Michael Saylor: The Blueprint for A New Financial System

There are no losers here, except the 20th-century antiquated oligopoly that is selling inferior credit instruments. But that's technology. The human race has got to move forward. The skeptics and the cynics, they choose to be strategically ignorant.

27 years ago, you didn't have trading apps on your phone. And now it's even more accessible, but yet the market is still held back. The investment cycle is a thousand times faster than technology, real estate, anything else you've ever seen before in your life. We're literally selling 50 million an hour or 100 million an hour and buying the $100 million of Bitcoin the same hour.

Is there an appetite for overcollateralized debt that pays 10%? Just go walk down the street and ask a 100 people, "Would you like a stable investment that yielded 10% tax deferred?" If you think the Bitcoin is okay, I can jack your retirement income from $30,000 to $120,000. So what we're really talking about is creating an annuity or a pension. And so what's the offer like? Happily ever after? It's social security. That's the product for how many people? Like a billion. We need to go build the world that we want. The real interesting question for all of us in the industry is...

Michael, first of all, thank you for taking the time to sit down with me here in DC.

Yeah, happy to be here.

I've gotten to spend a little bit of time with you, but we've never sat down one-on-one, so I've been excited for this. There's one question I've always wanted to ask you because I love history and I know you majored in science of history, history of science, but you also have like the MIT um engineering degrees in astronautics, system dynamics, and history of science. So, it seems like this unique blend and I'm just curious how that the history so you sort of get the history as well as like aeronautics helps you maybe understand Bitcoin better and maybe sort of see where the future of Bitcoin goes.

Yeah, I think when you read history, I've read a lot of history of late, in its original form, you see historians observing things. They're making observations. They're noting it's suboptimal, like observing 10,000 tragedies.

Right?

Then occasionally you'll see philosophers who are complaining about it. So philosophers synthesize and they complain about what they don't like, or they lament that it isn't better. The Austrian economists, the philosophers, the engineers build machines that work. Airplanes, ships, railroads, etc. Electric motors. Um, the scientists, they, uh, they divine the relationships, the math that, you know, explains the universe. And the physicist, you know, and the mathematicians take that, you know, to the extreme. Right? Um, I had a background in all those things. I think it was useful to have studied physics. It's useful to have studied math. It's useful to have studied all the sciences, the engineering disciplines which get deep in thermodynamics and mechanics. And I think it's also useful to have studied history and philosophy. And the history of science is a particularly interesting subject because it goes back and looks at the histories, but it extrudes it through or filters through a scientific lens. Like, like the classic non-scientific historian says, "This happened, and this happened, and that was suboptimal."

Right?

And the history of science historian says, "That happened because of this. That happened because of this." You know, Guns, Germs, and Steel, right? That the Europeans didn't just show up to the new world and then they conquered it. They showed up to the new world, brought a germ, and everybody died.

Right?

They didn't have to conquer it.

Right?

90, 95% of the natives died. You know, and that's that's actually a, you know, a biological explanation for what happened. If you don't understand, you know, the science of immunology or you don't understand germs, you couldn't explain it. Right? Um, and then, you know, if you think about the impact of steel, what's it take to create steel and explosives and gunpowder, you know? And, um, so the history of science is all about how technology dynamics channeled the course of human history. And I think the reason it's important to Bitcoin is you can't really understand Bitcoin if you're not an engineer, if you don't understand engineering systems, systems engineering, control systems, servo mechanisms, system stability. You've got to understand all those concepts intuitively. If you don't understand thermodynamics, you know, the people that are pure computer scientists who are weak on physics and engineering and systems, oftentimes they create Rub Goldberg devices in code that...

Right?

That a hardcore engineer wouldn't build. Right? And so you can't just be a coder. And of course, if you're a pure engineer and you reduce the world to, "I built a ship," or, "I built a gun," but you don't consider the implication of the ships and the guns on the course of economic and political history,

Right?

Then you don't really understand Bitcoin either. Because you have to understand the history of money and the history of economics and mercantile networks. And, yeah, the idea, the idea credit networks are local. Like a German prince can have a credit network, a British prince can have a credit network, but gold or silver networks tend to be transnational. Right? That the French, the Germans, the Brits, the Persians, and the Chinese could all agree to trade on a silver network or a gold network, but not on a Chinese paper money network. And so when you start to understand the impact of technology that's metallic money on economic networks, and then the impact of a ship with guns on it, you know, on that economic network, or the impact of not having immunity to all the germs the Europeans brought, or the impact of not having steel and being stuck in the Stone Age. All of those things have an impact on the way the world evolved. And I think Bitcoin is, it's crossing every one of those fields right...

Right now.

Right. Yeah. So being able to synthesize that information and understand the cause and effect, and then looking at the changes today, as you said, sort of a multinational asset, strong as steel, fast, etc., then you can start to, it seems like you could start to see maybe the future that that creates better than most people.

Well, I just, I think if you've got a broad synthetic educational background, if you've studied a bunch of different subjects, had a lot of experience, you appreciate Bitcoin more. If you have a very narrow background, if you understand economics or if you studied economics but never studied engineering, you'd be missing half the equation. And if you're an engineer that doesn't understand economics and never been in business or never traded internationally or never traveled,

Yeah.

Or didn't know anything about history.

Yeah.

You know, you would also understand only a part of the equation. So, I just think you need to know a lot of different subjects in order to fully appreciate...

Yeah.

The impact and the significance of the invention of Bitcoin.

Yeah. Which is then in your professional career building technology companies. And so you kind of predicted a lot of the technology companies that have grown in some of your books that you wrote in the past, but then also navigating those tech companies through the capital markets then sort of gives you a new perspective to see the deficiencies in the current capital markets that we have today and then help you kind of think about fixing those with jumping into sort of like this refinery model trying to um see solve some of the deficiencies in those capital markets. The way companies accrue capital.

Yeah, I think what can be said of the capital markets is, um, 99.9% of the companies are locked out of them. Right? So the first question you've got to ask is, how come there's 40 million businesses in the United States, but there's only like 4,000 publicly traded companies?

Right? So don't have access to the capital.

Okay. So it doesn't sound like a, like if I said only 4,000 companies have telephone and internet access and the other 40 million businesses don't. What would you say?

Yeah, that'd be a problem.

Yeah. What? Yeah. What if I said 4,000 companies have bank accounts and the other 40 million don't?

Right.

So, so you just start with the observation that the capital markets can't be all that effective if 99.99% of the companies can't access them.

Right? And, you know, beyond that, the other observation is, if you look at the companies that are in the public market, if you look at the thousands of publicly traded companies, it's like 20 that control all the attention.

Right?

And, so, you know, most public companies are zombie companies. They're uninteresting, no one cares about them. They carry a huge burden of regulatory compliance and, um, they don't get the attention they deserve. So, one could characterize the capital markets as being, um, unwieldy, ineffective, right? And it's, you know, and what is that? They're 20th-century instruments that never really evolved in the 21st century. You've got to ask the question, why does it take three years to raise money? If you have a small business, why can't you do it in three days?

Right?

Why does it, uh, you know, why is it impossible to take custody of your own stock shares?

Why is it impossible to trade shares on Saturday afternoon?

Right?

Why is it impossible to transfer things globally?

You know, why is it, why is it that you can actually take a million dollars of cash and get paid interest on it, but you can't take a million dollars worth of stock shares and get paid for that? Yeah. Why, why, you know? So there are all these things that just are very inefficient that we just take for granted, but they don't work very well.

Right? A lot of that is technology being inefficient. And here we're at this in DC at this Bitcoin policy event. Um, and a lot of that might also be regulatory, right? So a lot of that regulations maybe prevent some of that.

Yeah, generally, oftentimes whenever you have a highly regulated industry, progression stops.

Right?

The banking. If you look at the credit markets, they seem to be stuck in, they're stuck in a mode that was probably, probably modern 30 years ago. Like they're 30, 40 years old and they haven't advanced. If you look at the equity markets, it's the same way. For example, you know, my company came public in 1998. We traded on NASDAQ from 9:30 in the morning till 4 in the afternoon. The year is 2025. We trade on NASDAQ from 9:30 in the morning till 4 in the afternoon.

Right?

What's the difference between the way my stock trades today and the way it traded 27 years ago?

Yeah.

Nothing. Nothing.

Yeah.

Right. Could you imagine any other industry where there was no material change for 27 years?

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And, and one of the differences, I mean, 27 years ago, you didn't have trading apps on your phone, and now it's even more accessible, but yet the market is still held back, even though retail could access it easier.

Yeah, because, you know, the traditional finance industry is highly regulated and it has, it has settled into a comfort zone. And, you know, the forces of progression are in the crypto industry. The most of the force in the traditional finance industry are forces of regression. Like, the knee-jerk reaction is, "Why shouldn't we do this? Why is this a bad idea?" If you, if you listen to all the Gensler speeches for the last four years, it's always, "Why this is a bad idea."

Right?

Right. Like, why, why can't I issue a token, you know, for my small business over the weekend? Well, we've got to protect the investors.

Right?

Okay. So that's why we're going to disenfranchise 40 million companies from being able to raise money because the people that might want to invest in them might not be qualified to make that investment. So it's kind of like, well, why don't we give cars to people below the age of 60? We've got to protect the pedestrians or protect the, you know, it's like if you took that rule and you applied it to phones or cars or websites or flying in an airplane, we would have no automotive industry. We'd have no aircraft industry.

Right?

We'd have no telephones. We'd have nothing, 'cause we wouldn't do anything until we're sure that no one would be harmed by the doing of the thing.

Which is impossible.

We wouldn't even have fire, you know? We wouldn't want someone to get burned. We wouldn't have electricity. People might get shocked.

Right?

Gotta protect the, you know.

Yeah.

Gotta protect the people that might get hurt by the new idea.

Yeah.

So that's pretty much the existing status quo in traditional finance and it has been for 30 years.

Yeah.

And with the advancements of technology, I'll get, I want to get more into the politics side. And you talked earlier on your keynote about maybe the last 12 months of this big political winds that shifted. Um, but kind of sticking with some of the ways that technology is changing. Um, on your keynote, you said you spent, I think, about 30 years trying to come up with a billion-dollar idea, which you did. Um, and then couldn't come up with the next one. And now half a dozen billion-dollar, billion-dollar ideas in the last, you know, year or two. Um, and that's sort of in New York at the unconference, you talked about this refinery model and Standard Oil sort of taking this raw asset like Bitcoin and creating products off of it. And so you're creating now products off of it. Um, that's the model to do this. What, what would be the kerosene of this industry?

Um, kerosene represents most highly refined crude oil. It's like, it's pure liquid energy, right? It's jet fuel. You put it in rockets. Like, you can't refine oil more than kerosene. So it's an important metaphor. It's the cleanest, highest grade distilled, uh, liquid energy. Like pure grain alcohols, right? That's what you're talking about there from a, from a bunch of, uh, potatoes, stack of potatoes, and outcomes pure grain alcohol. Um, the equivalent of kerosene in the Bitcoin industry is a treasury preferred credit instrument, like STRETCH. So, on one side, you have digital capital, Bitcoin. And Bitcoin is a long-duration, volatile, high-energy, high-performance source of capital. Um, long duration. Think of it in terms of like 240 months, like 20 years. Like, you should, if you want to get the optimal performance, you're going to hold it for 20 years. Like, it's a, it's a 10 to 20-year type investment.

Right?

High volatility. Right now, it's about 45 vol, implied vol. It's been 50, it's been 60, it's been 70 vol. And, um, high performance, you know, appreciating 50% a year.

Right?

So that's the raw commodity. Um, what happens if I, uh, if I strip away the volatility, strip away the risk, strip away or compress the duration, translate it to a given currency, and extract the yield? Right? That's what a treasury credit instrument or treasury preferred is. So that's what STRETCH is. The idea is you build something that's got one month. Like, I'm going to give you 10% dividend yield for one month. Like, the duration is one.

Yeah.

The yield is 10%. The currency base is US dollars.

Right?

Uh, the spread is like, if the risk-free rate is 400 basis points, and that's like a 6% 600 basis point credit spread. I've extracted a 600 basis point spread for the next month in US dollars.

Right?

Maybe I 5x overcollateralize it. Maybe I 10x. If I, you know, raw Bitcoin is like one to one. It's like, if I have a dollar Bitcoin, I have a dollar of Bitcoin. If Bitcoin trades down 50%, I've lost half my money.

Right?

But if I 10x overcollateralize something, I have $10 of Bitcoin, I have $1 of STRETCH. If Bitcoin trades down 50%, I still got a dollar of STRETCH. If Bitcoin trades down 90%, I still have a dollar of STRETCH. The statistical odds of Bitcoin trading down 90% are like, point something. Right? It's a small percentage. So by overcollateralizing, you strip away the risk. By structuring it to adjust, if you put a set of adjustments or representations below par, below 100, you start to strip away the volatility on the downside. If, like with STRETCH, what we did is we put in a call option at 101.

And then we told the market we're going to sell it actively at 100 or better.

Like, and then we also told the market we're not going to sell it below 99.

And if it's below 99, we're going to raise the dividend.

Right?

Okay. So you're kind of collaring this instrument. And then, then the last point is we created a preferred instrument where we pay it monthly in cash and then we adjust the dividend every month. So it turns out if you scan in the history of preferred stocks or the history of the credit markets, no company's ever issued a preferred, uh, preferred stock where the management has discretion to adjust the dividend every single month. Like, there are some preferreds that are floaters where they set the credit spread at 350 basis points over SOFR and they will float with SOFR with the risk-free rate.

And there are a lot that are fixed where you set it at 7% and the principal will trade up and down if SOFR falls or rises. But the idea that the credit spread is completely variable is a new idea. But by the way, not a new idea in the world of credit because who does this? Well, nation-states do it.

The Fed.

Literally, that's what a central bank does, right? That's what every central bank does. They set the interest rate on their currency.

Yeah.

What we did was just copied, you know,

Traditional bankers. And we set the interest rate on our currency, which is STRETCH. So that is the kerosene of, of the Bitcoin, you know, treasury company or of the digital assets industry because it's the, it represents the greatest degree of financial engineering, just like kerosene represents the greatest degree of petroleum engineering.

Right?

I've done the most, uh, refining. I've distilled the highest quality product you could imagine. For example, you could, you could extract the same product in Yen. So I want to create a Yen instrument that's 10,000 Yen that pays, you know, a monthly Yen cash yield or a cash dividend. I change that every month. And now I've created the equivalent of kerosene for the Japanese market. And of course, what does everybody want? Everybody kind of just wants, "I've got some money, I need to park for the next 90 days. If I put it in the bank, if I put it in the bank in Japan, I get 50 basis points or less. I put it in the bank in Switzerland, I get minus 50 basis points. If I put it in the bank in Europe, I get 200 basis points or less. If I put it in the bank in the US, I get 400 basis points or less." And so what I'd like to do is put it in some kind of structure where I'm going to get my money back in nine months or six months or whatever. The principal is not going to move around, but I'm going to get 10%.

Right?

Everybody wants a bank account that pays 10% instead of 4% or 2% or 0%. And, uh, and so I think the most interesting product that you can create, the most interesting digital credit product is a treasury preferred credit instrument for corporate treasurers or for retirees, right? Just, you know, and how big is that market? It's like $30 trillion in the US.

Yeah.

Of just short-term treasury money. So 30 trillion in the US that's getting paid SOFR.

Yeah.

And, uh, the opportunity with digital credit is, um, you create a company, you hold Bitcoin, that's digital capital. You start to issue credit instruments on top of the capital. And you can decide, uh, how much risk do you want to strip away. Is it, uh, a BTC rating of two, which is two times overcollateralized, or is it 10?

Right?

Right. Two is less risk stripped away. 10 is more risk stripped away. Strip away the amount of risk you want. Strip away the amount of volatility. Uh, the smaller the instrument compared to the overall collateral pool, the less the volatility. And then there are a lot of terms and conditions that you can put in the instrument that would, uh, constrain the volatility. So you decide how much volatility and risk you want to strip away. Decide how much yield you want to give it. You decide whether you want it to be in pounds or Canadian or euros or yen or,

Whatever, you know.

And then you distill out, you extrude the yield and the pure, you know, boost over the risk-free rate.

Yeah.

And you offer that to the marketplace.

Yeah. I saw you ask it both at the New York unconference and then today at the keynote. Just let me see a raise of hands, like how many people have a bank account that like 10%? And of course, everybody wants that. So we can see the demand for that is...

Nobody in the world's getting paid five.

Right?

Right. Uh, we created a product, uh, STRD, Stride. It's the junior long-duration credit instrument. Right now it pays about 12.6%. 12.6% as a return of capital. So it's tax deferred. And if you put your money in the bank, you're going to get 4% pre-tax, 3% after tax.

Right?

So it, it pays anywhere from three to four times as much cash flow.

Yeah.

So that, those are really interesting products.

Yeah.

That we're creating in the market.

Yeah. I mean, just in the US, we have $7 trillion sitting in money market accounts just trying to earn a third of that yield that you're paying out there. And so then you have four different products. And so not everybody wants kerosene. Some people might want other products. And then you've got STRIKE, STRIFE, STRIDE. And so each one of those sits in a different location that gives them a little bit of a different variation of the kerosene.

Yeah. Pure kerosene. Like the, I would think, I would say the other ones are kind of like gasoline or diesel or plastic or, you know, the, or NAPA, or there's a lot of other petrochemicals. You know, the entire petroleum industry is fascinating because out of a barrel of oil doesn't just come gasoline, diesel, and jet fuel. Also, uh, you get acrylics, you get fibers, you get polyester, you get Lycra, you know, you get PVC, you get the, you get the stuff that we make doors with, we make walls with it, we make pipes with it, we wear it, we look through it, we burn it.

Think, think about how profound it is. Like, just around this room, if you glanced at the room, you'd probably find there's probably a hundred or hundreds of petrochemical products in this room.

Yeah.

That have been created. So, um, the possibilities are endless. But if you come back to just what we've done, right, we're just one company and we're just, we're showing what's possible. Um, STRIKE was the first, and it is a convertible preferred. So STRIKE shows how you can, you can extract any amount of yield, delta, duration, risk, or volatility. So with STRIKE, we basically gave it about 35 delta, that is like 35% of the upside of the equity. So you get, you know, you get an equity component, then you get like a, right now it, it's like 8 and a half% yielding, like it pays 8% at par. Um, so we gave it a dividend at 8%, we gave it an equity component for some upside, and then we made it cumulative. And so it gave it some seniority privileges. And that's for people that kind of just, they don't want to buy Bitcoin and be on the roller coaster. They want to get, I call it a Bitcoin fellowship. It's like, you know, it's like you buy it, you're waiting for the upside, and you're getting paid a, you know, a living stipend.

Right?

While you're waiting. Yeah. You know, for the principal to appreciate. So that's one instrument.

Because it will convert into MSTR at a thousand?

Because it's got a conversion rate, right? So if you believe, if you want to hold something for 30 years, well, you're going to get 30 years worth of dividends. And at the end of 30 years, you're holding, say, for a $100 stock, you're holding, if you have a one of these, you've got a $40 worth of of equity when you buy the $100 instrument. So that's for people that want some upside with downside protection, with with guaranteed cash flow, right? Uh, which a lot of investors want, right? I mean, a lot of investors, if they, if they wanted max upside, max volatility, you would buy the Bitcoin.

Right?

But can I go 30 years without any cash flow?

Right?

Can I go 10 years without cash flow?

And can I stomach the volatility?

Yeah.

Yeah. And there are a lot of people that just don't want the volatility, right, for any number of reasons. So that's STRIKE. It, it turns out that STRIKE is the most volatile of the four preferred instruments because it's got that equity component in it.

Right?

And it's got longer duration. And so that means it's got more volatility to interest rate forward curve, and it's got more volatility to Bitcoin price, and more volatility to MSTR price. Um, the second thing we did was STRIFE, STRF. And that was long duration senior credit. So it pays 10% dividend at par forever. And that means that, um, and it doesn't adjust. It's like a, you know, it's not a bond because it's a dividend. It's better than a bond because in that, if you want cash flow, because the dividends get better tax treatment. And if it becomes, if it becomes a return of capital, which is what it is right now, it's completely tax deferred. So that's, uh, that's for someone who's a long-term credit investor. And it happens to be senior in the capital structure. So it, so it gets paid off before everything else. And it has penalty provisions if we ever skip a dividend, right? And so extremely risk-averse institutional investors who want the credit, but they want to be ahead of everybody else in the stack, they would buy that. Well, that's trading above par right now. So it pays like 9% effective yield.

Okay?

Because it's senior. We followed that with a, with the identical instrument. Uh, we basically 10% at par, but instead of cumulative, we made it non-cumulative. And we made, instead of senior, we made it junior. And instead of the penalty provisions, we took them out.

So get a little more yield.

So what it does is it makes it theoretically riskier, you know, to the person studying the contract, but it means it trades lower. So that trades like in the 80s. So that that yields 12 and a half or 12.6%.

Right?

So the issue is, why would somebody want to buy the one without all the investor protections in the security? And the answer is because you get paid 360 basis points.

Right?

So, do you want 12.5 or 12.6% for the junior instrument, or do you want 9% to be senior?

Well, if Bitcoin, you know, goes sideways or up, and if the company doesn't fail, then it's going to cost you 3.6% a year for the rest of your life to not trust us.

Right?

You see? So, so now you've actually got there an actual credit spread. If you're wondering what is the equity premium between being senior and then having, having none of the representations, well, you've actually got the market telling you it's like 3.6 or 3.7% or something. It varies every single day.

Yeah.

If you don't trust Bitcoin, if you think Bitcoin's gone to zero, you wouldn't want to buy any of this.

Right?

Right.

And so then it comes down to how much do you trust the company.

Right?

And if you, you know, people buy dividend-bearing equities all the time. Like every single equity, if you buy Verizon equity or if you buy AT&T equity, they pay dividends, but they're not required to. They could suspend them without prejudice and without penalty at any time. So could Apple.

Right?

Do you trust the company?

Right?

You know that if they suspend it, their stock's going to take a hit, but otherwise, you're completely trusting them. Your view is like, well, they probably won't because the stock will take a hit. And so the issue is with STRIDE, will we pay the dividend? Well, of course we will. But what, what happens if we don't? Well, if we don't, STRIDE will trade way down.

Right?

But then we won't, but then you're like, well, why does the, why would the company care? It's like, we want to sell it.

Right?

Like, if it, if we actually default on that obligation, then the instrument isn't the capital raising vehicle for us. And the big idea is, unlike most companies that issue credit apologetically in order to deal with a crisis, we issue credit strategically, enthusiastically, with the intent that the credit is the product. See, when Boeing issues preferred stock, the product is the airplane. They sold the preferred stock because they ran out of money to build airplanes. We issue the preferred. The product is the preferred. We didn't never run out of money.

Right?

We issued that, you know, why did you sell a billion dollars of STRIDE? So I could sell $10 billion more of STRIDE. Why did you sell a billion dollars of STRIFE? So I could sell $10 billion more of...

Right?

STRIKE. So we have a very different business model in that regard. We created the STRIDE so we could create the credit spread because we literally wanted to have an investment grade type instrument, a senior one, and we wanted to have a junior one because there's one class of investors that want the junk credit, but like they want 12% yield, right? It's like, it's very simple. Do you trust the company? Do you want 12 and a half percent? You know, do you half trust the company and you prefer to take the 9%? Well, ironic, there's markets for both, and they are not the same investor.

Yeah.

There are days when everybody wants to buy STRIFE, and they don't want STRIDE. And there are other days when they want to buy...

Yeah.

STRIDE. And so, so that was part of building out the risk curve. And then the last thing we did, STRETCH, was a very different idea. Instead of paying an 8 or 10% perpetual dividend forever, we just said, "Hey, let's actually reduce this to one-month duration."

Right?

And so we're only promising to pay this dividend for a month. The other one is a promise for a hundred years. And so theoretically, the Macaulay duration, the theoretical duration on the other instruments ends up being between like, you know, 8 and 20 years, or 8 and 15 years. It's very long range. Think of a lever that's 120 months to 240 months long, and you know, you have a little change in interest rates, and that's a very big lever to the good or bad. But with STRETCH, the idea is a one-month duration. Of course, inherently that's going to be less volatile.

Right?

And you're like, well, I'm not going to get capital appreciation if SOFR dives by 400 basis points. I'm not going to double my money.

Well, exactly. It's the treasury instrument. You're not buying it to double your money. If you wanted to double your money, if SOFR dives, you would buy STRIFE.

Right?

Right. That's the instrument for the credit investor that wants to actually ride it up when interest rates fall, or wants to do the opposite when interest rates rise. That's a different instrument. It turns out that most people, right, corporate treasurers, retirees, retail, most people, they're not really interested in being long-duration credit investors.

Yeah.

Like, ask the, ask the average person, "Do you have a bank account?" Yes. "Um, do you have a 30-year Treasury bond?" No. Like the difference is like 50 to 1. STRETCH came last. But ironically, STRETCH is the best piece of financial engineering, and it's probably the most, uh, universally applicable product because what you're doing is just giving people pure currency cash flow. Pure, pure currency yield without the volatility, the risk, the duration.

Yeah.

Or the delta. It's like, you know, some people want delta. Like, I want the 30, I want 30 or 40% of the upside of the common stock. Other people don't. Other people like, "I want nothing to do with the common stock. I just want you to pay me 10% on my money until I ask for my money back."

Right?

That's what they want. It's a very different, uh, financial instrument for a different investor.

You mentioned how when Boeing issues debt, it's because they need the money. And when you do it, uh, when Mike, when Strategy does it, you're issuing the debt because that's the product. And we think about like, if I'm buying the debt of Boeing, then I'm trusting that their investment into their airline will have enough cash flow maybe to pay me in the future versus I'm paying you, but you're buying the asset. So I'm not dependent on future cash flows because I know you have the asset and the debt is overcollateralized.

Yeah.

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Well, if you look at the credit markets, you've got corporate credit, that's basically a credit issued against future cash flows of a company. You've got investment-grade corporate credit from Apple or Microsoft, and you've got distressed corporate credit from quasi-bankrupt companies. You've got junk from companies that can barely cover that cash, right? And so that's corporate credit. You've got mortgage-backed credit. It's, it's when you're basically issuing credit backed by by mortgage payments of homeowners.

Yeah. We saw that play out in 2008.

Yeah. And, and, and, you know, it's like the good news, bad news is, if it, if it yields a lot, they probably can't afford to pay it. And if it yields a little, you're not getting much yield, right? So either, either they're not going to default, but it doesn't pay you much, or it pays you a lot, and they're probably going to default. And that's the great financial crisis, and we learned that. Well, then you've got municipal credit, you know, a little bit safer, but it pays nothing, right? Like almost no two, three, very little yield in municipal credit backed by cities and projects, like, you know, you've got bank credit that is, uh, when you deposit a million dollars in the bank account, you bought bank credit. You know, they're selling you bank credit, and they're paying you the SOFR rate or the risk-free rate, etc. So that's there's that, but, you know, it's pretty uncompelling in most countries.

I mean, the best is the US and Switzerland, and in Japan, it's like nothing, right? It doesn't pay anything. Uh, and, um, then you've got sovereign credit, fiat credit. You know, the government of the United States or the government of the UK issues its sovereign debt, and it's, and that's backed by the cash flows of the country, in theory, the taxing ability of the country, or just the ability of the country to print its own currency. And when the country has a collapsing currency like Turkey, those interest rates have to be very high, but the country's currency is collapsing. And the issue is, are you going to want, what are you going to be able to buy with the currency? Are the interest going to get paid?

Right?

So really, the big bra, when's the last time in a hundred years there's a new form of credit? Every one of those credit instruments, they've all been around for a while. You could argue that mortgage credit evolved into a higher form with Freddie Mac and Fannie Mae, right? When what happened? The government started underwriting the credit risk of mortgages, that drove down the rates, that created systemic risk, right? So that changed a little bit. But the idea that a company's going to borrow money, or someone's going to mortgage their property, or a government's going to borrow money, or a city's going to borrow money, none of those are new ideas, right? I think you can trace them all back for hundreds, if not thousands of years. So the idea that, you know, what was a quasi-stable idea, issue credit on gold, on a monetary asset? Well, that, you know, we saw that in the 17th century, the 18th century, the 19th century, even the 20th century. You could argue, you know, British sovereign debt, French sovereign debt, they were all gold-backed credit instruments, and they were all backed by various amounts of gold, but it was almost never one to one. It was always like undercollateralized, and eventually, it would probably got down to 5% collateralized in 1971, and that's the end of the gold-backed credit era.

Right? Right?

And so now you have digital credit. You have digital gold. You have Bitcoin. Bitcoin is digital gold, digital capital. The killer use case of digital gold is to issue digital credit instruments. And the aha, the aha moment is, any company, any publicly traded company can create a digital credit instrument with any degree of yield, duration, delta, or risk, and to a certain degree with a man-wi, with any amount of volatility that they want.

Right? If you want extremely low volatility, you can't create a lot of it. Like, if, if you have a hundred billion dollars of capital, can you create a hundred billion dollars of credit that's low volatility? No. But, you know, the real interesting question for all of us in the industry is, can I create $10 billion of low volatility credit with $100 billion in capital?

Yeah.

Or do I need, do I need a hundred X? Can I only create a, I'm sure I can create $1 billion of very, very low volatility at a hundred times overcollateralization. You'll certainly get it done with 10x overcollateralization. I think you'll probably also get it done at what level? 5x, 3x, 2x? At what level can you not? And of course, that's a function of, uh, the Bitcoin volatility too, because the less volatile Bitcoin gets, the easier it is to create these low volatility credit instruments.

Would it also depend on the creditworthiness, the trustworthiness of the company issuing it?

Yeah, I think it's, it's a function of, of the issuer.

Right?

Their reputation, their balance sheet, what's senior and junior the instrument. It's a function of, uh, the type of credit instrument. Uh, is it a bond? Is it a preferred stock? It's the container it's in, the security design, the rails it's running on. Is it trading on the New York Stock Exchange, the NASDAQ, the Frankfurt exchange, the Toronto Stock Exchange, how much liquidity? It's a function of the regulators, because in a more, uh, flexible regulatory environment, the issuer has more tools to strip the volatility. And in a more inflexible, traditional, uh, primitive regulatory environment, the issuer doesn't have the tools. They can't legally take the action. And even the technology rails, for example, you know, on the NASDAQ, you can't issue a preferred stock denominated in euros.

On the NASDAQ.

On the NASDAQ, can't do it. Uh, you know, uh, so what if I wanted to pay a weekly dividend? In theory, it'd be less volatile, but technically, with the existing US banking system, it's not practical to snapshot the holders of record every week because there's like a three-day delay play, you know. So, it's very problematic to pay a daily dividend or a weekly dividend. Even monthly is about the quickest anybody's done. You know, there are some exchanges where they, they're more inflexible on your ability to say do ATMs and issue securities at the market. You know, there are other, there are other places in Switzerland, they've never issued a, there's no support for preferred stocks in the market.

Okay.

Just the entire country.

Right?

You know.

In the UK, they're hardly used as well, preference shares.

Well, there's an issue of whether they're used or whether it's impossible to do it, too. And then, and then of course, it's there's a question of, can the exchange you want to trade on support it? And the second question is, can, will the regulator allow you to issue it? And the third question is, will, uh, the investors in the country buy it? And the fourth question is, will the bankers that control those networks sell it?

Right?

And so you really have many, many layers of support that you need.

Yeah. And I, and I think over time, many of the, the better ideas will spread. But it's just like the spread of electricity or gasoline or crude oil or whatever. It's like they didn't all spread in the first year.

Right?

Right. Take, take Robinhood. Robinhood is the way people buy a lot of securities today. They hold, they support common stocks, but they don't support preferreds. You can't buy STRETCH, STRIKE, STRIFE, STRIDE on Robinhood. Why? You can't buy any preferred on Robinhood. Why? Because no one ever created one that anybody wanted to buy.

Because there's no market.

Because most, there's a market for garbage. Like, there's a market for 20th-century traditional defective, crippled credit instruments in the preferred market. Okay? They all pay 6%. They're undercollateralized. They're opaque. They're heterogeneous credit.

Right?

And they're issued by any of 5,000 regional banks you've never heard of, or by 5,000 REITs you've never heard of, and they trade cheap. They're illiquid. The bid-ask spreads are wide. They have QIP numbers. There are no ATMs on them. No one's ever heard of them. Your private wealth, you know, think about this. 100,000 private wealth advisors, they're, you know, pulling up their Bloomberg and they're finding that the 97th issue of some big bank preferred, and they're putting it in your retirement portfolio. And when it comes due or it gets called, they're rolling into something else. And they manage your money and they charge you an X% fee. And the person that actually owns that thing doesn't know what they own. They've got XXY QIP149223.

Right?

And they couldn't even read the screen.

And by the way, there is no quote on the screen. You'd have to buy a Bloomberg and pay $25,000 a year to get the quote. So, yeah, there's that market. But, uh, but the, the modern retail market, the digital market is like 50 million people, you know, want to be able to trade on Saturday afternoon. And so that is not a criticism, by the way, of Robinhood. That's an observation that you invent a new thing, the existing distribution infrastructure never seen the new thing. There's no, there was no demand. So they didn't build out the rails to move the new thing.

So there's been, and the inertia in the system at the point that those things become screaming home runs and 27 million people ask for them, then, you know, somebody upgrades the rails and then they start to distribute them. And so that's what's going on in the world right now.

It's interesting that you, you know, use Robinhood in that example because they're one of the newer digitally tech-forward, uh, into crypto. So they're sort of at the forefront of that, and yet they're still behind the curve.

In their defense, what I've just described didn't exist in January of this year.

Sure.

Right. Like.

Yeah.

Like we're literally about to be October, and in January, none of these digital credit instruments existed. So even if you move f-lightning fast, it's within a year or two years.

Right.

Right. Most big banks, they take three to five years to study something.

Yeah.

There are literally credit investors and fixed income investors. Their view is, well, and money managers got to have a three to five-year track record before we'll consider an allocation to them.

Yeah.

Right. So I'm not, again, not being critical. That's just the the natural inertia.

Yeah.

Of the world, and we are moving very, very fast in our industry right now, and the world's going to take a while to catch up.

Yeah.

When, when we were in London, I was meeting with some of the bankers there. We were talking to the Rothschilds, and they're like, you know, we have this century-long, um, timetable, and we don't move really quickly, and preference shares aren't really something that's used a lot in the UK. And I said, "Forget the preference shares for a minute. Is there an appetite for overcollateralized debt that pays 10%?" And they're like, "Well, of course." Right? So, of course, the appetite is there. You just have to get it packaged up properly, uh, in front of the right people.

Like, for example, bond. The reason that we didn't do it is because you can sell preferred in the US, and if it's a perpetual instrument, you can attach an at-the-market shelf registration to it. And if your goal was not to sell a billion dollars or half a billion of bonds, but rather to sell a billion dollars a quarter forever, if you wanted to sell billions of dollars a year forever, then you need to do it with a perpetual instrument.

Right?

And of course, a five-year bond's no good because in three years, the bond's almost about to be called. So.

And you'd have to liquidate the Bitcoin and give it back, which goes against the entire purpose of accumulating the Bitcoin. The reason that we don't use that kind of debt is because eventually there's a refinancing event, and you know, we wouldn't liquidate the Bitcoin. We'd want to refinance the bond. So we'd issue a new bond. But the point is, who wants to be beholden to the bond market? Like, do you want to issue, do I want to raise a billion dollars of capital every four years for the next hundred years? Because that's 25 deals.

Right?

And each one of them is a 2% fee. And so I'm gonna pay 50, you know, you're gonna pay $500 million in underwriting fees, or do I just want to issue the billion dollars once for the next hundred years and not pay the next 50% in fees? And not, and of course, the problem is not just the fees. The problem is the risk because if you get to a refinance point and there's a financial crisis or bank crisis, then the window to refinance bonds closes, and now you have to actually sell some of the underlying assets.

So, you know what? Speaking of the Rothschilds, if you read the history of the Rothschilds, they were very famous for selling, uh, consols, right? Which were, uh, British government sovereign debt issued, you know, from like 1760 on, you know, for 100 years. And they paid 3 to 5%. They were perpetual. They never came due. Par value 100 pounds. So if you think about what that is, that's actually just what Stride is or Strife. It's a, you know, what we did is just copied, uh, British sovereign debt from 200 years ago.

Yeah.

And it's very humbling to notice that the world went backwards. In my opinion, a $100 pound, a $100 par value in pounds that pays 5% forever, a perpetual instrument is a better way for the government of the UK to raise capital. It's a better instrument for an investor to hold. It would adjust the par value, adjust up above par or the principal adjust above par or below par depending upon the risk of the nation and the prevailing, you know, interest rate environment. Um, you never have to refinance it. What happened between then and now? We forgot. We swapped that for issuing five-year notes, three-year notes, one-year notes, three-month notes.

And, uh, and in the preferred market, we issue retail preferred, baby per-baby preferred, the par value $25.

Or institutional par value $1,000. I mean, is it not obvious to a schoolboy that a hundred is a better par value than 25?

Yeah.

Or a thousand. And isn't it obvious that having a perpetual thing that never comes due is a lot more elegant way to raise capital than having 19 different.

Yeah. You literally, if you look at US government debt, right, you have stuff coming due in March, in September, in April. Like, you've, you've converted a simple idea into 25 or 50 different tranches of individual securities that have to be continually juggled and traded.

Yeah.

You made it an accounting nightmare. You made it a tax nightmare. You made it a trading nightmare. What about that is better than the, the way that the British did it during the Napoleonic Wars?

Yeah.

You know?

Sometimes we have to relearn those lessons. Speaking of relearning those lessons, you've been moving fast and you've been pioneering this whole industry, obviously. And so, sort of MicroStrategy, which used the convertible debt, now strategy, which is maybe the 2.0 version using the ATM and prefs. You rolled out four prefs. You called Stretch, like the iPhone moment. It had this huge splash. You were oversubscribed, I think, 2.6 billion in the IPO, something like that. Now, looking backwards, is Stretch the perfect instrument? Or really, do we need all those different instruments for all the different people? And more specifically, my question is, if you were starting over, would you skip ahead to like a Stretch? And maybe Strike, being convertible, isn't the best instrument anymore? Real estate or Bitcoin? Which one's better?

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I think, um, we have provided the entire market with a roadmap with all those instruments. They can see how you can see how they all trade. You can see the vol, the way the volatility profiles come off them. Like, for example, uh, the senior credit instrument, Strife, is traded to a 10-ball. Uh, Stretch traded to about a 10-ball. The junior instrument is more like a 20-ball. Strike is more like a 27-ball. The equity is more like a 50-ball or something. So you can actually see that you can see the demand in each one of them. You can see the liquidity profile. Um, they all do serve different investor bases. So I don't regret having any of them out there. We will let the market decide what their appetite is for each of the four. I, I would say, you know, in terms of plan, what we know is we won't focus on convertible bonds or straight bonds, junk bonds, unsecured bonds. We won't do that. We will gradually equitize our convertible bonds as they come due. And then, uh, if I were giving advice to a new, uh, digital asset company, a new Bitcoin treasury company, if you will, I would say, you want to raise as much capital as you can. You want to buy as much Bitcoin as you can. You don't really want to have senior debt. You don't want to have, um, debt that has a lien on the Bitcoin. You know, you, in the ideal world, you might do a convertible bond, but you don't. But it's not clear to me that you should. Um, if someone wanted to buy a convertible bond from you while you're private, if they showed up with $200 million in cash and said, "I'll give you $200 million and you, and I don't want the equity, but I want a bond with conversion rights and a 35% premium." I might take that money. That's not unreasonable. Um, having said that, if you're already trading in the aftermarket, the reason to do a convertible bond is you want to raise a lot of capital in a hurry. But the way you're going to raise the capital is the person that buys the bond is going to sell that much of your equity in four hours. So if you sell a $200 million bond, you're probably going to create $150 million of selling pressure on the equity that day. And then the question you'd have to ask yourself is, why don't you just sell the equity yourself, right? And so, a lot of times people that have the convertible bond, they don't have an ATM. So if you don't, if you're crippled because you don't have an ATM, the convertible bond is the de facto, uh, you know, triparty ATM.

But you pay a price, right? You might as well just dump $200 million of your own stock on the market, not owe anybody.

Right?

The stock will take a hit.

They're going to do it anyway.

The stock will take a hit, but if you do the convert, the stock will take a hit, but you'll still owe the money, right?

You see?

Yeah. So I, I think that you could potentially skip that stage. And then, um, you know, if you take, if you take the perfect structure, here's, here's an ideal structure. You raise a billion dollars, you buy Bitcoin, and then you go to the market and you sell $200 million worth of Treasury preferred credit instrument, Treasury preferred stock like Stretch.

Yeah. Like if you just wanted the simplest possible. The equity is high volume, high performance, high risk.

And the credit is low volume.

So you have two tools. You have the common performance and the, and the preferred.

Yeah.

Right. And the leverage for the equity comes from the preferred.

Right.

And the collateral, right? And, you know, for the preferred comes from the equity sale and from the Bitcoin capital.

Right.

And then sell the equity to pay the dividend on the preferred.

Yeah. So that might be the best kind of combination to come out with.

You could very well build a hundred billion dollar company from scratch with one credit instrument.

Right.

Just, just you. So if you were to say, you know, what would I do? I, yeah, I would distill kerosene. You're like, is that a big enough market?

It's a big enough market.

Yeah. It's $30 trillion in the US. It's $7 trillion in Japan.

Must be $15 trillion. Right. Basically, ask yourself, what is the sum of bank deposits, money market accounts, treasury preferred, repo, short duration,

Yeah.

Treasury credit instruments in any given capital market. I would just, uh, what is the word? Like, skip all the intermediary steps and go direct to the answer.

Yeah.

And my opinion is, uh, kerosene is the answer, or in this case, treasury credit. A Bitcoin treasury company is in the unique position to create treasury credit, digital credit, digital treasury credit. And people are going to, they're going to endlessly torture you and say, "Well, why should the equity trade at a premium?" And the answer is because an operating company can create digital credit. An ETF cannot. And they're like, "Well, why would I," you know, a lot of, like, "Well, why would I just buy the Bitcoin?" It's like, "Well, I'm not selling to the bit to people that want Bitcoin. I'm selling to people that want 10% bank accounts."

Right?

Do you have a, do you have a bank account that yields 10%?

No, but I want one.

Yeah. Yeah. Well, why don't you just buy Bitcoin instead? But, but, and, and that basically tears apart the argument of the short sellers. Like, the reason that people aren't going to buy Bitcoin is they don't want Bitcoin. What they want is a bank account that's high yield. In, in Switzerland, they want 10% not 0%. In Japan, they want 8% not five, you know, nothing. In Europe, they don't, they want more than nothing. Right? So the beauty of just focusing upon that market is it's such a simple story.

Yeah.

It's like, I have a company. We own Bitcoin as digital capital. We use it to back digital credit. We're selling a credit instrument. Oh, what does it do? Oh, it pays you 5% more than your bank account. Do you want it? Of course I want it. Right? So what's the objection? The only objection is, is it, is the principal value stable? Right? How volatile is the principal? How risky is it?

Yeah.

If it's, if it's undercollateralized and volatile, you're not going to sell that much of it. If it's overcollateralized and stable, in theory, you're going to sell quite a lot.

Yeah.

Right. And, and just that simple. The largest IPO in of the year this year in the United States is Stretch. It's our IPO. You're asking why? Because it's the simplest, most obvious thing. I'm going to give you 10%.

Yeah.

The biggest ham.

10%, you know, strip away the risk and the volatility.

Yeah.

And like, well, I don't know what'll happen in the future, but I'll just park my money there until I figure out where what gives me better than 10%. That's the idea.

Yeah.

And it's a very simple idea, and you can test it. Just go walk down the street and ask a hundred people, uh, would you like a stable investment that yielded 10%, you know, tax-deferred?

Yeah.

And like, of course I would. And it's a question of, do I trust you? Do I trust Bitcoin? So you reduce the entire thing down to, is Bitcoin, am I trusting Bitcoin as the basis, you know, and do I trust the company?

Yeah.

And it's kind of like, hey, I have this penthouse apartment, you know, in an island city, you know, and it's beautiful and it's free. Do you want it? And the question is, well, is the island going to sink underneath the ocean? And do I want to live there?

That's Bitcoin. Is the granite solid?

Yeah.

And then, oh yeah, who built the building? And then do the elevators work? And.

Do I trust them?

Yeah. Do I trust, you know, do I trust the neighborhood? So, if I get comfortable with the company and get comfortable with the local, then of course I want it. It's better than my current situation.

Yeah.

So, it's, it's a very straightforward, constructive thing to focus on. The, the trust piece was the one I was thinking about. If maybe the Stretch one takes more trust, and so a Strike or Strife might be a little bit less trust, so maybe as a new company, easier to roll out because they're a little bit more senior in the stack, build some track record, and then roll out the Stretch.

I don't think so, to tell you the truth. I've thought about it a lot. I mean, to be honest, uh, we did Strike because it was the first thing we thought to do.

And it, it felt like a perpetual convertible bond, and we were bootstrapping it with existing convertible debt investors and existing equity investors, you know, and we didn't really have a big base of retail or fixed income investors. That's why we did it. It was a gateway product.

Yeah.

And it's got a role. But, and then we did Strife because it was the next obvious thing we thought of. We, we needed a perpetual instrument, and we didn't, it didn't occur to us we could do anything variable. So we did the perpetual 10% because that's what we could sell. And then after we did it, we did Stride because we thought, well, if we strip away the cumulative rights, then this instrument potentially gives us unlimited leverage risk-free. Like, we could, in theory, sell a hundred billion dollars of it with no credit risk.

Right?

So, you know, why not? And because we'd already sold Strife, and Strife and Strike were already successful, they'd already traded above par, it wasn't a hard thing to sell the identical instrument at a 30% discount to the thing that people already owned, right? You see?

Yeah.

We did Stretch because we ran into a bunch of other headaches trying to, trying to globalize the first three. It's just the lawyers are slow, the regulators are slow. I thought, what can I do in the US market which is not, uh, going to cannibalize those? I thought, well, I'm on the far end of the yield curve. Let's go to the short end of the yield curve, right? The short end of the duration curve. So we kind of stumbled on it accidentally. And then as we iterated through it, we realized that it really was, you know, a better product, and that's what people really wanted. So a lot of people that were buying the other instruments, they were buying the high yield, but they were getting the duration, not because they wanted it. They wanted, like, "Do you want the 12% with the risk that that the principal will move up and down, or you just want 12%?"

Right.

"I just want the 12%." Right. See, so they were buying it, but.

They were stomaching the volatility because they wanted the yield.

Yeah. Yeah. You took the delta, you took the V, because you wanted the yield. So with Stretch, we stripped away the delta, stripped away the V, kept the yield.

Yeah.

And so I think that it's a simpler product. It's, you know, look, it's a bank account. If you put in $99.99, you'll get back down to the last penny. With a money market, you know, you expect to get back down to like one significant digit past the decimal point or something very close. May not be the last penny, but it's, you know, plus or minus, you know, a small rounding error. With a product that's a preferred stock that's trading, you know, you're not looking to get to the sixth significant digit or the third decimal point, but, um, you want to be plus or minus, you know, 10, 20, 30, 50 basis points.

Yeah.

You don't want to be varying by one or two percent. You want to be varying by fractions of a percent. And what you offer in return is, okay, I'll give you 5% more yield. And, and that is just slightly more, it's, it's more flexible than a money market. And you got to go into that. It's not a money market. You got to go into it with your eyes open that that money markets are trying not to break the buck, you know, at all. But, uh, on the other hand, you're targeting something that pays double.

Yeah. So the yield's going to make up for that long.

So how, you know, we're, we're giving you a competitive money market that pays double. That will get everybody's attention. That's a simple discussion. Also, I mean, the truth of the matter is, it's easier to judge whether it's successful or not. For, for example, you know, Stretch has marched from 90 up to 97 and some change now, and, you know, the target is 100. And when it gets to 100, you know, if it were to jerk up to 105 or down to 95, you know, it's not working. But if you look at Strike, or you look at Strife, those things could tra-if if the interest rates fall 100 basis points, Strife could trade up 10 or 20%. And that, that's not because it's failing.

Right?

You know, and if you, you know, when Jerome Powell gives a speech and says, you know, "I don't, I don't really think we're going to lower interest rates as fast," you know, so Strife trades down three, four, five dollars, ten. It could trade quite a bit because of what Jerome Powell said. That's not a failure of our instrument. You see?

Right. But you understand how much more complicated it is to explain that Strife reacted, uh, rationally to the forward yield curve expectations.

Right. Whereas with Stretch, I don't have to. With Stretch, everybody knows the mission. It's like, we're pegging it to be between 99 and 101. Like, we're targeting for 99 to 101. And the way you'll know that it's in the range is where it's between 99 and 101. Yeah. Right. And when you.

Success is defined.

Like, my, my goal for Strife is I want to see it trade to 150 or 200. Right? You can imagine a world where Strife is way overcollateralized. The risk-free rate in the US is 2%. We have a 300 basis point credit spread. Strife trades with an effective yield of 5%, which means it should trade at 200. You see?

That's success for that. But you understand how much more complicated that is.

Right?

Because what if it gets to 200? Well, we're going to be paying an effective yield of 5%. We'll be selling at 200, but now what happens if you buy it at 200 and interest rates get jacked 2% and it trades down to 160? Did it work? Yeah, exactly as designed. Is some, is a retiree going to be irate? Yeah. Like, wait, I, I got 5% more, 3% more, but it traded down 20% or something, and that's not what I signed up for. Do you understand that looks scary?

Yeah. Those long duration, high delta, high high duration, high delta instruments look scary. They're very exciting for people that are professional investors. But we're, we talked about the iPhone moment. I mean, it's, it's, maybe not even the perfect metaphor. I mean, the perfect metaphor is a comfortable retirement. It's like, you pick up the phone and call your dad and you say, "Hey, Dad, you know, you have some capital in your 401k. You put in a Stretch. It was paying you $32,000 a year. You put in a Stretch, it's going to pay you $125,000 a year. What's the risk?" "Okay, well, there's no risk."

Yeah.

I mean, there's risk, you know, of a security, but the point is.

You know, it looks like it's 8x overcollateralized or 5x overcollateralized, which is more than investment grade companies offer you, right?

So, it's investment grade comparable risk.

Yeah.

If you believe in Bitcoin. If you hate Bitcoin, Dad, don't take it.

Yeah. Yeah.

But if you think the Bitcoin is okay, I can jack your retirement income from $30,000 to $120,000 if you do this.

Yeah.

Well, what do I have to do? Nothing.

Just buy it in your equity or brokerage account.

You know, like a lot of 80-year-olds don't use an iPhone, right? A lot of senior citizens have a hard time using technology. No one has a hard time collecting a pension. So what we're really talking about is creating a living stipend or creating an annuity or a pension. And so what's the offer is like happily ever after to its social security. That's the product for how many people? Like a billion? Like everybody, right? It's, it's basically social security and living happily ever after for a billion people. What do I got to do? All you got to do is just A, understand Bitcoin and trust it. And then B, you got to trust the company or the security that you're buying. But once you get over those two, those two barriers, what you get? It's like, how many people would like their salary to go from $30,000 to $100,000 a year?

Everyone.

You. So you understand why I would say that's the simplest product to sell.

Yeah.

Because it's like the other ones lead you down a path of explaining conversion rights and delta and duration, interest rate risk, and it's just, you know, and, and what happens if the central bankers say this and do that, and you might get this boost, but you might not get that, and it's like, it's a lot more complicated.

And if you create something which is simple, that means you'll sell 10 to 100 times as much of it, right? But if it's 100 times as much you sold, it's going to be 100 times as liquid.

If it's liquid, it means you get in and you get out, right? So, what we're trying to do is that means there's less volatility. So, at the end of the day, the simple universal product that everybody needs, that's the most liquid with the highest AUM, you see, my, my criticism of the preferred stock market and the corporate bond market is, is they were never trying to create good credit. It was always crippled credit. It's like, there, why doesn't a big bank have a hundred billion dollars worth of a single preferred instrument with a four-letter ticker that trades five billion a day with a bid-ask spread of a penny? Because, because they never really wanted to create a good credit instrument. They, they created, you know, 97 tranches of rolling debt issuances. It's, it's a traditional market, an insider game they play with themselves. There is a, a set of traditional investors and a set of traditional bankers and a set of traditional issuers and a set of a traditional mode, and they're all basically, they're going through this hyper-inefficient process. Whereas when we created these instruments like Stretch, you know, ask me what I want. I want to sell $50 billion of it. I want, I want $50 billion with two billion, three bill. I want it to be the largest, you know, outstanding preferred stock issued in the history of the world. And already these four credit instruments, they're already the most liquid preferred stocks of the century.

Yeah.

And that's in the first few months of their life. Imagine what happens three to five years from now after we've actually sold via the ATM every single month.

For the next 36 months.

Yeah. The difference is, as you said before, like Boeing, they're taking debt to build their product. And so a bank or Boeing, they're not trying to make the credit. It's not the product. So it's not attractive. Whereas you want to sell the credit as the product. You're trying to make it to reach the biggest addressable market. And if you look at in the developed world, we have 250 million retirees, right? And they all want the yield with no volatility. So the TAM, the total addressable market is massive. As you've explained, the profit margin for you to create that product is also big. It's simple. The market's big. Um.

You see what breaks people's brains though? Because they think of credit issuance as a means to an end. And the end is tax arbitrage at Apple. It's, it's, uh, you know, leveraging Microsoft stock, right? If you look at all the big, well-run companies in the world, they're solving a tax issue, a shareholder rel-they're trying to improve the quality of their equity or their EPS performance, or they're, or they're building airplanes, or they're building buildings, or they're developing skyscrapers, right? It's, it's a means to an end. Or it's like the bank is, they're not bragging about issuing the world's greatest preferred stock. They did it because they have to for like tier one capital, mezzanine capital allocations so that they can make commercial loans so that they can do something else. Right? So, what we stumbled upon in the Bitcoin treasury business is we just realized that if you were the first well-run company that actually thought of credit as the product, then the killer application of Bitcoin and the killer application of capital is to issue credit. And the killer application of Bitcoin is to issue digital credit. And now, if you look at, at these things that were languishing, any public company in the US can issue a preferred stock. Most just choose not to. When's the last time you bought a preferred stock from Microsoft? Microsoft, in theory, could give you a 10% yielding preferred stock, but could you imagine discussing that or pitching it to the CFO? They're like, "Are you out of your mind?"

Yeah.

"Why would we do that?" Right. And so most companies in the US, they could have, but it was never really a means, it was never strategic to them. Uh, the ATM was developed, I think, by Michael Milken many, many years ago, the at-the-market shelf registration. But, you know, if you were to go to Microsoft or Apple or Google or Amazon or Meta and say, "Hey, what do you guys think about selling your own equity?" They're like, "Are you out of your mind? We buy our equity. We don't."

The money. Yeah.

"We have no use of the money. We don't have a use of capital." Okay. Well, you could issue credit instruments, but at the market. Well, we don't want to issue credit instruments. And so what we did is we took existing ATM, applied it to a preferred stock, paired it with a radical different view toward treasury capital. We inverted the company, inverted the balance sheet, inverted the business model, right? We're selling credit. That's literally what we do. Credit is the product. We create it. We engineer the product, right? Then we issue the product.

Yeah.

We use the proceeds to build the capital structure, which then thereby boosts the performance of the equity. Right. The, the elegance of it, it really is a symmetric thing of beauty. We're selling US dollar yield, USD yield to create BTC yield.

Right?

That's the swap, right? The equity investors value the company based on BTC yield, the appreciation of Bitcoin per share. Credit investors value the credit this, the credit security based upon USD yield. And so just swapping a fiat yield, a, a yen, a euro, a US dollar yield for a BTC yield with the Bitcoin as the collateral in the middle is the business, you know? And the, and the skeptics and the cynics, they choose to be strategically ignorant, you know. It's like, like a, a hater. I, I don't want to understand the business because I might have to agree with you. So, if I've already decided I hate you, I don't want you to explain why what you're doing is going to save the world or help anybody or or help the shareholders. I just don't want it. No, I'm going to choose to stick my head in the sand and be ignorant. But, uh, but if you're more open-minded about the entire thing and you just embrace the idea that this is a new kind of company, a, a new, it's not a bank because it doesn't, it's not regulated. It doesn't take consumer and commercial deposits. It's not that kind of bank. It is a financial kind of company, right? And it's a new form of company. There are banks, there are insurance companies, etc. So a treasury company is a company that issues securities in order to acquire capital. Now, a commodity, really, you're issuing securities to buy a commodity. And if you pick a commodity that happens to be scarce, you create a, a very powerful feedback loop. Work through your mind. If I, if I do this on Bitcoin going up 50% a year, I can easily pay 10%, capture the 40% spread. That is an amplifier.

If I issued the credit to buy soybeans.

Yeah. Without the car. Doesn't.

Yeah.

Or natural gas or crude oil or some other, you know, commodity that returns 3, 5%. Anything less than the cost of the credit, then I've run the feedback loop in the opposite direction. I'm destroying capital as fast as I can. The business is not really much more complicated than that. It's just no one's ever seen it before, which is why people just have a hard time getting their head around it.

And if they don't believe in Bitcoin. Now, you've talked about the different preferreds and how even just one could work and it gives you leverage. And in the, in the last quarterly report, which are brilliant, by the way, you're changing the industry with that. It's great. Um, you showed several slides of this Bitcoin factor, which is like this amplification of Bitcoin. And so, by doing the preferred, you're adding the leverage, which then over time, use a 10-year window, it can give you a Bitcoin factor of 2.8 to, right?

You know, five, six, whatever. Does that number sort of relate into this MNAV number over a long period of time and sort of justify or show why that MNAV number should be greater than two or three or four?

Yeah. So if you think about, think about the value of the equity over and above net asset value. Um, if the company did nothing, if it just bought Bitcoin and held Bitcoin, um, forever, it starts to look like an ETF. Probably it trades around NAV.

Right?

Um, the way that a company generates a premium to NAV is primarily through credit amplification. So if a company can generate say, 30% leverage, then it's going to create an amplifier because you can see systemically, I issue a billion dollars of a preferred stock paying 10%. I buy a billion of Bitcoin, right? If, if I've, if I own a billion dollars of Bitcoin already and I was able to do that trade, I'd have $2 billion of Bitcoin, no additional common stock outstanding, you know, so you end up with 50% leverage on that. So you start to generate amplification. Now, there, we have models to calculate how accretive that is. How does that contribute to Bitcoin per share? And it turns out that, um, it's more accretive, uh, but this won't come as a surprise. It's more accretive if the cost of capital falls. For example, raising the $10 billion at 5% instead of 10% is more accretive, right? Raising it at 1%. Imagine borrowing a billion dollars at 1% and buying Bitcoin at that returns 55%. You're capturing a 54% spread, right? So the spread that you're capturing is a function of your cost to capital. So the lower the cost of capital, the more the amplification. The higher the leverage, the more the amplification. The faster, if, if you did all that, the Bitcoin went up 0% a year. It's not terribly. You don't get a lot of good amplification, right? So if Bitcoin goes up 50% a year, right? Uh, that's more amplification. So the rate of growth of Bitcoin, the AR of Bitcoin plus the leverage plus the cost of capital, all those are primary factors that drive the amplification. Then, as a rule of thumb, you know, we kind of calculated that, you know, assuming Bitcoin appreciates 30% a year and we get 30% leverage, then we should be able to get a 3x BTC factor, or we can accumulate three times more Bitcoin per share over a 10-year time frame. So you could imagine an MNAV floor of three, right? Makes sense? Or, you know, how, what do you do in percentage? Or you do that a factor? And, you know, for when you're evaluating a company, the question is, how high can they take the leverage? How much is it going to cost them? There's second-order effects like credit risk, right? So I'm describing a perpetual instrument, never comes due, there is no credit risk. There, but if you were, if you were achieving that leverage with a six-month loan,

Right?

Yeah.

Right. You can go on an exchange and you can actually crank up the leverage to three or four or five,

But the duration is instant, right? You get force liquidated overnight. When we're, when we're managing the business, we're constructing credit amplification in the most intelligent way. And of course, in my opinion, uh, the least risky, most intelligent way to create credit amplification is through publicly issued preferred stocks that are perpetual.

Right.

Right. For the obvious reason, you never refinance them. The principal doesn't come due. And so the risk on the principal is di-minimus. And then the dividends, you know, are are subject to the approval of the board of directors, and the company can suspend the dividend or delay it for a time under financial duress. And so the, the coupon risk is di-minimus, as well as the principal risk. The opposite extreme is a one-year senior loan. Pledge the collateral of Bitcoin. Pay off the principal in one year. And pay interest every month as a coupon. Miss the interest in a month, you're in default. Miss the principal, delay it, you're in default. Miss the principal, you're in default. And the collateral gets ripped away, and the entire company collapses. Right. So intelligent leverage, unintelligent risky leverage, right? You want to go for one, not the other.

So you think it sets, in in that example, and as you said, there's three different factors in there, but that's sort of in that, in that example, that sets an MNAV number about a three times.

When you look at other asset-heavy companies, banking, insurance, oil, they kind of trade in that one to two times. But you think because this is not oil, as an asset that's got this 50 times or call it a 30 times, um, CAGR over this long period of time, then.

I, I would stop there and I would say MNAV is just price to book value. Okay. Well-run banks trade at a price to book north of two. But what is Microsoft's price to book value, right?

It's like 20.

Sure.

10. So a lot of companies trade at a price to book five, six, seven, eight, 10. Right? Like they, they have very productive capital, right? They have huge leverage on it. Right.

Right. So MNAV, an MNAV of three is just a price to book of three.

Right.

So, you know, how do you get there? There, it's, it's simple to figure out how you get there. For example, if you have, um, $10 billion of Bitcoin and you sell $10 billion worth of Stride STD, you would have a leverage factor of 50%.

Right.

No credit risk.

Yeah.

Right. Right. So, you'd sell another five of Stride, right? If you can sell it, right? This all comes down to not should you.

Can you?

Can you?

Yeah.

Right. Not should you, and, and if you do, you will get there. Right. If, in that particular case, it all comes down to what kind of credit can you issue and, um, and under what terms and how rapidly?

So at 50% leverage with no credit risk, I mean, then there's a five times, right?

Yeah. You could get to have a five, or you could be priced to book a five, right? But, but ask yourself the question, how do banks get to a price to book more than one?

Leverage.

Right.

Right. By, why do preferred stocks exist at all? So banks can generate leverage on the common.

Yeah.

Right. And so everything I'm describing is, is not, we didn't invent that.

Yeah.

There's 5,000 banks in the country right now. There are 25,000 banks a hundred years ago. Thousands and thousands of banks and thou, you know, all sorts of finance companies. They generate intelligent leverage using various, um, various tiers of equity capital.

Mezzanine equity, preferred equity, senior preferred, junior preferred, little bit of debt, and then they got common equity. Then the question is, so why, I mean, why does your favorite bank have to issue anything at all? They're the bank. And the answer is because they're actually creating equity on the, they're generating leverage on the common.

Right?

That's all. I mean, JP Morgan, all these, they could basically pay off all their debt if they wanted. But the point is, they're, they're trying to create leverage on the common to give the common stock value. So the only difference is they're not really strategic about their, not trying to make their credit instruments the best in the world and brag about it and make them homogeneous and transparent.

We are.

Right.

Right.

Yeah. They're trying to set the terms for them. You're trying to set the terms for the customer. So, it's like a different, different.

Different product there. You talk about, um, the common. I remember in Prague, you talked about, you gave a vivid example how, um, how MSTR trades as a volatility to Bitcoin, and everybody wants it to trade volatility to Bitcoin. And you gave this example that if God came and spoke to you tonight and told you the market was going to crash tomorrow, and you woke up and hedged your position and the market crashed, but MicroStrategy didn't go down, that'd be great. And you said, "No, that wouldn't, because the market expects us to move."

Right.

With Bitcoin. And I, and I think you were trying to explain to us during that, during that, is that sort of when the company is lean and sort of stripped down, it can trade volatility to Bitcoin. And so I'm curious, your take on sort of then, um, having like that pure play, um, company versus a company that's like an a big underlying business, um, that has a Bitcoin, um, treasury, and how that then maybe, maybe potentially takes that common away from really being used like in the ATM. Sort of almost neutralizes that part of the tool.

Yeah. So, you can have an operating company, uh, that has cash flows that uses Bitcoin as a treasury asset. Um, if it's a retailer, if it's a utility company, a power company, a water company, a, you know, fill in the blank software company, the world's full, every one of the Mag Seven companies. The world's full of companies that have good businesses that generate cash flows, but they have a defective treasury strategy. All of those companies have a treasury which is not generating shareholder value. Right? If, if you take a billion dollars and you buy, uh, money markets with it, they yield 2% or 3% after tax. And if the S&P is generating 14%, then you've underperformed the cost of capital by 11%. Therefore, your treasury is a cost center, not a profit center for the shareholders. And so what happens is the, it shrivels up. The company basically decapitalizes the balance sheet and they give all the money away. And that, it just describes in a nutshell every well-run company in the United States, right? Except Berkshire Hathaway. Uh, every everywhere else, like, uh, all the Mag Seven, what they do is they defund the treasury. So, if you're one of those companies, you could just replace money markets with, um, well, you could replace it with Bitcoin instead. And Bitcoin is 50% or le-20-year forecast is 30% if you're a believer, 20% if you're an investor, 10% if you're a skeptic, right? But whether it's 10 or 20 or 30%, they're all better than 2% or 3%, which is the status quo, right? So if you're, if you're in the 20 or 30% camp, it, it outperforms the hurdle rate, which is the S&P index. And so at that point, the treasury in the balance sheet becomes a profit center, which means that you would stop paying dividends. You would stop doing buybacks. You would roll it into Bitcoin, and the company's market cap would grow faster, and the stock would grow faster. Right? So that's a way to create shareholder value. You won't be better than us. You won't be better than a pure play treasury company, but you'll be better than your peers. Right? Like, if, if you're a native business, your organic business is growing 10%, you'll go 13%.

Right?

Right. If every other retailer is losing money, you'll make money, right? Um, what we've done is created a pure treasury.

company. So our risk, our risk-free rate, our hurdle rate is 30%. That's what I expect out of Bitcoin over the next 20 years. 29%, but let's call it 30% round up. So my my uh benchmark rate is 30%. If I put leverage on it, I should be able to grow 50 or 40. There's I don't think there's any non-financial company. There's no there's no physical company that's going to actually appreciate at that rate because you can't do it with real estate or oil or natural gas. The investment cycles are too slow. You know, the the development cycles are too slow, the risks are too ineffable, etc.

So I would say across thousands of companies, every company ought to recapitalize their balance sheet on Bitcoin because that will cause them to grow 50% faster than their peers or than they would otherwise. They'll just be better and that compounds. Yeah. Yeah. So, a billion-dollar company will be worth $10 billion instead of $2 billion in a decade. Okay. If they were a pure play, they might go from a billion dollars to a hundred billion. They won't do that, but that's not their bogey. And and the truth is they probably can't get political consensus to change their retail or to sell the retail business and become a pure financial company. That's probably not going to happen. So I I just think uh it's not a bad idea, but your expectations ought to be adjusted based upon the enterprise value mix, right?

>> Yeah. >> Like if Microsoft bought a hundred billion dollars of Bitcoin tomorrow, 98% of the enterprise value would still be indexed to the software business, right? >> Yeah. >> If they bought a trillion dollars of Bitcoin tomorrow, they'd still be 75% indexed to the software business. So you can't get to 100% digital exposure unless you actually start with a clean balance sheet. >> Yeah. Starting with a clean balance sheet. So it seems like for the new crop of companies that are starting up in micro strategy when you raise the convertible debt then you had the debt to cover. So then there was a lot of questions in the industry about how you cover the debt. What's the underlying business model? But in sort of the strategy 2.0 version >> skip that. >> If you could just go raise a billion dollars of Bitcoin and start issuing preferred >> doing it again. I'd raise a billion dollars. I'd take the thing public >> and then I'd sell 100 million, 200 million, 300 million worth of preferred stock as soon as possible. >> Yeah >> and then I would rock back and forth between levering, delevering the thing. And I would grow it with the minimum most elegant set of credit instruments. Like if you look at expansions for us right now, stretch seems like the killer product in the US. Maybe we do the same thing in yen or euros or Canadian or pounds, right? But but otherwise there's nothing else that's all that exciting, >> right? I mean, and even those things are much less exciting than just growing the business in the US by a factor of 100. >> Yeah.

So speaking of that, then in New York, you had talked about the potential to have a thousand of these companies. Um, >> yeah. When you think about if it's just as simple as just selling that one product, can there be a thousand companies selling that one product or is it that there's going to be a thousand companies each doing their own variations? Some are like more like in insurance companies, some are more like banks. We have 10 major banks. >> There's a lot of products. >> There's thousands of regional banks, but there's like 10 major banks. >> Yeah. So, I think there's huge amount of how many insurance companies are there in the world? >> A lot. How many life insurance companies are there in the world that sell essentially the same exact product, >> right? >> Like more than a dozen, >> right? And they're completely different than banks. >> Yeah. >> Yeah. How many car insurance companies, right? How many DNO insurance? How many reinsurance companies? Like, so off the top of my head, products, the obvious ones, you sell treasury credit in every country in the world. Brazil, Argentina. Look, you won't be better than a US company, but you'll be better than every Argentine company, >> right? The Brazil, you know, Brazilian treasury company, it won't be as good as as the US one, but it'll be better than every country in Brazil. And by the way, in that way it may become better because if you're this if you are the most compelling, fastest growing company in Brazil, then aren't you going to slurp up all the equity capital and all the credit capital in the entire country, >> right? >> Which is like which is interesting. So you can do this um there's place to create um a treasury company in Switzerland. Uh the 26 country is it 26 or 27 countries in the Euro zone? They're all different. There's a German one, a French one, a Swedish one, a Norwegian one. You can do, you know, Netherlands, Belgium, UK, Ireland, Spain, Portugal, Italy, right? You know. >> Yeah. and and uh then Japan, Korea, >> Dubai, China, Abu Dhabi, >> China, Kingdom of Saudi Arabia, India, Australia, Canada, >> Mexico. Okay, so there you could just be the first provider of digital credit, right? And maybe you sell kerosene, you sell stretch, but then maybe you also sell long duration credit or convertible credit or whatever. But then let's I've just broken it down geographically, but then let's come back to the US and break it down by industry sector, right? You could be the one that specializes in insurance or or feeding the insurance company or you could create a a credit product that's like a reinsurance product, right? You could you could create various credit part products that are tailored to the life insurance, the annuities, the you know every other type of insurance, you know, flood, casualty, property insurance businesses. Um there are a lot of buyers in the market, fixed income buyers, they just will not buy prefers no matter what. They'll want to buy bonds. Okay? So I I don't want to sell them because it doesn't make sense for me. But if you were saying, "Mike, I got 10 billion dollars. I want to compete with you and and I want to grow just faster. What niche should I pick?" I'm like, "Well, I'm I'm not going to do 10-year bonds. Why don't you just do what I did, but raise $10 billion and issue a billion dollars of bonds? It'll do do 144a offerings, not compete with me." By the way, the market loves them. >> Yeah. >> Start to do basically over-the-counter institutional bond offerings. And the debate is, do you sell five-year instruments? I'm going to sell five-year secured bonds and I'm going to roll them every quarter or I'm gonna say, you know, you could go and and do the convertible bond market if you want or you could do unsecured or you could do secured. I'm like, Mike, I found like the biggest insurance company in the US, they don't want the preferred, they don't want the converts, but they would take senior debt as long as it's they've got a claim on the capital for up to 20% of the capital structure or whatever. >> Yeah. and uh and they have hundred billion dollars they'll give me. Do you want it? I'm like no, I don't want it right now. It confuses my story, confuses my investors. It puts credit risk senior to all my other instruments and that kind of is not good for my capital structure. But should you take it? Absolutely. You could probably take a hundred billion dollars. There's probably a hundred billion dollar senior debt thing. Hundred billion dollars of junk unsecured. is hundred billion dollars or 50 billion to take out of the convert market. You could probably write all sorts of custom instruments for the annuity industry, the insurance industry. And guess what? None of that's going to be interesting to the Japanese insurance companies, >> right? >> They're going to want different. So when you say what are all the products, I think the products are if there's $300 trillion of credit instruments, I think the products are every possible currency, every pos. By the way, we can say euro, but you know, French bonds and euros aren't the same as German bonds and euros, right? So, it's like every type of currency, every uh jurisdiction, every type of credit, every flavor of credit, you know, we issued a lot of things that you know, and then every distribution channel. Do you do you go public on that exchange? Do you do direct to institutional sales? It's not clear to me. For example, we couldn't do something where we just like roll 10-year bonds and just, you know, it's like, how do you handle the credit risk? Well, just every year we'll refinance 10% of them. We'll never have more than 10%. Or maybe I'll just refinancing them every quarter. I'll never have more than 2%. 2 and a half%. You know, so there there are other credit products that can be created. There are other buyers. They're investors, right? But then again, there's also corporations that would bypass. So like the pension funds and the insurance companies would get you could go direct to them and open up a pipe. And then there are all the bond traders and the pimos and the vanguards and the fidelities of the world and and indirectly the pension funds and the endowments are behind them. Right. >> Yeah. So, you know, you might be able to create the perfect product for an endowment. It's like, well, we like Bitcoin, but we don't want we can't stomach the volatility. Can you just give me uh a 10% guarantee? And then and then there's issue of liquidity, like, well, we would give you $10 billion, but we need the right to redeem 500 million in any given quarter direct from you. Like I wouldn't do that deal like for my company because it's complicating for me, >> but you might do that deal if the choice was have a hundred billion dollar company and agree to create $500 million in cash on hand or not. >> Right. >> Right. >> Yeah. And and by we haven't explored that but but there's a lot of there's a lot of you could create a quasi money market instrument where you actually you know allocate kept 5% of all the capital available for ready redemption on a daily basis and then you you know how funds they'll create gated redemption windows like you're investing with me for seven years but once a quarter you have a one day when you can give me rede you can call you could put you could put call options and put rights or redemption rights into a preferred stock. I haven't. You could. >> Yeah. >> It's a different product. >> You know, some people like polyester, some people like Lycra. >> Yeah. >> You know, nylon. >> Yeah. >> Right there. There's a lot of things you can do with carbon, hydrogen, and oxygen. >> Yeah. And not everyone's going to want to do all those things. In the US, we have almost 5,000 ETFs that are each just a little flavor of something, right? Thousands of bonds. >> And a lot of it's a question of what can you market more like what can you sell? >> And what I think that is there'll be a Cambrian explosion in digital credit issuers and there's a you know you're like well, isn't that a lot of stuff? Well, have you ever studied the mortgage back security industry? You know how many things people created? Yeah. I mean, there's hundred hundreds of thousands of credit instruments, maybe millions of credit instruments, and you know, start to go online and figure out every possible twist and turn of every credit instrument. The average person can't even name the top five categories, >> right? >> Or top 10 category. So, there's an industry there. The beauty is the beauty is there's a um there's a methodology or a distribution channel to figure out whether your idea is a good one. Like you create uh a security and you go and you offer it and it's a two-day road show or a one-day road show and the investors are either going to buy $250 million of it in one day or they're going to tell you we don't want any of it. It's very so you can create billion-dollar product lines in uh a conversation with the investors in a 144A offering. How many consumer products that are a billion dollars can you create in two days where you know for certainty it's going to work? Yeah. So I so I think that the capital markets are primed for innovative digital credit issuers to go and create dozen different interesting compelling things. Like you you might not come up with the thing they want, but you won't spend more than a few days finding out. And uh you know in the real estate business, people create a billion dollar building and no one wants to lease it and it takes five years and they lose a billion dollars. >> Yeah. That's never going to happen with a digital credit instrument. >> Yeah. You can essentially sell it before you build it. >> Like we're literally building it in real time, >> right, >> Mark? Like we're open for business every day with four credit ATMs. If someone hit the bid and wanted to buy $500 million in a minute, we build a building in a minute. Yeah. In 60 seconds. Trade is done. cash change changes hands. We create the collateral. We bought the Bitcoin underlying that day. Sometimes we're we're literally selling 50 million an hour or 100 million an hour and buying the $100 million of Bitcoin the same hour. Like we could do a billion dollars of capital raising in a day and we might have 20 million of exposure at 400 PM. And by 5 or 6 PM we're fully done. >> The investment cycle is a thousand times faster than technology, real estate, oil and gas, anything else you've ever seen before in your life. And maybe the more profound idea is think about all these other credit instruments. You know, what's backing corporate credit? What's backing mortgage credit? What's backing bank credit? what's backing all the, you know, all these things. If you sell a billion dollars of mortgage back securities, who's going to build a billion dollars worth of real estate that someone wants to rent and how long will that take? So, this is a a profound new idea and and uh that's why those digital credit issuers can grow so fast.

Man, you've explained it so well. I'm gonna I'm gonna wrap it up with this last uh question here since we're here in Washington DC in the nation's capital. Um at the at the keynote you just gave earlier. I love the way that you closed it down. It was like this empowering message of sort of telling people like this amazing opportunity that we have right now. The winds have shifted like now is a time for those that want to embrace digital intelligence and digital capital is kind of how you said it. In New York, you had uh said, I want to push back on the fix the money, fix the world narrative and because it was like in order to succeed, we have to go fix the equity and fix the funds and and fix the bank. So, we need to go build the world that we want. And so, I'm just curious while we're here in DC thinking about Bitcoin policy. How do you think we should be sort of fixing that in this political environment? More of like a constitutionalist. We're sort of trying to get them to sort of pass laws that sort of protect us or are we are we pushing for regulations that give us clarity and direction?

>> Well, I think the good news is Bitcoin has already got the best regulatory treatment of any digital asset in the world and has right. It's it's globally recognized as a digital commodity and property even in China. In China, where crypto trading is illegal, where crypto mining is illegal, Bitcoin mining is illegal, Bitcoin holding is not illegal, and Bitcoin is represented, is recognized by the courts as digital property as property. You can own it. So, we're already starting with a good place. Um, if your business model is digital credit, we've already got pretty well-developed credit laws. Um, the US has the most advanced rule. So if you're a US company, you could get there are a thousand ideas like I just gave you who knows how many >> different ones. There's a thousand things you could do starting with Bitcoin in a public traded company right now. You don't need any regulatory changes. You don't need any new laws. You can go at it. If you're a Bitcoin treasury company outside the US, look, the Swiss are a bit behind on some things. The Europeans are slightly behind on they're slower on ATMs. The Swiss are slower on preferred stocks. the Japanese are a bit slower on this and that. So you have to go and lobby those regulators and those politicians to upgrade and update their their exchanges, their regs. Sometimes the tax code is prejuditial. You know, like in Japan, the taxes on Bitcoin were much higher than the taxes on equity. So any company has a responsibility for advocacy on behalf of its investors, you know, and on behalf of its constituents. We think about what's good for the credit buyers and we think about what's good for the equity holders, right? And we think about what's good for the world and what's good for the United States. And we only advocate for things that are good for everybody, right? There's the thing is there are no losers here. Except the 20th century antiquated oligopoly that is selling inferior credit instruments. So it's like you just invented the car and there are a lot of horse and buggy manufacturers that are going to be out of a job and if you feel sorry for them, no one's getting cars. And we've got the atomic powered flying faster than light hover car. And yeah, there's a lot of people selling antiquated crappy vehicles and no one's going to want to buy them anymore, but that's technology. The human race has got to move forward. So, so if you're offering digital credit, digital capital, digital equity, it's a better thing. And and ultimately, you're feeding the 400 million companies. Look, every for every company that can't sell a crappy credit instrument, their treasurer can buy our credit instrument and get triple or quadruple and maybe that'll save the company, right? So, yeah, there's technology that's putting you out of business all the time and then there's new technology that will make you a fortune and put you in business. If you're a critical skeptical keragin, you just focus on the negativity and you're just negative on everything. I hate that. I hate that. That's bad. I hate that. I don't want to change. And if you're constructive and cheerful and if you're an optimist, you're like, well, I won't be, you know, my eight track take collection isn't that valuable anymore, but I do have unlimited free streaming music. >> Yeah. >> You know, and I I guess, you know, I lost a little money invested in whatever record stores, but I also bought some Apple stock and made a fortune, right? And and I would say all these corporate operators their job is you know look at the you know anticipate the future look at the past move forward do it in the most graceful civil responsible, you know elegant fashion you can. Right? The world isn't the way it was 100 years ago. It it won't be this way a 100 red years from now. That's the human condition. If there were if there wasn't work to do to move us from the past to the future, you wouldn't have a job. There'd be no reason to get up in the morning. There'd be nothing to get excited about, right? You're irrelevant. And I I got to tell you, you don't want to wake up one day and think, "I'm irrelevant. Nobody needs me. No one will care." and and the way we did it for the past hundred years is probably just the way we should do it forever. >> Yeah, that's not a way to succeed. We want to grow. We want to challenge ourselves and learn.

All right. Well, I think we covered we covered everything. Thanks so much. I and I I want to say I kind of said it in New York, but um I just want to say thank you for all the education that you put in the space. I mean, you're tirelessly going on everybody's show speaking around. I know you're in DC speaking, so the education piece is massive. So, thank you for that. I mean, it's it's made a big difference, but also blazing the trail for what's what we can do with these credit instruments and these treasury companies, not just so other companies like ourselves can follow in the footsteps, but all these pensioners that need it, right? And so, um, sort of taking Bitcoin to the biggest group of people that need it the most, but probably won't use it, and now they can have it. So, I want to say thank you. Anything that you want to call out attention to before we shut down? >> Well, thanks for hosting me and I'm happy to be on the journey with you. >> Yeah. All right. Thank you.