the government.  You didn't really have to address it before, but then you have to address it. 

So, I would say I was kind of woken from my slumber, or shaken out of a lethargy, by about mid-April, and then I started about six weeks of intensive exploration.  That's when I discovered the Bitcoin community, the crypto community, I started going down the rabbit hole and I'm reading the internet of money and I'm listening to a bunch of your podcasts.  And, I am listening to some Pomp podcasts, I'm not going to lie!

But, I'm also watching debates between Eric Voorhees and Peter Schiff.  Then, I eventually find, at some point, I remember you saying you disagreed with Saifedean's view of arts and food and I'm like, "Who is this Saifedean dude?", because you're talking about it, so I guess I'd better read it.  And I understood what you were saying and I get that, but the nuggets I took out of the book were the 7% expansion of the monetary supply for ten years.  That's the eye-opening thing for a decade. 

Then, once you see that the monetary supply is expanding at 7% and there is no inflation and interests are low, and then you see that the S&P 500 is going up by 8% a year for a decade, and then you start looking at the bond rate and you're like, okay, well interest rates on the ten years went from 550 basis points to 50 basis points.  Then you realise that a $1 million bond inflated to be $10 million; you have to pay $10 million to get the same $50,000 in interest that you could have got for $1 million ten years ago, and that means that the inflation rate on a bond is 22%.

Once you get that, and that's an insight I had between 1 April and June, then I realised I'm on a melting ice cube of $500 million worth of money; the purchasing power is dwindling at 10% to 20% a year; I have to do something.  Then this becomes a question of what are you going to do.  And, I cycled through all these other investments, but Bitcoin is the purest.  It's the purest treasury reserve asset.  If you're looking for -- if I had $100 million and I wanted to put it into a vault and take it out in 30 years, maybe if I wanted to put $100 million in a vault and take it out 100 years from now…

And most people they roll their eyes when I saw this because they're like, "Well, who's going to live 100 years; who thinks about it?"  That's not the point.  The point is, when you're thinking about 100 days, there's just a bunch of noise.  It's all irrational.  There's that phrase, "The market can stay irrational longer than you can stay solvent".  And so, whether you think about 90 days or one year or two years or three years, then you're just making a bunch of decisions based upon the greater fool theory. 

I know it's stupid to do.  It's stupid to loan money at 1% interest, but if there's a fool that's going to actually agree to loan it at 50 basis points for the rest of my life, I'm actually going to make a lot of money when that other fool steps into that trade.  So, the greater fool theory kind of gets into the mix when you take a one-, two-, three-, five-year time frame.  When you go ten years, it gets different.  When you go to 100 years, it's extremely clarifying because now, you realise the structural defect of every other idea you have with a gravitas.

When I started saying, "What am I going to do with this money?" and I started thinking 10 years out, 30 years out, 100 years out, and then I discounted back, it became clear that real estate, bonds, stocks, corporate debt, sovereign debt, gold, silver, commodities, none of these things are going to work.  They all have defects with them, and we can go into all of the defects if you like, but the conclusion is they all have defects.  You're going to lose 99.5% of money if you leave it in the bank over 100 years; you're probably going to lose 95% of your money in gold; but, you might lose it all in gold too over 100 years, for a lot of reasons. 

Peter McCormack: Tell me that one, because I would have thought gold would have been a safe bet, unless you think Bitcoin is destroying gold's value proposition?

Michael Saylor: Well, it's an important point.  Maybe the single most important point, the single most important attribute of Bitcoin versus gold that people do not understand, I think, because they're not really thinking deeply about the problem, is this.  Go into any bank in any major city in the year 1900 and put $1 million into gold.  Okay, think this through.  You have $1 million in the year 1900.  You walk into the best bank in Tokyo and you buy $1 million in gold.  How much money do you have by the year 2000?  Nothing.

Peter McCormack: I don't know.

Michael Saylor: Toky; did they win or lose the war?

Peter McCormack: Okay, lose the war.

Michael Saylor: In 1945, they lost the war.  The bank failed, the government failed.  Now go into Beijing in 1900.  By the year 2000, what happened to your gold?  It's gone.  Pick a city in the western world.  Buenos Aires, it's gone; Rio de Janeiro, it's gone; Berlin, it's gone.  It's gone twice in Berlin.  You would have lost the money in 1918 when they lost the First World War; you would have lost the money in 1945; you probably would have lost when the Weimar Republic failed and the Nazis took over in 1930.  There are three regime changes you would have lost your money.

And Paris, you would have lost it when the Germans walked in, marched into Paris, in 1940.  Give me a city where you would have not lost your money?

Peter McCormack: Bedford!

Michael Saylor: Try New York; you would have lost it in 1933.  The United States won every war in the 20th century.  You would have lost your money in New York, DC, San Francisco and Chicago.  London?  Not clear.  You might have had the gold seized in a currency revaluation in London; I haven't studied that one.  Off the top of my head, I'm thinking maybe you would have not lost all your money in Geneva or Zurich, maybe.  That's the only place, right?  I mean, Rome doesn't work.  How about Madrid?  No; Spanish Civil War.

So, that's counterparty risk.  In 100 years, you'll take 95% chance the bank fails or the regime fails, right; 95% chance.  If the bank doesn't fail, the regime doesn't fail and nobody seizes your gold or your money and the currency doesn't collapse, in the best case, miners are going to produce 2% more gold every year.  If you produce 2% more gold every year, the half-life of gold is 35 years, which means you go from $100 million in gold to $50 million in gold to $25 million in gold to $12.5 million in gold.  That's assuming the price of gold is flat.  If the price of gold tracks inflation, you're going to get 2% more in gold; you're going to lose 87% of your purchasing power over 100 years, if the regime doesn't fail. 

But, there's a problem with that because it's a commodity.  I got my start in business, Peter, modelling commodities for DuPont and Exxon; petroleum, nylon, fibres, polyester, all these commodities.  Do you know what the problem is with commodities?  The problem with commodities is it's a dirty word.  No intelligent business person ever in 100 years wanted to be known for being in a commodity business.  When I sit around with the DuPont executives, it's like, "Oh, we've got to get out of this business; this is a commodity business.  This business was really good until it got commoditised".

Commoditised was a synonym for "destroyed", Peter.  I got commoditised; I got destroyed.  What's so great about commodity money?  Now, why is commodity a dirty word?  Saifedean makes this point in his book, other people make this point, and the point is this: human ingenuity, technology and capital, entrepreneurism with technology with capital, can produce anything on this earth that is in high demand if the price is high enough. 

You want an apartment on Central Park that's 16,000 square feet with a perfect view of Central Park in the year 2018?  You're late, right?  Impossible?  No; perfectly possible.  I buy a block, it costs me $100 million, I build straight up 150 stories, I sell you the apartment for $150 million.  Okay, I wouldn't buy that apartment; you wouldn't buy that apartment; but, if you have $150 million, there's somebody in this society that can manufacture you Central Park real estate with a perfect view.  It's just about the amount of money you want to pay.

So, commodity, the kiss of death is, when the price goes up, everybody's going to charge into that business and they're going to double the production of it.  If the price of gold goes up, there are more goldminers coming online.  When it goes up by a factor of ten, there are a lot of goldminers coming online.  And by the way, that's not the problem; that's a part of the problem; that's a first order of problem.  If I actually take the price of gold to $50,000 an ounce, I'm going to get a lot more goldminers.

But here I'm going to tell you what the real problem is.  When the price of gold goes to $50,000 an ounce, and hundreds of billions of dollars get invested in goldmining, they're going to double the production or triple the production of gold; they're going to drive the price down.  But, the variable cost of producing gold's going to be $2,000 an ounce; the price is going to be $50,000 an ounce; the price of gold is going to get driven into the dirt to $40,000 to $30,000 to $20,000 to $15,000 to $10,000 to $5,000.  When it gets to $2,000 an ounce, it's possible that the goldminers will go offline, or the commodities will go online.

But, let me tell you what happens to commodity businesses, every one of them, for 100 years, I could give you 1,000 examples.  The price goes below the variable cost because there's a government involved that will subsidise the variable cost to keep the plant running.  So, if the actual fully-burdened cost is $3,000 an ounce and the variable cost is $1,500 an ounce and you thought it was going to $10,000 an ounce, it will shoot through the fully-burdened cost, the cost to capital, to the variable cost.  And, it might even, for a while, go below variable cost because it's a national champion, and somebody wants to drive everybody else out of business.

By the way: what's the most famous commodity in the world right now?  Oil?

Peter McCormack: Well, I want to say Bitcoin.

Michael Saylor: Yeah, we love Bitcoin; I get it.  But, oil. 

Peter McCormack: I know, it's oil.

Michael Saylor: What just happened to oil in this crisis?

Peter McCormack: It went negative.

Michael Saylor: Did the price of oil go below the fully-burdened cost of producing oil?  Yeah.

Peter McCormack: Dude, it went negative.  They were paying you to take it.

Michael Saylor: Is there any debate about whether it went below the variable cost of producing oil?  The point here is, this is why you don't put your treasury reserve in a commodity, because ultimately it becomes political.  A government might decide that they want to mine gold, or they might want to buy in to the commodity.  When you have $10 billion worth of goldmines and the price of gold goes down, do you think anybody walks in and says, "Let's shut down all of our goldmines, liquidate them for cash and invest it in Amazon stock"?  You can move liquid capital from Amazon to Apple to Bitcoin.  You can't move goldmining capital.  It only does one thing, which means that I am locked, my knees are buried up with concrete and all I know how to do is I know how to make more gold.

So here, you're damned if you do.  If the price goes up, goldmining is going to triple.  If the price goes down, goldminers are going to keep producing gold, because they've got to work off their fixed cost.  By the way, this happened with oil during the fracking explosion.  We produced 5 million barrels of oil in this country a day and everybody said, "Oh my God, the price of oil's going to $100 a barrel; it's a crisis".  We fought wars over this, Peter; two wars over this.  We fought wars in order to go protect our oil interest, because we thought the western world was going to be choked to death if we didn't have access to cheap oil from Saudi Arabi. 

So, what happened?  The price of oil went up.  When it got to $100 a barrel, you know what happened?  The big famous bulge bracket banks, they would form conferences and they would bring high net worth individuals together and they would say, "You know, there's an opportunity to invest billions of dollars in these new fracking operations, and they can produce oil for $45 dollars a barrel, or $40 a barrel, and the price is $100 a barrel, and we can sell it for $70 or $80 or $90 a barrel?"  Billions of dollars flowed from Wall Street into fracking, and Chesapeake Energy and other frackers came online.

The production of oil in the United States was pegged at 5 million barrels a day for 50 years.  Then, the next year, it's 2010, it goes 6 million and 2011 it goes 7 million, and 2012 it goes 8 million, and then the next year 9 million, and the next year 10 million.  And this thing that everybody new was impossible to produce, that we went and fought wars in order to …  Generally when you fight a war, it's because you think it's pretty important, right?  We thought it was impossible to produce oil until we just put some billions of dollars into it.  And we took capital and we took chemistry and some technology and we dynamite some shale fields and, Peter, it's very hard to do. 

It's hard to put a man on the moon.  It's hard to make an aeroplane not fall out of the sky.  It's really hard to create steel.  You screw up with the steel and it overflows, it falls on the concrete, the water in the concrete super heats, the steel explodes, it becomes a bomb, it kills everybody for hundreds of metres in every direction.  We're surrounded by hard stuff that human beings figured out how to do because they had the incentive to do it.  So, we figured out how to produce oil, and there's no oil crisis in America anymore.  We have so much oil, we tanked the price of oil.  We drove the price of oil so far down that we're ready to go fight a war to get the price of oil up.

This is the problem with commodities, and this is why you would be a fool to put all of your life savings into commodity money.  And this is why, I joke; I say gold peaked in the 19th century.  It's the best thing we had until we came up with something better.  Bitcoin is 21 million gold coins and, by the way, Bitcoin money is so much better than goldmining.  I don't think people get this.  Let me make one more point.

If you put $100 billion into goldmining, you have $100 billion in special purpose capital and the only thing you can do with it is flood the money with gold, and you will do that until you can't anymore.  The goldminers are the enemy of the gold owners; they're your enemy.  They're trying to dilute and debase your currency.  They're not your friend.  Goldminers are at a war with gold owners. 

If you put $100 billion into Bitcoin mining, you're going to buy a range of SHA-256 miners and you're going to buy the next generation and the next generation.  By the way, what are they good for?  Nothing.

Peter McCormack: Money.

Michael Saylor: Nothing, other than Bitcoin money.  You can't get --

Peter McCormack: Solving algorithms.

Michael Saylor: You can't run data centres with them.  You have committed -- by the way, there's only one thing you can do with them, which is you can provide security, hash power, to the Bitcoin network.  You can defend to the death the Bitcoin holders' assets for the next 100 years; that's all you can do with it.  You can't create anymore Bitcoin, and so the beauty of it is you're making a capital investment in a special purpose asset that has no purpose in the universe, other than to protect and nurture Bitcoin.  And that's a good thing, because you can't produce more of it, you can just make it better.

If the price of Bitcoin goes down and you own this equipment, you're not going to sell it to Amazon, you're not going to give it to Google.  The only thing you're going to do with it is keep running it until the price of Bitcoin, or the price of running it, is less than the marginal cost of your electricity.  And, by the way, you might keep running it below the price of electricity because your government, the nation state that has the Bitcoin mining facility, might very well view that the same way that the Saudi Arabian government viewed oil which is, we're just going to run our Bitcoin mining rigs until we drive out all the high-cost producers, and we're going to get the hash power.  And, when the price of Bitcoin noses up again, then we're going to own X% more. 

So, what you have is you have a dynamic, but it's so much more constructive to the price of Bitcoin than oil drilling is to the price of oil, or goldmining is to the price of gold.  Bitcoin is not a commodity; it is a specialty, the ultimate speciality, because it is ultimately scarce in the universe.  As people put more capital and more ingenuity into it, they make it better.  With commodities: gold, silver, real estate in Manhattan, you know, what happens when Tesla price goes up?  Well, they can make more Tesla stock in a heartbeat. 

So, you can produce more of most things.  Name something in the universe that is a liquid treasury asset that you can't produce more of if the price goes to infinity?

Peter McCormack: Bitcoin, man; Bitcoin.

Michael Saylor: I couldn't find anything else, Peter.  I looked at everything else; I couldn't find it.

Peter McCormack: But, look, I agree with you and that's brilliantly articulated.  Let's just take a second.  Bitcoin isn't definite.  It does have its own risks; limited, and I think things like what you've done and now what Square have done is actually building a regulatory moat around Bitcoin.  I think you're creating, as miners defend the security of Bitcoin, I think you're defending Bitcoin's legitimacy because if any government, specifically the US government was to, let's just say there was an attempt to ban it, they would be on shaky legal ground with the likes of yourselves and Square.  And, if enough companies have invested, I think there could be a challenge to it.

That said, all I'm saying is there is still a certain amount of risk and when you're sat there with $0.5 billion melting ice cube, you could have said, "We'll put $100 million in and we'll put some in gold and we'll put something else in there", you know.  You could have moved your money around and hedged your risk, but you didn't; you just went balls deep in Bitcoin, and you were like, "Fuck this, let's do it all!"  So, that's some conviction that you had?

Michael Saylor: You know, when the war arrives, you've got to choose sides.  You're one of the nobles during the War of the Roses and the Lancasters are coming across from the left and the Yorks are coming across from the right; you can stand in the middle, but I think you kind of have to make a decision.  This is the time period when I think everybody's got to decide what they stand for, don't you think?

Peter McCormack: Well no, I agree.  Listen, I made a show shortly after your purchase with a couple of other guys and I went right out and I put -- look, my business is small, it's a podcast business; two shows.  But, the amount of money sat on the balance sheet relative to me and my income was high.  We're talking six figures, so for me that's relative and that's high.  And, I became nervous about holding pounds. 

So, I moved up to 60% of my business balance sheet, and that's money I don't need.  So, I have my ongoing working capital, which is absolutely fine.  But, this is the money where I'm not going to pay it out as a dividend and it's just sat there.  So, I moved 60% and I'm personally up to 80% now, because I guess I had a certain amount of conviction and I got more conviction from what you did.  So, I picked a side, I guess?

Michael Saylor: I think there are just a bunch of good things going on right now, and I agree with you; there is risk to anything you do in life.  Every decision you make in life, there is risk.  And, if you're afraid to take any risk, you'll never do anything, you'll never go anywhere, you'll never try anything, you'll never do anything, and so we all have to deal with that.  That's part of being an adult, and that's part of the human condition. 

When I looked at the risks in Bitcoin, there are regulatory risks.  By the way, there are regulatory risks that are different across every single jurisdiction, right?

Peter McCormack: Yeah, that's fair.

Michael Saylor: It's different in Wyoming versus New York versus Florida versus the US versus Russia versus China versus Japan versus whatever, and it's changing all the time.  There's a whole set of challenges to be overcome and there's a huge community of bitcoiners that are working in all their jurisdictions to do the right thing and to overcome those challenges.

Then there's a set of risks in the technical domain, in the software domain.  We could actually get really enthusiastic and put so many features in the thing, we break it.  But, I'm a software -- I've been in software for 30 years.  You know, Peter, most of my failures, they weren't bad ideas; they were good ideas pursued too enthusiastically.

People think, "Oh, yeah --"

Peter McCormack: No, don't say that, you've just gone after Bitcoin enthusiastically!

Michael Saylor: I am enthusiastic.  But the point is, you sit down and you think, "I can build this application and I can put 37 features in it", and it fails and tanks and then you realise the guys at Instagram created a piece of software and all it did was share a photo; and you couldn't even resize the photo.  And when I looked at it, I thought, there's a thousand photo apps are better than this, but theirs is the one that won, because resizing the photo wasn't critical to the photo network.  What was critical to the photo network was speed and simplicity.

Too often, enthusiastic technologists, they want to add a feature, and with a feature comes an attack surface or a performance problem or an instability, and that kills the network.  So, the challenge is to have ten ideas, but to only embrace one idea, and to have the humility to know that just because there are a hundred things I could do, maybe there's only one thing that I should do, that I need to do, and the others are just undue risks that are probably going to be counterproductive and they'll either destroy everything, you'll wreck the entire business, take it to zero; or, they'll make it mediocre.

So, there's technical risk in Bitcoin and there's a whole community of people fighting that technical risk right now and we want to pray for them that they make the right decision, right?  And then there are the miners that are running and they're struggling with hardware risk and power risk, etc.  I kind of think about the keeper of the flame, you know; that's such a strong metaphor.  For example, have you ever been to the Pantheon in Rome?  It's not the Parthenon, but the Pantheon.  It's a beautiful building, built by Agrippa.

Peter McCormack: I think I have.

Michael Saylor: He was Augustus's right-hand man, the guy that won the war for Ceasar Augustus.  He endowed this building, the Pantheon --

Peter McCormack: Yes, I have.

Michael Saylor: -- a gorgeous building.  You walk into it, it's got a big oculus in the middle.

Peter McCormack: Yeah, and the light comes through it?

Michael Saylor: Yeah.  And you could never forget it if you walk in the building, because this bolt of light comes in.

Peter McCormack: Yeah.

Michael Saylor: Why do you think that lasted for 2000 years?  Most buildings don't last for 2000 years.

Peter McCormack: I mean, I guess because it was built on solid foundations?

Michael Saylor: I would love to say that.

Peter McCormack: And, I don't want to say it was defended by the Italian army?

Michael Saylor: It's easy to build a thing; it's hard to maintain the thing; and it's really difficult to profit from a thing.  What you learn over time is that over time, everything gets decimated.  Everything gets torn down and the only way to not decimate is you have to maintain it. 

The reason that building is still standing 2000 years later is because it was adopted as a church by the Roman Catholic church and you had 100 generations of monks and all of the cash flows of the Roman Catholic church, or the church through the ages, flowing in to maintaining that against corrosion and the destructive force of rain and you name it.  They rebuilt it, they maintained it.  If the church had not adopted that, it would have crumbled eventually.

So, when I use the words "keeper of the flame", you ask how do I get something to last hundreds of years, right; what's going to last hundreds of years?  Oxford?  Cambridge?  It needs to be an institution.  St Peter's?  St Paul's?  Something that someone feels a religious passion about.  It's important enough for me to lie down in front of the tank for that.  My son, my daughter will carry on.  This is in my Will.  I will leave, as my last Will and Testament, I will leave all my money to the maintenance of the thing.

So, when I look at Bitcoin, I think the maximalists are really critical to this entire thing.  That's what elevates it beyond someone's science experiment, right, and there are a lot of things in the crypto space where their tech and community is, and all they want to do is find a better, cheaper, faster, cooler, sexier widget.  But what they're missing is, is their grandchild going to fight and die and protect and brag about the fact that their grandfather or grandmother did this thing?

If you go to St Peter's, I think it took like 180 years to build the building.  These things take a while and they stand for a while and people didn't do it because they thought it was a cute trick.  They thought that it was a monument to divinity, you know, it was a way to achieve all their hopes and their values and their aspirations as human beings. 

And, when I watch the Bitcoin network run and I watch the software developers feed it and the nodes feed it and the miners feed it; and then I look at the analysts and the people that cover it and the people that promote it; everybody's out there and building servers on the back end and exchanges; and they're building front-end wallets and they're building software; and they're fighting those regulatory wars.  Those are the cyber hornets that are serving the Goddess of Wisdom, and it's going to be a never-ending fight for as long as the thing lives. 

But, news flash, so is everything else; countries, religions, institutions, families.  They're all never-ending fights.  The question is, where are your values and how are you going to spend your life force and what do you care about and what do you want to be defined by?

Peter McCormack: Okay.  So, you make the decision, you get your absolute conviction, you bowl into work one day, sit down with your board and you're like, "Lads, listen, I've got an idea".  How does that work; how do you first deliver that?  Did you have to counsel some people internally first; did you sit down with your board and go, "I've got an idea"; how did that work?

Michael Saylor: For something like this, you need the consensus of the officers and the directors of the company.  They all have to internalise it, understand it, believe it and support it, and they all have a voice in it.

So, first I collected a small curation of materials, things that make the case; call it about three hours' worth of YouTube videos and a number of documents.  And, by the way, there's a Bitcoin section on MicroStrategy's website, for anybody that's interested in this, and we've actually created its own category.  And in addition to some of my videos, some of the videos that I relied upon that I showed to the board are there and some of the documents; and, some of the whitepapers are there for anybody else to look at, including some of our financial filing.  So, we've tried to curate this so anybody else can just go and look.

What I did is I curated a set of materials, then I had one-on-one meetings.  I think what I did is I sent the materials to everybody and said, "Look, this is your homework; I need you to look at all this and watch these things, because it's better explained by one of the early --", there's the early Andreas discussion; there's the "What is Bitcoin?" discussion; there's, I think, a seminal debate between Eric Voorhees and Peter Schiff on Bitcoin versus fiat.

Peter McCormack: I love that debate.

Michael Saylor: It's kind of ironic now; Peter Schiff defending fiat seems ridiculous, right?

Peter McCormack: Yeah, I know.

Michael Saylor: I don't even know, how can you possibly believe in gold and then defend fiat?  I don't get it.  But, you know, I found things like that, I put it to the directors and officers when I met with them one-on-one, and then I answered every question.  We had a discussion, you know, and everybody told me what they thought.  Some of them had some experience with Bitcoin, and some had experience with crypto and some did not, about half in half.  Half of them were ahead of me, and then half of them had never seen this before.

So now, we're all coming up to the same level of speed.  And, in my experience, Peter, if you want to create stress and anxiety, there's a simple way to do it.  You put two people in a room and you give them a topic which takes 30 minutes to understand and you give them 5 minutes to make a decision.  Whatever it is, if it takes 5 minutes to understand the issue, then I give you 30 seconds to make the decision.  So, that's the way that you have people at loggerheads with each other. 

And the real key to getting consensus and having everybody feeling good about it is you can't jam these things on anybody; you can't rush them.  Everybody needs to feel respected and it all needs to be symmetric information, not asymmetric.  I can't have ten hours of knowledge and you have ten minutes of knowledge.  Two intelligent people are going to disagree and fight with each other.  So, first we establish a base line, then I figure out where everybody is, then we come together as a group and we discuss it.  Corporate governance is critical in a publicly traded company, right?  

Here's an idea, and you and I, if you're a private investor, all I have to do is convince you that this is better than real estate, stocks, bonds, swaps, other forms of cash, random insurance policies and commodities, gold, silver, platinum, or whatever; or, buying another company.  Those are all the things you can do with the money.  Buy anything on earth.  Or Picassos, right; you want to buy art?  Scarce collectibles.  All I can do is convince you this is better than that and then we're done.  Then you're like, "Okay, Mike, let's just put our money in this", or, "Give me $10 million worth of it, or $100 million worth of it".

If you're a publicly traded company, you've got a whole other set of questions.  How do we account for it; how do we report it; how will our partners feel about it, our outside shareholders, our partners in the business?  So, after I finish figuring this out, figuring out what is the most rational course of action from an investor point of view, we have to ask the question, what does the Body of Civil Law say; what are our disclosure obligations; what are our accounting obligations; and now, how do we communicate this to our counterparties?  And by the way, we also have outside law firms and we have outside accountants and we have the rest of our employees and we can't do business without their support. 

Peter McCormack: That's a lot of people?

Michael Saylor: It's kind of like being married to 15 different women at the same time, and they all have equal rights.

Peter McCormack: Jesus, that's like a description of hell!  I struggled with one.

Michael Saylor: But, you understand you can't just make the decision yourself.  There's that phrase, "If you want to go fast, go alone; if you want to go far, go together".  So, we have to work through that.  So, after I get consensus from the board and the officers of the company, everybody's got their own role to play.  The general counsel has a project, because he's got to work through all the legal issues.

Peter McCormack: With the board, was everybody on board, or were there any kind of naysayers, or does it come down to a vote and some lose out; or, did you essentially have consensus on the board?

Michael Saylor: We had consensus on the board, and I feel very blessed.  We're fortunate for a number of reasons: one, everybody's very technology forward.  We're a software company, we're a technology company, all we've done is make investments in technology for 30 years.  And, there's no future for a technology company that doesn't continually reinvent itself.  So, I don't have people on the board that aren't sensitive to the need to progress.

I think the other thing is, there's a lot of continuity on the board, so we all knew each other really well, and have good relationships.  It's hard to do something dramatic in a hurry when you're new to a relationship.

And I think the third is, we have a small board; there are only five of us on the board.  So, if we were 15 or 20 or 25, the cost -- when you get to 20 people on the board, the number of combinations and permutations of dynamic get pretty extreme.  By the way, the idea of Bitcoin, right, is we decentralise everything so no one will ever agree to make a dramatic change that will wreck it.  But, if you want to actually get consensus to do something, you need a finite number of nodes.

So, I think that we benefitted from our structure in that regard and the nature of the company, and that helped us move quicker.  And how I knew it was necessary for the first, I think that if you're the tenth company that does this, then you're like, "Well, this company did it and then Square did it", and if you get a Twitter that does it or you get another tech company that does it, pretty soon it becomes just something that people do, and that would be easier.

Peter McCormack: Wow.  So, you make the decision, you get your lawyers on board.  Your lawyers must have been like, "Oh God, man, what are you doing?"  Are you traditionally one of those, I won't say reckless, but off-the-wall CEOs who does some big, bold moves occasionally?

Michael Saylor: It's all relative; relative to the CEOs that have their job for a decade.  I've been a public company's CEO for 84 quarters; 22 years, which means that I've been a CEO of, I think probably, of a technology company longer than anybody.  There might be one person in the entire industry; but in my industry, that's a long time.

So, there have been CEOs that came and went that maybe were a lot wilder than me, right, but they stick around long because your company gets acquired, or you blow yourself up, or something like that.  But, for someone that's going to be in the business a decade, I would say that I'm a bit more progressive.

Peter McCormack: Right.  So, you've got them on board, the lawyers must be like -- were there massive hurdles for the lawyers; like, was it a huge issue, or was it just one where there was figuring out?

Michael Saylor: There was a lot of thinking to go through.  The entire industry revolves around precedent, so you look at every other publicly traded company that's ever done this, of course what we found was no one had ever done this.  We found Overstock, and Overstock wasn't really a good case because we couldn't find an example of a publicly traded company that adopted Bitcoin as a treasury reserve asset; we found Overstock had basically taken some revenues in Bitcoin, and Square were doing some revenues in Bitcoin. 

But, our use case was very different, and so the disclosures and body of law would be different.  That makes it challenging, but as I said to other people, it's a project, but there are harder things.  When Andrew Carnegie figured out how to make steel plants work without blowing up, it was harder.  But, any entrepreneur that's ever been successful in getting a business from zero to something did a hard thing.

It was just a project that we went through and eventually, that's why we kind of worked on it from Memorial Day, all the way through June, all the way through July.

Peter McCormack: When's Memorial Day?

Michael Saylor: 30 May, the end of May.

Peter McCormack: So it's like, what, a three-month process from decision to trigger?

Michael Saylor: Something like that.  I mean, we went just a little bit faster, but it was like eight to ten weeks.  I think if you were lightning fast, maybe you could do it in four weeks, but I just don't think you can do it in less than four weeks, because what has to happen is first, you get consensus with the directors and officers; then you have to go through and vet institutional-grade custodians and institutional-grade exchanges.  You have to line up all of your special purpose legal and accounting advice and policy and understand how you're going to do that.  You have to think through your control compliance systems, how you're going to handle these things.  Then, you may or may not have disclosures and timing.

What Square did was a 1%, which means that you could make a 1% move; it would be deemed as immaterial by an accountant, and you could do that and put that -- they still put it out on a wire.  But, at 1%, you're almost at the threshold where you might not even have to announce that, other than, I mean, you might buy 1% of whatever, and you could electively put it out on a wire with an 8-K, or you might wait for the quarter and put it out on your 10-Q, or you might just say, "1% is so immaterial on a huge balance sheet that we're just going to call it 'other assets'".

So, that's just one of those interesting nuances, and there's a little grey area there, but if that was 50% or 30%, now you go through the issue of, "Do I have to disclose the potential of doing that to shareholders before I do it?"  Would you actually announce to the entire world that you just put $5 billion into Bitcoin overnight?  I don't think they would have done that.  But, could you do it? 

You could do it, but you would be wise to say, "We're thinking of doing it".  You would announce that, "We've now changed our treasury policy and over the next 12 months, we may in fact, subject to market conditions, invest a substantial proportion of our treasury into Bitcoin"; that's what you would say.  And you would let the market digest that, right?

And, by the way, you might be more conservative.  You might do what we did, which is to say, "Well, we're thinking of doing it", and then you say, "We're going to invest $250 million in Bitcoin, but we're also going to buy back $250 million of our own stock at a premium, so if you don't like it, you have an option to sell out at a premium; you can get off the train".  You either get bought out of the partnership out of profit, or you stick around to see how things work. 

If you had a partner and your partner walked into your office and said, "Peter, I'd like to invest all of our treasury, or half our treasury, in Ethereum", and you thought Bitcoin was a better idea, you might be irked if he said, "I already did it".

Peter McCormack: Oh, yeah, I would be.

Michael Saylor: And so, the respectful way for him to do it would be to say, "Peter, I feel strongly about this.  I want to do it but if you disagree with me, I'll buy you out at a premium", you see?

Peter McCormack: Okay.  But, did anyone freak out anyway?

Michael Saylor: It was remarkably smooth.  It was incredibly smooth.  In fact, we announced this and then we talked to some of our investors and the majority of the investors we talked to said, "Yeah, that seems pretty progressive; I get it".

Peter McCormack: Amazing!

Michael Saylor: And then I heard, there's one story; I was like, there's this one investor who's not going to like it, you know, and so get ready when you meet him.  And so, I met the one investor and he said, "So, tell me about the Bitcoin thing?" and I started with my spiel of, "We think we're going to get a negative 10% to 15% real yield on our cash and we didn't want to defund the entire treasury; we couldn't drain it all; we needed to keep it somehow.  And so Bitcoin was, in our opinion, the strongest thing we could do that would keep our treasury purchasing power that would give us a hedge against inflation and let me tell you why it's better than other things".  And he goes, "No, you don't have to; I know Bitcoin; I own it".

So, his issue wasn't, "I don't like Bitcoin"; his issue was, "Why can't you just give me back all the money".  Instead of buying back $250 million, why don't you buy back $500 million worth of this stock and just give us all the treasury and then I'll go and invest it the way I want.  And, look, I respect that.  It's like, "Yeah, nice.  I know why you want the $500 million to invest but the problem is, if I drain the treasury, I decapitalise the entire company. 

"If I decapitalise the entire company and we come into an unexpected negative event, we're insolvent and we're bankrupt.  And, if we go insolvent, that causes me to break faith with every one of my customers and every one of my employees and every one of my creditors and every one of my counterparties, and that's not a wise way to run a business, with zero treasury.  So, let's just try half and half".

Peter McCormack: Is treasury, just to help me understand it because I don't know how it works out in the US, but is treasury post-tax; so, have you paid your corporation tax?

Michael Saylor: Generally.  It's possible to have treasury balances in foreign subsidiaries that are not repatriated.

Peter McCormack: Yeah, like Apple have, yeah, like Apple have got?

Michael Saylor: Sometimes.  But, having said that, I think the tax law, the tax code change of 2018, they basically imposed a repatriation tax on everyone unilaterally, whether you wish to repatriate or not.  So, we had the problem solved for us by that tax change, where I think we had the tax, we paid the tax, and then we had the option to repatriate it.  So, for us, we had all the capital after tax.

Peter McCormack: But, if Bitcoin goes up in value and you have to liquidate any of it, is there an incremental tax on that you have to pay as well?

Michael Saylor: Okay, the tax code is, you only pay tax when you sell it; and you realise the tax when you sell it.  By the way, you would realise the tax if you transferred it as a payment; or if you received it as a payment, you would mark it on your books with a basis.  So, it's a very important nuance.  If I owed you a bill and I paid it with $100,000 dollar worth of Bitcoin, I would look at the price of Bitcoin on the day that I paid you and it would be as if I had sold the Bitcoin.  If that generated a taxable event, then I would owe that tax.

So, the use of Bitcoin as a currency, per US IRS tax code, and I think this is tax code in most of the western world, would be taxable on transfer or on trade; it doesn't matter whether I sold it or whether I transferred it.  So, in that particular case, if we buy $100 million worth of Bitcoin and it's in our treasury and it goes up, there's no tax until we sell it.

Peter McCormack: Right, okay.

Michael Saylor: Now, you said, "Well, what if it goes up and we have to sell it?"  Well, that's a non sequitur.  I don't have to sell it because it went up; I have to sell it because I got hit with an unexpected large bill because of some pandemic shock.

Peter McCormack: No, that's what I meant.  If there was a situation you were forced to sell it, do you have another tax to pay on, and do you just pay it on the incremental additional earnings?

Michael Saylor: If we had $100 million in Bitcoin and the price didn't go up, and if we had a shock and we needed to raise $20 million, we would sell $20 million worth of Bitcoin, pay no tax, because there's no capital gain in it.

Peter McCormack: Yeah, so it's just a capital gain.

Michael Saylor: If we had $100 million in Bitcoin and it went up by a factor of ten and we had $1 billion and we had a shock and we needed $20 million, we would sell $20 million and that $20 million would have a large capital gain in it; 10:1, so it would have an $18 million gain in it.  We would owe, at long term 28%, maybe income tax, maybe capital gains tax, I forget, but let's say 30%.  We would pay some tax bill on the gain, not on the basis, at the time that we sold it.

Peter McCormack: Right, okay.  So, you've pulled the trigger and you've gone through with it, you've done the purchase, you've custodied; but, through the whole process, if somebody was listening to this and they're thinking about it for their company, what were the most important key lessons that you learnt, and did you even make any mistakes; was anything in the process like, "Shit we should have done that differently"?

Michael Saylor: I don't think we made any mistakes.  I thought the execution was pretty textbook.  From how we made the decision, how we went through the corporate governance, all of the deliberation, all of the disclosures to the public, the mechanics of the acquisition, the perfect synchronicity of the tender offer with the acquisition; all of these things were important, and then the subsequent disclosures.

If I was giving advice to someone else, I think it would depend upon whether they were a publicly traded company or they were a private company.  I think if they were a private company, then it just becomes much, much easier.  Then you just have to go through the due diligence, the deliberation, build consensus, establish your trade relationships.  And then after your trade relationships, execute.  I think if you're a public company, then you've got the additional steps that I outlined.

Public company, it's a very different thing, because every company has a different capital structure, has a different shareholder base, has a different set of expectations.  For example, if you were a Warren Buffett, it wouldn't be very hard for Warren Buffett to do this at all.  Warren Buffett could say, "We bought $2 billion worth of Bitcoin, we bought $5 billion worth of goldminers, we bought $10 billion worth of Apple, we bought this, we bought this".  If you're an investment company, it's very straightforward.

If you're a high-tech company with a very, very small treasury, then it might be viewed as making a small treasury liquid.  But, if you've got a massive treasury and you don't need the money, like if you're Apple, Twitter, Square; they don't need money, they don't need the treasury.  They're generating cash flows that are insanely great and the likelihood in the next five years or ten years, it's almost impossible for those businesses not to generate cash; just almost inconceivable for a YouTube or Twitter or Apple to not generate cash. 

Maybe Netflix, because they've got this capital-intensive business, where they've got to go spend hundreds of millions of dollars to buy content or make movies.  But, if you have a pure digital network like Facebook, they're just going to generate cash.  So, I don't think it's that much of a risk for them.  It's just a little bit more of a disclosure issue, because people aren't used to seeing Facebook invest in equities, debt, or other alternate assets.

Insurance companies though, Warren Buffett created an insurance company.  Talk about aggressive.  What if I bought an insurance company with MicroStrategy's stock and then the insurance company had $2 billion or $5 billion in assets and government bonds, and then I sold the bonds and I bought Bitcoin with the $5 billion worth of insurance assets that are being held in trust for widows and orphans and life insurance funds to pay off 30 years for now, or a pension fund, right?  That would be an interesting move.

By the way, it happens.  There are insurance companies that do buy equities and at some point, other institutions could invest in this.  But, the summary is, everybody's different and they've all got different circumstances, and so they'll go through their own journey, I think.

Peter McCormack: Have you had any CEOs get on the phone to you and say, "Can we talk about this?  What have you done; I'm interested"?

Michael Saylor: I'm making some new friends!  I'm making friends, I'm meeting people and I'm meeting people in the industry that have substantial sums of money and are thinking about this in a very deep fashion now, and I'm giving them advice, and I look forward to giving more advice.  And, if any of your listeners know of anybody that runs a company, private, public or otherwise, that wants to get the full blow-by-blow inside scoop, hook them up with me.  I have infinite energy to take people through this.

There's a lot of stuff that I can tell them that I just can't post publicly and I can't share publicly for security reasons, but yeah, there are a lot of conversations going on and I expect there'll be more in the future.

Peter McCormack: Well, I mean you have an incentive to do it; you own over 0.1% of the Bitcoin supply, right?  The more people come on board, it's going to prove your bet!

Michael Saylor: You know, Peter, I have incentive to do it, but for the record, and I want to be very clear about this, my number one reason to do it is I want to help the maximalist.  I really think that the heroes, the unsung heroes, the people that really saw the future, they bled for the future, they dragged this thing on their back, they went through hell, they fought war one, they fought war two, they stood up against the establishment, they stood up against the miners, they stood up against the exchanges, they were betrayed who knows how many times and they got up, and they kept working, were the Bitcoin maximalists.

They deserve this, out of respect to them.  I would do it for them.  I just feel like they deserve this, right, and people ought to show them some respect; it matters.

Peter McCormack: Also actually, interestingly, so it can do some weird some things in terms of the valuation of MicroStrategy, right, because I guess if, say, Bitcoin did a 10x and your position ends up becoming worth $4.5 billion; if someone was interested in acquiring MicroStrategy and you're like, "Yeah, I'm done, I'm happy", then I guess, would you release that and distribute it among shareholders, or do they end up having to buy the whole thing?  It puts you in an interesting position.

Michael Saylor: I'm able to speculate about the future of Bitcoin as much as you want, but I'm not really empowered to speculate about the future of MicroStrategy, what we would do or not do in a hypothetical situation.  So, I will let you do that.

Peter McCormack: I will do that.

Michael Saylor: What I will just say is something a bit more topical which is, if someone throws you into a sea of liquidity and you fell off a ship, and strapped around your neck was a $500 million block of concrete and it was heavier than water; not so heavy that it dragged you down.  Let's say it was a $500 million block of concrete that sort of floats a little bit, but it's slowly sinking, like 10 feet a year, 20 feet a year, and you've got this leash on you.  And you thought, "Maybe I have a one-time chance to convert a $500 million block of concrete into a $500 million crypto-Ark, or crypto-inflatable, and that's going to float on top of the sea of liquidity".  I might go ahead and pull the red cord and inflate the raft.  I might cut the line to the 500 tons of concrete.  I might crawl up into my crypto raft.  And if you ask me, "Why did you do it?"  I did it to not drown, Peter, right; I did nearly drown. 

But then if you said, "Well, Michael, what happens if the sea rises by 100 feet, or the crypto-sea keeps rising; if they just keep pumping more water and it rises and rises and rises and rises?"  I'm like, "Well, a rising tide lifts all boats.  I would just like to be in the boat".  So, when I look at it, I think, "If Bitcoin is successful, that's good for us.  And, if people keep printing more money, that's probably on the margin; I'm better to be in the inflatable that's floating on the money than be swimming with the concrete block around my neck that's sinking with the money".

That's how we look at it from a financial point of view, and I think that that's the essence of Bitcoin as a treasury reserve asset.  The whole point is to float and not sink.  And by the way, other assets are floating.  The reason we had a K-shaped recovery is because the bonds and the stocks and the market were floating on all of the money, all the stimulus money, that was being printed by the Fed.  But on the other hand, all these mainstream businesses are not floating on it.  They're basically chained to an anvil that is holding them down as we basically pump water into the room.