Michael Saylor Anthony Pompliano Bitcoin

Michael Saylor On Buying Bitcoin With His Balance Sheet | The Pomp Podcast

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Key Takeaways

  • Asset price inflation combined with negative interest rates means cash is trash
    • “There are 3500 publicly traded companies and there’s $5Tr in their treasuries and it’s all melting and at some point, you have a fiduciary obligation to not lose the money” – Michael Saylor
  • Find an asymmetric bet, “What I want is something that might be cut in half that can go up by a factor of 10, that’s what any intelligent investor wants”
    • “Bitcoin isn’t 10x better than gold, it’s 100x, maybe it’s 1000x better than gold” – Michael Saylor
  • “The winning formula for the past 10 or 15 years has been find a digital dominant network that has dematerialized some fundamental thing.” – Michael Saylor
    • E.g. (Information network: Google, social: Facebook, retail: Amazon, etc.…)
  • Bitcoin’s proof of work and immutability are key points to understanding Bitcoin
  • Bitcoin’s volatility is exaggerated, “I think in the next 10 years you have people coming in that are moving hundreds of millions of dollars in and out of the market they’re going to tend to dampen all the volatility” – Michael Saylor

Resources, Books, and People Mentioned

Intro

Lessons From the Technology Industry

  • Every few years there is a new thing that could be an existential threat to a company or, if you act correctly, an opportunity
  • On acquiring new products and companies, “Just because you can buy it doesn’t mean you can make it competitive, and even if it’s competitive doesn’t mean you can make a profit from it” – Michael Saylor
  • Timeless advice, “Don’t run out of money, always have cash on the balance sheet, and don’t spend more money than you are taking in” – Michael Saylor
  • “There is no example of a successful company in the history of the world that wasn’t a technology company” – Michael Saylor
    • Everything starts off as a technology, even Standard Oil and Hershey’s Chocolate started off as technology companies

Asset Inflation

  • CPI and consumer goods hide the true inflation rate
    • Real inflation can be found in asset prices, which shot up by around 25% this year
      • “You aren’t getting inflation on YouTube and Netflix streaming videos and candy bars manufactured by robots in factories and Dominos Pizza. You are getting inflation on everything you want” – Michael Saylor
  • Asset price inflation combined with negative interest rates means cash is trash
    • “I have a mega mega mega problem and the mega problem is I have a lot of cash and I’m watching it melt away”
      • Similarly, “There are 3500 publicly traded companies and there’s $5Tr in their treasuries and it’s all melting and at some point, you have a fiduciary obligation to not lose the money” – Michael Saylor

Find an Asymmetric Bet

  • Tech companies stocks don’t offer good risk-reward, and commercial real estate is still subject to the economic conditions
    • As Robert Kiyosaki puts it, “Gold, Silver, or Bitcoin, choose one”
      • That said, “What I want is something that might be cut in half that can go up by a factor of 10, that’s what any intelligent investor wants”
      • “Bitcoin isn’t 10x better than gold, it’s 100x, maybe it’s 1000x better than gold” – Michael Saylor
  • “The winning formula for the past 10 or 15 years has been find a digital dominant network that has dematerialized some fundamental thing.” – Michael Saylor
    • “You buy them when they’re $100B market cap. When they’re 10x bigger than the next biggest thing and they’re $100B, they’re probably going to crush everything.”
      • The mobile network: Apple
      • The information network: Google
      • The video network: YouTube
      • The social network: Facebook
      • The retail network: Amazon
      • The speech network: Twitter
    • Boosted by strong network effects, they generate incredible value

Enter Bitcoin

  • Bitcoin’s biggest misconception is it’s just software and thus can be easily copied
    • Thus, proof of work and immutability are key points when introducing Bitcoin
    • Additionally, promoting hundreds of altcoins and forks doesn’t help
      • Altcoins are the tail end, “Bitcoin is 92% of everything and the next competitor is 2% and the next competitor is 1.5%”
  • Bitcoin isn’t like Myspace to Facebook, Myspace was 200 times smaller than Bitcoin is today
    • “There’s never an example of a $100B monster digital network that was vanquished once it got to that dominant position”
      • “All you gotta do is see that chart and then you think about the dynamic and the network effect and you are like this [Bitcoin] has already won.” – Michael Saylor
  • Bitcoin hard forks are proof of its immutability
    • “The fact that Bitcoin went through it, and we saw what happened, and we saw that the community would defend Bitcoin. That’s what gives a person like me confidence to invest hundreds of millions of dollars in Bitcoin.” – Michael Saylor

Acquiring Bitcoins

  • Purchasing $425MM worth of Bitcoin isn’t a trivial undertaking, here is some advice
    • Audition multiple institutional-grade exchanges and custodians
    • Examine all the security and technology issues
    • Develop a relationship with the team
    • Divide up the total volume into many small purchases spread over days
      • Patience is key in order to not run the price up
      • Michael later tweeted on how it took 78,388 off-chain transactions to acquire 21,454 bitcoins
  • From the point of deciding to buy Bitcoin, it would take a company a minimum of 6 months to complete this undertaking
    • MicroStrategy has shown companies how to do it, and the clock started back in August

Bitcoin’s Volatility is Exaggerated

  • “I think in the next 10 years you have people coming in that are moving hundreds of millions of dollars in and out of the market they’re going to tend to dampen all the volatility” – Michael Saylor
    • “If there is any it’s just going to be to the upside”
  • Besides, Bitcoin trades 168 hours/week, “It’s remarkably non-volatile in that regard”
    • “I look at this thing in awe. When I look at these exchanges at Saturday night 9:30pm and I’m watching the thing stream… this is the most magical hardest working security in the history of the world”
  • Beyond volatility, “there is a negative real yield on everything else I can buy”
    • “Bitcoin is the only thing I could find that is positive.”

Miscellaneous

  • Software is going from solid state (Desktop computer) to liquid (laptop) to vapor state (mobile)
  • Michael’s first introduction to crypto was by selling the domain Voice.com for $30MM to a crypto company
    • He doesn’t remember his now famous tweet about Bitcoin’s days being numbered
  • Consider this: Between Square and Twitter, Jack Dorsey oversees a $10Bn cash reserve and he has one word in his Twitter bio – Bitcoin
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Notes By Mostafa Khaled

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