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We'll be right back.

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I think that any others could love it

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So I knew what I could did

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Feel the thing they would fit in my eyes

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And say, you ain't seen nothing yet

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Baby, you just ain't seen nothing yet

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Here's something that you never want to forget

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Baby, you just ain't seen nothing yet

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Woo! Here we go. Welcome back. True North, episode 35, the iPhone moment. We are going

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to get into it. We're going to have some fun today. And we're back after a week off. And

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you know, we have lives and it's summer and sometimes we need to focus on other things.

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And we're excited to be here. So going to be fun one today. I've got Ben. He went to

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go get some booze and uh there we go he's back and here comes grain i think he's gonna jump on

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at some point but we've got four of us and we are gonna have a good time we are going to

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get into quite a few things and we're gonna try to do this in 90 minutes and chop off half an hour

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of uh fluff perhaps that maybe we've had in past episodes and i don't know we'll try this mode and

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see how it goes. So agenda for today, we are going to do the classic MSTR leverage and statistics

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update. We're going to do a Q2 2025 earnings call review and discussion. That will probably be the

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bulk of this conversation today. We'll go through some of the slides. We'll think about what it means

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and how we're thinking about it and how we look at things. Lay the land of the BTC treasuries.

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there's at least 10 figures of dollars in USD that are sitting in escrow right now ready to buy

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Bitcoin. So it's exciting time to be looking at this space and analyzing what's going on.

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And then lastly, I've been personally making a really big push on Bitcoin as a unit of account

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and starting to think of the rest of the world in Bitcoin terms and what that means and starting to

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take this stepping stone into a Bitcoin denominated future or thinking about equities or fixed income

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denominated in Bitcoin or pricing the existing equity market using a Bitcoin framework. Bitcoin

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risk-free rate, STRF is the risk-free rate, discounted cash flow models using different rates,

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et cetera. So yeah, we'll jump right into it. It's going to be a good time. And I will start

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with the typical leverage update. Let me share my screen here. And we share this every week.

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Actually, before we get into this, a word from Tim Cosma.

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Ladies and gentlemen, what you're about to hear may be amazing, but it is not financial advice.

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It's for informational and educational purposes only. Jeff, back to you.

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Bingo. Thank you, Tim. And here we go. So, and I'll make this bigger.

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my screen. We'll focus on it. Okay. So True North, the investment grade Bitcoin podcast.

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What is this about? We talk about everything going on in the Bitcoin treasury ecosystem. We talk about

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using Bitcoin as capital, Bitcoin being the hurdle rate, companies that are adopting a Bitcoin

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treasury strategy with a really huge focus on MSTR because they are the pioneer and leader in

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the space and they're providing capacity and ability for all of these other treasury companies

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to operate and innovate in the space. So they're really lifting the floor and providing opportunity

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for others to operate here. And we focus on leverage because this is a big topic. Everybody

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in the market is, in the past, has said strategy is going to blow up, somebody is going to blow up

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because people have blown up by being over leveraged on their crypto in the past. And this story is

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completely different. And it's different because it's got a very professional financial framework

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that is conservative and sustainable. And it's really important to highlight this consistently

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because one of the common pieces of feedback in the market is strategy is going to blow up.

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There's going to be a margin call. There's too much leverage. They're way leveraged.

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But when you actually look at the balance sheet and you look at the numbers,

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they're actually very conservative and they're doing everything they can possibly

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to increase their leverage because they feel under-levered. And that's why we show these

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numbers. So in this column here, BF, so as of 8-6-2025, we are getting deep in this spreadsheet.

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We're at least 100 columns into the spreadsheet. So Bitcoin held on balance sheet, 628,791.

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Bitcoin price, $115,000 as of today. So the assets held on balance sheet, they've got $72

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billion of assets, and they've got $8.23 billion of debt and $6.3 billion of preferred stock

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outstanding. So when you look at the net capital held on balance sheet, you just take the pure

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math, $72 billion minus eight plus six, you get $57 billion of net capital held on balance sheet.

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So you look at the liability to asset ratio. If you just take a pure liability to asset ratio,

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you're looking at a 20% leverage ratio and a debt coverage multiple of 5x.

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And what does that debt coverage multiple mean?

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That means they have five times the amount of assets than they do debt on the balance

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sheet.

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So if you were to think about any bear potential scenario here, the price of Bitcoin would

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need to go down to $23,162 for the assets to be worth less than the debt held on the

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balance sheet.

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So you need an 80% decline in the price of Bitcoin and sustained for a long period of

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time with strategy to not have any other ability to raise capital in order for there to potentially

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truly be any issues in the future. So very low likelihood, a very strong financial position,

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and very strong moving forward into the future. And we also show this other column here,

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the 8625 pro forma, we subtract out the $3 billion of equity that's currently trading into money.

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It's effectively equity at this point with where the stock is trading. And if you pull this $3

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billion of debt out, you've got a 15.7% leverage ratio, 6.4x debt coverage multiple. So again,

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incredibly financially strong. Now, I've included this new column, and I think this is how some

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people should start to look at strategy and think about these preferred equity instruments and

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leverage and different types of leverage. And this is something that Ben and I and Matt Cole

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have talked about in the most recent hurdle rate podcast. And we saw with the earnings call this

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last week, there are different types of leverage. Convertible bond has a maturity, preferred equity

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does not have a maturity. And when you think about what is the risk to the company, a debt that has

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a maturity is higher, more risk than an instrument that does not have a maturity. So when you think

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about the leverage ratio, if they're taking on more leverage with preferred equity, it may not

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be necessarily more, or it's just not as risky as convertible debt because there isn't a maturity

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where those dollars come due. So you can think of the leverage framework a little bit differently

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with the preferred instruments. And they're a little bit more efficient and higher torque

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on the balance sheet, the asset side of the balance sheet.

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So what does that mean and why is that important? So if you look at a 50% drop in the price of

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Bitcoin, with the price of Bitcoin going down to $57,500 in this scenario, strategy would still

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have $36 billion of assets on the balance sheet. And what is this? About $14.5 billion of debt,

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$8.2 billion of that being convertible debt. And so the net capital that you have on the balance

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sheet, you still have $21 billion of capital on the net capital free, you call this free capital

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on the balance sheet. And the reason I point this out is because it's an incredibly strong financial

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position. And how I explained this this last weekend at the Portland Bitcoin conference,

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for those of you that weren't there, let's just take this column here and chop a couple zeros off.

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So let's say you are a personal investor and you have $7 million in assets.

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If you needed to borrow $50,000, like a $50,000 or $60,000 loan,

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as an underwriter, if you put your underwriter hat on, would you underwrite that loan?

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I'd say yes, 100% of the time, because you're good for it, right?

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You have strong enough capital position that you're going to figure out how to repay me

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at some point in time, because you can go access different capital markets.

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You could sell assets.

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You can do a plethora of different things.

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Now, take the same exercise, and you drop the assets by 50%.

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Well, now you've got $3.6 million of assets, and you still have a $60,000 loan.

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Would you underwrite that loan?

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The answer is yes, absolutely, because they're good for it.

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And you have a plethora of different avenues to go raise capital or sell your assets in case if you did need to at any point in time.

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So the goal and the purpose of this is a corporation has significant access to capital and these different instruments where they can tap different capital pools in different markets at different points in time and market cycles.

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And that's the real innovation here is that these new preferred instruments all have different volumes every day.

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They have different volumes.

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They have different people that are buying and selling them.

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Algos are now getting involved in selling them.

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On the common equity, you have different people that are buying and selling it.

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And then you've also got this access to the convertible debt market, which they would like to not use here in the future.

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But it's always there.

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This is always another pool of capital that you can access.

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or you can access fixed debt markets or do private placements or these other things that

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people don't even talk about. So they're in an incredibly strong financial position and that

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access to capital is what makes this whole thing work. I'm going to pause there. I'm going to kick

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it over to Ben, Soleil, Grain. Initial thoughts. I think the spreadsheet is going to get a lot

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bigger. I think there's a lot more metrics that we're going to have to build into this to keep an

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eye on it now that we know. It kind of started. Okay, good. Yeah, I was going to say that's going

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to become the focus. Yeah. Right. I mean, these preferred stocks, and it was pretty clear, and I

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know we'll get into earnings here a little bit later, but because it's so clear that they have

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a path now that they're going down and they're saying, let's get rid of any maturity or any

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principal repayment risk in this entire model, right? Let's streamline this thing. Let's make

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it highly efficient. And let's raise in such a manner that we really have one category that

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we're going to have to focus on. And that's annual dividend obligations. And I think that's something

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that a lot of people are missing because they're still looking at, you know, kind of that total

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debt structure because we still have all the convertible bonds out there. But as those start

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to roll off and this gets much more streamlined, people are still looking at the notional value

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of the preferreds, but you have to realize that because these are perpetual preferreds,

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there's no repayment to that principle coming at any point. So really what they're starting to

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focus on is just managing that annual dividend obligation. And that's actually a much bigger

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shift than people think it is. Because the reason why originally you had that 20 to 30% leverage

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ratio that strategy was really starting to target is it's because it allowed you to really monitor

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what type of a drawdown you could absorb for an extended period of time when you have debt on the

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books that has a maturity point where you are responsible for either rolling or redeeming or

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whatever the action is that you're going to take at the time you have a different type of risk

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in that model and i think that's part of the reason why all of these new companies that are

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that are coming into the market,

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and particularly the companies

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that are gonna achieve enough scale

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to be able to participate in this preferred market,

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I think you're just gonna see them completely bypass.

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Because if you can get large enough,

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and this is where I think we're gonna start

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blowing out this spreadsheet

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and really starting to track it more.

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And if people saw me frantically looking around over here,

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it's because I'm in the nerd data at the moment,

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calculating out, what does this look like

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if the convertible bonds are gone?

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How much coverage do they have

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the annual debt obligations then.

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Oh, the coupons were gone.

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That's in there.

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You already have it.

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It's in their presentation.

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120 years.

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Yeah.

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Yeah.

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I was going to say I've got 124 right here.

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Yeah.

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Today.

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So then I was modeling.

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Well, okay.

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What if there's an 80% reduction in the Bitcoin fair market value that they're holding?

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So, you know, they're down to $14.4 billion worth of Bitcoin.

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And then what does that give you?

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that's 25 years of coverage at an 80% drawdown.

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At a 90% drawdown, they've got 12 years of coverage.

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And that's if you had to use assets

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to cover the dividend obligations, right?

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So that's if you had to sell Bitcoin

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to cover the dividend obligations.

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So then you look at, well,

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what kind of liquidity do you have out here?

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And what does that look like?

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How many days worth of the trading volume

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would you need to be able to fund this obligation?

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And right now, if you've got 12.1 million shares trading hands every day, that's about $4.6 billion that's trading around the common stock equity every single day.

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So right now, it takes about 12.5% of one day's trading volume to fund the annual dividend obligation.

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so it takes very little for them to use that atm on the common stock to actually pay that dividend

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and then when you get down to 80 it would take you a little bit over a day assuming it was trading at

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one times nav so it'd be trading at about 46 a share if there was an 80 drawdown in bitcoin

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and then you normalize that out there at about 46 a share so that would be 105 of the daily

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trading volume that would be required to fund the dividend obligation. And if it goes down 90,

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then it would take two days, assuming the volume milk, obviously it would drop down.

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So anyways, it's going to be interesting to start monitoring this because it's a completely

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different risk profile. And you're really starting to focus more in these models,

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one on the resiliency aspect, right? And I think that's that coverage that how many years of

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coverage do you have on the dividends like you're showing on this slide here. But then the other

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metric to start watching is you continue to monitor that trading volume, right?

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How much activity is there around this equity?

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How much liquidity is out there that they're able to tap to pay these annual

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dividend obligations? And then you can model, you know, what is the risk, right?

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When does it become a heavy burden on drawing out of the common

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shares via an ATM to fund these dividends?

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And it could be a very, very long time.

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A lot of ways to pay these.

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Yeah.

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Well I think this is just being completely missed at the moment How much more resilient this model makes them than when they were using convertible bond debt I know there a lot of people championing convertible bonds at the

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moment out there, and I think they're good. And I think there's going to be a lot of companies

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that are going to move into that niche because I think a lot of the companies that don't get large

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enough to issue these preferreds very quickly, I think that they're going to have to find a market

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where they can start to scale, and they're just going to need to be accepting of the fact

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that there are different types of risk that come into the model when you have to use something that

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has a maturity aspect to it. But I think that for the ones that scale enough, it's an absolute

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no-brainer for them to bypass it if they can and go straight into the preferred market and really

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focus on managing that annual dividend obligation and building a model that's incredibly resilient

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to massive drawdowns. I love that Saylor answered that question so clearly. I think it was

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lynn that asked that question and he started giving the examples of you know at 80 nothing

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happens you know at 90 you know i guess it starts getting fun right they're gonna dance it a little

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but uh it's just a total shift so you know i know as we go through the earnings but i just you know

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as i was looking at the numbers it was even surprising me just how much coverage they would

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have in the event of a massive massive drawdown so i'll clean it up and make it pretty and put it

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out in a poster at some point, but I just thought it was an interesting observation.

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And the cool part is when you start to conceptualize that the scale of capital that would come in the

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door to even get to that point where it would be an issue, it would be an astronomical number

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that's going to buy Bitcoin that hasn't existed before. It's going to put us into new territory.

218
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And thinking about that concept is pretty cool. But I think you're right, Ben, the convertible

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debts could be really valuable to the extent that strategy is going to retire these.

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That market is going to look for a place to park that capital. And since they've succeeded,

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they're going to be hungry. They're going to be hungry. And those small companies,

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that they could have a really big opportunity to get to that next level.

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And it might be, they might have to work through it, right?

224
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And maybe go through a bear cycle like strategy did,

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where people are yelling about their stock and just wait it out

226
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and get to a new echelon where they can start running these instruments

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and moving a bit quicker.

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So it's going to be useful for a lot of those smaller companies, I think.

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Yeah, I mean, strategy being, you know, for the last year, the largest issuer in the convertible bond market, you know, that does leave a pretty major vacuum out there. And I think that a lot of these convertible ARB desks, because they realize just how powerful holding corporate bond paper that's tied to Bitcoin is for them to implement their own trading strategies, you know, there's going to be a lot of demand.

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And because of that, I think now there's an opportunity for that to get spread out amongst more of these companies.

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So I'm not expecting the convertible bond market to just disappear from the strategy.

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Quite frankly, we should acknowledge that it's really what got strategy to the dance in the first place.

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So you can't even look back at strategy and go, well, that was a bad idea.

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Well, that was the idea that got them to the dance.

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It built the scale that they needed to evolve into this next form.

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Now, going backwards, knowing what they know, you know, yes, they may have deployed the strategy differently, but it doesn't mean that it served no utility or that it put too much risk into the model.

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They were very conscientious about how they did it, and it gave the market a massive education

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in how to manage that risk that comes with these, including things like building out that debt ladder

239
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and staggering your maturities and giving yourself a full Bitcoin cycle to allow for these to perform.

240
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But we'll see what happens, because obviously in that market, it's tied to what the volatility is doing.

241
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And volatility has been pretty low recently, so that's going to drain some of that excitement.

242
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out of that market you might not have the same level of capital available but this goes in cycles

243
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right volatility comes volatility goes so i think it's it's far from over in the convert market

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and you know i'll be watching for which companies do pop up that start filling that void because i

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think there's going to be several that try to achieve their scale and that's going to be the

246
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the tool and the capital to do this i don't think

247
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you know it's been yeah it just makes sense to move to the prefs if you can right you're

248
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targeting a much bigger market and you get to be creative you know you don't get to be so creative

249
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in the convertible bond market the creativity was the fact that these were all bitcoin driven

250
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instruments right by the volatility on the balance sheet of these bitcoin treasury companies

251
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and so that made for wildly volatile equities that people were embracing instead of viewing as a risk

252
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so that created that opportunity but now in the prefs now that you know that you can basically just

253
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you know hammer the silicon and create your own products and tailor make these for specific use

254
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cases i think there's gonna gonna be a lot of excitement in the preferred markets yeah it's

255
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not that the bonds are bad you know they're like training wheels if you can't go straight to the

256
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preferreds you know it's okay to uh walk before you run well and i think in the early days you'll

257
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see people go to them as well because they're not immediately dilutive and you can raise at a premium

258
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right so for some companies if you've got the option of going straight pipe type of a transaction

259
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where it's completely equity and you maybe you're a smaller issuer and you're looking to minimize the

260
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amount of shares you're putting out early and you want to be able to raise some of that capital at

261
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a premium you know you might get out of the gate with a convertible bond so you know i think they'll

262
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serve utilities given the various phases that these companies are at and sometimes that's going

263
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to be the market that's open right these markets aren't open all the time it's part of the reason

264
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why getting to a model like strategy has now i know people get sick of us for you know praising

265
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strategies model and all this but they're the ones innovating here and you know that's something that

266
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i'm not going to shy away from acknowledging the reason this entire industry exists is really

267
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because strategy really pushed the envelope here and gave everyone else the confidence to be able

268
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to pursue this. And they're the ones that are ahead of the curve in all the products that they're

269
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issuing and now the structure for how they're deploying them. And one of the things I look at

270
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now is as this market evolves, how do you get to a place where you can execute efficiently and

271
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within your own control? And those two things are very important to me as I look at this model,

272
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because recognizing that these different markets aren't always available to you. It's not like you

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can just go to the convertible bond market and get a deal done whenever you want to. It's not like

274
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you can just go and do a private placement pipe deal whenever you want to. And there's always

275
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capital there that's available. That's not how it works. A lot of it is tied. Yeah, it oscillates.

276
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And a lot of it depends on what the latest deal in the market was and how that deal performed for

277
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the investors as to whether they've got the appetite to re-up and redeploy that capital

278
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back into the market. Convertible bonds, obviously, it's all about the volatility and you want to get

279
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a good premium and you want to get a good coupon rate so that you're not straining your business.

280
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So those markets aren't always available to you. So when I look at these models now,

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part of what I put a huge amount of value on when I'm looking at these companies is how efficient

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is the execution going to be? And by that, I mean, if you look at strategies model and where

283
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they're moving. So say they shed the convertible bonds. Now look at how they're raising capital.

284
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You've got the common stock ATM that's out there and always available for you, but the ATM on the

285
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common stock is a delevering tool. So they're moving away from that for now, but that lever's

286
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always available and they can pull it whenever they want to. Now you go into the preferreds.

287
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Well, it's the same structure. You go through the IPO process and that, don't understate how much

288
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work it is to go through an IPO. That's a pretty difficult process. And the fact that they've been

289
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throwing these out as rapid fire as they have is a pretty impressive feat in its own right.

290
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But once you get through that initial IPO, and once they get the products out there that build

291
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this yield curve for them, now you're back into the ATM model for the preferreds. So even for the

292
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products where you're raising the most accretively, you're using an ATM, which gives you ultimate

293
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flexibility for your execution. So you build the foundation of this. You go out and you get the

294
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approvals for all the capacity on all these products through your filings. And now you're

295
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in total control over when and how rapidly you raise capital. You're not going through the

296
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constant sales cycle and doing the roadshows and doing all of this stuff. It becomes very efficient

297
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the way you raise capital. So right now what I see them doing is building out the framework and

298
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getting all the pieces of the puzzle in place so that at that point, the team can now focus on

299
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optimizing for which ones of these products they're raising at based on any given market condition.

300
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And they're going to start scaling them so that they can acquire really rapidly.

301
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And because of the characteristics of these products and because of how much coverage they

302
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have, right, that 124 years on the preferred so far before they scale them even more and they buy

303
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more Bitcoin, they're just going to be in such a sound place where if you look across the industry

304
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and you go, who's the lowest risk play? If I want to buy one of these fixed income products,

305
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you're competing on the credit quality. And right now that's coming through strategy. So

306
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I've kind of shifted in the way, well, it's not really a shift. It's evolved right in front of me,

307
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right? I didn't see all of this coming, but now that it's out here and you start looking at what's

308
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the board i really value that efficiency of execution right for the company to have control

309
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over their own future and their own execution as the opportunities present themselves i don't think

310
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you can understate how valuable that is they built a robot for capital raising it's like

311
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hershey's chocolate before like if you're make hershey's chocolate bars you got to do a lot of

312
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work as a human and you make a chocolate bar and then you got to wrap it and then you sell it

313
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and you go back to the beginning you got to build the machine before you can put it on right so

314
00:26:45,226 --> 00:26:50,346
a bar you wrap it you send it out you go back to the beginning but now you put a robot in place

315
00:26:50,346 --> 00:26:53,946
you're like okay let's just take all that work out of it let's just put a robot in place and

316
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we just put the ingredients in and we get the chocolate bar it's already wrapped out and then

317
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we send it out the door and like that's what they did with the press and the atm on the press is it

318
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just automated the whole system so they're able to bring that capital in the door when there is

319
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appetite and energy flow coming in the door on those different instruments which is

320
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i mean monumental but totally totally monumental and the the innovation here right this is like

321
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they they went through the challenges of the convertible bonds and saw okay this isn't the

322
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this isn't the best and let's go try these things where it's a little bit more efficient but the the

323
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other thing that you mentioned ben which i think is really good to point out is the convertible bond

324
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terms are the the interest rate and the premium are terms that can be levered in different directions

325
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depending on the type of company you have so if you're a company with like really high cash flow

326
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maybe you crank up the dividend to instead of zero percent maybe crank it up to ten percent and you

327
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drop the you drop the premium the conversion premium by 50 and maybe that's how you get out

328
00:28:08,186 --> 00:28:12,106
the door it's like okay let's go raise 100 million dollars or 250 million dollars but

329
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we make it a little bit more favorable because our our business model's got great cash flow

330
00:28:16,826 --> 00:28:21,786
and there's there's going to be so many more players coming to the space here and there's

331
00:28:21,786 --> 00:28:27,066
gonna be opportunity for people to raise capital with those vehicles so yeah you're gonna need

332
00:28:27,066 --> 00:28:31,226
another line in the spreadsheet because it's almost like the convertible bond leverage ratio

333
00:28:31,226 --> 00:28:37,546
is completely different than the post convertible bond era leverage ratio because the bond era had

334
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higher risk even with the same number you need a weighted average a risk adjusted uh torque

335
00:28:43,946 --> 00:28:52,426
adjusted leverage ratio as a function of your actual annual liabilities or like your maturity

336
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liability risk. So yeah, but I was I was glad to see it. I was looking like grumpy cat with the low

337
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leverage, you know, the last few months. But the joke was on me because that that slide that they

338
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showed with the yield curve that they're building out, and there's that big blank space in the

339
00:29:08,646 --> 00:29:13,886
middle. And there's room for at least two. I mean, if I want to squeeze them in there,

340
00:29:13,886 --> 00:29:18,886
yeah, exactly right there, the future opportunity. I mean, I'm figuring there's room for two to

341
00:29:18,886 --> 00:29:26,586
six more preferreds. I mean, I don't know how many AIs got lined up for them, but it just,

342
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you know, I was thinking, okay, they're going to knock out all these convertible bond deals,

343
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but they didn't need to. They really needed to keep that leverage ratio low to make room

344
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for the preferreds that they knew they were coming out with, but we didn't, you know what I mean?

345
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Like I didn't know. So I'm just clamoring for the convertible bond deals, but of course they've,

346
00:29:43,226 --> 00:29:47,446
they've been planning these things for months. So, you know, they made room and they needed to

347
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make room. So it just kind of all worked out according to plan, I'm sure.

348
00:29:51,366 --> 00:29:54,866
Hey, I had one, a new... Yeah, go ahead, go ahead, Graeme.

349
00:29:55,006 --> 00:29:58,146
Yeah, so you know what? Could you go to slide number 19?

350
00:30:00,186 --> 00:30:02,726
Yeah, we're going to come back to this. Yeah, absolutely.

351
00:30:03,306 --> 00:30:07,126
I wanted to make this comment relative to what you were talking about in the very beginning.

352
00:30:07,766 --> 00:30:13,766
I think we should have two metrics, MSTR and the Bitcoins that are held on balance sheet,

353
00:30:13,766 --> 00:30:18,706
and obviously the debt and also the rest of the preferreds added together, which is in the right

354
00:30:18,706 --> 00:30:24,466
column, the enterprise value. And I think that as those begin to grow, the enterprise value,

355
00:30:24,706 --> 00:30:29,386
that's what we should look at as the market cap of strategy. There's a market cap of each one of

356
00:30:29,386 --> 00:30:35,986
these instruments, MSTR, strike, strike, stride, and so forth. And so when you add, so Ben, please

357
00:30:35,986 --> 00:30:43,286
correct me, there is no partitioning or securing any of these Bitcoins to any of these instruments.

358
00:30:43,286 --> 00:30:46,266
They're just in one pot, so to speak.

359
00:30:46,686 --> 00:30:48,846
And then all of these assets have...

360
00:30:48,846 --> 00:30:50,506
Now, there's a difference in the capital stack.

361
00:30:50,726 --> 00:30:55,666
And you guys, the preferences, sorry, the relative...

362
00:30:55,666 --> 00:30:56,866
I'm not changing that.

363
00:30:57,126 --> 00:31:01,526
But I'm saying, I think that the enterprise value is how we should look at the market cap of strategy.

364
00:31:02,026 --> 00:31:08,606
And when somebody says MSTR, market cap, they're talking about just the market cap of MSTR, not strike, strife, and stride.

365
00:31:09,346 --> 00:31:10,186
And stretch.

366
00:31:11,586 --> 00:31:11,986
Right.

367
00:31:11,986 --> 00:31:16,006
Right. And all of these can be that size and can be $112 billion.

368
00:31:16,306 --> 00:31:22,266
Right. So if the person that we think, you know, Fred Kruger, I don't know if he's listening,

369
00:31:22,466 --> 00:31:27,626
but he actually thinks it stretches a good idea, STRC. And if that can go to, you know,

370
00:31:27,626 --> 00:31:34,706
$100 billion by itself without diluting MSTR shares, I think that's what I posted about a

371
00:31:34,706 --> 00:31:39,326
couple of days ago. And a lot of other people have posted some great content on this in the

372
00:31:39,326 --> 00:31:44,246
past few days. That's why I'm so excited about MSTR because of the guidance that was in Q,

373
00:31:44,486 --> 00:31:48,606
that they put out. There was guidance. There was guidance.

374
00:31:48,886 --> 00:31:52,566
This is the first time they've ever put guidance out. First time we ever had that. So I don't want

375
00:31:52,566 --> 00:31:58,006
to derail anything. We can jump to the quarterly report. But I think that in your chart in the

376
00:31:58,006 --> 00:32:08,672
beginning I think you should make a new column and put in stride strike stretch and stref Enterprise value Right Or FCKD

377
00:32:12,412 --> 00:32:13,532
Yeah, absolutely.

378
00:32:15,232 --> 00:32:21,832
And going back to this, the opportunity, like the future opportunity here, medium duration.

379
00:32:21,832 --> 00:32:25,832
I think there's also an opportunity on the really, really short end duration, right?

380
00:32:25,992 --> 00:32:28,032
STRC has a one month duration.

381
00:32:28,912 --> 00:32:36,912
What about a daily duration, a money market fund, like an overnight, single day

382
00:32:38,832 --> 00:32:41,792
money market fund where there's a daily yield?

383
00:32:41,792 --> 00:32:44,192
I think that's an awesome idea.

384
00:32:45,872 --> 00:32:51,792
There are so many banks. Well, I guess there are probably potential issues there.

385
00:32:51,792 --> 00:33:08,272
But think about this. They've got the perpetuals, which is the long end. I mean, you don't get anything longer than perpetual. So the idea behind this is they had an overnight that would be even better. And that's probably the shortest duration you could possibly do.

386
00:33:09,492 --> 00:33:19,532
Yeah. Yeah, there's more here. And I don't know how much more here, but I think there's a lot more here.

387
00:33:19,532 --> 00:33:31,032
Yeah. And I'm not going to give financial advice, but if somebody wanted to go into this space and they don't buy individual stocks, that's a red flag right there.

388
00:33:31,032 --> 00:33:37,112
Like if you can't buy Apple stock or Microsoft stock, buying MSTR is pretty crazy.

389
00:33:37,552 --> 00:33:48,592
But if you were to say, look, for the proverbial $10,000, you divide it up into five buckets of $2,000 each and you buy five racehorses, it's the same 10 grand.

390
00:33:48,592 --> 00:33:56,052
and you put it in MSTR and all the preferreds, that's your five assets. And then you watch five

391
00:33:56,052 --> 00:34:01,572
racehorses. And it's all based on Bitcoin. Yeah, they synergize.

392
00:34:01,952 --> 00:34:06,712
Right. You tell people, you don't tell anybody to buy anything, but you buy them all on the same

393
00:34:06,712 --> 00:34:12,412
day, the same dollar amount in fiat terms, and then you watch what happens over six months.

394
00:34:12,852 --> 00:34:17,732
The problem is when the cycle is high, they're like, oh my God, I should have bought more MSTR.

395
00:34:17,732 --> 00:34:22,852
are. And then when it dips down because of the volatility, not risk, because of the volatility,

396
00:34:22,852 --> 00:34:26,452
they're like, well, I'm happy that I have the preps.

397
00:34:26,452 --> 00:34:27,092
Yeah, the low-level.

398
00:34:27,092 --> 00:34:33,812
Right, I have those. And so that's where people will watch the same company. I think this is the

399
00:34:33,812 --> 00:34:38,932
only time where we could see this. The only company that has the same asset, like we said,

400
00:34:38,932 --> 00:34:44,852
that's not partitioned, but yet there's five different flavors of returns. And some returns

401
00:34:44,852 --> 00:34:51,012
are paid as dividends and stable price and others, there's no dividends and only paid as appreciation.

402
00:34:54,052 --> 00:35:00,212
Absolutely. Absolutely. Shall we jump in a little bit further into this thing? Because I think this

403
00:35:00,212 --> 00:35:06,212
was another monumental earnings call for many reasons. One, they provided guidance. Two, they

404
00:35:06,212 --> 00:35:12,452
went through all of the different preferred instruments and gave us an outline of exactly

405
00:35:12,452 --> 00:35:19,252
how these preferred instruments work. They outlined the general liquidity, the collateralization of

406
00:35:19,252 --> 00:35:23,892
these instruments relative to everything in the market. It was just an incredibly data-heavy

407
00:35:23,892 --> 00:35:31,832
presentation that just showed all of this information in really condensed ways.

408
00:35:32,052 --> 00:35:36,132
So I'm going to go through a few slides that were really impactful to me. Maybe we'll just

409
00:35:36,132 --> 00:35:38,852
kind of unpack them and talk about them. And if you guys want to walk through anything or if

410
00:35:38,852 --> 00:35:45,652
anything coming to mind let's talk about it and i'm going to start yeah i'm going to chime in real

411
00:35:45,652 --> 00:35:49,812
quickly um and we're not going to talk about this now you you can go through this out the most

412
00:35:49,812 --> 00:35:56,612
impactful thing on the q2 report jeff was your question you had the last question and and i i

413
00:35:56,612 --> 00:36:02,852
dialed in at 45 minutes in and i and i said i said to friends how to go i got in 45 minutes late

414
00:36:02,852 --> 00:36:08,212
and i still listen to it for an hour and a half but your question at the very end that was the

415
00:36:08,212 --> 00:36:13,252
question I want asked. And Lynn had a great question in the beginning, but you had the best

416
00:36:13,252 --> 00:36:16,932
question and we'll get to that. But I wanted this to be in the beginning of the recording,

417
00:36:17,652 --> 00:36:21,012
you know, to have people, so they listen to the recording, they can listen to that.

418
00:36:21,012 --> 00:36:23,812
But your question was the best question, but go ahead.

419
00:36:23,812 --> 00:36:29,172
Yes. The characteristics, you know, the characteristics of the leverage, which is kind

420
00:36:29,172 --> 00:36:32,612
of what we hit on here in the beginning, the characteristics of the leverage have changed

421
00:36:32,612 --> 00:36:36,372
now that they're rolling off the convertible debt and you could take on more leverage,

422
00:36:36,372 --> 00:36:43,332
hypothetically with the preferreds because there is no maturity and you can just you just have to

423
00:36:43,332 --> 00:36:48,292
finance the dividend obligation how are you going to pay the dividend obligation well look at the

424
00:36:48,292 --> 00:36:52,132
look at this what you're seeing on the screen look at the liquidity of all of these instruments

425
00:36:52,132 --> 00:36:57,732
look at how liquid these things are look at how they've traded look at their relative risk profile

426
00:36:57,732 --> 00:37:03,332
relative to everything else in the market there's no doubt that the rest of the market is going to

427
00:37:03,332 --> 00:37:08,612
catch up to these or they're going to identify these as opportunity because they outperform

428
00:37:08,612 --> 00:37:13,972
everything. It's not like they're a little bit better than the existing things in the market.

429
00:37:13,972 --> 00:37:22,292
They absolutely crush everything. Absolutely crush everything on every characteristic.

430
00:37:22,292 --> 00:37:27,652
So when people used to look at Bitcoin, they would see Bitcoin as career risk. Like, oh,

431
00:37:27,652 --> 00:37:32,372
if I took a, if I got Bitcoin exposure on my balance sheet and that's, I'm taking career risk.

432
00:37:32,372 --> 00:37:33,732
If this blows up, I'm screwed.

433
00:37:33,732 --> 00:37:35,092
I'm out of a job and I get fired.

434
00:37:35,092 --> 00:37:36,532
I can never get the job again.

435
00:37:36,532 --> 00:37:41,092
Now, the plumbing and architecture has changed.

436
00:37:41,652 --> 00:37:43,892
There's going to be a scenario within the next four years.

437
00:37:43,892 --> 00:37:46,532
If you're not looking at these instruments and you're a money manager,

438
00:37:47,252 --> 00:37:49,012
you have career risk.

439
00:37:49,012 --> 00:37:53,892
If you are actively seeking to not take exposure to these things,

440
00:37:53,892 --> 00:37:55,252
that is a position.

441
00:37:55,252 --> 00:37:57,412
You are short these instruments.

442
00:37:57,412 --> 00:37:59,652
If you're holding all of these other instruments, you're not holding these.

443
00:38:00,212 --> 00:38:02,212
You are short those instruments.

444
00:38:02,372 --> 00:38:10,052
And that's going to be a form of career risk, in my opinion, in this fixed income money market,

445
00:38:10,172 --> 00:38:17,312
money manager space. If you don't have Bitcoin backed credit in your portfolio, you're going to

446
00:38:17,312 --> 00:38:22,952
get killed by anybody else that does. And that capital is going to flee. They're going to say,

447
00:38:22,952 --> 00:38:28,252
hey, why is my fixed income portfolio underperforming Joe Schmoes over there

448
00:38:28,252 --> 00:38:34,432
by 200 basis points. Like, how are you getting crushed by 200 basis points? Like, what are they

449
00:38:34,432 --> 00:38:39,952
doing? And it's like, well, they leaned into Bitcoin back to credit and they're outperforming

450
00:38:39,952 --> 00:38:44,712
the market. And it's like, well, okay, I'm going to go over there. And you've got this entire

451
00:38:44,712 --> 00:38:51,252
generation baby boomers that is leaning into their fixed income portfolios and relying on

452
00:38:51,252 --> 00:38:56,132
their fixed income portfolios and their real estate portfolios. And they need these things.

453
00:38:56,132 --> 00:38:59,612
they need these products and they're too good to not hold.

454
00:38:59,932 --> 00:39:04,572
So how long is it going to take before we see massive inflows in these things?

455
00:39:04,672 --> 00:39:05,652
I have no idea.

456
00:39:06,432 --> 00:39:08,372
I have no idea how long it's going to take.

457
00:39:08,632 --> 00:39:11,492
I've got a comment about this very particularly.

458
00:39:12,112 --> 00:39:15,992
So in my family, there's some older family members.

459
00:39:16,152 --> 00:39:18,192
Obviously, they know exactly what I've done,

460
00:39:18,652 --> 00:39:21,612
but they still believe in CDs, certificates of deposits.

461
00:39:22,412 --> 00:39:24,732
What I tell people to do a certificate of deposits

462
00:39:24,732 --> 00:39:29,332
when I talk about this is, again, the proverbial $10,000.

463
00:39:29,812 --> 00:39:31,572
If you're going to do a six-month CD,

464
00:39:32,452 --> 00:39:36,052
don't put the 10 grand in at one time

465
00:39:36,052 --> 00:39:39,512
and then have to wait six months in order to get it.

466
00:39:39,972 --> 00:39:44,432
Take a quarter of it, 2,500 bucks, put it in, wait six months,

467
00:39:44,592 --> 00:39:46,752
build out the same ladder, the same dollar amount,

468
00:39:46,832 --> 00:39:47,712
whatever you get, you get.

469
00:39:48,152 --> 00:39:49,472
And that way it rolls over.

470
00:39:49,612 --> 00:39:51,472
So if you need the cash that comes out,

471
00:39:51,612 --> 00:39:54,972
you don't have to wait the full six months obviously after the first time you do it you

472
00:39:54,972 --> 00:40:00,572
have to do it so you then stagger the maturities of your cds now the people on this you're sounding

473
00:40:00,572 --> 00:40:08,092
ancient grain i mean cds no no no no no no no listen how this is related so now if you if you

474
00:40:08,092 --> 00:40:14,332
buy strc there is no ladder there's no ladder you just buy it and then you get out and it's liquid

475
00:40:14,332 --> 00:40:19,772
you can't sell a portion of a cd with this you could sell to to the boomers and the old people

476
00:40:19,772 --> 00:40:26,012
you say, hey, you can't sell a portion of a CD and lose that interest, which is minuscule on this.

477
00:40:26,012 --> 00:40:32,332
If you buy this, right, not with all your money. And if you buy this, you can sell a portion of it

478
00:40:32,332 --> 00:40:37,452
at any time. And that way you have a conversation that somebody can understand that's older.

479
00:40:38,812 --> 00:40:40,012
Right. Yeah.

480
00:40:40,012 --> 00:40:41,612
Right. It's a benefit over a CD.

481
00:40:41,612 --> 00:40:43,612
It's liquid. It's just liquid.

482
00:40:43,612 --> 00:40:47,852
It's liquid. That's why I'm on this page. Like this liquidity is a,

483
00:40:47,852 --> 00:41:03,932
And we talked about this on the hurdle rate. Liquidity is a risk, like lack of liquidity gets a risk charge. If you're holding, you know, $100 million of Boeing preferred stock and you need to get out of it.

484
00:41:04,172 --> 00:41:16,652
Well, it's like how liquid is Boeing preferred stock? How many people in the market want $100 million of Boeing preferred stock? It's pretty limited. So you have to take into consideration like the liquidity of these instruments and how quickly you can get in and out.

485
00:41:17,852 --> 00:41:20,492
if you can't hold through the duration of them.

486
00:41:21,852 --> 00:41:29,852
And now you have liquid instruments that outperform the yield that you can buy and sell at any point in time.

487
00:41:30,812 --> 00:41:35,052
And they're absolutely crushing everything in the market that deserves a premium.

488
00:41:36,332 --> 00:41:41,372
The yield on these should be far lower because of how liquid they are.

489
00:41:41,932 --> 00:41:43,132
And this is huge.

490
00:41:43,132 --> 00:41:46,092
This is like so this is so, so, so, so, so big.

491
00:41:46,972 --> 00:41:53,692
and people 99 of people don't get it and they don't they don't understand how like monumentally

492
00:41:53,692 --> 00:41:57,932
enormous this is and they're going to continue to be more liquid because there's going to be a lot

493
00:41:57,932 --> 00:42:01,772
of people buying these and selling these buying these and selling these moving in and out moving

494
00:42:01,772 --> 00:42:05,932
between mstr and stride and strife and strike and there's gonna be algos trading all of them

495
00:42:05,932 --> 00:42:10,412
there's gonna be these huge pools of liquidity and all these instruments and they're just going

496
00:42:10,412 --> 00:42:16,012
to continue to grow especially as institutions wrap their heads around this yeah one of the

497
00:42:16,012 --> 00:42:21,352
So all of us were there. There's a picture of us at the Bitwise event in New York City.

498
00:42:21,932 --> 00:42:26,352
And it was after the event was over. And Sailor, we go up and we talk to Sailor. In fact,

499
00:42:26,392 --> 00:42:29,872
I'm actually in the picture showing my face. I'm reading all the comments that come up here.

500
00:42:30,332 --> 00:42:34,552
And so I was there, but I was credited. But everybody's like, which one's green? But anyway,

501
00:42:34,712 --> 00:42:38,912
the important part about this, and Jeff, you remember this because I was standing next to you.

502
00:42:38,912 --> 00:42:46,092
and Saylor just goes on this epic rant for 45 minutes talking about the treasuries and exactly

503
00:42:46,092 --> 00:42:50,792
what you just said. I am not a bond trader. That is not my area of expertise. And he's like looking

504
00:42:50,792 --> 00:42:54,732
at us like, Jeff, and what do you think about this? And do you remember this, Jeff? And he's

505
00:42:54,732 --> 00:42:58,292
going on and what about the, and he goes on. Like I'm selling these to insurance companies.

506
00:42:58,452 --> 00:43:03,712
Right. And he's saying this to us with this passion. Now he did not disclose anything to us

507
00:43:03,712 --> 00:43:09,552
about STRC or what was happening. But obviously he knew about this because it takes months to get

508
00:43:09,552 --> 00:43:14,592
this done, like Ben said, to do an IPO and ends up being the biggest IPO of the year.

509
00:43:14,592 --> 00:43:19,472
And he's talking to this and he's so animated, excited about this. And people, if you could ever

510
00:43:19,472 --> 00:43:26,992
go see Saylor in person and you go up and you just talk, introduce yourself and say hi and ask him,

511
00:43:28,032 --> 00:43:32,752
I asked him a question that was a dud, but it may become important. The question was,

512
00:43:32,752 --> 00:43:37,072
will you trade these in other currencies? And he's like, no, because I can raise tons of money in US

513
00:43:37,072 --> 00:43:42,832
dollars. And then it clicked in my head recently. What happens is strike is available. I'm sorry,

514
00:43:42,832 --> 00:43:50,112
STRC is available in another currency like yen or euros or pounds. So-

515
00:43:50,112 --> 00:43:54,512
Oh yeah, this thing is revamping the entire financial world.

516
00:43:54,512 --> 00:43:58,672
This is a big deal. Why am I so animated about this? It's because of the guidance

517
00:43:58,672 --> 00:44:04,192
and it's because of strc something that i'll probably i mean maybe i'll use it short term

518
00:44:04,192 --> 00:44:09,712
if i get out of a trade what am i going to put it into i'll put an strc right so it's not it's

519
00:44:09,712 --> 00:44:15,152
not going to get me rich green it's put you're pushing it push if you push the clutch in you

520
00:44:15,152 --> 00:44:19,872
now have an instrument backed by bitcoin where you can you can push the clutch in and still be in

521
00:44:19,872 --> 00:44:26,432
bitcoin which is like come on come on that's awesome i tell you green it's good to have you

522
00:44:26,432 --> 00:44:31,952
back i know you uh i know you left team micro strategy here for a little bit but it's good

523
00:44:31,952 --> 00:44:36,512
it's good to have you back i like this energized grain well maybe being a little bit salty has some

524
00:44:36,512 --> 00:44:43,392
effect hey people just you got to give it time man if you're if you are uh look how old look at this

525
00:44:44,112 --> 00:44:49,392
oh come on grain you're all racing motorcycles and super cars you can't pull the old cars

526
00:44:49,392 --> 00:44:58,272
grows any longer i'm gonna look like santa claus just coursing through his veins he's not an old man

527
00:44:59,392 --> 00:45:04,432
yeah yeah he's just filled with adrenaline i mean you see any picture of grain it's um you know

528
00:45:05,072 --> 00:45:09,952
flying by the edge here you know he's just ripping around corners on racetracks or something this is

529
00:45:09,952 --> 00:45:16,112
an adrenaline guy so i get why he does high octane investing too but i think one of the other things

530
00:45:16,112 --> 00:45:22,192
to focus on here when you look at these charts and you can also look at the next one as well

531
00:45:22,192 --> 00:45:26,512
but look at the grouping on the left i think just because you know this is around these specific

532
00:45:26,512 --> 00:45:32,272
preferreds everyone ignores the massive cluster on the left of the chart yeah those are all

533
00:45:32,272 --> 00:45:37,632
i think strc is also i'm not even talking preferred stuff further oh oh oh yeah yeah yeah these

534
00:45:38,272 --> 00:45:44,112
those are all other products that somebody is buying yeah right so when you look at this and

535
00:45:44,112 --> 00:45:49,312
you go all right well strategy has four of these products in market is this market saturated now

536
00:45:50,672 --> 00:45:56,112
you know this is a what 1.3 trillion dollar market globally the preferred market so far

537
00:45:56,992 --> 00:46:04,432
at the moment and there are buyers holding all of those other products that are massively

538
00:46:05,232 --> 00:46:10,752
underperforming all of these bitcoin back credit instruments by yield by liquidity and on the next

539
00:46:10,752 --> 00:46:17,552
chart it's by collateral position yeah this is i mean these are are such superior products relative

540
00:46:17,552 --> 00:46:23,152
to what all this other capital is holding you know the difference i think is is that these are new

541
00:46:23,792 --> 00:46:28,832
it's a new concept and the market is always going to have to digest new concepts and that's where

542
00:46:28,832 --> 00:46:34,112
opportunity comes in i think one of the most fun things watching all these preferred you know people

543
00:46:34,112 --> 00:46:39,312
are gonna gonna get upset because it's not just mstr and it's not the high octane version of the

544
00:46:39,312 --> 00:46:44,032
I think people are going to stumble into capital appreciation accidentally with these products.

545
00:46:44,772 --> 00:46:48,972
You're going to buy them for the yield while it's down here at the 10%.

546
00:46:48,972 --> 00:46:51,772
And then all of a sudden that risk is going to reprice.

547
00:46:52,812 --> 00:46:55,892
And that yield premium is going to compress.

548
00:46:55,892 --> 00:46:59,852
And all of a sudden it compresses by the price of the shares going higher.

549
00:47:00,532 --> 00:47:02,852
That's what brings down those credit spreads.

550
00:47:03,792 --> 00:47:08,892
So I think there's going to be a lot of people that are accidentally going to stumble into capital appreciation.

551
00:47:09,312 --> 00:47:11,192
on their fixed income products.

552
00:47:11,252 --> 00:47:13,052
And I think that's going to be pretty funny to watch

553
00:47:13,052 --> 00:47:15,992
when the market finally reprices the risk on these.

554
00:47:16,952 --> 00:47:19,192
Yeah, every single one of these is a category killer

555
00:47:19,192 --> 00:47:22,372
and they're going to keep coming out with new ones

556
00:47:22,372 --> 00:47:24,632
until they have one category killer per category.

557
00:47:24,632 --> 00:47:27,472
And they're just going to have the best preferred

558
00:47:27,472 --> 00:47:29,092
in every single category.

559
00:47:30,412 --> 00:47:31,352
Category killer.

560
00:47:32,272 --> 00:47:34,432
Yeah, exactly.

561
00:47:34,652 --> 00:47:35,992
Every single category.

562
00:47:36,352 --> 00:47:38,852
And to the extent they do get repriced down,

563
00:47:38,852 --> 00:47:42,152
There's probably both of these got to move closer to each other.

564
00:47:42,152 --> 00:47:52,012
I would assume both of these move closer to each other and then the strategy instruments get cheaper because they're liquid and less risky and digital compared to physical risk.

565
00:47:52,492 --> 00:47:54,632
So there's going to be like a flippening of.

566
00:47:55,532 --> 00:47:57,172
Wow, that's crazy.

567
00:47:57,372 --> 00:48:02,512
There's going to be a flippening of traditional fixed income and digital fixed income.

568
00:48:03,012 --> 00:48:21,918
Like they look so crazy right now but they going to go the opposite way And that going to bring strategies cost of capital down in half which is like rocket boosters on bringing Bitcoin in the door and on the balance sheet

569
00:48:22,678 --> 00:48:26,778
That's just like, oh my God, this is it. This is the biggest idea in all finance.

570
00:48:26,778 --> 00:48:41,118
That's what they look past is that, you know, as those yields come down, their ability to raise just accelerates or at least, you know, the premium relative to the obligation that they're putting on the books here for these annual dividends, it lowers.

571
00:48:42,118 --> 00:48:49,098
So it's just such a massive shift out here that the market's completely asleep on right now.

572
00:48:49,638 --> 00:48:52,558
But it is a different way of thinking, right?

573
00:48:52,558 --> 00:48:58,138
I mean, when you look at all of these other products, you got to look at what are you betting on, right?

574
00:48:58,198 --> 00:49:00,338
What is backing your belief in this product?

575
00:49:00,518 --> 00:49:09,678
Are you looking at the requirement for the future performance of this company to generate cash flows, to fund these new obligations?

576
00:49:10,138 --> 00:49:18,318
Or with Bitcoin-backed credit instruments, now you're focusing on, well, how over collateralized am I with the asset?

577
00:49:18,318 --> 00:49:24,678
but then you're also looking at what is the liquidity of the engine that's fueling the

578
00:49:24,678 --> 00:49:30,438
payments for all of these products. So it's the combination of the two that makes this so powerful.

579
00:49:30,438 --> 00:49:34,498
So you can look at it from just a collateral perspective and go, wow, this is safe,

580
00:49:34,498 --> 00:49:40,658
right? I'm so over collateralized. I can watch this in real time. I can adjust my positions as

581
00:49:40,658 --> 00:49:45,598
I need to. But then you look at, well, now I need to look at the next layer and go, all right,

582
00:49:45,598 --> 00:49:52,338
If they're not selling the asset that's effectively collateralizing these products, now I want to look at the next layer.

583
00:49:52,338 --> 00:49:57,798
And I want to look at where are they generating the income that's paying for all these dividends.

584
00:49:58,318 --> 00:50:09,038
And then you go down to that level and you realize how deep the liquidity is on the common stock and how little of it it actually takes to fund these obligations.

585
00:50:09,038 --> 00:50:13,538
So everyone who gets upset saying, well, they're using the ATM to fund these.

586
00:50:13,538 --> 00:50:20,198
Well, the ATM of the common stock, the common stock became their primary product that they created and released to the market.

587
00:50:20,278 --> 00:50:28,398
That was a lot of the early day discussions that we had on here was about how they were effectively introducing their equity as their newest product.

588
00:50:28,718 --> 00:50:31,378
Right. It's not a new software platform. It was the stock.

589
00:50:31,478 --> 00:50:35,758
The stock was the product and they were engineering that product to be superior.

590
00:50:35,758 --> 00:50:42,718
And now they're doing that with different categories, but they're using that core product offering to make everything else run.

591
00:50:42,718 --> 00:50:53,338
So it's such a unique way to reframe these types of products and figure out which ones actually offer all the superior characteristics to attract capital.

592
00:50:53,758 --> 00:50:59,938
And when you look at it through this lens, it becomes an absolute no-brainer if you're in this market.

593
00:51:00,598 --> 00:51:05,858
Why would you be holding any of these dots off to the left if they're less collateralized or offering me a lower yield?

594
00:51:05,858 --> 00:51:12,198
Why would I be holding on to those other than that's how these products used to be structured?

595
00:51:12,198 --> 00:51:20,038
I don't understand Bitcoin is probably going to be the main answer, but these things are going to be powerful and it's not going to take that long.

596
00:51:20,958 --> 00:51:22,578
Can we talk about valuation?

597
00:51:24,098 --> 00:51:25,638
We can talk about valuation.

598
00:51:25,698 --> 00:51:30,238
Talk about valuation because I think this is where I get really fired up.

599
00:51:30,358 --> 00:51:39,258
I think I've gotten a lot of flack because I feel like I see the world in a different way than a lot of people, which I think is fine.

600
00:51:39,258 --> 00:51:43,018
I've had a lot of adversity in my life and I'm not going to change the way I see things. So

601
00:51:43,018 --> 00:51:48,858
I'm just going to go for it here. As these instruments become more successful,

602
00:51:48,858 --> 00:51:52,778
you're going to get more Bitcoin held on the balance sheet and the value of the assets held

603
00:51:52,778 --> 00:51:59,018
on the balance sheet is going to rise. The assets that are relative to MSTR are going to continue to

604
00:51:59,018 --> 00:52:05,098
rise. Now, what is the value of the equity? The value of the equity is its ability to store value

605
00:52:05,098 --> 00:52:10,078
or distribute value to any of its holders. And this is like, it's almost like a value investing

606
00:52:10,078 --> 00:52:16,898
thesis. The value of the balance sheet is insulated to any AI innovation disruptions,

607
00:52:16,898 --> 00:52:22,598
and it's going to withstand the future, right? If everybody thinks that Bitcoin is the strongest

608
00:52:22,598 --> 00:52:26,678
asset on the planet, which I personally do, I think this is digital gold. All the characteristics

609
00:52:26,678 --> 00:52:31,578
are much better. I think it's going to go to the top of the leaderboard. It's going to surpass gold

610
00:52:31,578 --> 00:52:38,878
and keep on going. So if that's the case, if I wanted to store value, I can store value in Bitcoin,

611
00:52:39,018 --> 00:52:42,398
I could store value in the company that holds the most Bitcoin or any of these other companies that

612
00:52:42,398 --> 00:52:49,378
are accumulating Bitcoin. And this is really a value play here, because you know that the

613
00:52:49,378 --> 00:52:57,178
architecture of the equity market is a function of the market cap of these instruments. As larger

614
00:52:57,178 --> 00:53:03,958
equities get larger, they have passive index flows that are coming in the door to buy the stock at

615
00:53:03,958 --> 00:53:11,098
any price. This is just the way it works. So like one of the reasons the MAG7 has stayed up at the

616
00:53:11,098 --> 00:53:15,618
MAG7, not only do they have great products, but like really great access to capital, but they also

617
00:53:15,618 --> 00:53:19,598
have continuous passive flows that are coming in the door to buy the stock and to continue to put

618
00:53:19,598 --> 00:53:23,918
them up, push them up there, which continues to give them easy access to capital, which continues

619
00:53:23,918 --> 00:53:32,318
to allow them to do their operations that they normally do. Now, it's a little bit different

620
00:53:32,318 --> 00:53:38,398
here because you have a really strong asset side of the balance sheet, but you know that that asset

621
00:53:38,398 --> 00:53:44,158
side of the balance sheet is going to get significantly larger because of the way these

622
00:53:44,158 --> 00:53:50,958
instruments are designed. So it's only a matter of time before people start to reflect what is the

623
00:53:50,958 --> 00:53:55,918
value of this instrument? What is the value of the future compound annual growth of this instrument?

624
00:53:55,918 --> 00:54:02,158
What is the value of the future accumulation of this instrument? And what is the future value of

625
00:54:02,158 --> 00:54:06,558
the future accumulation of this instrument? And it just kind of compounds on itself. So,

626
00:54:08,078 --> 00:54:11,598
and the architecture of the market continues to push it up there and keep it up there.

627
00:54:12,078 --> 00:54:18,558
So I think it's undeniable that it's going to continue to, the market cap of the underlying

628
00:54:18,558 --> 00:54:25,278
equity is going to go higher because of the structure and the architectural design of the

629
00:54:25,278 --> 00:54:32,698
equity market. And where you get in on that point of time is your perspective on how you view that

630
00:54:32,698 --> 00:54:36,438
equity in the future. Same thing happened with Berkshire Hathaway. And we talked about this,

631
00:54:36,478 --> 00:54:41,458
I think a little bit on the hurdle rate podcast, like Ford, Ford Motor Company used to be a

632
00:54:41,458 --> 00:54:45,398
balance sheet company. Strategy is a balance sheet company. Insurance companies are balance

633
00:54:45,398 --> 00:54:48,938
sheet companies, banks are balance sheet and balance sheet companies, Berkshire Hathaway

634
00:54:48,938 --> 00:54:49,698
balance sheet company.

635
00:54:50,278 --> 00:54:57,218
And Ford, when they were first creating cars, they were obsessed with building their balance

636
00:54:57,218 --> 00:55:01,978
sheet because they wanted to insulate themselves for any downturns that happen in the market.

637
00:55:02,358 --> 00:55:06,098
And if there's downturns in the market, having a strong balance sheet is really helpful

638
00:55:06,098 --> 00:55:11,038
because you can continue to do business into the future.

639
00:55:11,038 --> 00:55:18,658
If you think about any of these companies in the S&P 500 right now, 493 of them are underperforming the S&P 500.

640
00:55:19,358 --> 00:55:21,278
Seven are outperforming the S&P 500.

641
00:55:22,178 --> 00:55:28,838
And those 493, if you don't have a strong balance sheet and the market turns on you, the value of your company disappears.

642
00:55:29,798 --> 00:55:33,358
And having a strong balance sheet gives you continued access to capital and continue to grow.

643
00:55:33,358 --> 00:55:47,878
So it's, I think, largely overlooked by people that are throwing these crazy valuations on equities that have a lot of uncertainty in how they're valued in the future.

644
00:55:47,878 --> 00:55:50,838
And they're really dependent on some future expectation.

645
00:55:51,458 --> 00:55:59,658
But if your assumptions on future expectations change by even a quarter basis point today, your valuation assumptions change drastically.

646
00:55:59,658 --> 00:56:04,198
So, you know, I wanted to chime in here on this.

647
00:56:04,678 --> 00:56:11,158
I think that what Saylor said in the Q2 earnings report was that he's paying 500 bips above

648
00:56:11,158 --> 00:56:11,518
SOFR.

649
00:56:12,158 --> 00:56:17,158
And what I liked about that was that it was a fiat metric.

650
00:56:17,558 --> 00:56:20,478
So his metric is not 10% of the Bitcoin CAGR.

651
00:56:21,218 --> 00:56:27,018
His metric is if interest rates continue to go down, he said 500 bips above it.

652
00:56:27,018 --> 00:56:31,738
But as SOFR goes down, the overall rate goes down on STRC.

653
00:56:31,898 --> 00:56:33,458
Ben, please correct me if I got this wrong.

654
00:56:33,698 --> 00:56:34,018
Right.

655
00:56:34,858 --> 00:56:40,358
So from that perspective, his hurdle rate that he picked, I don't want to, sandbag sounds

656
00:56:40,358 --> 00:56:43,078
terrible, but he picked a lower rate.

657
00:56:43,238 --> 00:56:55,098
And I think that's why if a preferred instrument can't pay 500 bps, a 5% above SOFR, then why

658
00:56:55,098 --> 00:56:56,298
would anybody buy it?

659
00:56:56,298 --> 00:57:00,138
you could just buy you know buy treasuries and that would be you get you know the full faith and

660
00:57:00,138 --> 00:57:05,178
backing of the u.s government provided you believe in that so i think that was it's an easy number

661
00:57:05,178 --> 00:57:10,618
to say i think that's an easy number for people to understand and the fact that it's over collateralized

662
00:57:10,618 --> 00:57:17,338
most times when you look at a um a company bond it's based upon the cash flow of the company

663
00:57:17,338 --> 00:57:22,138
or some assets that they pledge as collateral it's that companies with this it's bitcoin it's

664
00:57:22,138 --> 00:57:28,538
not strategies cash flows from their operating company it's not strategies buildings it's a

665
00:57:28,538 --> 00:57:33,498
non-correlated commodity i think that's that they're that they're accumulating that they're

666
00:57:33,498 --> 00:57:40,538
at an incredible pace right right and with a fixed supply absolutely and it has a network for

667
00:57:40,538 --> 00:57:47,498
delivering it you know roll all the bitcoin you know um awesomeness into it but they have a great

668
00:57:47,498 --> 00:57:53,258
charter and i'll tell you which it is in a second but keep on going yeah it's this uh this concept

669
00:57:53,258 --> 00:57:56,938
there's this concept in finance and this is probably too jargony but there's this concept

670
00:57:56,938 --> 00:58:03,578
of uh weighted average cost of capital and uh one of the one of the uh components of the equation is

671
00:58:03,578 --> 00:58:08,698
the risk-free rate and if you just change your risk-free rate assumptions well what do we know

672
00:58:08,698 --> 00:58:14,938
about the risk-free rate risk-free rate is the the rate at which uh the government pays you to

673
00:58:14,938 --> 00:58:18,298
hold their instruments because you know that the government's not going to fail so all right so

674
00:58:18,298 --> 00:58:25,978
the risk-free rate is at a four four and a quarter well inflation's what we found is like near six

675
00:58:25,978 --> 00:58:30,218
and a half to eight okay so what if you just change that risk-free rate to what like the

676
00:58:30,218 --> 00:58:36,538
inflationary rate is any assumption if you just change your discount factor any assumption on

677
00:58:36,538 --> 00:58:42,378
the valuation of any one of these companies drops the valuation today drops drastically and if you

678
00:58:42,378 --> 00:58:50,318
change that to this inflation factor or STRC or STRF as your risk-free rate,

679
00:58:51,358 --> 00:58:57,098
the way you value these companies probably drops in half because it puts a lot less

680
00:58:57,098 --> 00:59:03,558
value in the future cash flow because your opportunity cost of capital today is so high.

681
00:59:05,438 --> 00:59:09,618
And that's kind of what I've been trying to point out with some of the graphs and charts that I put

682
00:59:09,618 --> 00:59:16,298
together, we're like looking at net income over time priced in Bitcoin. Maybe we'll get there.

683
00:59:16,378 --> 00:59:21,178
Maybe we'll get there a little bit. This is probably a little premature. And we'll talk

684
00:59:21,178 --> 00:59:32,258
about that. But so can you pull up slide number 10? Yeah, you see, I like this slide. And one of

685
00:59:32,258 --> 00:59:39,258
the reasons why I like the slide is that comparing if you look at 2020 to 2023, you see that there

686
00:59:39,258 --> 00:59:45,258
their ability to um has consistently their bitcoin yield since 2020. but if you look

687
00:59:45,978 --> 00:59:52,698
diminishing returns didn't set in what happens is from 23 to 24 it went up 74.3 percent this is

688
00:59:52,698 --> 00:59:58,138
their numbers not mine and then you look at it went up 25 for the first half of this year

689
00:59:58,778 --> 01:00:04,458
so let's assume let's just assume ceteris paribus it all stays the same and it ends up going their

690
01:00:04,458 --> 01:00:07,638
their Bitcoin yield goes up 50% in one year.

691
01:00:07,638 --> 01:00:10,698
I'm like, well, that's a really great metric.

692
01:00:10,698 --> 01:00:13,318
Now, this is independent of the stock price,

693
01:00:13,318 --> 01:00:15,638
but it shows their ability to raise funds.

694
01:00:15,638 --> 01:00:19,938
So with that said, I like slide number 10.

695
01:00:19,938 --> 01:00:21,638
I mean, I think we should go through the deck

696
01:00:21,638 --> 01:00:23,438
and everybody picks out their favorite slides

697
01:00:23,438 --> 01:00:26,218
and we can talk about them, but this is one of my favorites.

698
01:00:26,218 --> 01:00:27,418
Well, this is the first time

699
01:00:27,418 --> 01:00:30,358
that they actually published this metric, right?

700
01:00:30,358 --> 01:00:33,718
Not the yield, but the actual sats per share.

701
01:00:33,718 --> 01:00:38,278
that's for sure i think a lot of people overlooked that right this is one of the charts i put out all

702
01:00:38,278 --> 01:00:42,678
the time because they would never report on it this was the very first time that they actually

703
01:00:42,678 --> 01:00:48,278
formally put it out so it was cool to finally see it show up in one of these decks you know what ben

704
01:00:48,278 --> 01:00:54,278
it feels like i just put on a nice warm sweater when you said that you can take that off your

705
01:00:54,278 --> 01:00:59,078
plate now ben yeah i guess i could offload that one yeah yeah that one's in sailors hands now i

706
01:00:59,078 --> 01:00:59,978
I think they'll do all right.

707
01:00:59,978 --> 01:01:16,458
I will say just as a general overall, one thing I did really like about this last earnings call was the way that they also put Fong out there a lot, where he was covering a lot more of the discussion as well and kind of giving Saylor a break on some of this.

708
01:01:16,538 --> 01:01:21,298
It was great to see that full team starting to get more and more engaged.

709
01:01:21,298 --> 01:01:27,458
and i think that's critical because anytime you have a figurehead you know that's as inspiring

710
01:01:27,458 --> 01:01:32,718
as a guy like sailor they tend to be the ones that have to carry the load here but it means

711
01:01:32,718 --> 01:01:40,998
that people don't realize what how powerful the team is that's backing this thing i mean it's

712
01:01:40,998 --> 01:01:47,218
incredible anybody you talk to on that team is as sharp as they come and so starting to see them

713
01:01:47,218 --> 01:01:52,738
become more public facing and start doing more of the discussions on these earning calls.

714
01:01:53,218 --> 01:01:57,478
I think that's huge because one of the early days discussions was always around key man risk

715
01:01:57,478 --> 01:02:02,558
in this strategy. And I think we've probably moved past that now. I think that a lot of us,

716
01:02:02,558 --> 01:02:06,538
obviously, you know, Saylor's still the figurehead over here because, you know,

717
01:02:06,558 --> 01:02:12,738
he's the visionary that's made all this possible. But when you know that now at this scale and the

718
01:02:12,738 --> 01:02:16,798
maturity at which they're operating, that you have a team that can carry this load for you,

719
01:02:17,218 --> 01:02:21,518
That's massive in terms of building that confidence in the market.

720
01:02:21,518 --> 01:02:25,178
So I just wanted to say it was really awesome to see that come out in this earnings call.

721
01:02:25,918 --> 01:02:36,578
Yeah, he had one of my favorite quotes, and I can't remember which slide it was, but it was the one where they were listing strategy in the list of sizes.

722
01:02:37,478 --> 01:02:41,618
And he said that they don't want to just be the biggest Bitcoin treasury company.

723
01:02:42,118 --> 01:02:44,838
They want to be the biggest treasury company.

724
01:02:45,358 --> 01:02:45,458
Yes.

725
01:02:45,458 --> 01:02:52,018
and i was like okay fong is just dropping the hammer boom i immediately screenshotted on my

726
01:02:52,018 --> 01:02:58,658
phone i was like screenshot going back to listen again the biggest treasury company and i mean

727
01:02:58,658 --> 01:03:06,658
they're not far yeah and berth berkshire hathaway was at the top so it was like you know okay berkshire

728
01:03:06,658 --> 01:03:09,618
you're gonna buy bitcoin or you're just gonna wait for strategy to acquire you

729
01:03:09,618 --> 01:03:11,618
Right.

730
01:03:11,618 --> 01:03:17,378
You know, another metric that I thought that was awesome from listening to the call, that

731
01:03:17,378 --> 01:03:22,578
at the end, first of all, the amount of people on the call rose the whole time. And anybody that

732
01:03:22,578 --> 01:03:27,698
does a call knows that usually after the first half an hour, people drop off. But when I joined,

733
01:03:27,698 --> 01:03:32,898
there was a little bit under like, maybe like 30,000 people on the call, maybe 40,000. And at

734
01:03:32,898 --> 01:03:39,938
the end of the call two hours and 15 minutes 80 000 people were listening to an earnings call

735
01:03:39,938 --> 01:03:45,618
i mean that's just got to be a wreck i mean i i have no i mean ben you have any idea of what

736
01:03:45,618 --> 01:03:52,258
what happens on a tesla earnings call or a nvidia how many people i mean i have no idea but these

737
01:03:52,258 --> 01:03:57,458
earnings calls in my opinion are one of a kind right most earnings call you go to it seems like

738
01:03:57,458 --> 01:04:01,698
people are reading a hostage statement right like they're captive and they have to read exactly what

739
01:04:01,698 --> 01:04:03,378
what the lawyers told them they could read.

740
01:04:03,378 --> 01:04:05,898
So the ability to do it this way,

741
01:04:06,078 --> 01:04:08,678
where you're using it not just to run through the numbers,

742
01:04:08,798 --> 01:04:10,058
which obviously they do,

743
01:04:10,104 --> 01:04:12,544
and they give you all the normal disclaimers.

744
01:04:12,664 --> 01:04:14,404
But then you use that time

745
01:04:14,404 --> 01:04:16,584
while you've got everyone's attention, right?

746
01:04:16,704 --> 01:04:19,284
Everyone's showing up for an event, the earnings event,

747
01:04:19,344 --> 01:04:21,144
and they want to see what the performance was.

748
01:04:21,764 --> 01:04:23,504
But now that you've got their attention,

749
01:04:23,644 --> 01:04:25,464
you've got the ability to educate them.

750
01:04:25,664 --> 01:04:28,324
And I've seen it over and over now

751
01:04:28,324 --> 01:04:30,884
as they've started doing this more often

752
01:04:30,884 --> 01:04:34,844
that it completely resets market sentiment when they do it

753
01:04:34,844 --> 01:04:39,184
because people reorient themselves to the long-term vision

754
01:04:39,184 --> 01:04:43,764
and they stop looking for optimizations for a day or a week or a month.

755
01:04:44,144 --> 01:04:48,144
And they realize that you're building the framework for something incredible

756
01:04:48,144 --> 01:04:50,364
that's going to be able to last for decades.

757
01:04:50,744 --> 01:04:52,484
And we're all guilty of it too, right?

758
01:04:52,504 --> 01:04:54,784
I mean, you get impatient, you're waiting for things to move.

759
01:04:54,864 --> 01:04:55,884
You don't know what they're doing.

760
01:04:55,884 --> 01:04:59,484
If you don't hear from them all the time, you assume nothing's happening, right?

761
01:04:59,544 --> 01:05:00,544
I mean, that's human nature.

762
01:05:00,704 --> 01:05:02,124
That's just how people get.

763
01:05:02,764 --> 01:05:07,204
But when they do these, and this is really when they take the time to engage investors

764
01:05:07,204 --> 01:05:13,844
in a way that I haven't seen any other company do, you're taking the opportunity to show what the

765
01:05:13,844 --> 01:05:18,744
world looks like through your lens as a corporation, right? Here's how we're going to leverage the

766
01:05:18,744 --> 01:05:24,484
strength we've built. And here's the markets that we're going to go and dominate. And here's exactly

767
01:05:24,484 --> 01:05:31,644
how we're going to do it. And running through that in the detail that they do and level setting it

768
01:05:31,644 --> 01:05:36,084
with data like you're looking on here, this is really data heavy for any of these types of

769
01:05:36,084 --> 01:05:40,364
presentations. Typically, if you're talking to consultants, they would tell you that there's way

770
01:05:40,364 --> 01:05:44,444
too much data and way too many names on this slide and you got to trim it down and have two or three

771
01:05:44,444 --> 01:05:50,524
things. But this is what investors are looking for now. The investors have gotten far more savvy

772
01:05:50,524 --> 01:05:56,184
and they're digging deeper into these companies and they're trying to really understand the nuance

773
01:05:56,184 --> 01:06:02,544
between what makes a successful Bitcoin treasury company. And if we think that this is going to be

774
01:06:02,544 --> 01:06:07,744
a trend that persists. And if you watch the news cycle, it's becoming pretty clear because you're

775
01:06:07,744 --> 01:06:12,744
seeing announcements all the time. You know, this is where you come to get your master's degree,

776
01:06:13,064 --> 01:06:17,084
right? It's these types of presentations. It's hearing from the people that are doing it at the

777
01:06:17,084 --> 01:06:22,264
highest level who have been thinking about this in a way that people who aren't actually sitting

778
01:06:22,264 --> 01:06:27,844
in the seat and executing and talking to the investors and talking to the banks, you're just

779
01:06:27,844 --> 01:06:34,024
unaware of what's even out there. So this is a huge move forward in investor relations to be

780
01:06:34,024 --> 01:06:40,524
able to do this and to empower your investors to now take this data and interpret it and then apply

781
01:06:40,524 --> 01:06:47,564
it broadly across an entire sector that's emerging. This is huge. So yes, I'm sure they're

782
01:06:47,564 --> 01:06:51,864
incredibly comfortable doing it because they're the leader. They are the one leading from the

783
01:06:51,864 --> 01:06:55,184
front. They're setting the framework for how everyone else is going to follow and everyone's

784
01:06:55,184 --> 01:06:59,424
going to tweak and find ways to make the strategy their own and how to optimize it based on their

785
01:06:59,424 --> 01:07:07,504
starting point. But this is how you get the message out. This is how you show that this is not some,

786
01:07:07,664 --> 01:07:12,244
you know, fly by the seat of your pants approach to trying to generate value for your shareholders.

787
01:07:12,244 --> 01:07:18,204
This is incredibly well thought through. You're thinking through every concept from how do we view

788
01:07:18,204 --> 01:07:23,144
MNAV, right? Because the market hasn't even settled on how they view MNAV, right? They just

789
01:07:23,144 --> 01:07:27,784
know they want it to be higher, but they don't know exactly what's going to make it higher.

790
01:07:28,024 --> 01:07:32,924
There's all kinds of arguments out there. So they give you the vision of here's how we view it.

791
01:07:33,484 --> 01:07:38,124
Based on the tools in our toolbox and the amount of Bitcoin we can create and the fact that we're

792
01:07:38,124 --> 01:07:44,744
denominating our performance in Bitcoin terms by focusing on Bitcoin per share and Bitcoin yield,

793
01:07:45,484 --> 01:07:50,904
this is what we think justifies X premium. And here's how you can expand it. Here's what we

794
01:07:50,904 --> 01:07:56,284
think we need to tweak to expand that metric. And here's how we're doing it. That's incredible

795
01:07:56,284 --> 01:08:01,464
transparency. And I think that this is a model that all companies are going to need to deploy

796
01:08:01,464 --> 01:08:07,444
at some point. They won't, but they should, because this is how you build an equity that

797
01:08:07,444 --> 01:08:14,144
has the liquidity profile that MSTR has. You don't get this amount of trading volume. I don't care

798
01:08:14,144 --> 01:08:20,284
what equity it is. If people don't feel comfortable trading in and out of it and knowing that there's

799
01:08:20,284 --> 01:08:25,084
stability here and that this isn't something that's completely erratic. This is incredibly

800
01:08:25,084 --> 01:08:29,904
well thought through. It's incredibly well managed. There's a focus on risk mitigation.

801
01:08:30,504 --> 01:08:35,304
They're constantly finding ways to de-risk the model and the business. And because of that,

802
01:08:35,444 --> 01:08:40,444
investors can deploy huge amounts of capital into this ecosystem. And now you're seeing the benefit

803
01:08:40,444 --> 01:08:45,964
of that. So this is a strategy I always look at. Everyone always wants me to comment on

804
01:08:45,964 --> 01:08:51,524
what's happening this week or next week or at options expiration this month. I don't care.

805
01:08:51,744 --> 01:08:57,844
That's not what I'm focused on. I love the strategy. And I think that if you're looking

806
01:08:57,844 --> 01:09:03,724
at long-term value creation for shareholders, they've been clear, they're not optimizing for

807
01:09:03,724 --> 01:09:10,664
traders. So you have to know that going in. And this is how you show that focus on optimizing for

808
01:09:10,664 --> 01:09:16,344
long-term investors. You're going to reward the long-term shareholders and they're going to

809
01:09:16,344 --> 01:09:21,284
continue to benefit in Bitcoin terms. And that's an incredibly powerful shift in narrative.

810
01:09:22,424 --> 01:09:27,264
Yeah. Your point about the constant optimization, I think is the key because, you know, people will

811
01:09:27,264 --> 01:09:35,704
say that AI is the least powerful it will ever be. And like strategy has 3000% gains over five years.

812
01:09:35,704 --> 01:09:43,824
Bitcoin is like 1000. So they've three X Bitcoin in five years. And this is the least efficient

813
01:09:43,824 --> 01:09:49,384
MSDR will ever be. The future is going to be better than that.

814
01:09:49,384 --> 01:09:50,304
Hell yeah.

815
01:09:50,384 --> 01:09:56,224
Like, you know, the days of them begging the bond market for good rates and favorable terms,

816
01:09:56,604 --> 01:10:01,644
that's all over the days of, you know, being helpless during a Bitcoin market because they

817
01:10:01,644 --> 01:10:07,404
didn't have the preferred tools, that's all over. It's only going to be more efficient.

818
01:10:08,884 --> 01:10:10,284
Wow. Yeah. It's like this.

819
01:10:10,764 --> 01:10:16,604
You know, I'm going to say this to the older people on the call. And I don't want to give

820
01:10:16,604 --> 01:10:21,924
financial advice, but if you think that your job is going to be displaced by AI or a person using

821
01:10:21,924 --> 01:10:28,624
AI, you pretty much have a simple choice. You can either get good at using AI. And if you don't have

822
01:10:28,624 --> 01:10:35,404
interest in doing that, that's probably not good for your career, you better get some Bitcoin in

823
01:10:35,404 --> 01:10:42,964
case it catches on because that's about the only thing that's going to save the white collar 40 to

824
01:10:42,964 --> 01:10:52,044
60 year old person that's going to get displaced by AI by a 25 to 35 year old person that has better

825
01:10:52,044 --> 01:10:56,824
technical skills. This is exactly what happened back in the olden days with the internet bubble.

826
01:10:57,544 --> 01:11:01,224
it's the same thing they got displaced i couldn't understand the internet and now oh i don't

827
01:11:01,224 --> 01:11:06,504
understand ai i don't use it which i think is kind of crazy because chat gpt has 700 million

828
01:11:06,504 --> 01:11:11,704
whatever daily or weekly users so there's a lot of people using it but you better get good at that

829
01:11:11,704 --> 01:11:18,344
and if you don't you better have a plan b or a backup plan yeah strategy is showing you what

830
01:11:18,344 --> 01:11:26,424
happens when you have ai and a vision and you need both of those things right ai tools are as good

831
01:11:26,424 --> 01:11:28,364
as what you're willing to put into them.

832
01:11:29,124 --> 01:11:31,204
And when you have a clear vision

833
01:11:31,204 --> 01:11:32,724
for what you're trying to accomplish,

834
01:11:33,204 --> 01:11:35,064
and you've already decided

835
01:11:35,064 --> 01:11:38,044
that you're going to throw out the old playbook, right?

836
01:11:38,124 --> 01:11:38,964
There's going to be a million,

837
01:11:39,064 --> 01:11:39,964
I'm sure that a lot,

838
01:11:40,064 --> 01:11:41,884
this had to be a very frustrating path,

839
01:11:41,964 --> 01:11:43,184
getting all these preferred products

840
01:11:43,184 --> 01:11:44,604
out into the market for strategy,

841
01:11:44,604 --> 01:11:46,444
because I'm sure at every turn,

842
01:11:47,144 --> 01:11:48,284
the bankers were telling them,

843
01:11:48,364 --> 01:11:49,464
well, this isn't how these work,

844
01:11:49,884 --> 01:11:51,324
or investors aren't going to know

845
01:11:51,324 --> 01:11:52,464
what to make of these products.

846
01:11:52,924 --> 01:11:54,364
So you have to be willing

847
01:11:54,364 --> 01:12:00,004
to utilize that technology in a way that pushes boundaries and create something new.

848
01:12:00,444 --> 01:12:03,164
And what they've created here is spectacular.

849
01:12:03,664 --> 01:12:05,024
And it's scalable.

850
01:12:05,624 --> 01:12:11,424
And it's powered by effectively the capital that opts out of the system that you're watching

851
01:12:11,424 --> 01:12:13,444
be manipulated in front of your eyes.

852
01:12:14,024 --> 01:12:18,684
And you cannot understate how powerful that is that you're backing the entire balance

853
01:12:18,684 --> 01:12:21,584
sheet of a company by truly decentralized capital.

854
01:12:22,104 --> 01:12:22,584
It's crazy.

855
01:12:23,424 --> 01:12:23,584
Yeah.

856
01:12:23,584 --> 01:12:25,444
It's a massive shift.

857
01:12:25,624 --> 01:12:45,144
And then you're building products on top of it that take advantage of the fact that you know, because they tell you that the US dollar or whatever your fiat currency is, if you're issuing preferreds in another country, like it looks like Japan or Metaplanet's going to do in Japan and several others, I'm sure are going to pop up in their own respective markets.

858
01:12:45,144 --> 01:12:56,004
You know, if they're telling you that they're going to be debasing the currencies and you know that you're capitalized on an asset that's truly finite, completely fixed supply.

859
01:12:57,184 --> 01:13:10,444
And you know that no matter the demand that comes in, right, no matter how much corporate demand comes in, no matter how much nation state demand comes in, no matter how much retail demand comes in, there's not going to be any more coming into the market.

860
01:13:10,784 --> 01:13:14,244
The only thing in that model that ultimately is going to give is the price.

861
01:13:14,244 --> 01:13:20,244
And because of that, you can build a long term thesis around that arbitrage.

862
01:13:20,244 --> 01:13:22,244
And that's what you see with these preps.

863
01:13:22,244 --> 01:13:27,244
Right. They're clipping the first, you know, eight to 10 percent of that Bitcoin CAGR.

864
01:13:27,244 --> 01:13:30,244
And they're passing that on to the people that want a fixed payout.

865
01:13:30,244 --> 01:13:35,244
And then the remainder of that flows into the common stock equity holders.

866
01:13:35,244 --> 01:13:43,244
Right. So if Bitcoin continues to perform at a really high level, it's a hugely beneficial ecosystem to be participating in.

867
01:13:43,244 --> 01:13:49,764
in. So it's one of those things that just every time you see a presentation come out like this,

868
01:13:49,764 --> 01:13:54,944
you get excited about it, right? I mean, to sit on an earnings call for two hours to watch people

869
01:13:54,944 --> 01:14:00,864
go through the high-level vision and then explain it to you in granular detail how they see it.

870
01:14:01,584 --> 01:14:05,204
I mean, you know, there's nothing better if you're passionate about an area than having

871
01:14:05,204 --> 01:14:12,964
this type of access to both the minds that are creating it, as well as the output of how they're

872
01:14:12,964 --> 01:14:18,144
thinking. It's a hugely powerful combination here. So I want to hit on a couple more things

873
01:14:18,144 --> 01:14:23,364
and so we could shift gears just recognizing time, but incredibly important parts of this,

874
01:14:23,364 --> 01:14:28,404
they gave Bitcoin guidance. This is the first time they gave Bitcoin guidance. And I think they

875
01:14:28,404 --> 01:14:36,144
kind of underestimated Bitcoin price relative to the analyst Bitcoin prices by the end of the year

876
01:14:36,144 --> 01:14:39,984
that were earlier in the presentation. So they came with a conservative estimate of 150,000.

877
01:14:39,984 --> 01:14:57,984
They bumped up their Bitcoin yield. So they shifted their Bitcoin yield target at the beginning of the year was like 15. They plowed through it. They pushed it to 25. They plowed through 25. They shifted it to 30. And we've got half the year left. And increase their Bitcoin gain, dollar gain target. Awesome. Awesome to see guidance like this.

878
01:14:57,984 --> 01:15:05,524
The other thing is they put out earnings guidance, which is a function of the underlying Bitcoin price.

879
01:15:05,524 --> 01:15:11,044
And you start backing into this earnings guidance relative to some of these other large companies, and it is just monstrous.

880
01:15:11,044 --> 01:15:14,224
And it's insulated.

881
01:15:14,224 --> 01:15:20,584
If there's any change in market sentiment in AI or any blow off top in any of those things,

882
01:15:21,064 --> 01:15:30,304
this is likely to be insulated from any froth because it is value. There's true store value

883
01:15:30,304 --> 01:15:33,864
that they're holding on their balance sheet here, which I think is fascinating. The next one,

884
01:15:34,324 --> 01:15:42,204
this was huge. Josh Mandel was on fire. He was all about this. We got some MSTR MNAV equity

885
01:15:42,204 --> 01:15:49,304
guidance. So it looks like they changed their algorithms for issuing the MSTR equity. So right

886
01:15:49,304 --> 01:15:56,324
now, I think MSTR MNAV, which is the multiple on enterprise value is how they calculate it on

887
01:15:56,324 --> 01:16:02,084
strategy.com. It's the enterprise value as a function of the underlying Bitcoin holdings.

888
01:16:02,284 --> 01:16:09,224
So right now the MNAV is like 1.7 and below two and a half MNAV, they will not be using the MSTR

889
01:16:09,224 --> 01:16:16,184
common atm which has got to make people happy right there's uh jim chano's trade doesn't work

890
01:16:16,184 --> 01:16:22,344
anymore and there is going to be no additional equity issued to the market until two and a half

891
01:16:22,344 --> 01:16:26,824
x m nav and then between two and a half and four they don't even say that they're going to use it

892
01:16:26,824 --> 01:16:30,424
all the time they say they're going to opportunistically issue msdr to acquire bitcoin

893
01:16:31,624 --> 01:16:39,064
so you know it's probably similar to kind of what they have in place right now you know on

894
01:16:39,224 --> 01:16:45,584
you know, good days, positive days, whatever. So I think that's really positive for the underlying

895
01:16:45,584 --> 01:16:53,084
equity. And it was good to see some guidance here. And then STRC credit guidance, they refine this a

896
01:16:53,084 --> 01:16:56,404
little bit, just showing exactly how they're going to try to keep this in the target range between

897
01:16:56,404 --> 01:17:01,704
101 and $99, which this is just going to be such a fascinating product. And I know a lot of people

898
01:17:01,704 --> 01:17:07,424
are fired up about it because once we get to 99 or 100, if there's additional volume coming in the

899
01:17:07,424 --> 01:17:12,344
door, they're going to act, they're going to do a five day BWAP and issue more

900
01:17:12,344 --> 01:17:16,904
shares of this stuff out to the market to bring the price back into target range.

901
01:17:17,204 --> 01:17:23,144
So as the world wakes up to this instrument and that continues to trade up

902
01:17:23,144 --> 01:17:35,732
higher they have the ability to just continuously raise capital If there more volume excess volume coming in the door on these things So I mean I had three conversations with people today about STRC

903
01:17:35,732 --> 01:17:40,952
and there are people I've talked about MSTR for a really long time. They've got a little bit of

904
01:17:40,952 --> 01:17:44,132
MSTR, but they've always been just like a little hesitant about it. And I said,

905
01:17:44,872 --> 01:17:50,012
hey, this is a really cool product. You got to check it out. And that's, I'm just one step at a

906
01:17:50,012 --> 01:17:56,312
time. And, you know, it takes a couple of people having a really improving their life from having

907
01:17:56,312 --> 01:18:01,712
this instrument. It takes a handful of those people telling a handful of people. And all of a

908
01:18:01,712 --> 01:18:09,352
sudden, you're Kevin Bacon, seven layers of separation, and your stretches in every brokerage

909
01:18:09,352 --> 01:18:15,892
accountant of every person in the United States. I think this one becomes massive because one,

910
01:18:15,892 --> 01:18:19,872
it's just got characteristics people like. They don't like to wait till the end of quarters to

911
01:18:19,872 --> 01:18:23,732
get dividends. So if they can get monthly dividends, you know, it feels like it's working

912
01:18:23,732 --> 01:18:27,532
for them more. So I think you see a lot more capital coming in and they're going to be pretty

913
01:18:27,532 --> 01:18:34,372
active trying to keep it capped at 101. But also every month when that dividend gets issued and

914
01:18:34,372 --> 01:18:40,052
you get all the reinvestments that come, right, the drip, they've got an opportunity right there

915
01:18:40,052 --> 01:18:45,072
to effectively try to neutralize that new buying pressure with new shares in the market so they

916
01:18:45,072 --> 01:18:50,632
can recollect that capital. The drip just comes back. Exactly. So this is one they're going to

917
01:18:50,632 --> 01:18:55,992
have to actively hit because you saw what can happen when those dividend reinvestments hit.

918
01:18:56,072 --> 01:19:00,172
We saw it with all the other prefs and things spiked in a really crazy way. So on this one in

919
01:19:00,172 --> 01:19:03,912
particular, they're going to have to be ready for that. And I think they're going to be putting a

920
01:19:03,912 --> 01:19:07,812
ton of shares in at the end of each month when those dividends are getting paid and going back

921
01:19:07,812 --> 01:19:13,152
into the reinvestments. So they've got an ability here to raise a lot of capital. And the larger this

922
01:19:13,152 --> 01:19:18,832
things scales, the larger that opportunity every month comes as well. So I think there's just going

923
01:19:18,832 --> 01:19:22,272
to be a huge amount of capital they're going to be able to raise with STRC. This is going to be a

924
01:19:22,272 --> 01:19:29,732
really powerful tool. And on the MNAV and the ATM, I think it was big, right? I think the timing

925
01:19:29,732 --> 01:19:38,652
was right because the common stock ATM had really become the primary capital raising tool for them

926
01:19:38,652 --> 01:19:43,512
for a very long time, and that's a delevering instrument. So every time they were raising

927
01:19:43,512 --> 01:19:47,792
capital via the common stock ATM, they were adding Bitcoin to the balance sheet. It increases

928
01:19:47,792 --> 01:19:53,872
the fair market value of the Bitcoin. It delevers the balance sheet. And so it was hitting this

929
01:19:53,872 --> 01:20:00,312
point where they were going to become increasingly delevered with time. And now that they're sub,

930
01:20:00,412 --> 01:20:04,472
you know, what are they? Including dead end prefs, like 11% or something like that.

931
01:20:04,472 --> 01:20:10,652
I was in your sheet. I can't remember. Oh, yeah, yeah. 11% leverage. And if they're looking at it,

932
01:20:10,652 --> 01:20:14,752
and on that one slide, they showed that with just the press, because you're managing the annual

933
01:20:14,752 --> 01:20:20,052
dividend obligations, you know, 30% is no longer your ceiling, right? You could go higher on the

934
01:20:20,052 --> 01:20:26,392
leverage, knowing that they have to scale these products now, even in order to relever, they've

935
01:20:26,392 --> 01:20:31,772
got a long runway of raising capital through these preferred products before that leverage

936
01:20:31,772 --> 01:20:37,052
ratio really climbs in a big way. I mean, there's a ton of capital they have to raise to get that up

937
01:20:37,052 --> 01:20:42,092
back to 30%. I do the math here, but I just shut that part down. But we'll figure out what that

938
01:20:42,092 --> 01:20:47,132
number is. But it's a lot of capital to get back up to 30%. It's huge.

939
01:20:50,572 --> 01:20:54,972
They're going to be aggressive here. And I think that the remaining five months of the year,

940
01:20:54,972 --> 01:20:58,732
there's going to be way more capital raised than people are anticipating.

941
01:20:58,732 --> 01:21:07,952
Bigly. A lot of capital. Bigly. Last thing is talk about comparables. I felt really seen by

942
01:21:07,952 --> 01:21:13,212
Phong here. Big shout out to Phong because I've been trying to say a lot of this stuff and they

943
01:21:13,212 --> 01:21:16,572
just put it together in a presentation and they just took it off my back, which is great.

944
01:21:17,152 --> 01:21:22,412
But benchmarking strategy to the top S&P 500 companies, they've got ninth in operating income,

945
01:21:22,412 --> 01:21:28,532
but 96th in market cap. They're 13th in estimated income, but 495th in PE multiple.

946
01:21:28,732 --> 01:21:31,932
I know some people put in the chat, Exxon is a balance sheet company.

947
01:21:32,512 --> 01:21:35,452
Exxon, balance sheet company, 16.5x PE multiple.

948
01:21:35,932 --> 01:21:39,232
Berkshire Hathaway, balance sheet company, 25x PE multiple.

949
01:21:39,852 --> 01:21:41,452
And you look at some of these crazy ones here.

950
01:21:42,152 --> 01:21:47,272
The one that's not on here is Palantir, which there's been a lot of energy and people talk about that today.

951
01:21:47,372 --> 01:21:51,892
But there's a 650, 675x PE ratio.

952
01:21:52,392 --> 01:21:53,012
Is that all?

953
01:21:53,552 --> 01:21:57,572
Yeah, there's a, you know how we talk about real estate?

954
01:21:57,572 --> 01:22:07,472
There's a lot of monetary premium in real estate, and there's going to be a reevaluation of real estate as monetary premium gets sucked out and all this risk gets reevaluated.

955
01:22:07,892 --> 01:22:13,012
I think the same thing exists in 493 of the stocks in the S&P 500.

956
01:22:14,352 --> 01:22:15,752
And you can see it here.

957
01:22:16,552 --> 01:22:17,772
Who's buying Broadcom?

958
01:22:19,092 --> 01:22:25,132
There's no irresponsibly among Broadcom communities out there, right?

959
01:22:25,192 --> 01:22:25,912
Like, I don't know.

960
01:22:25,912 --> 01:22:26,552
Maybe there are.

961
01:22:26,652 --> 01:22:27,012
Just me.

962
01:22:27,012 --> 01:22:50,072
I just haven't looked at it. Like, you know, irresponsible along Walmart. I don't know. And that's even as a Walton saying that, you know, dissing on my name brand, I guess. But yeah, I think there's a lot of opportunity here. And I think the world will eventually wake up to this. And the other interesting part is all of these companies on the right hand side, strategy is the only one that's not actually included in the S&P 500.

963
01:22:50,072 --> 01:22:56,772
As I've mentioned in the past, the S&P 500 holds like 6% of most of these equities on the screen.

964
01:22:57,972 --> 01:23:06,392
So as that continues to change and we see this speculation on whether they get included in the S&P 500, it's just going to be a fun conversation.

965
01:23:06,672 --> 01:23:11,812
You've got these two valuation systems that are clashing in epic proportions.

966
01:23:11,812 --> 01:23:18,412
You've got balance sheet value investing, discounted cash flow, expectation of future cash flow investing.

967
01:23:18,412 --> 01:23:22,412
and the valuations of those two are clashing just monumental proportions.

968
01:23:24,332 --> 01:23:28,972
Do you think that one thing that surprised me when the guidance came out, right? Obviously,

969
01:23:28,972 --> 01:23:33,772
this earnings was a massive deal because this was kind of the culmination of everything that had

970
01:23:33,772 --> 01:23:37,852
been happening for years now. It was the first time that they could realize that value.

971
01:23:38,732 --> 01:23:43,132
You know, and this was what, $10 billion in net income. And now you've got guidance

972
01:23:43,132 --> 01:23:51,292
just for the rest of this year for 24 billion you know if they start showing quarter after quarter

973
01:23:51,292 --> 01:23:56,652
after quarter right if bitcoin continues to perform and if sailors correct that winter's not

974
01:23:56,652 --> 01:24:00,732
coming back and the structural bid builds up underneath bitcoin because all these new

975
01:24:00,732 --> 01:24:06,972
corporations are coming in and other people will get in the mix as well i mean that type of earnings

976
01:24:06,972 --> 01:24:12,572
is pretty incredible and when you see it i think right now you're still in that position where

977
01:24:13,132 --> 01:24:17,512
A lot of people that haven't been following this for a long time will go, yeah, but it's a one-time event.

978
01:24:18,492 --> 01:24:18,672
Right.

979
01:24:19,172 --> 01:24:23,092
They got to recognize it this time, you know, marked it to fair value.

980
01:24:23,252 --> 01:24:23,552
Okay.

981
01:24:23,672 --> 01:24:24,512
One-time event.

982
01:24:24,512 --> 01:24:38,992
I think seeing it multiple quarters in a row, particularly if it happens to be in like, you know, $10 billion type range is going to continue to bring eyes in and start getting people interested about what is going on over here.

983
01:24:39,132 --> 01:24:40,692
What is the model that they're deploying?

984
01:24:40,692 --> 01:24:47,152
Why is this small software company just dominating the fixed income markets?

985
01:24:47,492 --> 01:24:48,332
What is happening?

986
01:24:49,152 --> 01:24:55,212
So I do think that while this was a huge deal, I think that we're still in the phase where

987
01:24:55,212 --> 01:24:58,152
people can shrug it off and go, well, it was one time.

988
01:24:58,532 --> 01:24:59,832
It's not going to happen again.

989
01:25:00,212 --> 01:25:05,612
And now, if it does happen repeatedly, particularly throughout the year, and if they hit that

990
01:25:05,612 --> 01:25:11,592
24 billion mark that they're guiding towards, that's going to be powerful for messaging for

991
01:25:11,592 --> 01:25:21,812
all the Bitcoin treasury companies. If Bitcoin goes to 200,000, the net income goes to 80 billion.

992
01:25:22,552 --> 01:25:29,152
Yeah. That's 80 billion additional. So then they're going to be sitting on $150 billion

993
01:25:29,152 --> 01:25:34,172
of this stuff of Bitcoin, right? They're right below NVIDIA in this chart.

994
01:25:35,612 --> 01:25:43,492
Okay, if Bitcoin goes to a million, that's $500 billion net income.

995
01:25:43,892 --> 01:25:46,052
That's 5x all of these, right?

996
01:25:46,172 --> 01:25:47,612
Those numbers are too big, Jeff.

997
01:25:47,752 --> 01:25:52,412
We need to start with the smaller numbers here that people can conceptualize.

998
01:25:52,552 --> 01:25:56,812
Five years of net income at Google, the biggest net income.

999
01:25:57,612 --> 01:25:58,652
How big is that neighborhood?

1000
01:25:59,052 --> 01:26:00,152
There's a million dollar homes in it.

1001
01:26:00,152 --> 01:26:01,332
That's a big neighborhood.

1002
01:26:01,972 --> 01:26:03,192
We could go back to that one.

1003
01:26:03,192 --> 01:26:04,972
Okay, I'm going to stop sharing my screen.

1004
01:26:04,972 --> 01:26:12,812
so i get my screen back and well uh man that was cool it was a that was a great earnings call once

1005
01:26:12,812 --> 01:26:17,452
again a master class they're just trying to communicate to the market that's all the finance

1006
01:26:17,452 --> 01:26:24,572
is is telling a story they just got to tell their story and yeah but but effectively right but jeff

1007
01:26:24,572 --> 01:26:31,452
let's be realistic 400 companies out of the s p 500 have a crappy story they don't have a story

1008
01:26:31,452 --> 01:26:32,452
It's dead.

1009
01:26:32,452 --> 01:26:33,452
They don't have a story.

1010
01:26:33,452 --> 01:26:34,452
That's why they…

1011
01:26:34,452 --> 01:26:37,992
And so the CFO has got to get on the call and talk about, and if they don't have good

1012
01:26:37,992 --> 01:26:42,072
metrics, who wants to be on that call, right, and take questions?

1013
01:26:42,072 --> 01:26:45,072
I mean, it's, you know, we've all seen…

1014
01:26:45,072 --> 01:26:52,692
Well, so a year ago from Strategy World, the previous year, I was there with Ryan and Plank,

1015
01:26:52,692 --> 01:26:56,352
and maybe there was 150 people in the room.

1016
01:26:56,352 --> 01:26:59,192
And then this year, it was outrageous.

1017
01:26:59,192 --> 01:27:06,472
main stage that he was on with sailor i mean that the tvs were what 20 feet tall and 100 feet wide

1018
01:27:06,472 --> 01:27:13,672
i mean it was it was crazy how in one year it just everything had changed and you don't see that like

1019
01:27:13,672 --> 01:27:18,552
you know where's the irresponsibly long broadcom group maybe somebody's listening will be like

1020
01:27:18,552 --> 01:27:24,232
there is one and we don't know about it but i i want to i want to just say something here um if

1021
01:27:24,232 --> 01:27:30,152
people will see that my sentiment has fundamentally changed where it was for the past six months and

1022
01:27:30,152 --> 01:27:34,472
and seven months. And the reason why is one of the main reasons because of this earnings call,

1023
01:27:34,472 --> 01:27:40,712
because of STRC, because of the guidance, because it was in writing and there are slides in here

1024
01:27:40,712 --> 01:27:46,472
talking about this. And so once they give that guidance in terms of the 2.5 MNAV on the common

1025
01:27:46,472 --> 01:27:53,832
stock ATM and we see this, they listen to feedback. And if a group don't listen to feedback

1026
01:27:53,832 --> 01:27:58,572
And the perception tends to be pretty close to reality sometimes.

1027
01:27:59,312 --> 01:28:03,232
And so if that's the case, then they made a course change.

1028
01:28:03,352 --> 01:28:04,652
And I commend them for that.

1029
01:28:04,712 --> 01:28:08,272
If they're listening, if the execs from Strategy are listening, congratulations.

1030
01:28:08,972 --> 01:28:12,252
You listened to what the shareholders were saying.

1031
01:28:12,652 --> 01:28:15,512
And we're proud to be part of this group.

1032
01:28:15,812 --> 01:28:21,352
But we thought that by selling too many shares on the common stock ATM could depress the price

1033
01:28:21,352 --> 01:28:22,392
specifically of MSTR.

1034
01:28:22,392 --> 01:28:28,312
are and you you made a change to that so thank you we appreciate that launching strc i hope it's the

1035
01:28:28,312 --> 01:28:33,192
iphone product i truly do i think that if they came out with an overnight jeff i think that's

1036
01:28:33,192 --> 01:28:39,752
a great idea i i like that i like that idea they could do that repo overnight yeah yeah it's a

1037
01:28:39,752 --> 01:28:44,392
daily daily product and brokers would have to figure out how to do a dividend daily and get

1038
01:28:44,392 --> 01:28:48,872
comfortable dividend daily because it'd be one day settlement i mean they're probably maybe there

1039
01:28:48,872 --> 01:28:53,192
maybe you just do it weekly but if you could do it daily and it just tabulates it daily but it

1040
01:28:53,192 --> 01:28:58,152
pays out weekly i i think that that would be the if you have the short duration and you have the

1041
01:28:58,152 --> 01:29:02,952
long duration perpetuals you got you've got the yield curve well you got a yield curve there yeah

1042
01:29:04,152 --> 01:29:08,152
look all my all my junior enlisted from the navy can you get us like a payday loan version

1043
01:29:08,792 --> 01:29:14,312
yeah i'm saying that's what we need give me the dividend up front and uh and i'll hold it

1044
01:29:14,312 --> 01:29:21,752
i'll pay you back next friday well however you got back rain we're glad to have you back yeah

1045
01:29:22,472 --> 01:29:28,152
well well well thanks and and guys look i of course i want to be on these calls and and add value to

1046
01:29:28,152 --> 01:29:32,792
this but you know when i look at it you know there's another great slide if you could pull it up

1047
01:29:32,792 --> 01:29:41,192
um slide number 26. yeah let me see and and and the reason why because um there was an interview

1048
01:29:41,192 --> 01:29:44,232
with, what's his name?

1049
01:29:44,292 --> 01:29:47,872
The guy that's on CNBC, the option guy.

1050
01:29:48,012 --> 01:29:48,852
I forgot his name right now.

1051
01:29:49,032 --> 01:29:49,932
It was a quick clip.

1052
01:29:50,112 --> 01:29:51,552
It was 20 minutes long.

1053
01:29:51,652 --> 01:29:53,452
I had reposted it about a week ago.

1054
01:29:54,392 --> 01:29:58,872
And what he said was, the question was to Saylor was,

1055
01:29:59,012 --> 01:30:01,232
who have you spoken to that would surprise us

1056
01:30:01,232 --> 01:30:02,672
without releasing any names?

1057
01:30:02,752 --> 01:30:03,912
What company or country?

1058
01:30:04,392 --> 01:30:06,152
And Saylor came back and said,

1059
01:30:07,012 --> 01:30:10,012
I haven't really spoken to any company

1060
01:30:10,012 --> 01:30:11,592
that would really surprise anybody.

1061
01:30:12,112 --> 01:30:16,612
But then what he said was the only serious conversations he has

1062
01:30:16,612 --> 01:30:18,392
is with the United States.

1063
01:30:19,392 --> 01:30:20,892
So he said that.

1064
01:30:21,172 --> 01:30:24,432
And then you see slide number 2026 come out here

1065
01:30:24,432 --> 01:30:27,352
because this administration has embraced Bitcoin.

1066
01:30:27,352 --> 01:30:30,272
And there's people that have been left off of this slide also.

1067
01:30:31,512 --> 01:30:32,272
What's his name?

1068
01:30:32,372 --> 01:30:34,412
Bo Hines, for instance, is not on the slide.

1069
01:30:34,832 --> 01:30:36,232
So there are people that are left off.

1070
01:30:36,372 --> 01:30:38,292
And we've talked at the Bitcoin conference.

1071
01:30:38,292 --> 01:30:42,212
I talked to a lot of staffers for Cynthia Loomis

1072
01:30:42,212 --> 01:30:45,252
and other people there that were bullish,

1073
01:30:45,252 --> 01:30:56,400
the younger staffers are bullish on Bitcoin So this is a fundamental shift that he talks about And then not only do you hear about this when he does an interview but then you see it in the Q2

1074
01:30:56,400 --> 01:31:02,120
report and you put a picture with a face to it. And so not only did he change the FASB accounting,

1075
01:31:02,520 --> 01:31:07,320
but because of the change in the political structure of the US, it got rid of Operation

1076
01:31:07,320 --> 01:31:12,260
Chokepoint. And then by the way, if you scroll up or down, blah, blah, blah, hold on one second.

1077
01:31:12,260 --> 01:31:17,120
And where's the, there's a slide with the Clarity Act with the three acts in it.

1078
01:31:19,340 --> 01:31:23,320
Oh, slide 37.

1079
01:31:24,360 --> 01:31:28,360
There's a slide on the FASB, Capital has embraced Bitcoin.

1080
01:31:28,780 --> 01:31:31,280
So the Genius Act was approved and got through.

1081
01:31:31,360 --> 01:31:33,820
You got the Clarity Act and the Bitcoin Act trying to get those through.

1082
01:31:33,820 --> 01:31:41,900
So my takeaway is Bitcoin has to perform because you've got what you saw in this section here.

1083
01:31:41,900 --> 01:31:44,300
is being important that these people came in.

1084
01:31:44,820 --> 01:31:47,360
There was a change in the political winds in the U.S.

1085
01:31:47,460 --> 01:31:50,280
And therefore, now this is the best tailwinds you get for Bitcoin.

1086
01:31:51,120 --> 01:31:52,080
It's right.

1087
01:31:52,220 --> 01:31:53,100
I mean, does anybody disagree?

1088
01:31:53,440 --> 01:31:55,300
I mean, it's fantastic.

1089
01:31:55,520 --> 01:31:58,360
I mean, yeah, the architecture, again, has changed.

1090
01:31:58,360 --> 01:32:06,260
And going into midterms in like almost a year, that's probably pretty important too.

1091
01:32:06,760 --> 01:32:10,560
And what I've seen with very difficult and any political thing is that

1092
01:32:10,560 --> 01:32:15,860
once something gets done, it's 10 times harder to undo it. It's very hard to get something

1093
01:32:15,860 --> 01:32:20,740
accomplished, but once it's accomplished, to undo it is very hard. So in this particular case,

1094
01:32:20,800 --> 01:32:25,500
an Operation Chokepoint did not go through Congress. It was just more like policies were

1095
01:32:25,500 --> 01:32:30,980
there. So these undid it by law. And I think that this is a fundamental shift. So again,

1096
01:32:31,500 --> 01:32:36,480
what changed my sentiment, it's changed based upon the information that you see in this deck

1097
01:32:36,480 --> 01:32:40,080
that may not be, it's directly related to strategy,

1098
01:32:40,080 --> 01:32:43,560
but it's related to government and guidance

1099
01:32:43,560 --> 01:32:45,120
and sentiment and so forth.

1100
01:32:46,780 --> 01:32:49,340
It's really one of the first times

1101
01:32:49,340 --> 01:32:52,260
where you look forward into the future

1102
01:32:52,260 --> 01:32:57,020
and you don't see nearly as many potential roadblocks

1103
01:32:57,020 --> 01:32:58,880
that can be thrown in your way, right?

1104
01:32:58,900 --> 01:33:00,300
It feels like from this point,

1105
01:33:00,420 --> 01:33:04,220
particularly now that investors are getting easy access

1106
01:33:04,220 --> 01:33:09,500
and exposure to Bitcoin through brokerage accounts, which means you've got a lot more

1107
01:33:09,500 --> 01:33:14,520
people likely getting that exposure. And obviously the success of the ETFs is proving that out.

1108
01:33:15,520 --> 01:33:23,400
Those are important voting blocks. So for any political party to come out now and decide that

1109
01:33:23,400 --> 01:33:29,180
they're going to go anti-Bitcoin is going to be a massive, massive risk. The move is really

1110
01:33:29,180 --> 01:33:34,840
to go out and say, we're more pro-Bitcoin than the Republicans, or we're more pro-Bitcoin than

1111
01:33:34,840 --> 01:33:40,180
the Democrats, right? We're all about empowering you and allowing you to buy whatever commodities

1112
01:33:40,180 --> 01:33:45,540
it is you want to buy. It is one of those first times where it feels like we're catching a tailwind

1113
01:33:45,540 --> 01:33:52,500
instead of pushing through a headwind. And just that shift alone is huge. And investors are waking

1114
01:33:52,500 --> 01:33:56,400
up to that. And I think they're feeling more confident deploying capital into the space,

1115
01:33:56,400 --> 01:34:02,040
which means more people are going down the rabbit hole of understanding what Bitcoin actually is,

1116
01:34:02,560 --> 01:34:05,520
why they should be holding the asset themselves, right?

1117
01:34:05,900 --> 01:34:07,580
Participating in what makes it powerful.

1118
01:34:07,880 --> 01:34:13,280
I'd be curious to see the stats on, you know, like home miners that are getting sold,

1119
01:34:13,400 --> 01:34:17,640
these small solo miners, because I think that would be a really interesting trend to see,

1120
01:34:17,700 --> 01:34:22,940
to see how many people are starting to try to participate more in everything Bitcoin has to offer,

1121
01:34:22,940 --> 01:34:26,280
whether it's running a node or running a miner in your basement or whatever.

1122
01:34:26,400 --> 01:34:32,720
is you know i think that the uptake in that type of an education and adoption as people understand

1123
01:34:32,720 --> 01:34:37,520
just how powerful it is to have a fully self-sovereign asset like bitcoin in your portfolio

1124
01:34:37,520 --> 01:34:43,360
can be and then you know obviously brokerage accounts are a massive top of funnel for generating

1125
01:34:43,360 --> 01:34:47,920
interest and as their brokerage accounts perform it just sends you deeper down the rabbit hole

1126
01:34:47,920 --> 01:34:51,120
because you want to know what is the asset that's making all of this possible

1127
01:34:51,120 --> 01:35:00,120
bingo uh we're we're getting close to uh we're over an hour and a half i wanted to try to keep

1128
01:35:00,120 --> 01:35:04,600
it at 90 minutes so i've got one final thing to talk about and it's just this bitcoin as a unit

1129
01:35:04,600 --> 01:35:11,000
account and maybe maybe we'll make this two hours who knows i don't know but uh i just shifting

1130
01:35:11,000 --> 01:35:18,800
gears here a little bit and something i'm noticing in the marketplace and just a just a general trend

1131
01:35:18,800 --> 01:35:25,600
and I think it's worth talking about, is a lot of people are doing a ton of analytics on Bitcoin

1132
01:35:25,600 --> 01:35:30,420
treasury companies right now. Fantastic. It's absolutely great to see. There are little

1133
01:35:30,420 --> 01:35:35,080
communities that are popping up everywhere. They're following these stocks. This is just

1134
01:35:35,080 --> 01:35:42,400
great for the entire ecosystem. What I don't like is that it's like infighting between all

1135
01:35:42,400 --> 01:35:46,620
of these people. You need to buy this because this metric is slightly better. And this Bitcoin

1136
01:35:46,620 --> 01:35:49,420
treasury companies are going to outperform this Bitcoin treasury company. It's like,

1137
01:35:50,420 --> 01:35:54,240
you know, whatever anybody does with their investments is fine. I mean, it's all good

1138
01:35:54,240 --> 01:36:00,460
for the general Bitcoin ecosystem. And where I think the bigger fight and the bigger argument is

1139
01:36:00,460 --> 01:36:07,080
here is against the traditional financial markets. And all of these analytics can be done.

1140
01:36:07,680 --> 01:36:12,260
Just take the same framework and apply it to all of the traditional financial ecosystem

1141
01:36:12,260 --> 01:36:18,340
them and start seeing the world in Bitcoin and your whole perspective on the rest of the world

1142
01:36:18,340 --> 01:36:27,420
completely fundamentally changes. And this is a call to action to people to start to use the same

1143
01:36:27,420 --> 01:36:31,520
Bitcoin framework and think about the rest of the equity market and the rest of the fixed income

1144
01:36:31,520 --> 01:36:37,980
market. And this is a campaign here. Like we really want Bitcoin to become adopted. There needs

1145
01:36:37,980 --> 01:36:40,680
to be stepping stones to get there.

1146
01:36:40,680 --> 01:36:44,600
And it's through communication, it's through analysis,

1147
01:36:44,600 --> 01:36:47,980
it's through doing things a little bit differently.

1148
01:36:47,980 --> 01:36:50,460
It's not through infighting about which treasury company

1149
01:36:50,460 --> 01:36:52,200
has the best months to cover MNAV.

1150
01:36:52,200 --> 01:36:55,140
I mean, it's great information and it's like great analytics,

1151
01:36:55,140 --> 01:37:00,140
but it's not useful time and energy spent.

1152
01:37:01,700 --> 01:37:05,180
And I just, this is just an example.

1153
01:37:05,180 --> 01:37:09,180
And there's so much opportunity in this space

1154
01:37:09,180 --> 01:37:10,620
to like rethink the world in Bitcoin

1155
01:37:10,620 --> 01:37:12,100
of all these other things.

1156
01:37:12,100 --> 01:37:13,360
And this is just an example

1157
01:37:13,360 --> 01:37:14,880
that I've just was starting to come up with.

1158
01:37:14,880 --> 01:37:19,780
And I posted this on my Twitter feed is,

1159
01:37:19,780 --> 01:37:23,240
so on the left-hand side, this is CrowdStrike.

1160
01:37:23,240 --> 01:37:25,620
CrowdStrike was recently added to the S&P 500

1161
01:37:25,620 --> 01:37:28,140
because they had four positive quarters in a row.

1162
01:37:28,140 --> 01:37:32,000
And I went back and I wanted to see, okay, their net income,

1163
01:37:32,000 --> 01:37:35,120
I wanted to price their net income in Bitcoin

1164
01:37:35,180 --> 01:37:37,380
at the time they announced earnings.

1165
01:37:37,980 --> 01:37:40,420
So I took the price of Bitcoin at the time they announced earnings

1166
01:37:40,420 --> 01:37:43,100
and I converted into Bitcoin and I just looked at it over time.

1167
01:37:43,700 --> 01:37:47,140
And I wanted to see like how much Bitcoin would they have stacked

1168
01:37:47,660 --> 01:37:50,460
if they would have just bought Bitcoin with 100% of their net income?

1169
01:37:50,860 --> 01:37:53,180
And like, what would their position be?

1170
01:37:53,180 --> 01:37:56,740
And you look at this company CrowdStrike and effectively,

1171
01:37:56,860 --> 01:38:01,100
they've lost like 18,000 Bitcoin over this horizon

1172
01:38:01,100 --> 01:38:08,120
in net income perspective, which is like a negative $12 billion loss relative to the negative $2

1173
01:38:08,120 --> 01:38:13,580
billion loss they actually posted in dollars. But if you think the world in Bitcoin, that's a

1174
01:38:13,580 --> 01:38:18,860
significantly bigger loss. Your opportunity cost capital is really high. And it's an interesting

1175
01:38:18,860 --> 01:38:22,120
perspective. And then you start to look at this one over on the right-hand side, this is Nike.

1176
01:38:23,320 --> 01:38:29,280
And this is net income over time. And you look at during 2020, obviously, they would have purchased

1177
01:38:29,280 --> 01:38:33,040
a lot of Bitcoin and same with 2022 in the bear market, which kind of in the middle here.

1178
01:38:33,680 --> 01:38:40,080
But on the right hand side, you look at their ability to raise this capital, this permanent

1179
01:38:40,080 --> 01:38:48,640
capital and hold into the future is dwindling. And that's just making the moat of any of these

1180
01:38:48,640 --> 01:38:54,240
Bitcoin treasury companies greater and greater. You look at a company like Strategy, it holds

1181
01:38:54,240 --> 01:39:06,640
600,000 Bitcoin. And even if you combine all of Nike's past 21 quarters here, it's still not more

1182
01:39:06,640 --> 01:39:14,560
than 600,000 Bitcoin. It's maybe close, but that's 21 quarters of converting 100% of their net income

1183
01:39:14,560 --> 01:39:19,160
into Bitcoin, which they're clearly not going to do. But it's just starting to see the world through

1184
01:39:19,160 --> 01:39:24,380
a little bit of a different lens, it could be really helpful in communicating to other people.

1185
01:39:25,460 --> 01:39:31,760
I also think that because we're moving into the age of rapid disruption, right, with AI coming,

1186
01:39:32,460 --> 01:39:35,820
there's going to be a huge amount of disruption to a lot of different industries.

1187
01:39:36,520 --> 01:39:42,620
And one of the things that I've been starting to focus on is looking at more of these traditional

1188
01:39:42,620 --> 01:39:49,420
equities and looking at how resilient are they to that disruption from a financial strength

1189
01:39:49,420 --> 01:39:53,920
perspective. If they come in, you've seen it with some of the announcements that have come out,

1190
01:39:54,040 --> 01:39:59,360
you know, like whenever, what was that AI tool that came out out of China that, you know, said

1191
01:39:59,360 --> 01:40:05,420
they basically launched it. Yeah, DeepSeek. And like when that came out, it just totally shocked

1192
01:40:05,420 --> 01:40:11,580
everybody, right? Like, oh my gosh, is this industry already getting disrupted? This is

1193
01:40:11,580 --> 01:40:15,360
supposed to be the one that does the disrupting, that's going to come for a lot of these other

1194
01:40:15,360 --> 01:40:22,480
companies because now you've got these smaller, nimbler companies that are enabled and don't have

1195
01:40:22,480 --> 01:40:27,660
all of the built-up overhead of decades of operating and building out org structures and

1196
01:40:27,660 --> 01:40:33,080
hiring people. And they're going to be able to build more efficient operating models and better

1197
01:40:33,080 --> 01:40:40,300
product sets. And you start to look at what optionality do those companies have if disruption

1198
01:40:40,300 --> 01:40:46,020
comes for them. So if you've got this massive war chest on your balance sheet and you've built up a

1199
01:40:46,020 --> 01:40:51,300
really resilient balance sheet, you've got the ability to reinvent yourself at some point in

1200
01:40:51,300 --> 01:40:57,560
the future if you need to. It's optionality to buy yourself time. In a lot of these companies,

1201
01:40:57,560 --> 01:41:02,080
because they have to constantly be reinvesting all of the capital that they bring in the door,

1202
01:41:02,160 --> 01:41:05,980
because it's all about expanding the next quarter's earnings. And so they've got to pump it

1203
01:41:05,980 --> 01:41:11,040
into sales and marketing and R&D, and they've got to just keep putting all that capital out the door

1204
01:41:11,040 --> 01:41:16,300
and they never get to accumulate any, they never get to build a war chest. If they fall behind in

1205
01:41:16,300 --> 01:41:22,520
that race and they get disrupted, their timeline is short. Whereas if you're a company that holds

1206
01:41:22,520 --> 01:41:30,100
more than 600,000 Bitcoin worth 70 some billion dollars and you've got a relatively low burn,

1207
01:41:30,200 --> 01:41:34,720
which is what you're looking at with this annual dividend payout, if you start looking at other

1208
01:41:34,720 --> 01:41:37,480
companies through that lens and going, how resilient are they really?

1209
01:41:37,480 --> 01:41:41,360
If they get disrupted, how much runway do they have to pivot if they need to?

1210
01:41:42,220 --> 01:41:45,820
And the answer in most of these instances is going to be not very long.

1211
01:41:46,580 --> 01:41:47,060
Netflix.

1212
01:41:47,060 --> 01:41:47,960
Huge overhead.

1213
01:41:48,060 --> 01:41:51,120
They've got huge risk associated with those business models.

1214
01:41:51,760 --> 01:41:57,080
And I think that that's part of the value proposition of starting to talk to these

1215
01:41:57,080 --> 01:42:02,720
companies about the opportunity to stand up a second value creation vertical within

1216
01:42:02,720 --> 01:42:08,540
your business, which is completely focused on deploying the balance sheet and building that

1217
01:42:08,540 --> 01:42:12,540
war chest while you're still operating your business. Go ahead, keep operating that business,

1218
01:42:12,700 --> 01:42:17,320
keep building it, keep making it successful. But on the other side, when you've seen what

1219
01:42:17,320 --> 01:42:21,980
strategy's done, where they've deployed this strategy through their treasury and built this

1220
01:42:21,980 --> 01:42:26,960
massive war chest and generated additional value for their shareholders that wouldn't have been

1221
01:42:26,960 --> 01:42:32,540
created through their standard operations, that's a powerful shift. So I think kind of shifting

1222
01:42:32,540 --> 01:42:37,500
the way you view these companies both from the way you were saying jeff looking at you know net

1223
01:42:37,500 --> 01:42:42,060
income or converting ebitdao over to bitcoin terms and seeing whether it's you know eroding out from

1224
01:42:42,060 --> 01:42:47,420
under them or not and then looking at the composition of the balance sheet and figuring

1225
01:42:47,420 --> 01:42:51,580
out just how resilient this company is and what optionality they have for the future

1226
01:42:52,300 --> 01:42:59,020
is going to completely change the way that you view companies that you've typically looked at as

1227
01:42:59,020 --> 01:43:09,660
bulletproof yeah so that's wild because you're so you know the ai you can leapfrog someone right

1228
01:43:09,660 --> 01:43:15,740
you can disrupt them whatever industry you're in you can be disrupted but the only thing that can't

1229
01:43:15,740 --> 01:43:23,980
be disrupted is a bitcoin balance sheet because it has a fixed supply so these companies that are

1230
01:43:23,980 --> 01:43:29,100
still on zero Bitcoin. They haven't gotten off zero. They don't even have a runway. The only

1231
01:43:29,100 --> 01:43:34,460
companies that have runways at all are the Bitcoin treasury companies. And everyone else is just

1232
01:43:34,460 --> 01:43:40,120
falling farther behind because they're not even in the race. Yeah. And a lot of these companies,

1233
01:43:40,260 --> 01:43:45,280
I mean, their financial performance is reliant on, you know, you're seeing things that pop up like

1234
01:43:45,280 --> 01:43:49,800
tariffs that then have to get passed through to the end consumers. And so their cost of goods goes

1235
01:43:49,800 --> 01:43:53,520
up. So they get to raise the prices on their products and they're passing that cost down to

1236
01:43:53,520 --> 01:43:58,140
the consumers. So it looks like their revenue is continually increasing, you know, quarter over

1237
01:43:58,140 --> 01:44:02,580
quarter and their bottom line increases proportionally, but really they're just, you know,

1238
01:44:02,920 --> 01:44:20,708
passing through and the debasement of the dollar is what fueling all of that continued growth and all these earnings So I mean it is one of the things that if you an executive you have to focus on that right Because if we learned anything in the last decade it that no business model is safe

1239
01:44:21,488 --> 01:44:27,088
Go back 30 years and look at the companies that were dominating the market and see how many of those were resilient over time.

1240
01:44:27,288 --> 01:44:28,888
Not many, right?

1241
01:44:28,908 --> 01:44:32,108
They all disappeared and they didn't have the opportunity to reinvent themselves.

1242
01:44:32,328 --> 01:44:35,188
They eroded down the value, eroded out, and then they went out of business.

1243
01:44:35,368 --> 01:44:42,888
green tell us about kodak tell us a story about kodak please i i have a story about kodak so so

1244
01:44:43,448 --> 01:44:49,288
so wait this is crazy so during back in the olden days during the internet bubble i was working for

1245
01:44:49,288 --> 01:44:53,608
global crossing and i'm like cool they're going to send me out to global center because global

1246
01:44:53,608 --> 01:44:58,968
center housed yahoo and they're going to send me out to santa clara and then after i get the job

1247
01:44:58,968 --> 01:45:04,808
they're like dude you're going to rochester new york and that town was built obviously on kodak

1248
01:45:04,808 --> 01:45:09,848
And I lived in walking distance from the George Eastman's mansion.

1249
01:45:09,848 --> 01:45:12,548
And I lived in a little small house.

1250
01:45:12,928 --> 01:45:14,588
But anyway, so I was there.

1251
01:45:14,828 --> 01:45:18,308
But while I was there, the next door neighbor was the mayor.

1252
01:45:18,908 --> 01:45:22,628
And the mayor did not know that Global Crossing even existed.

1253
01:45:22,988 --> 01:45:26,348
Because I was talking to his wife and he said, oh, what are you doing here?

1254
01:45:26,368 --> 01:45:27,648
I go, I work for Global Crossing.

1255
01:45:27,788 --> 01:45:30,668
They bought Frontier, the phone company.

1256
01:45:31,108 --> 01:45:32,328
And they're like, what's Global Crossing?

1257
01:45:32,328 --> 01:45:46,528
So this was one of the internet darlings. The mayor of the city did not know that one of the biggest companies during the internet bubble had bought Frontier Networks to get a phone company.

1258
01:45:46,928 --> 01:45:55,568
And they were completely, they did not understand anything I was talking about. They had no idea. So you probably don't even know the story that I just told you.

1259
01:45:55,568 --> 01:45:57,808
But oblivious to this completely.

1260
01:45:58,608 --> 01:46:01,808
And then eventually I made it to Silicon Valley after being there a year and a half.

1261
01:46:01,988 --> 01:46:03,908
But they had no idea what was going on.

1262
01:46:04,328 --> 01:46:06,688
This is all before the iPhone and all that.

1263
01:46:06,948 --> 01:46:10,048
So, I mean, I want to get back to unit of account we're talking about.

1264
01:46:10,048 --> 01:46:12,388
And I read these comments.

1265
01:46:12,908 --> 01:46:19,288
Look, there are different market structures in different countries, whether it's Japan, whether it's Europe.

1266
01:46:19,488 --> 01:46:23,748
And by the way, the UK is different than the European Union because they have a different currency.

1267
01:46:23,748 --> 01:46:27,388
and they exited whatever two, three years ago.

1268
01:46:27,468 --> 01:46:28,368
Somebody will correct me.

1269
01:46:28,868 --> 01:46:32,968
So the point there is that these Bitcoin treasury companies

1270
01:46:32,968 --> 01:46:36,828
can have a home field advantage in a different currency

1271
01:46:36,828 --> 01:46:38,828
with a different market dynamic.

1272
01:46:38,828 --> 01:46:42,548
And if a spot Bitcoin ETF is not available in that country,

1273
01:46:42,688 --> 01:46:46,088
then the Bitcoin treasury company may be the only way

1274
01:46:46,088 --> 01:46:50,168
that you could acquire shares in a Bitcoin treasury company

1275
01:46:50,168 --> 01:46:52,568
is to acquire those shares in that

1276
01:46:52,568 --> 01:46:54,068
because you can't easily buy Bitcoin.

1277
01:46:54,628 --> 01:46:55,888
So from that perspective,

1278
01:46:55,888 --> 01:46:58,928
I want to see other Bitcoin treasury companies to be successful.

1279
01:46:59,148 --> 01:47:01,808
And then in their currencies, that'll be great.

1280
01:47:02,628 --> 01:47:04,208
Then somebody can say, oh my God,

1281
01:47:04,268 --> 01:47:07,108
well, what happens if a spot Bitcoin ETF comes out?

1282
01:47:07,688 --> 01:47:09,628
Well, we've already done that in the US.

1283
01:47:09,788 --> 01:47:14,848
That happened January 11th of 2023, sorry, 2024.

1284
01:47:15,528 --> 01:47:16,008
Is that right?

1285
01:47:16,208 --> 01:47:16,768
Yeah, 25.

1286
01:47:17,248 --> 01:47:17,968
Right, 2024.

1287
01:47:18,468 --> 01:47:22,528
And what happened is strategy stock still continues to go up.

1288
01:47:22,568 --> 01:47:26,188
and to beat that MNAB, the multiple of the Bitcoin that it holds.

1289
01:47:27,188 --> 01:47:30,228
So what am I seeing for unit of account?

1290
01:47:30,668 --> 01:47:35,888
I want other companies to be able to replicate this, to be successful,

1291
01:47:35,888 --> 01:47:37,668
because they're buying Bitcoin.

1292
01:47:38,428 --> 01:47:39,908
And that reflects the flywheel.

1293
01:47:40,148 --> 01:47:43,068
If they could then do that, I already posted about this two days ago.

1294
01:47:43,068 --> 01:47:46,348
If they could come out with a stretch product, an STRC,

1295
01:47:46,488 --> 01:47:50,688
that does the same thing in their own country, again, that buys Bitcoin.

1296
01:47:50,688 --> 01:47:52,788
that drives the price of Bitcoin up.

1297
01:47:52,868 --> 01:47:54,568
I don't know why people would be against this.

1298
01:47:54,848 --> 01:47:56,448
So I don't like seeing the infighting.

1299
01:47:56,828 --> 01:48:00,868
I think that there might not be enough Bitcoin to go around

1300
01:48:00,868 --> 01:48:02,068
and the price goes up.

1301
01:48:02,568 --> 01:48:04,688
There's nothing we could do about that, okay?

1302
01:48:05,148 --> 01:48:06,708
So my takeaway is-

1303
01:48:06,708 --> 01:48:07,468
Great for the ecosystem.

1304
01:48:07,688 --> 01:48:09,048
Yeah, it's great for the ecosystem.

1305
01:48:09,288 --> 01:48:10,628
It brings in other countries,

1306
01:48:10,768 --> 01:48:12,468
other people that are excited about this.

1307
01:48:12,528 --> 01:48:13,288
You see the picture,

1308
01:48:13,808 --> 01:48:15,188
what happened with MetaPlanet,

1309
01:48:15,528 --> 01:48:16,448
their earnings call,

1310
01:48:16,448 --> 01:48:19,548
the picture, the one they had a year and a half ago,

1311
01:48:19,548 --> 01:48:24,168
and there's like six people in the audience and four of them work for the company.

1312
01:48:24,728 --> 01:48:28,968
And then you see the next picture and there's 300 people in the room, standing room only.

1313
01:48:29,408 --> 01:48:36,848
And I think that getting that narrative and the attention-driven society that this is something

1314
01:48:36,848 --> 01:48:42,168
important, it's new, and it could save your retirement. And if you don't understand AI,

1315
01:48:42,688 --> 01:48:48,948
you better have a freaking backup plan. Yeah. Another interesting thought I had

1316
01:48:48,948 --> 01:48:54,048
just earlier today, I think I saw that like Amazon was making AI available for anybody

1317
01:48:54,048 --> 01:49:01,348
they've got on Amazon Prime. And maybe it was ChachiBT. But I was just made this realization

1318
01:49:01,348 --> 01:49:07,188
like, oh my God, AI is going to disrupt AI. And so you're going to have all of these AI

1319
01:49:07,188 --> 01:49:10,608
companies that are going to get just these like super frothy valuations because it's

1320
01:49:10,608 --> 01:49:18,408
like AI, AI, AI, AI. I feel similar to maybe .com, but maybe different because there's

1321
01:49:18,408 --> 01:49:24,528
significant efficiency in a lot of these things, but some of them are going to gobble up everything else

1322
01:49:24,528 --> 01:49:28,368
and be able to disrupt that industry as well.

1323
01:49:28,568 --> 01:49:33,948
We just have no idea what this looks like and how we come out the meat grinder on the other end.

1324
01:49:35,468 --> 01:49:37,288
It just never ends.

1325
01:49:37,528 --> 01:49:37,968
I don't know.

1326
01:49:38,428 --> 01:49:43,748
The weird part about AI is that the people that learned how to code, AI can probably code better than you.

1327
01:49:43,748 --> 01:49:52,128
So as long as you could do the prompts and I know people that can code and a year and a half ago, they're saying, ah, the code that came out of it wasn't particularly good.

1328
01:49:52,228 --> 01:49:57,308
And now it's like, well, the code comes out 97% great.

1329
01:49:57,308 --> 01:50:00,468
And then they just have to go in and debug the last 3%.

1330
01:50:00,468 --> 01:50:03,188
And so what I'm seeing, I'm here in Silicon Valley.

1331
01:50:03,388 --> 01:50:04,568
So we're seeing this.

1332
01:50:04,828 --> 01:50:09,688
So it increased the efficiency of the coders and be like, oh, this is great.

1333
01:50:09,788 --> 01:50:12,468
I'm like, you're not particularly smart, are you?

1334
01:50:12,468 --> 01:50:13,988
This is how we get to idiocracy.

1335
01:50:14,208 --> 01:50:23,788
They need less coders then if one guy's, now if you only had one super coder, now you have one super coder, you have four AI coders and fire the rest of the people.

1336
01:50:24,168 --> 01:50:28,248
The problem is it's disrupting everything people didn't think it would, right?

1337
01:50:28,288 --> 01:50:35,108
I mean, everyone thought this was going to, that technology would show up, it would take over all the blue collar jobs.

1338
01:50:35,248 --> 01:50:38,648
You know, you wouldn't have anybody working in a McDonald's anywhere in the country, all that.

1339
01:50:38,648 --> 01:50:51,288
But, you know, where it's starting is it's all of the professional services, high fee, you know, so even things like attorneys are getting disrupted by AI in a big way.

1340
01:50:52,168 --> 01:51:02,068
Coders, I mean, software developers just three years ago, that was what everyone was telling you you needed to do to be resistant to disruption.

1341
01:51:02,068 --> 01:51:05,808
Right. Go go learn how to code. Right. There was the big push for it.

1342
01:51:05,808 --> 01:51:12,268
that was supposed to be the thing that would keep you employable for a long time. And now, yeah, I

1343
01:51:12,268 --> 01:51:19,128
mean, the AIs now are very good from a coding perspective. I use them almost daily. By the way,

1344
01:51:19,168 --> 01:51:24,888
I just want to say this. Dan's not on the call. Dan Hillary's not on the call tonight. And he did

1345
01:51:24,888 --> 01:51:30,148
this great video. And in the backdrop of the video, he was showing like this, and he was showing his

1346
01:51:30,148 --> 01:51:36,068
desktop. So he had this great Excel spreadsheet. I don't know, it was six columns and there was at

1347
01:51:36,068 --> 01:51:42,248
least whatever, 75 rows in it. I screenshotted it with his picture in it, screenshot it,

1348
01:51:42,368 --> 01:51:48,008
uploaded the chat GPT, and I had to analyze all the numbers that he had. And it was able to back

1349
01:51:48,008 --> 01:51:53,948
out and figure out all the formulas that he put in for each column. And now I'm going back and

1350
01:51:53,948 --> 01:51:58,728
forth with the two Dan's. They're like, you did what? I'm like, dudes, I just screenshot that,

1351
01:51:58,728 --> 01:52:02,248
I put in the chat GPT and then I query it for the next 20 minutes.

1352
01:52:02,248 --> 01:52:04,888
And then I call you up and see what you guys think.

1353
01:52:05,368 --> 01:52:08,108
And I'm telling people, and by the way, Saylor said he does this.

1354
01:52:08,188 --> 01:52:10,088
It's not like I figured this out on my own.

1355
01:52:10,568 --> 01:52:15,748
Saylor said at Strategy World, he said, I figure out I want to do a new product.

1356
01:52:15,908 --> 01:52:17,668
I go into deep research mode.

1357
01:52:17,828 --> 01:52:18,728
I go into it.

1358
01:52:18,768 --> 01:52:20,548
I figure this out how I want to do it.

1359
01:52:20,788 --> 01:52:23,228
And then I copy and paste it into an email.

1360
01:52:23,228 --> 01:52:24,868
I send it to the lawyers.

1361
01:52:24,868 --> 01:52:29,628
and here's all the citations for everything that has to be done for all the financial information,

1362
01:52:30,028 --> 01:52:35,268
go get to work. And he already did six months worth of research for them and he gives it to

1363
01:52:35,268 --> 01:52:40,108
them. Now, can you imagine that if you're the lawyer on the other side, you're like, oh crap,

1364
01:52:40,428 --> 01:52:43,588
this guy gave us all of this info already. Now we got-

1365
01:52:43,588 --> 01:52:45,448
It was a million dollars in billings. Yeah.

1366
01:52:45,508 --> 01:52:50,168
Right, right. And then he's like, because you know that as soon as they give the information

1367
01:52:50,168 --> 01:52:57,608
back, he copies it, pastes it into AI, and then writes it back to them. I was like, once you see

1368
01:52:57,608 --> 01:53:04,168
how fast the permutations, or sorry, iterations, how fast things leapfrog. And so he said this,

1369
01:53:04,568 --> 01:53:08,828
and I think that's where people have to understand where this is going.

1370
01:53:09,448 --> 01:53:11,508
Yeah. You got to use it. You got to use it.

1371
01:53:12,348 --> 01:53:16,468
Strategies using AI to create the preferreds, and then I got to use AI to tell me what it means

1372
01:53:16,468 --> 01:53:22,708
when they come out with a new one right and by the way some guy today on on x is like he's like ah

1373
01:53:22,708 --> 01:53:28,068
this chart doesn't show me you know doesn't accommodate it showed the amount of debt being

1374
01:53:28,068 --> 01:53:34,948
acquired per person over time it doesn't show the rise in wages i copy and paste the chart into it

1375
01:53:34,948 --> 01:53:39,908
and i told chat gpt i just said and this is not an advertisement for you could probably do it in

1376
01:53:39,908 --> 01:53:46,228
grok or the other ones and i just said i just said could you reanalyze this chart recreate the chart

1377
01:53:46,228 --> 01:53:52,948
and accommodate it for the rise in wage, do it on three different y-axis, keep one x-axis

1378
01:53:52,948 --> 01:53:57,268
for a time. This took me like three minutes. I just wanted to see how hard it would do it and

1379
01:53:57,268 --> 01:54:02,148
I posted it up. Nobody clicked the like button. But when somebody says something to me and they're

1380
01:54:02,148 --> 01:54:06,948
like, what does this mean? Or why did you do, or I think it should be like this. Well, why don't you

1381
01:54:06,948 --> 01:54:13,348
use ChatGPT or use AI, make your own chart and post up and say, I think you're wrong and here's

1382
01:54:13,348 --> 01:54:19,028
the chart and i was smart enough to use ai to do it if somebody can't take that effort to say i

1383
01:54:19,028 --> 01:54:26,308
disagree with this chart but then they're too lazy to use ai to refute the chart that is that is

1384
01:54:26,308 --> 01:54:33,348
mediocre thinking it's just here's what i'm going to say it's going to get increasingly important

1385
01:54:33,348 --> 01:54:40,228
to uh get away from the screens and go outside and touch grass because every algorithm out there

1386
01:54:40,228 --> 01:54:45,668
is going to be optimized to keep your attention oh yeah really hard to pull yourself away and you

1387
01:54:45,668 --> 01:54:51,748
got to train yourself early to shut it off go outside there's a lot of really cool stuff out

1388
01:54:51,748 --> 01:54:57,268
there i know a lot of us probably haven't seen it very much recently but shut down the screens go

1389
01:54:57,268 --> 01:55:01,748
outside the ai is always going to be there it's always going to be looking for you i promise yeah

1390
01:55:01,748 --> 01:55:05,588
so i'm going to sign off guys look this was a great call but one of the reasons why i've been

1391
01:55:05,588 --> 01:55:10,988
missing in action is because I've been enjoying the summer. And I think that sometimes I like to

1392
01:55:10,988 --> 01:55:18,448
be inspiration that if you've been on a Bitcoin unit of account for me like eight years, then I

1393
01:55:18,448 --> 01:55:22,948
wanted to take off and enjoy the summer. And I got plenty of plans, but I'll be in New York.

1394
01:55:22,948 --> 01:55:28,388
Shout out to Tim Kotzman, the Unconference, September 17th, Wednesday, September 17th,

1395
01:55:28,668 --> 01:55:33,788
the band, MSTR. Well, are we just True North now? Not MSTR, True North.

1396
01:55:33,788 --> 01:55:34,288
True North.

1397
01:55:34,588 --> 01:55:35,208
True North.

1398
01:55:35,348 --> 01:55:41,668
The True North folks, the group's all going to be in New York City Wednesday, September 17th.

1399
01:55:41,848 --> 01:55:42,868
We're going to be there.

1400
01:55:43,088 --> 01:55:45,248
We're going to have different events on other nights.

1401
01:55:45,528 --> 01:55:46,808
Some will be informal.

1402
01:55:46,988 --> 01:55:48,768
We'll just show up at Pub Key.

1403
01:55:48,928 --> 01:55:49,888
We'll announce this.

1404
01:55:50,708 --> 01:55:51,828
So shout out to Tim.

1405
01:55:51,928 --> 01:55:53,888
I would recommend everybody getting there.

1406
01:55:54,488 --> 01:55:55,748
Sailor will be a co-host.

1407
01:55:55,868 --> 01:55:58,588
You'll be able to meet these people, talk to them in person.

1408
01:55:58,808 --> 01:56:01,088
If you've never been to an event, get there.

1409
01:56:01,628 --> 01:56:01,888
Okay?

1410
01:56:01,888 --> 01:56:06,108
Right. Yeah. Go see. Yeah. Meet people in person. It's going to be a good time. It's going to be a great time.

1411
01:56:07,608 --> 01:56:12,248
Yeah. And on that on that last point, I guess we'll hit final thoughts. We'll wrap it around.

1412
01:56:12,248 --> 01:56:19,168
But yeah, it's summer and go enjoy summer. And we may not do this every week.

1413
01:56:19,668 --> 01:56:23,588
And when when we first started this or like, well, let's just chat.

1414
01:56:23,768 --> 01:56:28,848
And when it works and it works. And when we're traveling, we're not going to do this.

1415
01:56:29,128 --> 01:56:31,228
And if we need to take weeks off, we're going to take weeks off.

1416
01:56:31,228 --> 01:56:34,248
So don't go roasting us and trying to say like,

1417
01:56:34,328 --> 01:56:35,888
it's true and are dead and falling apart.

1418
01:56:36,088 --> 01:56:36,688
It's crazy.

1419
01:56:36,828 --> 01:56:37,188
It's like,

1420
01:56:37,588 --> 01:56:38,008
what?

1421
01:56:38,128 --> 01:56:39,688
Like we have lives guys.

1422
01:56:39,788 --> 01:56:40,168
Come on.

1423
01:56:40,208 --> 01:56:40,708
Like there's,

1424
01:56:40,788 --> 01:56:42,028
there's things going on.

1425
01:56:42,268 --> 01:56:44,408
We'll be here every week in the winter guys.

1426
01:56:45,708 --> 01:56:47,008
I got nothing else to do.

1427
01:56:47,548 --> 01:56:47,988
Yeah.

1428
01:56:48,188 --> 01:56:48,808
We'll be here,

1429
01:56:48,908 --> 01:56:50,688
but it's sunny outside.

1430
01:56:50,988 --> 01:56:51,628
So go take advantage.

1431
01:56:51,628 --> 01:56:51,888
Yes.

1432
01:56:52,048 --> 01:56:52,988
Enjoy the summer.

1433
01:56:53,468 --> 01:56:53,648
Yeah.

1434
01:56:54,188 --> 01:56:54,628
Cool.

1435
01:56:54,768 --> 01:56:55,268
Final thoughts,

1436
01:56:55,408 --> 01:56:55,608
Ben.

1437
01:56:55,708 --> 01:56:56,028
Soleil.

1438
01:56:57,528 --> 01:56:58,148
I'm good.

1439
01:56:58,808 --> 01:56:59,908
Short and sweet for me.

1440
01:57:00,348 --> 01:57:00,788
STRC.

1441
01:57:01,228 --> 01:57:02,768
Make dry powder great again.

1442
01:57:03,108 --> 01:57:04,248
Put it on an orange ball cap.

1443
01:57:04,388 --> 01:57:05,028
Put it in the merch store.

1444
01:57:06,808 --> 01:57:08,508
Make dry powder great again.

1445
01:57:10,508 --> 01:57:12,048
I don't have anything else to add.

1446
01:57:12,128 --> 01:57:12,748
We'll end on that.

1447
01:57:13,588 --> 01:57:14,888
That's the best way to end it.

1448
01:57:15,248 --> 01:57:16,128
That was perfect.

1449
01:57:16,748 --> 01:57:17,148
Great.

1450
01:57:17,408 --> 01:57:17,648
All right.

1451
01:57:17,688 --> 01:57:18,188
Thanks, everyone.

1452
01:57:18,308 --> 01:57:19,048
Appreciate the time.

1453
01:57:19,188 --> 01:57:21,648
And we had 26,480 people.

1454
01:57:21,768 --> 01:57:23,008
Thank you, Sailor, for the retweet.

1455
01:57:23,128 --> 01:57:24,348
That always cranks up the numbers.

1456
01:57:24,968 --> 01:57:26,088
Hour and 57.

1457
01:57:26,088 --> 01:57:29,728
And episode 35 is finished.