In this episode, I interview Michael Saylor, founder of MicroStrategy, a company that now owns 3% of the Bitcoin in circulation, and an evangelist for Bitcoin. We talk about where he got his ambition, how his grounding in fantasy and science fiction allied with the encouragement of his parents to produce the ambition in him that has culminated in this consequence, and why Bitcoin is increasingly becoming an accepted monetary standard like gold.
00:00:41.700Okay, now you come across Bitcoin and you talked about it as if it was abstracted gold.
00:00:46.300If God's not going to set up Divine Bank and solve all your monetary problems, what's the second best idea?
00:00:51.960We don't trust the government, we don't trust a local bank, we don't trust each other, and we want the bank to last for 1,000 years.
00:01:00.260Let's go ahead and build out this Bitcoin network.
00:01:03.340My guest today, Michael Saylor, started a number of successful companies, successful by almost every standard.
00:01:26.440It wasn't sufficient to expand out the full scope of his ambition, and I would say that in the most positive sense.
00:01:35.740He became deeply interested in 2020 in Bitcoin, in consequence, and has been at the forefront of a revolution in finance.
00:01:45.980His company now owns 3% of the Bitcoin in circulation, and the successful company that he built, with blood, sweat, and tears, let's say, 10 years ago, has become a hyper-successful company in consequence.
00:02:02.280He's used religious symbolism and terminology to describe it.
00:02:06.100He's on fire for Bitcoin, and we talked about things you really need to know today.
00:02:13.760You need to know who Michael Saylor is, where he got his ambition, how his grounding in fantasy and science fiction allied with the encouragement of his parents to produce the ambition in him that has culminated in this consequence.
00:02:31.020You need to know that Bitcoin is increasingly becoming an accepted monetary standard like gold around the world.
00:02:40.140There are revolutionary transformations on that basis in the last year, not least because of the new Trump administration.
00:02:47.200If you're young, or if you're middle-aged, or if you're old, and you're trying to understand how you will store the work that will comprise much of your life, you need to listen to this podcast and hear what Michael Saylor has to say.
00:03:01.020So you discovered Bitcoin, as I understand it, in March of 2020, which was relatively recently, and it had been around for a while.
00:03:11.140And you had been doing a lot of other things, but it moved your life laterally, as I understand it.
00:03:17.400And I'm curious, you're an engineer and a software engineer, I'm curious about what it was that you discovered and realized that produced this profound change in your orientation, why you think it's justified, and why you evangelize for it as well, I guess.
00:03:34.920I discovered Bitcoin 30 years into my career.
00:03:41.920For 30 years, I had been running an enterprise software company, MicroStrategy.
00:03:46.220We brought it public on the NASDAQ in 1998.
00:03:48.920Initially, we were focused upon one line of business, which is to sell software that allows banks or large retailers or insurance companies to analyze all of the data in their databases and assess risk and come up with marketing campaigns.
00:04:04.920Or if you wanted to figure out what sells with what and do market basket analysis or any kind of risk assessment, and you're a large enterprise, you would want to build a proprietary analytical system.
00:04:20.280Then I was in my expansionary era in my 30s and in my 40s, and I wanted to create lots of things, and so I launched 10 other businesses.
00:04:30.360I bought up all the domain names like angel.com and alarm.com and strategy.com and hope.com, and I launched businesses, and some of them were singles, some were doubles.
00:05:09.460I would say that the thing I started with turned out to be the biggest success between 1990 and 2020, and then the next idea was a double, and the next one was a single, and the rest sputtered out.
00:05:37.560And so it's an important part of the story because by 2010, we had overexpanded as a company, and we'd launched all—I wanted to be the conglomerate, 10, you know, like the 10 different things.
00:05:50.040And I found that the one thing worked and the other nine things didn't work, and I couldn't—I needed to focus.
00:05:55.100So we refocused on the core business, and for the next decade, I had two dual experiences.
00:06:01.720I had the experience professionally, and I had an experience personally in finance.
00:06:19.640We had a $500 million enterprise software business, and we found that we were the winner, 99 out of 100 of our competitors, or 99 other competitors had gone bankrupt or left the industry.
00:06:31.320We were the winner, and we were competing against Microsoft, and Microsoft is Microsoft.
00:06:39.140And so we were the pure play, you know, call it the David against the Goliaths.
00:06:43.960And so for the next decade, I spent huge amounts of money on development.
00:07:09.060I flew around the world for a month, and I talked in every city, everywhere in order to get the message out.
00:07:16.780So I had tried every conventional thing imaginable, and 10 years later, the company was still about a $500 million company.
00:07:24.200We were like a very low growth, and we were banging our head against a company, Microsoft, which is more—you could more easily leave the United States than you could leave the domain of Microsoft.
00:07:46.960I had brilliant people working with me.
00:07:49.120We tried everything imaginable, but we could not dent, you know, the digital monopolies of the world.
00:07:55.140And we were this—we were this—I'll call us a zombie company.
00:08:00.200It's a publicly traded company that makes money that won't go out of business that's uninteresting because it's not growing 20% or 30% a year.
00:08:38.380And the book—the theme of the book is what happens when software dematerializes, when the software runs on a phone, when the computer goes from under your desk to in your hand, when it's no longer solid state or liquid state, but it's vapor state, and you go to sleep with the phone next to you.
00:08:57.960And what kind of software would happen in the mobile world?
00:09:02.380And, of course, we know all about it, right?
00:09:04.060The Instagrams, the Facebooks, the Ubers, all of these things became possible during the mobile era.
00:09:10.100They were inconceivable when the software ran on a computer.
00:09:13.660So the theme of the book is, you know, software is going to leap from under our desk to our clothing.
00:09:20.600We'll wear it, we'll hold it, and it's become ubiquitous 24-7-365, and it's going to change—we're going to dematerialize 27,000 devices.
00:09:32.08020,000 device companies died so Apple could live.
00:09:35.340We're going to crush 20,000 retailers because everybody's going to want the Amazon.
00:09:40.300You're going to see 20,000 newspapers crushed because Google and Facebook eats them.
00:09:46.460And, you know, the message of the book is, you know, you probably ought to just buy the Amazon stock or buy the Apple stock.
00:09:53.540And as an investor, I took, you know, a decent amount of money, call it $25 million that I'd made over the previous 20 years as a CEO and as a founder of a company.
00:10:06.280I invested in these stocks, and I 20x'd it.
00:10:10.420You know, how do you make money in the tech world?
00:10:12.900You invest in something everybody needs, nobody can stop, and very few people understand.
00:10:22.760Like, most people would—in the year 2010, if you had said, hey, I really think that Amazon's going to work, people would have said, you're crazy, Amazon's losing money, no one's going to do this, you know?
00:10:34.940And they would have thought, you're nuts.
00:10:36.220And if you had said, I remember with Apple, you say, well, Apple, I think this iPhone's a cool thing.
00:10:43.180They would say, well, no, eventually it'll go to the price of $25 a phone like Nokia.
00:10:49.140They can't hold—their margins are too high.
00:10:51.760They're going to actually have their margins collapse like Dell or like Nokia.
00:10:55.520And, of course, the conventional wisdom was Apple's not a good investment, Amazon's not a good investment, Facebook, what is this goofy thing?
00:11:06.460And, of course, for the next decade, here's what happened.
00:11:09.080I work an hour a month as an investor, and I get rich, you know?
00:11:19.000All you've got to do is just buy the Magnificent Seven in 2010, and the conventional wisdom of Wall Street is if the stock doubles, you should diversify.
00:12:44.240These all became dominant digital monopolies.
00:12:47.660And they became dominant because Apple could ship a new feature to the iPhone over the weekend to a billion people for the cost of the electricity.
00:12:57.860And before Apple, you would have to—Kodak or Polaroid or fill in the blank—would have to create a new device.
00:13:04.500It would take a year, and then they would have to sell it, and it would take another year, and there's a variable cost to it.
00:13:09.140But so when the functionality becomes software, there's a 99% gross margin, and you can give it to $100 million, a billion, right?
00:13:19.420Apple could do Apple Music and give it to YI and people.
00:13:23.540Right, and so they dominated the rails, and they had these—I used to say Apple's going to be the most valuable company in the world because it's the most valuable company in the world because it's the first time one company could deliver a feature to a billion people overnight.
00:13:41.460You know, we never had that 30 years ago or 40 years ago.
00:13:46.180So there are all these natural monopolies that built, and at some point, you know, Microsoft dominated, you know, business software and—
00:13:57.060I mean, the companies you listed off, that was pretty good—that was a pretty good hit list.
00:14:01.420And like you said, you know, you worked yourself half to death, but all the money that you made or the majority of the money you made was actually a consequence of an hour—you said an hour a month in investment strategy.
00:14:11.200But like what—and this is germane to the Bitcoin question because one of the things you're doing is setting up the circumstance.
00:14:17.320You could—you saw the direction the digital world was going.
00:14:21.840You bet money on it, which is actually an indication of commitment to it, and the bets that you made paid off.
00:14:28.020And they paid off in some ways more than your hard work on the business front.
00:14:31.740You know, you got to roll back to, you know, first grade.
00:14:35.120My parents told me they'd give me a dime for every book I read, and I had a comic book addiction.
00:14:40.440So one summer, I read 100 books and won some reading competition.
00:14:43.780I started reading in first grade, and that led me to a love of science fiction and fantasy, especially science fiction.
00:14:50.300And I read the big three—Heinlein, Clark, and Asimov.
00:14:54.560And my entire generation, you know, Elon Musk, Jeff Bezos, a lot of us were influenced by that.
00:15:01.300Yeah, I was reading 10 a week when I was, well, in grade 3 and 4.
00:15:04.800My neighbor across the street had a wall of science fiction, and he'd let me come in once a week and take, you know, as many books as I wanted.
00:15:12.380And this time I was reading exactly the same crew that you described.
00:15:18.420One of the—well, a famous book by Heinlein is Have Spacesuit, Will Travel.
00:15:22.060And in the book, a precocious youth builds a spaceship, gets picked up by, you know, bug-eyed monsters or by space aliens gallivants around the universe, saves the human race from bug-eyed monsters, comes back.
00:15:36.360And because he saved the human race through his courage and his capability, he gets full tuition scholarship to MIT.
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00:20:32.100You know, how do people embrace new ideas?
00:20:35.880Whether it's the Copernican Revolution or whether it's, you know, whether it's relativity and Einstein's ideas.
00:20:43.160Or whether it's quantum physics or whether it's, whether it's, what happens when I introduce railroads or electricity or crude oil or radio.
00:21:14.260But the fantasy background was very important because in fantasy, there's this idea that if you know the name of a demon, you can summon them.
00:22:01.540How many domain names do you think you bought?
00:22:03.880I bought a bunch, but I bought about 30 of the classics.
00:22:07.360My idea was the most valuable thing is a constructive word in the English language that has a positive connotation that everyone understands, everybody can spell.
00:23:00.320Let me tell you, for 30 years, half our customers mispronounced it, MicroStrategies.
00:23:05.880Like, when you pick a word that's not in the English language, if you teach it to third graders or sixth graders, the education system is burning the word.
00:23:36.580Now, if we go to mobile, my fascination was this idea that if software goes from the back office to the desk to my pocket, it goes from solid state to liquid state to vapor state.
00:23:58.880What happens when it can talk back to me?
00:24:01.380Well, you know, now you have to have an imagination.
00:24:06.160Science fiction, it's valuable because it says if you learn science and engineering, you can figure out, like, what's the optimal way to get to Mars from the U.S.?
00:24:15.720You will start to understand gravity wells.
00:24:19.720That's very important for one part of the story.
00:24:22.960But the other part of the story is fantasy.
00:24:26.480You know, I'm creating something in cyberspace.
00:24:30.860I'm an engineer, and I can imagine throwing a baseball in orbit.
00:24:35.200And if I throw it fast enough, it stays in orbit.
00:24:38.520And if I throw it harder, it breaks Earth's gravity field and it orbits the sun.
00:24:42.680And if I throw it harder, it breaks the sun's gravitational field and it spins off into, you know, Milky Way.
00:24:49.320Well, that's what science fiction or engineering teaches you.
00:24:52.800Fantasy teaches you I can throw the baseball and will it to be a flock of seagulls that land on my head and turn into a pot of gold because they like me.
00:25:02.820Those are little paradigm revolutions, that fantasy.
00:25:06.000The significance is in the hardware world, you're subject to thermodynamics and physics, and you better know it.
00:25:14.220But in cyberspace, you're not subject to thermodynamics and physics.
00:25:19.980So you could imagine, you know, I look at mirror, mirror on the wall, who's the fairest of them all, right?
00:25:27.580And Snow White gave you the answer, right?
00:25:30.980Because, you know, when that happens in a fairy tale, the mirror talks back to you.
00:25:40.560And eventually, we got to, you know, Zoom and video, and pretty soon your iPad became a magic mirror, and pretty soon you could talk to, you know, a relative of yours 8,000 miles away, and that was pretty magical.
00:25:55.340But then when you put the AI behind it and the AI generates an AI image, you're not talking to a person.
00:26:01.360You're talking to an angel or a demon, right?
00:26:04.940And so now, if you want to design that stuff, if you want to design magic software—
00:26:16.000Yeah, because, you see, one of the things I wanted to talk to you about today was the use of imagery, your use of imagery in your tweets and your marketing for Bitcoin.
00:26:24.960Because, like, you have a strange mind in many ways, because you have your engineering background, and you think that way, but you also have a foot in the world of fantasy.
00:26:37.040And that's not a—that's—I mean, there's a lot of—
00:26:40.380Well, there's lots of engineers that are sort of possessed by the world of fantasy.
00:26:44.240You know, they live in a Star Wars ethos, right?
00:26:47.220And many of them had their philosophy shaped by the science fiction that they read when they were in their early adolescence.
00:26:54.820And that really produced the religious and fantasy substrate of their thought.
00:26:59.360But there's not a lot of examination of that.
00:27:01.840But you thought about fantasy, by all appearances, in a lot more detail than that.
00:27:07.760Yeah, well, when I was at MIT, I was surrounded by some of the most brilliant mathematicians and engineers in the world.
00:27:14.420But what distinguished me is I was a pretty good engineer.
00:27:20.160Like, I probably wasn't like a field's medal mathematician, right?
00:27:24.040I wasn't like that, but I was a good engineer.
00:27:27.200But I had a liberal arts band, and the truth is, if I could have afforded it, I would have gone to Yale and studied history as an undergraduate.
00:27:59.120I'm a synthesis, so I generally—I'm the person that would tell you why the steam engine, you know, and the governor on a steam engine are similar to a political process that was implemented in medieval Russia.
00:28:15.160Like, I'm thinking about the mechanisms and how they function in the physical world, the political world, the economic world, the fantasy world, the magic world, the whatever world.
00:28:26.500So I would always be thinking simultaneously across that.
00:28:31.720So when I went to MIT, most of them were there to do engineering.
00:28:35.240I was actually half liberal artist, half engineer, and that was what was different about me.
00:28:44.520And when I—and, of course, when I came out of MIT, I didn't work for—I don't want to work for someone else doing something they told me to do.
00:28:55.220And I think that—I think that, you know, when you're—
00:28:58.520That entrepreneurial bent probably goes along at least to some degree with that proclivity to appreciate fantasy because, well, entrepreneurial activity is associated with trade openness, which is the creativity dimension.
00:29:12.740And so it makes sense that you would have that entrepreneurial bent combined because you have to imagine possibility to be an entrepreneur, right?
00:29:37.500In my current stage in life, I spend a lot more time reading history, like cover-to-cover Durant's history of—story of civilization, every volume, all 15,000 pages, or all the history of America, you know, conceived in liberty, Rothbard's history of America before the Revolutionary War, or history of economic thought.
00:30:00.760So a lot of history, a lot of biography, a lot of monetary theory, and, of course, today, I spend my time reading legislation and all of the developments in the political economic world relevant to digital assets, digital technology, because there's a flood of it, and I'm expected to have an opinion on it.
00:30:23.080But when I can sneak away, I'll go read history.
00:31:11.720Yeah, that was in relationship to the angels and the demons.
00:31:14.300You know, if you write a book about something, you know, write a book about Bitcoin and it's 200 pages long, I wrote the book about something.
00:31:24.360What I discovered is 1% of the people will read the book in five years, maybe 0.1%.
00:31:31.240It's very, you know, and when they read the book, if you wanted to explain something in 200 pages or 500 pages, they might have forgotten what they read on the first 50 pages by the time they get to the end.
00:31:42.380And so a 200-page explanation isn't nearly as powerful as to say, oh, that's a demon coming out of cyberspace.
00:31:55.200That's an actor in cyberspace with hostile intent that I should be afraid of.
00:32:00.900And so there's a lot of over-explaining in the world.
00:32:05.880And what I've discovered is, you know, in the modern world, we live in an age of abundance and there is so much infant information.
00:32:13.520You know, I watched your podcast on YouTube.
00:32:16.180I came to know you before COVID and I was fascinated by them.
00:32:19.840But then I stumbled across chess videos and then I found you could spend your entire waking day watching chess videos.
00:32:26.680And then I realized you could spend your entire life watching Magnus Carlsen chess videos.
00:32:31.320And then I realized you could probably spend an entire day watching different chess commentators covering one Magnus Carlsen game from 30 different points of view.
00:32:41.520And if you want to go down that rabbit hole, whether it's, you know, diets, the carnivore diet or chess or pocket knives or someone sailing around the world, there is literally infinite depth content.
00:32:56.580You know, and, you know, then comes along Netscape and YouTube, you know, and all these other streaming.
00:33:02.120And then, Lord help you, you fall into a TikTok hole, you know, and you're like, you start swiping and then YouTube decided to steal it and they have these shorts.
00:33:09.620And when you pull up the YouTube short, you know, the algorithm is thinking, what is the statistically most likely thing to capture your attention and punch your buttons and hit your dopamine and you find yourself going.
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00:34:17.900And of course, while it's optimized to grip short-term attention, you know, and there's something really distressing about that, because the more immature a mind is, the more it's gripped by short-term attention.
00:34:30.320And these bloody algorithms maximize for short-term attention, and the attention fragments are getting shorter as the content gets shorter.
00:34:37.240And so, we're literally training super-intelligent AI systems to hook us in keeping with our hedonistic drive.
00:34:45.820You know, it's just—so that's a demon, I would say.
00:35:03.000Yeah, the smartest engineers and the smartest AI systems that are actually operating in ways that we don't even understand, because they're reinforced—they learn by reinforcement.
00:35:12.280But so, they understand things about us that we don't understand they understand.
00:35:16.340Coming back to my communication style, then, what I realize is people just don't have the time.
00:35:22.400Like, you can—for example, in life, you can equivocate.
00:35:26.260You could say, well, you know, you might do this, and you might do that, and do your own research.
00:35:30.040And if you think, blah, blah, blah, that this might happen, and read these 82 pages.
00:36:00.040And in March of 2020, Michael Saylor, the CEO, is slaved for a decade working infinitely hard, working his 2,000 employees infinitely hard to compete against Microsoft and Magnificent 7 and to put growth back into this public company called MSTR.
00:36:22.400The company is a perfectly fine company, but we're, you know, a company growing 1, 2, 3, 4% a year is uninteresting to every professional investor in the capital markets.
00:36:33.160And we've tried everything under the sun, and we cannot break free, and our employees are paid in stock options, and the stock's not going anywhere, right?
00:36:43.180And so I am at a dead end there, very frustrated, my wit's in.
00:36:49.660And then Michael Saylor, the individual, occasionally buys some Apple and Amazon stock, and he's made a fortune.
00:39:05.440When I was—my first job was as a paperboy, and, you know, so I'm delivering papers in Dayton, Ohio, through the bitter cold, the blizzard of 78, and at some point there's going to be a competition for the best paperboy of the Dayton Daily News,
00:39:24.060and my mother enters me in the competition, and, you know, she creates this book of entries, you know, I'm the musician, I've got the book collection, I'm the gamer, I'm a this, I'm a that.
00:39:35.360And I swear she must have thought I was God's gift, you know, and it never occurs to me that being, you know, the number one honor paperboy in Dayton, Ohio isn't necessarily the pinnacle of achievement,
00:39:49.140but in her eyes it was, and she entered me in the competition, and I end up number two.
00:39:53.800But I thought, you know, she thought I was the greatest person on earth.
00:39:57.000She's like, you're going to change the world.
00:39:58.120Freud's mother thought that about him, and he said that it had given him a tremendous advantage.
00:40:02.600You know, it's really something to have a parent who has, like, unblinking faith in you, especially if they've actually identified those elements of you that are useful.
00:40:13.580Like, I was, like, number one in my class normally, but being number one in your class in a public elementary school in middle Ohio is no statistical justification for thinking someone's going to grow up and change the world.
00:41:39.940But, you know, once I got into reading, you know, if you read Heinlein, Heinlein's, you know, stories, his juvenile stories and his stories are, here's a teenage kid that's going to go off, go to Mars and make peace with the Martians and change the course of human history.
00:43:01.920And so you have the inspiration of him as, you know, as kind of a figure.
00:43:10.540And then you have the inspiration of, you know, your parents in a different way.
00:43:14.820And then, of course, once you start reading books, right, if you read enough, you're inspired by the lives of human beings that came before you.
00:43:23.480So I think all of that made me think I was put here to do something.
00:44:24.580I'd invented 10 things, and that didn't work to invent something.
00:44:28.060And then I had tried 10 different business strategies, and not small.
00:44:32.620Like, I bought $300 million of my stock bag.
00:44:35.560I was like, I'm going to spend hundreds of millions of dollars, and this is against a company that made $75 million a year, right?
00:44:41.280So I spent huge amounts of money to try to fix it.
00:44:44.380I literally rewired every single IT system, rebuilt everything, rethought every business process as the, you know, thinking, if I just work, if I work harder and focus more.
00:45:54.980So we're waiting for the old guard to die.
00:45:57.560But the one time when it's possible for an old dog to learn new tricks, if you will, is when there's a war.
00:46:03.920So when I first saw Bitcoin, it was 2013, I was fascinated by Apple, fascinated by Amazon, making a lot of money in my private investments.
00:49:48.780I would say I was very technically sophisticated and I was very good at running a business.
00:49:53.080I was in the category of work very, very hard and know my business.
00:49:59.480But what I didn't understand was money and I didn't understand banking and I didn't realize that as hard as I was working, they were taking it out the back door through inflation.
00:50:11.500So the interest rates are maybe 2.5% as we roll into the year.
00:50:45.200And, you know, the administration looks at it and, you know, the hue and cry comes from the mainstream media and from the leaders in business and from the politicians, lower the interest rates.
00:50:59.300So Jerome Powell turns around and lowers the interest rates and lowers the interest rates and pretty soon we've got interest rates going from 250 basis points, like overnight rates, to zero.
00:51:09.700Well, what happens to the stock market?
00:51:12.120And this is the most perverse thing imaginable.
00:51:14.280By the summer of 2020, all of the stocks have recovered.
00:51:19.280It's like, oh, we had a crisis, but we solved it by taking the interest rate to zero.
00:51:32.320People are basically taking Disney up to double and they're trading it based upon forward expectations of Disney streaming video revenue year 2024.
00:51:40.880And I'm watching this and this was a, what happened in 2020, I would characterize as a bifurcation of Main Street and Wall Street.
00:51:51.680What you saw was Main Street was destroyed by these policies, right?
00:51:59.180Main Street got shut down, the private manufacturer, the person that works with their hands, the guy that shows up, the small business, the mid-sized business.
00:52:09.000This is the Trump constituency, by the way.
00:52:59.720So the perverse irony is you own a building, no one's in it, the value of the building doubles in four weeks.
00:53:08.440You're owning a company, all the customers are being bankrupted, the value of the company doubles.
00:53:14.980So what happened was the government printed money.
00:53:18.840We had hyperinflation, not in consumer products, not in producer products.
00:53:25.040We had hyperinflation in financial assets.
00:53:29.740That hyperinflation meant that the stock market rallied, real estate rallied.
00:53:35.720If you owned a portfolio of real estate or portfolio of stock, you got rich.
00:53:40.760And the thought that I had, which is this investment manager sitting on his floatie at his house in the Hamptons is having the best year of his life.
00:53:49.300And I'm having the worst year of my life.
00:54:44.800My chances of turning this around are zero because after doing 100 things for a decade, they're zero.
00:54:51.560My human capital is about to be stripped away.
00:54:55.140And so I have a choice between a fast death or a slow death.
00:55:00.300And so it was time to make a decision to choose a side.
00:55:05.500And I felt like if I give the money back to the shareholders, conventional wisdom is, you know, give the capital back to the shareholders because you idiot, you're getting 0% interest.
00:55:18.300And us brilliant investors are getting, you know, S&P's up 25% this year.
00:55:23.200Okay, so I could just give the money away.
00:55:25.400Well, I took 30 years to accumulate the money.
00:55:27.660Why should I give up 30 years of my life?
00:55:31.9402,000 people did a million things right and I'm just going to give it up and slink into my hole and disappear from history.
00:55:39.680And I thought that's not very appealing.
00:55:42.320Well, I can keep the money at 0% interest, but I'm boiling, right?
00:55:48.340The environment is boiling my employees off and it's a slow death, not a fast death, but it's a slow certain death.
00:57:17.220Good luck with, like, how do I find $500 million of Picassos and Monets attractively priced?
00:57:23.740That's not, and by the way, we're now, we're struggling with, you're looking at a guy after 30 years in business and an engineering education, reasonably educated, but not a classically trained economist, not an Austrian economist.
00:57:39.840I am struggling with the time-honored question, what is money?
00:57:43.500I need a liquid fungible asset which will store my economic energy for an indefinite period of time.
00:57:55.620I'm looking for money, and, you know, eventually I get to gold, and I'm thinking, should I buy $500 million of gold?
00:58:03.420And, you know, my attorney, he looks at me and goes, you know, Mike, I remember when gold was $800 an ounce back in the 70s or the 80s, and then it went nowhere for 20 years, and you should be careful about that.
00:58:14.460And it might not, it's kind of dead money, and then I, so I'm sitting at this table, and I'm watching the world burn while all the Wall Street guys get rich and the talking heads on CNBC say what they're saying.
00:58:29.040And I'm looking out at Miami Beach, and I'm looking at Collins Avenue, and every car is not, there's no cars on the road except for an Amazon truck, which just makes me angry.
00:58:42.180And I've got 82 birds in my backyard, and they're hunting for worms because all the restaurants in Miami Beach shut down, so whatever, whoever was feeding them is not feeding them.
00:58:52.680So I'm watching us strip the world back to the Stone Age, right, a devolution.
00:59:00.760And I'm staring over my pool, and I look at Eric, and I say, Eric, tell me about that Bitcoin thing again.
00:59:08.640And Eric was a crypto entrepreneur, and he had been investing in digital assets and crypto, and I had dismissed him two years earlier in 2018.
00:59:17.780I was like, oh, that's probably just a scam coin that's going to collapse.
00:59:22.920But, you know, everybody finds this when you, you know, if I tell you you got six months to live, you would go looking for a cure.
00:59:31.600And if I told you every asset that you hold in Canada is going to be seized from you within six months.
01:00:13.740I learned a lot about diets and ketogenic diets and the carnivore diet, and I learned a lot about food politics, and I learned a lot about psychology, and also I started studying up on crypto, and I started speed watching and intensely watching, and I went and I saw the work of Andreas Antonopoulos, and I saw the podcast of the early crypto developers, and I started looking for the books, and I read the Bitcoin standard,
01:00:42.940and I got, quote-unquote, dragged down the rabbit hole.
01:00:47.560And I came to the opinion that the solution was a non-sovereign store value bearer instrument of which gold had been the best of those.
01:01:01.900But then I applied my engineering mind, and I thought the way Heinlein would have thought about it, and I said, okay, over a long enough timeline, what's the mortality rate, okay?
01:01:17.900Short, you know, people that think short time think about weeks or months or years.
01:01:24.660I looked over 100 years, and I realized that at a 2% inflation rate, and that's the rate at which we mine more gold, at a 2% inflation rate, that means the half-life of gold is about 36 years, which means that the value of the gold you hold is cut in half three times over 100 years, which means that if you started with 100, you ended up with 12.5% of the money you started with over 100 years.
01:02:17.180And so gold, although it's quote-unquote sound money, and in the Austrian economy school of thought it was the best money, it's not perfect money.
01:02:26.520The reason that you had stable prices throughout the gold era, you know, the gold standard age, is gold was inflating about 2% a year, and the economy is growing 2% a year.
01:02:41.120And so if the output of goods and services grow at the rate of the money supply, the price is constant.
01:03:01.600And by the way, in technology, when you look at technical products where the company grows productivity faster than 2%, in a gold world, the price would fall very fast.
01:03:17.220Okay, so what's going on is there's a race between productivity and money supply, and if I can drive the price of the product down 20% a year, I can inflate the amount of money 10% a year, and the price of that thing will fall 10%.
01:03:34.740But if I didn't inflate the price of money, it would fall 20%, you see.
01:03:38.740So I looked at gold, I said, I need something like gold, but the problem with gold is its conventional asset had kind of recovered a bit, and I thought, it's not perfect, it's the best idea in the 19th century, and it's not quite working in the 20th century.
01:03:59.720And so I started thinking, what if someone designed digital gold?
01:04:05.900What if I, you know, now we go back to the engineer saying, can you perfect gold?
01:04:12.760And the engineering idea, how do you fix gold and make it perfect?
01:04:16.260Well, you make it impossible to mine anymore.
01:04:19.500What if, and then we get into the fantasy thing.
01:04:22.460What if, you know, what if, if God came down, and there's a bit of theology here, if you allow me, if God came down and wanted to fix gold, it's impossible to make any more gold, right?
01:04:43.440I'm going to cast a spell and allow you to teleport the gold anywhere on earth.
01:04:47.580If God said, you know, I'm going to implement a system of 21 million gold coins, but we're going to call them God coins, and I'm going to keep them in a bank in heaven, and I'm going to let you transfer, you know, any amount.
01:05:01.300I'm going to let you subdivide it by 100 million, and we'll call them Satoshis.
01:05:06.060And I will let you transfer peer-to-peer and pay anybody, anytime, instantly at the speed of light, and I will keep track of the ledger of who, you know, who owes what.
01:05:16.540I will never cheat you, and I will do it forever for free, you know?
01:05:23.880If God offered you that kind of divine bank, and you were sitting in Argentina when the currency was collapsing to zero, the Argentine peso went from a dollar to the peso to a thousand pesos to the dollar over 20 years, and it did it five times over the century.
01:05:45.240Or if you saw it happen in Russia, where their currency collapsed, the currency collapsed in Brazil, not 25 years ago, currency collapsed in Germany a few times.
01:05:56.120If you read the history of civilization, read Durant, Durant's talking about currencies collapsing in Russia in the 16th century.
01:07:45.080I create a basket of—by the way, I create a basket of goods that are not likely to go up in price as I print money, and I put that into the basket.
01:07:56.380So it's inflation of the inflation standard.
01:07:58.540Grass-fed—this pops up in organic diet or, you know, carnivore diet or diet in general, where people note that if everybody ate meat and if it was all organic, then we probably couldn't support the 8 billion people on the planet.
01:08:14.640We could support 800 million people, so it behooves us to convince everybody that they should eat biscuit.
01:08:20.780And that's what the Egyptians figured out 5,000 years ago, that, you know, if you grow grain and you feed the population biscuit, you can raise an army, and it's very cheap.
01:11:11.140There's a different inflation rate for every single thing in this room, and it would be a different rate for this room if I put this room in Toronto, right?
01:11:22.320So the inflation rate of there's 100,000 things you might want, and the rate of inflation on all of those 100,000 things is changing minute by minute, and it's different in Hong Kong than it is in China.
01:11:35.440It's like, okay, there's a war going on.
01:12:16.920So we laid the groundwork for why this Bitcoin revelation hit you hard, and then you laid out an economic argument,
01:12:27.360which was that your assessment of the situation was that the standard story with regards to the reliability of currency
01:12:36.980and the inflation rate is radically off kilter.
01:12:41.340The most successful currency hasn't been particularly successful at all, and the inflation rate that's reasonably estimated is much higher than the official inflation rate,
01:12:53.460which means that your storehouse of value, whatever it is, is going to be deflated terribly during your lifetime.
01:13:01.040Okay, now you come across Bitcoin, and you talked about it as if it was, you know, this abstracted gold with the properties that you already described.
01:16:37.740So if I have a bathtub or I have a swimming pool with a leak in it, you can't jump into the swimming pool without risking breaking your neck, right?
01:16:49.840If I have a leak in a fuselage of an airplane, we can't fly.
01:16:54.900If you're an engineer and you're engineering airplanes or internal combustion engines or spaceships, you have to do the engineering properly.
01:17:06.960And that includes make it a closed system or a thermodynamically sound system.
01:17:15.100There's either a friction cost or there's a leakage cost and you have to account for the leakage in a replenishment if you want the machine to work.
01:17:23.440The machine will not work if you don't actually solve the problem.
01:17:27.340So when we come to this idea of the ideology of Bitcoin, Bitcoin is based upon engineering principles, mathematical soundness, consistency, integrity, truth, right?
01:17:47.600And those are all the principles of the—
01:17:49.680And that's the incorruptibility of the ledger.
01:17:52.120Those are the principles of libertarians and Austrian economists, right?
01:18:30.220A lawyer would like to—if the politicians could pass a law, they'd pass a law suspending gravity rights, you know, for the time being in certain places.
01:18:39.920But you can't—as Elon Musk says, you don't get to break the laws of physics, right?
01:18:44.480So Bitcoin starts with this ideology of the engineers, the scientists, the mathematicians, right?
01:18:56.260The protocol is, what if a bunch of smart people in the world—what if they wanted to keep their money?
01:19:05.240What if—or in this case, I gave you the example of the divine bank that God gave you, except if God's not going to set up divine bank and solve all your monetary problem, what's the second best idea?
01:19:20.020The second best idea would be a smart engineer takes advantage of semiconductors, the internet, and cryptography, and you create a system where 21 million bitcoins circulate, subdividable by 100 million satoshis each.
01:19:37.900That system is protected by public and private key cryptography, and should you actually have possession of the private key, you have control over your coins.
01:19:51.680That means that you've created a bank in cyberspace.
01:20:00.920They all get together one day, and they say, well, you know, God won't solve our problems for us, so we've got to solve our problems ourselves.
01:20:08.120Let's go ahead and build out this Bitcoin network.
01:20:12.220And this is a bank, and we're all going to be able to deposit our money in this bank.
01:20:33.640Well, the answer is everybody's going to run the software because nobody's—
01:20:37.840I trust you, you trust me, but your idiot great-grandson I might not trust, or maybe my idiot great-grandson might not get along with your idiot great-grandson.
01:20:49.700So, you know, and this is where history of science comes in.
01:21:29.800Just like the Wright brothers figured out how to fly without the aeronautical engineering degree, the bicycle makers figured out how to fly.
01:21:35.780The clockmaker figured out how to solve the problem.
01:24:07.500It's an internet virus, a monetary virus, an ideological virus.
01:24:13.620And everyone that chooses to run the node is feeding the network, you know, participating in the network.
01:24:20.520All of the miners are defending the network.
01:24:26.640People will—but once you understand it like that, then you realize that what's going on with this, with Bitcoin, is a bunch of people with the same ideology—we just all like to keep our money—
01:24:38.860Mm-hmm, running a protocol, have instantiated that protocol in software that runs on mobile phones, that runs on computers.
01:24:47.840We should also say, you know, it's not exactly that you want to keep your money.
01:24:51.460It's you want to keep the fruits of your labor, and you want to keep your reputation.
01:24:55.260And you want to do that over the longest amount of time possible, with the least amount of parasitism and corruption manageable.
01:25:03.340And so, you know, because when you say you want to keep your money, it's got that kind of evil capitalist ring to it.
01:25:08.760But, you know, if you spent your entire lifetime building up a storehouse of value, and you did that in a way that also brought prosperity to other people,
01:25:16.520it's only natural justice of the sort that keeps hardworking people working and everything abundant in order to not allow people like that to be parasitized and taken out.
01:25:27.200If you would indulge me, this is where we should probably veer off into libertarian politics and philosophy.
01:25:33.140Let's wait. Let's do that on the Daily Wire side, because we should bring this part to a close.
01:25:38.400Well, you had a good landing there with regards to, you know, your summary of how Bitcoin worked,
01:25:43.740and all the things that we talked to culminated into that.
01:25:46.860And on the Daily Wire side, we'll talk about the relevance of this for young people.
01:25:51.140We'll talk about what you think is going to transpire in the next five to ten years on the Bitcoin side,
01:25:56.600and we'll flesh out the libertarian discussion.
01:25:58.780But that's an excellent place to stop.