“If God designed gold with no imperfections, he would’ve created Bitcoin.”
Michael Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc.
Companies like Google, Amazon, Facebook and Apple represent the big winners in the technology space. The last ten years were marked by investments in these giants. Now, it is harder to see such high returns through retail investing. With a massive expansion of the money supply, the biggest opportunity now lies with Bitcoin. Bitcoin acts as a digital gold guarding against inflation caused by government stimulus. “If you’re going to make money the 21st century way, you’ve got to do it virtually… Bitcoin has the potential to be digital gold… thermodynamically perfect.”
Bitcoin is now moving mainstream and major financial institutions are getting on board. These companies are putting Bitcoin on their balance sheet as an institutional safe-haven asset. This growth in adoption will drive an exponential increase in value. “Bitcoin is the one asset that as the price goes up, it becomes more attractive to an investor.”
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SPEAKER
Michael Saylor
Chairman of the Board & Chief Executive Officer
MicroStrategy
MODERATOR
Anthony Scaramucci
Founder & Managing Partner
SkyBridge
EPISODE TRANSCRIPT
John Darsie: (00:07)
Hello Everyone. And welcome back to SALT Talk's. My name is John Darsie. I'm the managing director of SALT, which is a global thought leadership forum and networking platform at the intersection of finance technology and public policy. SALT Talk's are a digital interview series with leading investors, creators and thinkers. And our goal on SALT Talk's is the same as our goal at our global conference series. The SALT Conference, which is to provide a window into the mind of subject matter experts, as well as provide a platform for what we think are big ideas that are shaping the future. And there's no bigger idea in our view right now at SkyBridge, that's shaping the future, than the digital asset space, the decentralized finance movement, and in particular Bitcoin. So we're thrilled to welcome the great Michael Saylor back for his second appearance on SALT Talk. He's a man who needs no introduction, especially to those who have been following the Bitcoin movement over the last year or so, but I'll read you a little bit of his background anyway.
John Darsie: (01:07)
Michael Saylor is a technologist, an entrepreneur, a business executive, a philanthropist as well as being a bestselling author. He currently serves as the chairman of the board of directors and the chief executive officer at MicroStrategy. Since co-founding the company at the age of 24, Michael has built MicroStrategy into a global leader in business intelligence, mobile software and cloud-based services. In 2012, he authored a great book called The Mobile Wave, how mobile intelligence will change everything, which earned a spot on the New York times bestsellers list. Michael attended MIT receiving an SB in aeronautics and astronautics and an SB in science technology and society. And again, as you may know, he has recently become a whale in the crypto space. He initially allocated a $425 million, I believe was his initial investment into Bitcoin from the corporate treasury balance sheet of MicroStrategy.
John Darsie: (02:05)
He subsequently issued more convertible bonds and bought more Bitcoin. And I believe his stack now numbers in the multiple billions in terms of his Bitcoin ownership. Hosting today's Talk is Anthony Scaramucci, the founder and managing partner of SkyBridge capital, a global alternative investment firm, SkyBridge, as you may have seen as well recently invested several hundred million dollars into Bitcoin, as well as launching a Bitcoin fund to provide a direct play for investors to gain pure access to Bitcoin. Anthony is also the chairman of SALT and with no further ado, I'll turn it over to Anthony for round two with Michael Saylor.
Anthony Scaramucci: (02:41)
Michael, thanks again for joining us. It's been quite a journey for us, as I know it's been for you. And you go from Bitcoin skeptic to Bitcoin believer and then there's this seismic Eureka moment where all of a sudden, you to yourself, "Wait a minute. I understand what this is now. I understand why I need to be invested and why I'm at the front of a early stage project. I'm at the frontier of something." Can you take us through that Odyssey that you went through from Bitcoin skeptic to Bitcoin believer, but then also putting your money where your mouth is?
Michael Saylor: (03:23)
Well, I think over the last decade we had progressive monetary expansion and the level of 5% a year which was significant to people that were sensitive to it. But for people in the tech industry or people that were busy with some other part of their life, we could live with 5% monetary expansion and still go about our jobs. And so I was a big tech enthusiasts and I was really, really occupied by my business until we got to 2020. And that context, everything I knew about Bitcoin for the first decade was like noise. Like I know it's something interesting and there's some people that care a lot about it, but it's noise. And I'm really more concerned about what the next iPhone is going to be or what Facebook is going to do, or the implications of Amazon rolling over 15,000 retail companies.
Michael Saylor: (04:22)
And those were all very exciting stories for a decade. And then I think we got the 2020, we got the K-Shaped recovery main street locked down wall street had a V-shaped recovery. The monetary expansion jumped from 5% to 20 or 25%. Now you couldn't ignore the fact that the money supply was expanding. Now, all of the interesting stories of the last decade, the Amazon story is over. We know how that ends, right? They win the Google story, the Apple story, the Facebook story, they're all over. We know how they end, right? It's pretty clear. They're going to go on to another stage, but it's not a technology play. Now it becomes about politics and society. And so now we all have a problem in 2020, the problem is the money supplies expanding. And then you realize if you're trying to make money doing it the 20th century way, it's just really hard.
Michael Saylor: (05:23)
And if you're trying to make money, the 21st century way, you got to do it virtually the virtual wave hit us. And so I would say, I became really interested in Bitcoin the second quarter of this year. And I realized that this had the potential to be digital gold. It felt like digital gold that no institutions had quite embraced, but a lot of early adopters had embraced. And everybody wants in a expansionary economy where the money supply is expanding. You all want sound money. And previous sound money for 5,000 years was gold, mostly sound expanding to 3% a year. Bitcoin is digital gold thermodynamically, perfectly sound money in theory, on a sheet of paper of God designed gold with no imperfections, he would've designed Bitcoin. So it's like, well, this is too good to be true. You just got to figure out, is going to be hacked? Is it going to be banned? Is anybody else going to buy into it?
Michael Saylor: (06:23)
What's the problem because it looks perfect. And we got involved not because it was elective. If I had a 5% problem each year, I could have ignored it. But when it became a 20% problem, I couldn't ignore it. We were forced, after March of 2020 to embrace the issue. So we got into it and we embraced it, not because we thought Bitcoin was risk-free. Bitcoin was nine, $10,000 a coin. There's a lot of controversy in April, May, June, even July, August, but we figured the certainty of losing half your purchasing power over four years was enough compensation to justify taking the risk of doing something new, right? A guarantee, and that's why we got into it the next six months.
Michael Saylor: (07:19)
You're going to see this story, which is maybe it's digital gold. Maybe the institutions need this thing to, well, I guess some needed to more of them need it. And then it goes to 20,000, 30,000 and 40,000. And I think as we enter 2021, people's perception is rotated to, I guess it is digital gold, and it's the newest institutional Safe-haven asset. And by the way, it looks to me like monetary expansion is continuing. Everybody's got an asset inflation problem. It's top of mind for every investor, what are we going to do about it? And so that's how we kick off the year as I speak to you.
Anthony Scaramucci: (08:05)
I was with a group of people, we've obviously launched our fund in good part, thanks to your help and your intellectual gravitas and helping us get around to this. My Eureka moment alongside of yours was understanding something you said last time we were together about it being a digital network, a digital platform for money, similar to an Amazon for retail, or say a Google for search and advertising or Facebook for social networking. But I was with what I would call the rat poison crew. It was a group of men and women, but mostly men in their seventies and eighties that were buying into the Warren Buffet idea that Bitcoin is rat poison.
Anthony Scaramucci: (08:50)
Now, Bill Miller said, "Well, it may be rat poison, but the rat might Fiat currency." So Bill is a believer like you and I but one thing that keeps coming up repetitively, Michael, I have my take, but I really want to hear yours is what the hell is it? It's just encrypted code, there's 21 million of them. Okay. So I get the scarcity, but why would that be worth anything? If all it is a code in the ether, and this is from the rat poison crew. And so your response to that would be, how did you get over that hurdle?
Michael Saylor: (09:29)
It's digital gold. Anybody could design code for digital gold, but is digital gold on the dominant monetary network in the world. So if I had an idea for Twitter and I thought I was going to launch a speech network, anybody could copy it. But at the point that everybody in our joined Twitter and they all looked at Twitter for half an hour, an hour a day, you got 400 million people pouring 400 million hours of bandwidth per day into Twitter. Then it's not the software anymore. Then it's a digital speech network. It's the dominant digital speech network for public speech. I think in the last decade you saw dominant networks form for speech on Twitter. You saw dominant video network on YouTube. You saw dominant mobile network for Apple. You saw dominant social network. You saw dominant retail network in Amazon. Each of these things gathered the commitment of a billion people and Warren buffet talks about brand, Warren Buffett would understand Coke.
Michael Saylor: (10:41)
The power of the brand of Coca Cola is. If I obliterated every Coca-Cola plant and every bottle of Coke everywhere on earth, I couldn't get it out of the minds of seven billion people, seven billion people know that what a Coca-Cola is. And so the brand of having that idea stuck in the minds of billions of people is very powerful. So Bitcoin is the brand of digital gold stuck in the minds of a billion people, but more importantly, it's gathered hundreds of billions and now getting close to what is it? $700 billion worth of monetary energy. As that energy flows on that network, that's an incredible dominant network effect. And on the other side of the network with the minors, you have billions and billions of dollars invested in special purpose hardware, mining rigs, decentralized everywhere in the world that has no purpose other than to run the digital gold network that is Bitcoin.
Michael Saylor: (11:51)
And so you have massive hundreds of billions, of dollars of monetary energy sunk onto a monetary network that is the brand. And so in that regard, it has the same dominant inertial effect that the Twitter or Facebook or YouTube or Google have in order to replace it with a copy of the code, you have to displace the $700 billion of monetary energy. But then again, what would be the motive for the $700 billion to move to Bitcoin version 2? I mean, there really isn't one, so it takes on a life of its own. And as the price goes up, this is not just driven by Metcalfe's laws. Metcalfe's law says that the power of the network is the square of the number of people, the number of nodes on the network. That would be true if everybody on earth had the same amount of money, if everybody had $10, then Metcalfe's law would be the rule.
Michael Saylor: (13:01)
But this is driven by Newtonian laws of physics that is some people have a billion dollars, some people have $10 billion. So if people weighed 10 billion pounds or a trillion pounds, they'd have a gravitational pull that is more than the person that weighs a hundred pounds. And so the laws of gravity are flowing on this network. And as the price goes up, it's kind of like all the mass is collapsing into a planetary body. The gravitational attraction is increasing therefore everything that comes in the orbit of the planetary body is being sucked into the planet and it's getting stronger and stronger as that price goes up. Bitcoin is the one asset that as its price goes up, it is more attractive to investors, which is the opposite of a stock price. Whereas the price goes up, it looks more risky and less attractive to an investor. And it's a very subtle impact of a monetary network that's worth understanding and dwelling on.
Anthony Scaramucci: (14:10)
Well, it's interesting because it'd people talking to me about it. I'm more comfortable with Bitcoin at 35000, 40,000 a coin than it was in 2014 at $400 a coin because it didn't hit that escape velocity point that you're describing. It didn't get the full embrace, a bed network and the capitalization. And then of course, we've got places to store this now beyond the USB, whether it's a place like a fidelity digital assets or other homes for Bitcoin. So you know, it's now, in my opinion, gotten to that escape velocity akin to Twitter and Google, but you said something that has never left me, I'm going to repeat or hopefully paraphrase what you've said. You said the first Bitcoin is the hardest one to buy. Once you own it, you realize that you don't own enough. Do you remember saying that I want you to take us through that thought pattern?
Michael Saylor: (15:11)
Well, I mean, first you have to a problem. If you embrace the idea, you have a store of value problem because of a macro economic sensitivity that leads you on a quest for what's your store of value. Then you realize that the theoretical best answer is a crypto asset network. That's decentralized that duplicates gold that is deflationary, and that is Bitcoin. Then you have to get over all of your concerns about forking and hacking and banning. And is it legal? And what's the tax treatment and the like, once you get past all those and you decide, "Yeah, Bitcoin is digital gold. It is the best safe Haven assets for the 21st century." Then the issue is, "Well, how do I buy it?" You can't buy it from traditional banks and wirehouses. You can pick up the phone and buy a hundred million dollars worth of gold ETF in 10 seconds, 30 seconds, but buying a hundred million dollars worth of a Bitcoin ETF while there is none.
Michael Saylor: (16:20)
I hear rumors people say, well, there are a lot of banks wherever you try to buy, like GBTC or something. They either make you sign a disclaimer, they make you sign a form, or they tell you they won't sell it to you. So there's a lot of people, I guess what? 90, as we enter the year 2021, you might know better than me, but I'm guessing 95% to 99% of investors. They don't have an easy on-ramp to buy this, it's a struggle for them. So you have to actually go through a search and look for an institutional grade brokerage and you either got to find a fund you trust, and you either buy into it as a fund, or you got to decide, you're going to find an exchange you trust, and you bind the underlying asset. And there are pros and cons to either of those.
Michael Saylor: (17:17)
Once you find that if you're going to buy the underlying asset, you've got to work through the issue of custody and who do I trust and will I self custody? And will I Multisig self custody with the 24 phrase seed key or will I use an institutional grade custodian. And of course that is to a certain extent, the beauty of Bitcoin is the crypto and our kids could literally buy a hundred million dollars, a Bitcoin, put it on a hardware wallet or memorize it in their head and walk around with it. That's one extreme. And that keeps everybody honest because knowing that you could take custody of this stuff means that if you're a bank or a custodian, you can't abuse your customer. No one's going to take delivery of a hundred million dollars of gold and carry that around in their head.
Michael Saylor: (18:10)
So it's a nice theoretical benefit. But as a practical matter, 99% of the people don't want to self custody, a hundred million dollars worth of this stuff. They don't trust themselves as much as they trusted institution. So that means they have to go through this exercise of, do I buy it and custody it with an institution, or do I buy a fund, right? And a fund kind of solves the problem because I don't have to trade it. I don't have to buy it. I don't have to custody it. I don't have to worry about all these headaches. I just wire my money to a fund. They buy it for me, and then I get the economic interest in it. One way or the other, I think it probably took me four weeks of screaming and begging and pleading to get through the AML KYC paperwork process with my first custodian and broker. And it took me another four weeks, so it took me eight weeks for the next one. And I won't talk about who it is because it doesn't really matter, it's a four to eight week journey.
Anthony Scaramucci: (19:16)
Right.
Michael Saylor: (19:17)
And it's getting easier now, but my thought throughout the entire process was, "Wow, God designed gold in cyberspace. And that's exactly what I need. I need digital perfect gold in cyberspace." And then I thought, "Gee, it's really hard to buy this stuff." And I was all right, and then I thought, this is great because it's so hard to buy this stuff. It must be undervalued because everybody else that comes behind me is going to pay more for this. So I'm just going to go ahead and rush through, go through, jump through the hoops, get the accounts and I'm going to buy this stuff.
Michael Saylor: (19:57)
And I remember I was buying it when it was like $9,400 a coin. And was thinking, "Oh, I got to finish buying everything. I'm going to buy because when I wake up tomorrow morning, maybe other intelligent investors are going to realize that this is God's gift to the investor in the year 2020, and they're all going to buy it. They're going to double the price." And I really literally, I went to bed with anxiety, worried that when I woke up the price was going to shoot through the roof because people were going to realize that this is the perfect safe haven engineered store of value. And when they did, they were all going to buy it. And luckily I had a bit of time, but you know, the truth is once people started to realize it happened pretty fast, right?
Anthony Scaramucci: (20:47)
Yeah.
Michael Saylor: (20:48)
They started figuring it out.
Anthony Scaramucci: (20:49)
Yeah, it's happening. And obviously we both think we're at the exponential front of a frontiers clearly, if it gets to be the market capitalization of gold, the opportunities here, despite the volatility everyone will look quite precious if we're correct in our assessment of that. The regulators and particularly the bank of the ECB, the European Central Bank, Christine Lagarde about a day ago, made some comments. Uh, she basically said that quote unquote, "Funny business and some interesting and totally reprehensible money laundering activity has taken place with Bitcoin."
Anthony Scaramucci: (21:33)
The federal reserve, the treasury department, Fiat currency producers for many obvious reasons. Michael do not like Bitcoin. And so obviously Mike Novogratz responded and said, "Well, the banks have paid more in fines, a hundred plus billion dollars of fines in the last decade than anything that's happened on the Bitcoin network." But what's your reaction to regulators resistance, the speed bumps that could be ahead of Bitcoin related to the old guard, if you will, or the old monetary system and its regulators rejecting what would you and I would think of as a more perfect monetary system?
Michael Saylor: (22:12)
I think everybody should calm down and not overreact to this. I think that in the crypto community there's a lot of ideologues, I lovably refer this crypto anarchist. There are libertarians and they're sure they don't like inflation, but they don't really like taxation much either. And the idea that they don't like regulation and they're ready for, if all banks disappeared and all governments disappeared, they're ready for that too and they'd be fine with that. I actually think, and I've seen him sift through you know, the media overreacts to this. I think some of the critics over reacted this, I've seen him sift through like the writings of one politician and say, like eight years ago for like one minute and in a hearing, they said three sentences that looked kind of negative toward Bitcoin and we hate them.
Michael Saylor: (23:26)
Well, my reaction to this is like everybody's buying Bitcoin on regulated exchanges, you know what it's like to get a New York regulated license to sell Bitcoin. They all have to comply with KYC. They all have to comply with AML, anti-money laundering regulations, Know Your Customer regulations. And when she says, well, we're concerned about it from a money laundering point of view, the implication is you're going to see large banks and brokerages that are already complying with AML and KYC regulations that will continue to comply with those things. And all of the money that's currently sitting in Apple stock and Amazon and sovereign debt and cash accounts and real estate indexes that is subject to AML and KYC regulations will continue to be subject to it. And it's going to float into some digital gold and should the central regulators decide that banks have to comply with AML and KYC regulations with regard to a crypto asset in the same way that they would comply with those with regard to a stock asset, a real estate asset, a bond asset, or a commodity asset?
Michael Saylor: (24:48)
I don't think it's earth shattering. I don't think it's going to be negative for the industry. In fact, I think it's the opposite, which is for example, until we saw exchanges like Fidelity, like Coinbase get proper licenses from US regulators, neither you nor I would be buying Bitcoin. None of the institutions are buying Bitcoin through unregulated exchanges when a regulator says we should make sure it's properly regulated, I think that people can overreact to that. I think that every bank in the world holding all the money well, all the money in the United States is in regulated brokerages and exchanges. And it's just fine. And I don't think Bitcoin needs to be unregulated to be successful.
Michael Saylor: (25:47)
I think Bitcoin just needs to be better than gold to be successful, right? If you pick up the phone and called your bank and said, I want you to ship a hundred million dollars worth of gold on a pallet to a dark private wallet in Sub-Saharan Africa. And I want you to do it in the next 30 minutes and they'll report it to the government. I don't think that would be happening either, right? So I think people are very sensitive and they don't need to be, I think it's all going to work itself out just fine. And to the extent that we have regulated entities that are dealing in Bitcoin, I think it's just going to accelerate the stampede of institutional money into Bitcoin.
Anthony Scaramucci: (26:34)
Well, I think you make a brilliant case of Anchorage Digital Bank was recently approved as the first federally regulated digital asset bank. Michael, what do you think the impact of that news is?
Michael Saylor: (26:48)
I think it's going to be catalytic to other banks. I think what's going on right now is every bank, all of the major banks that don't handle Bitcoin they're, they won't let you buy it. They don't have a fund. They don't have an on-ramp. They don't have a custody relationship. I think they're all looking at this saying, "We're falling behind." They're going to be massive outflows of capital from traditional banks into crypto banks and Bitcoin friendly banks. It's already happening. It's going to accelerate. It's going to get to the CEO level of all the major banks on wall street. They probably got committees looking at this right now. They'll move at a institutional speed and some will move faster than others, but the writing is on the wall. And these are kind of more warning shots and sparks that tell you the world is changing. And people that want to keep up they're going to have to change with it.
Anthony Scaramucci: (27:59)
Well, I know Gary Gensler pretty well. It's being reported that he's the new SEC chairman. He taught a course on the blockchain at MIT, your Alma mater. Do you know Gary whether you do or you don't, but what is your regulatory outlook in the United States coming from the SEC? Do you have a view there one way or the other?
Michael Saylor: (28:25)
I don't know him. So I suppose his appointment is auspicious for Bitcoin in general. I'm a big fan of MIT professors. I did my thesis at the MIT School of Management so we have that relationship. I'm a big supporter of MITs DCI, Digital Currency Initiative and their security initiatives and they think highly of him so those are all good. My view on regulation, the most important thing could be boiled down to one sentence. Bitcoin is deemed as property by the SEC period, that's the single most important understanding. Bitcoin is property by the SEC, the IRS deems it as property. If you understand how it's going to be taxed, long-term, short-term capital gains. If you understand how it's going to be regulated in this particular case, being property versus security is a very bright line.
Michael Saylor: (29:36)
And it means that it is not regulated right per the securities laws. I think those two things are critical and by the designation of property by the IRS means Bitcoin is not going to be a day-to-day currency in a medium of exchange. It makes no sense to do a million transactions a day with something that generates a million capital gains tax bills. You know, it'd break every accounting system. It would break every taxes system. So, that decision by the IRS was critical. And the decision by the SEC to make it property means that it is appropriate to serve as a thermodynamically sound money or thermodynamically sound monetary index, an asset class. If it was a security, it would not be an asset class, it couldn't be.
Michael Saylor: (30:32)
But with Bitcoin as property, there's no reason why it shouldn't take its place next to the Dow, the S&P 500, the NASDAQ and other monetary indexes as an asset class. It transcends the limitations of a company or corporate security and that is the single most important thing that we could have on our mind, right? It's the thing that allows a senator to educate Congress on Bitcoin. That's the thing that allows you to have a congressional caucus that supports Bitcoin. It's the thing that allows someone in media to have an opinion on it. You can't imagine a Senator good at getting elected and saying, "I really think that XX stock is a better store value than the dollar." And I'm going to explain to Congress why the stock is a better store value than the dollar, right?
Michael Saylor: (31:30)
You could never say that because that's a security and it's a thousand times less powerful. And ultimately, by the way, the designation of Bitcoin as property while they're silent on the next 6,000 cryptos is incredibly important, right? One of the reasons Bitcoin has a network effect is because for you to actually have a digital, safe haven asset, it needs to be global property. It can't be a global security. There's no way that any company or any publicly traded company, no matter how big and powerful will ever have the same gravitas and the same prospects as Bitcoin as digital property. And it's always going to be a question looming over every other crypto, right? Like you can see the challenges of Ripple, right? If another crypto is deemed as a security, it completely is devastating to its prospects as the base layer of a monitoring network. And that's really important for investors.
Anthony Scaramucci: (32:39)
I think that is the genius of the design. Are you worried that the Satoshi Nakamoto or the group that created Bitcoin, or if there is this, a Satoshi is sitting on a tremendous amount of coins that could potentially flood the market? Is that something that you worry about that comes up in a lot of question and answer sessions with me?
Michael Saylor: (33:02)
No, I'm not worried. I think that Bitcoin is an ideally designed monetary network with a lot of rational incentives, right? And first of all, I don't think Satoshi is coming back ever. I don't think we're going to hear anything from a Satoshi for the rest of our lifetime. But second, there's a lot of FID and the crypto industry. And a lot of times it comes from other crypto assets, other digital assets where people are just throwing this out maybe Satoshi will dump, people will actually post on Twitter that maybe I'm going to dump all of my crypto and tank the market. And I read, I think, who are these people? Like you think Jeff Bezos is going to dump all of his Amazon to destroy the Amazon stock and whoever did an irrational thing just to like spite someone.
Michael Saylor: (34:07)
I think there's a lot of that, that goes around and you see your fair share of Satoshi will come back and destroy the market. You know, Dr. Evil will get a quantum computer and destroy the market. Someone's going to print a trillion dollars of Tether and destroy the market. And none of these things make any sense to me, but one of the dynamics is, in an unregulated environment, people seem to think they can get away with injecting those rumors. And so you get a lot more of those rumors get injected. I just think it's irrelevant, barbaric. Let me make one more point. You could sell a billion dollars worth of Bitcoin over the course of a week without moving the market.
Anthony Scaramucci: (34:54)
Yeah. It's deeply liquid. So yeah, we've got a few more moments with you. I'm going to turn it over to the millennial who thinks he has better hair than me, Michael, which he obviously doesn't just take a look. You can see that he doesn't have better hair than me. of what we're going to turn it over to John Dorsey to take some of these outside questions that we've got coming in. Go ahead, John.
John Darsie: (35:15)
All right. The big difference between your and my hair is that I didn't put shoe polish in mine this morning, so.
Anthony Scaramucci: (35:21)
Well, someday you will. Okay. So don't be, so self-righteous about it.
John Darsie: (35:24)
Ouch!
Anthony Scaramucci: (35:26)
We'll see what you look like when you're 150 years old, like me. Yeah. So it'd be, but go ahead, fire away.
John Darsie: (35:32)
And Michael, it's great to have you back on SALT Talk's. So we get a lot of questions about your decision and strategy to invest your corporate balance sheet into Bitcoin, Square did the same thing. Have you talked, without naming the companies, have you talked to other corporate treasurers who have looked at what you've done and said, "Wow, could you show me the playbook to how you got that done?"
Michael Saylor: (35:52)
I think entrance from companies, ever since we came out publicly and started talking in like September, I've had nonstop set of conversations with corporations and executives and large investors on this subject. And I think interest keeps building. And I've noticed that it built in September and October for a bit, and then it ramped up in December and now it's ramped up much more in January. I say tongue-in-cheek to Anthony, and honestly, as the price goes up, the asset becomes more attractive and the risk goes away. I think I'll say one more point on that, John. I think it's becoming increasingly clear to people that if you're a company carrying cash on your balance sheet, it's a liability. And if Bitcoin is an asset and to be clear by that, I mean, cash instruments, sovereign debt, anything that's cash or cash like it's not going to appreciate in purchasing power by 15% per year.
Michael Saylor: (37:05)
So if you expect a 15% asset inflation rate, then none of these cash like instruments will keep up. And you got to assume that over 10 years, you're going to lose 75% of your purchasing power. So a hundred billion dollars in cash is going to be $75 billion of shareholder value destroyed with a conventional Fiat based treasury strategy. On the other hand, if you convert that cash into Bitcoin, Bitcoin is, we debate, is it going up 15% a year or 100%? You know, when we had the three-day crash of this week and everybody declared Bitcoin dead, I pointed out facetiously, well, all that proves is that Bitcoin is not going to go up and an annualized rate of 1500% per year for more than one month at a time, right?
Michael Saylor: (38:01)
It was going up at 15X per year for that month. So it's clear, it's appreciating versus cash and whether it's appreciating a 10%, 20%, 50%, 100, 200, 300 it doesn't really matter because the number is positive and the number is likely going to beat the cost of capital. So I think the trend you're going to see this year is you're going to see more and more corporate cash rotate into Bitcoin. And that's...
John Darsie: (38:37)
An interesting comment that I see some from some crypto influencers on social media, is that, you think about Bitcoin, not as a currency. You can think about it sort of as an asset, but really it's a savings account. It's a way for you to park your cash in an asset or a commodity that has a little bit more long-term bullish prospects than something like the US dollar, which macro policies are pushing down upon. I want to talk about this virtual conference you have coming up February 3rd and 4th, you're hosting a virtual conference called Bitcoin for corporations to build on what you were talking about before. Why did you decide to host this event and what type of interest are you seeing in people that are looking to learn more?
Michael Saylor: (39:20)
You know, we have thousands of corporate customers and ever since we announced our Bitcoin strategy, we've had unsolicited people asking us, how do you do this? And they've got issues. Tell us about the legal issues. Tell us about the accounting issues. Tell us how we buy this stuff. How do we store it safely? And after getting so many requests, we decided we should as host a conference, which will be an accelerated two day crash course. And how corporations can plug their balance sheet or their P&L into Bitcoin. You know, Bitcoin's a monitoring network, so you can grow your company with it like Square and PayPal are obviously doing that. But I mean, so as SkyBridge, right? You can offer funds, you can offer mobile apps. You can offer insurance policies, you can build indexes. So one thing you can do is grow your company and improve your products and services.
Michael Saylor: (40:16)
The other thing you can do is plug your treasury into it and rotate cash which is a liability into Bitcoin as an asset. And that's a way to either create or preserve shareholder value. I don't think it was on the top of people's minds in February of 2020 and March of 2020, the world changed then we all sorted through this issue. Now, as we look at February, 2021, every corporation on earth is starting to be sensitive to this store of value problem. Their cash is a shareholder liability, not a shareholder asset. They've got a fiduciary challenge, but it's a scary new thing. So we need to get some education. And Bitcoin for corporations is a quick, easy way for people to get educated. You know, we've curated a bunch of content. We're going to put all of our proprietary content into the public domain and give it away to people that show up to the conference and that's million dollars plus millions of dollars of legal accounting, due diligence, jumping through hoops, took us two months to do it all.
Michael Saylor: (41:30)
And we figured it's stack thousands of pages. You ever see a 82 page board memo to explain the store of value due diligence, search and breakdown, silver versus gold versus real estate versus bond and exit versus stock indexes versus every crypto versus Bitcoin. And in such a fashion that everyone could get comfortable they considered the risks. That's the kind of memo that maybe you don't want to have your lawyer rate at $500 an hour or a thousand dollars an hour. So we figured we'd just give it away to the world as a public service. And I'm very impressed at the surge of interest, I think it's going to be a pretty big conference and hopefully we'll help a thousand companies or more come up to speed on this and figure out what to do next.
John Darsie: (42:20)
Well as a dedicated cyber hornet and in the spirit of Bitcoin's open source origins, that's great that you're sharing all that information in an open source way, really valuable information. We're going to leave it there. Michael, we're going to do more of these talks with you, hopefully in the future. We would encourage if you are an executive at a corporation, and you're watching this SALT's Talk, which we have a lot of corporate executives do watch, we would encourage you to participate in that conference with Michael on February 3rd and 4th, Bitcoin for corporations.
John Darsie: (42:48)
You know, the way we see it, the retail market got involved in Bitcoin years ago, and now you're seeing people like yourself, corporate treasuries, you're seeing hedge funds like SkyBridge and other entities starting to get involved in the space. I think you could start to see sovereigns start to get more involved in the space and you're seeing insurance companies. So it's just a wave of bigger and bigger players that are getting involved in the space that are, that are helping with that to accelerate Metcalfe's law, as you talked about earlier, but Michael, thanks so much for joining us. Anthony, do you have a final word for Michael before we let him go?
Anthony Scaramucci: (43:19)
Well, of course, we want to get you back, Michael. As you know, we're building our Bitcoin position. We're closing in, as I said, on $400 million, our fund is off to a very strong start. Just to remind our people, it's 75 basis points. We think that's a very attractive price as Michael was mentioning about the storage and the ease of use and having Ursa Young audit or positions and so forth. We just think it's an interesting delivery mechanism for high net worth individuals. So you can go to the skybridgebitcoin.com website for more details there, and we'll certainly be helping you any way that we can, Michael, to evangelize the story to other CEOs, corporate CEOs, corporate CFOs, et cetera. And thank you so much again for joining SALT. And I look forward to seeing you soon.
Michael Saylor: (44:11)
Thanks for having me always a pleasure.
Anthony Scaramucci: (44:13)
Well if you need any hair dye, Michael, I have a stash in my house according to the John Darcy. So just keep that in mind.
Michael Saylor: (44:21)
You got it.
John Darsie: (44:21)
You just have to get my digs in, but thank you everybody for tuning in to today's SALT Talks. It's been great to grow our community to include more people that are interested in digital assets, whether they're invested in Bitcoin today, or crypto curious as we like to say. We've enjoyed diving into that community and obviously our Bitcoin investments came at a very interesting time, we'll say, in the market. So thank you for joining us. Just a reminder. We're going to have a whole series of crypto and digital asset and Bitcoin SALT Talk's in 2021. It'll be a regular feature within the broader SALT Talk's brand. So you can sign up for all of those future SALT Talk's at salt.org/talks, and you can sign up for our entire archive of SALT Talk's at salt.org/talks/archive. Including our first conversation with the great Michael Saylor.
John Darsie: (45:11)
Please follow our YouTube channel. We're up to almost 10,000 subscribers. It's something we started during the pandemic. You know, we are known for our in-person conferences, but the opportunity during the pandemic to do these digital webinar type of events has been extremely gratifying for us. And we're starting to build up our digital presence. So we have great resources there on our YouTube channel, and you can watch all the episodes there. Please follow us on social media as well. We broadcast a lot of these talks on Twitter, Facebook, Instagram, LinkedIn. So please follow us there and please tell your friends about SALT Talk's, we love growing our community, and we hope to see many of you at our in-person conferences, which we'll have an announcement on that in the next couple of weeks about our next in-person conference, which should be very exciting. I think everybody is chomping at the bit to get some in-person interaction after what we've all gone through with the pandemic. But on behalf of the entire SALT team, this is John Darcy signing off for today. We'll see you back here again. Next week on SALT Talk's.