No One Realizes That Bitcoin Just Changed Business Forever | Michael Saylor

No One Realizes That Bitcoin Just Changed Business Forever | Michael Saylor

I don’t mind if you hate Bitcoin if you
short our stock that just means you’re
buying it in reverse like you’re going
to short it now but eventually you’ll
buy it later when I need you to buy it
and so we what we did is we created an
operating company and we realized at
some point now we’re a Bitcoin
development company back in 2020 out of
desperation to save his company Michael
sailor then CEO of micro strategy
carefully looked at all of his
investment options and saw Bitcoin as
the logical place to invest the $500
million he had on his
books fast forward to 2024 and sailor is
now worth $4.2 billion in the top 1,000
wealthiest people on the planet
according to Forbes and micro strategy
has custody of over 35 billion worth of
bitcoin in an interview with digitcom
sailor walked us through the stages of
how micro strategy went from acquiring
Bitcoin out of desperation to it
becoming an opportunity and now it’s
their full-on strategy that
differentiates them from the
market as Bitcoin trades in the $67,000
range and micro strategy trades for
about
$1,300 a far cry from the $112 stock
before Bitcoin sailor believes many
companies will see the value in Bitcoin
and try to emulate micro strategy but it
won’t happen overnight sailor believes
that we are still very early when it
comes to adoption from public companies
Sovereign funds and the like
sailor believes that his move with
Bitcoin being the focal point of his
balance sheet is a revolutionary move
and the complete opposite of what is
common knowledge in the business world
and because of his move away from
stability and embracing volatility he
has opened up the opportunity for many
players in the market to invest and
interact with micro
strategy sailor believes we are still
early and it’s clear that Bitcoin is
mainstream adopted by the Wall Street
crowd and it’s here to stay but the
opportunity for early adoption won’t
last forever let’s listen to what sailor
has to say if you took a company public
and you stole billions of dollars of
Securities to buy those
buildings the trick is can you get the
cheapest
financing a public company has cheaper
financing than a private company because
it’s more trustworthy and transparent
right you have to make thousands of
pages of disclosures you’re bound by a
lot more restrictions so so a public
company in America is probably the most
trustworthy worthy of a corporate
vehicle for issuing security and raising
debt so you would have an advantage if
you were a public company and you were
doing real estate development but
remember what I told you about
volatility y the volatility of real
estate’s 20 or 15 you can’t sell a 100
Vol equity and invest in 20 Vol assets
because at some point the volatility in
your Equity goes to 20 you see M exactly
what we were doing is selling the 100
vol plus equity and then we’re buying a
75v asset Levering it up to make it back
into 100v asset so if you’re actually
creating a volatile balance sheet that
will drive a volatile stock that creates
the options market and that creates the
opportunity to raise money for less than
1% interest
unsecured now um that is unique to
bitcoin maybe it’s the first time in the
history of Wall Street you have a
property asset or a commodity asset that
is appreciating because it’s hardc cap
21 million right it’s a scarcity so it’s
appreciating and it’s
volatile and most people in corporate
finance are taught to avoid volatility
they’re taught that volatility is a bad
thing so they get rid of all their
capital and if they invest money if you
had a billion dollars on your balance
sheet you wouldn’t buy something
volatile you would buy Treasury
but treasury bills are volatility 5 like
they’re the least volatile thing you can
possibly buy okay so how do you
Arbitrage that and so you think about
think about a big company a big company
it’s run to visibility for the next
three years I give you guidance for the
next three years I want to know what I’m
going to make a year from now I tell
everybody and then I have no capital on
the balance sheet that’s volatile so
there’s nothing that’s going to move and
I consider that success but if if I know
what’s going to happen for the next 12
months why would I trade the stock every
day I can just make a decision once a
year so the result is micro strategy
stock trades more than all these big
large cap companies right we end up
because you know McDonald’s and cocacola
and Nike and Walmart and fizer they’re
all very predictable yeah and and
predictable is good for people that are
afraid
of the future but predictable is awful
for the options market and it’s awful
for
Traders so in this particular case what
we’ve done it it represents a lot of
different Paradigm shifts first of all
it’s based on bitcoin which is a
paradigm shift it’s a digital commodity
instead of a physical commodity that’s a
big idea a billion dollars of digital
energy instead of a billion dollars of
oil the second big idea is Bitcoin does
one better it turns the commodity into a
scarcity it’s the only commodity in the
world that’s got a cap of 21 million
every other commodity like soybeans or
oil or natural gas or gold is infinitely
producible so there’s a lot of price
Supply elasticity exactly um that’s why
it doesn’t make sense to buy billions of
dollars of oil and hold it for 10 years
that’s why we don’t use oil as a
treasury Reserve asset yeah because
there’s too much of it so Bitcoin is a
scarcity that’s the second revolution
the third Revolution is using Bitcoin as
a treasury Reserve asset instead of
sovereign debt instead of treasury bills
well treasury bills have an effective
after tax yield of 3% the cost of
capital of a company is probably 12% if
you basically take the monetary
inflation rate and add in 4% for a risk
premium so if your cost of capital is
12% and you’re investing at 3% you’re
losing 9% of your Capital every
year Well bitcoin’s been appreciating at
20 to 50% so we’re not doing a third or
a quarter of the cost Capital we’re
doing double to Triple to quadruple so
if you have a treasury asset which beats
the cost of
capital then it’s not delive to carry
the money it’s a creative right the
conventional wisdom is when you sell
stock you dilute the shareholders but in
our case the more stock we issue or the
more money we raise the the more we
accrete and so hundreds of thousands of
companies have assets on their balance
sheet which are
dilutive and Bitcoin is the first major
asset which is ACC cretive so we turn
the entire treasury strategy upside down
by actually accreting assets today we
have $15 billion doar of of Bitcoin on
the balance
sheet and the operating company
generates $75 million a year in cash
flow and the operating revenues are 500
million so we made the balance sheet the
primary part of the company instead of
the p&l everybody else wants the balance
sheet to go to zero or negative and they
want the p&l to be the primary part of
the company when we did
that the volatility of the stock went
through the roof because if Bitcoin goes
up and down $2,000
and we have 214,000
Bitcoin then what happens is there’s a
billion doll swing over the
weekend and if there’s a billion dollar
swing in the balance sheet that’s the
same as 15 years of lost earnings so
imagine the company said we’re not going
to make any money for 15 years but
yesterday we told you we
would yeah and then the company the next
day says oh we were wrong we’re going to
make the same amount of money for the
next 15 years
okay in a normal company the investors
lose faith in the management team and
they dump the stock but in our case the
business model is still good the
management team is still good just the
Traders think okay I got to trade the
stock I got to trade the equity
so the way to think of it is I’m putting
a a crypto oscillator in the middle of
the balance sheet it’s a crypto
engine right and the entire crypto
economy is driving volatility and the
vola utility is driving the equity and
the equity is driving the options and
the options are
driving uh the arbitragers which then
are willing to give us billions of
dollars of capital for you know
unsecured no interests it’s like Risk
free yeah interest free Capital which
then we can invest back in the company
to the benefit of the
shareholders that to my knowledge it you
know I can’t think of another time when
that popped up and you can see if I try
to do that with gold it wouldn’t work if
I tried to do it with the S&P index it
wouldn’t work either because the
volatility doesn’t work or because
there’re all sorts of other restrictions
so we were granted an opportunity with
Bitcoin we started out of desperation it
became defensive it at one point I hoped
I’d have 500 million of Bitcoin and then
it became opportunistic maybe we get a
few billion then it became
strategic and then we realized that you
know our opportunity is to securitize
bitcoin and we’re meeting the needs of a
dozen different classes of
investors they would like to invest in
Bitcoin but they can’t buy the the
commodity they can’t buy the ETF they
can’t buy Equity they have to buy the
option they have to buy the debt so we
give them what they need and we’re a
bridge between traditional conventional
finance and the crypto economy the 20th
century was built on
credit the 19th century is built on gold
used to be you know the story was
Spanish sent gold across the ocean and
if your ship sunk you lose the capital
it’s a big problem if uh if the ship
gets washed into a Shore you lose the
capital it’s very slow it takes six
months or a year to move the capital So
eventually with the telegraph we decided
we were going to move the Capital bya
Credit a bank check or a or some bankd
draft and that worked in the 20th
century but the problem with credit is
credit is very expensive very fragile
very risky if I wanted to move if I
wanted to move a million dollars 40
times on a credit Network it takes about
a month to settle each time and it’s a
2% fee and so if I do a credit card
transaction a million times it’ll take
four years and the banks will have all
the million dollars is fees and so the
money doesn’t move on a credit Network
very effectively it is slow it is
expensive what you want is a Money
Network where you can move the money 40
times in one minute for a
penny no settlement
risk and what Bitcoin offers is it
offers that much more industrial
strength settlement Network and the
layers above it the layers two and the
layer three will just allow you to move
money at the speed of light friction
free anybody can open a bank anybody can
start a bank or an exchange anywhere in
the world on the weekend writing to the
Bitcoin protocol without asking
permission to anybody else and nobody
anywhere in the world can open up a a
company that will integrate with the
proprietary systems of the 20th
century you could have 20 years and a
thousand lawyers and you still wouldn’t
be able to plug into one of those
systems if someone doesn’t like you to
watch the full interview check out the
link in the
description what do you think of Sailor
thoughts here when do you see all the
big corporations jumping into Bitcoin
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[Music]

Back in 2020, out of desperation to save his company, then CEO of Microstrategy Michael Saylor carefully looked at all of his investment options and saw Bitcoin as the logical place to invest the $500 million he had on his books. Fast forward to 2024, and is now worth 4.2 billion dollars, in the top 1000 wealthiest people on the planet according to Forbes, and Microstrategy has custody of over 35 billion worth of Bitcoin. In an interview with Digitracom, Saylor walked us through the stages of how Microstrategy went from acquiring bitcoin out of desperation to it becoming an opportunity, and now it’s their full-on strategy that differentiates them from the market. As Bitcoin trades in the $67,000 range and Microstrategy trades for about thirteen hundred dollars (a far cry from the $112 stock before Bitcoin), Saylor believes many companies will see the value in Bitcoin and try to emulate Microstrategy. But it won’t happen overnight. Saylor believes that we are still very early when it comes to adoption from public companies, sovereign funds and the-like. Saylor believes that his move with Bitcoin being the focal point of his balance sheet is a revolutionary move and the complete opposite of what is common knowledge in the business world. And because of his move AWAY from stability and embracing volatility, he has opened up the opportunity for many players in the market to invest and interact with Microstrategy. Saylor believes we are still early and it’s clear that Bitcoin is mainstream, adopted by the Wall Street crowd and is here to stay

To watch the full interview:

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