3 Stories of Crazy Geniuses: Fenn’s Treasure, Michael Saylor’s Infinite Money Glitch + Ralph Lauren’s Bold Bet

0:00 So I think the theme of this episode is Rich guys. Crazy or genius. We've got the Bitcoin guy who's doing the treasure hunt. And

0:09 He's either crazy or he's a genius, right? Is he crazy or is he awesome? Ralph Loren. Crazier genius. Looks like you came down on the side of genius. I have another one for you. I feel like I can rule the world, I know I can be what I want to I'm put my all in it like my days off on the road less travel never. Dude, have you heard about this guy who's doing the two million dollar treasure hunt?

0:32 No, I have no idea what you're talking about. Okay. Well Can I interest you in a treasure hunt story? Yeah. Two million dollars. That sounds good to me. There's this guy named John Collins Black. And

0:43 There's not a lot of info about this guy. But he has basically hidden Somewhere between two and three million dollars across America right now. And different treasure chests. So he's got five treasure chests out there. Each with

0:56 A bunch of treasure inside and the specifically it's not just like cash, it's Things that are valuable. So he spent the last five years Buying. Valuable kind of artifacts.

1:07 You know, rare Pokemon cards, a two thousand and two holographic Charizard card. He's got one with George Washington's jelly glass that he bought out of an auction. There's things from it from old shipwrecks. And in total, the stuff is worth two to three million dollars. He split it between five Treasure chests. And he's hidden it in physical locations across America. And then he released a book. That was that's called there's a tr uh there's a treasure or something like that. I bury the treasures in the side. There's a treasure inside.

1:36 Yeah, and it's basically just clues to find his treasure. And so there's maps and clues, and you can buy this book right now and go find this treasure. Dude, wait, hold on. It's a this is it's even funnier. It's on Amazon. It's a book on Amazon called There's a Treasure Inside, and the book is thirty five dollars. So he's gonna recoup a little bit of his probably not as much. So he's got like, you know, a hidden a Colombian green emerald and all all kinds of stuff inside and I find this kind of fascinating. So this guy's story is interesting. He was like a musician in LA, and that didn't really work out. And then he was like, Okay, he cried creating uh websites for helping people find jobs and that started going good. He used that to buy Bitcoin earlier.

2:18 early ish on A I guess the story is he's a bitcoin multi millionaire. Who was also fascinated by Adventure.

2:28 And so there's this thing called the Fan treasure? Have you ever heard of this? Okay, yeah, fine treasure. It's a cachet of gold and jewels. Uh that Force Fenn, an art dealer

2:38 uh hid in the Rocky Mountains. Yes, I actually do think I've heard of this. I believe Zach Crockett, Zachary Crockett, who used to work for me at the Hustle, wrote a big article where he spent A week trying to find this treasure. How did he do? I don't think anyone has found it. So So five people died trying to find this treasure because he it was like is it up in the mountains, whatever. So they're climbing. So five confirmed deaths chasing the treasure. Then he

3:06 Announces somebody found it. I think this is in Twenty twenty ish, twenty twenty two. He says that um Somebody found it.

3:16 And then he dies months later. It was revealed that Former journalist and medical student Jack Stoof. found it and then he auctioned it off for what uh for a total of one point three million dollars of what he found. And so this guy, John or whatever Collins Black. Was searching for that.

3:34 In twenty twenty. And so he was like during Covid, he had s he he had searched for the treasure. He thought this was really cool. And when he when we were all in lockdown, he decided I'm gonna do one of two things. He either was like gonna create a children's book publisher or create a treasure hunt. He did both. And so he created this he started accumulating assets for this uh treasure hunt. I have a friend named Chip Forsyth. Chip Forsythe is a crazy person.

4:03 I've been friends for 10 years. His brother is AJ Forsyth, who started iCracked, if you remember iCracked. Yeah. And chip. Will go out. He's friends with these guys who raise funding. To go find shipwrecks. That they think have

4:18 Well, I guess some of them are valuable just because they're shipwrecks, but some of them are valuable because they were like ships that had gold or other like valuable stuff in the in the ship. And they raise money to go out and find these shipwrecks. And he tells me all about it. And it's like the type of story where the people who are into this It's the only drug that fills that need. Do you know what I mean?

4:41 Like it's it's like a t it it it is an intoxicating thing to find this like romantic. There's a romantic idea about a treasure hunt, right? Yeah, like it's awesome. And so like I understand why it's not my obsession, but I understand why it is other people's obsession. The other thing that I think is interesting is choosing to release a book for this. I feel like there's a missed opportunity. feel like he should have done something with TikTok. Or social media where

5:05 I feel like there was a more viral way to release the clues. Or to let people unlock the clues or search for this thing together. Like a weekly or a monthly announcement. Yeah, you know, I don't know if you've seen there's these things that go really, really viral on TikTok. It'll be like Some woman saying telling this 39 part story of how her husband cheated on her. And these things just amass it's like a true crime. They amass like. tens of millions of followers that are trying to just follow them. They wait for the next piece of the story to drop. And I do think that there was probably a way to do this that

5:36 Somebody could do, which would be to let Do a bit of a treasure hunt, but use Use social media, use TikTok as a way to uncover the clues as they go. Um, and then people go in the real world using those clues rather than a book. Steve Bartlett, who's the podcast host of uh what's it called? Diary of a CEO.

5:54 Before that, he had a like an ad agency and whatever. Before that, he worked for me back when he was maybe nineteen, twenty years old, twenty one years old, something like that. He was just like a young guy that we had that's like a growth marketer. And his job was to come up with great growth ideas. One of the things that he did at the time that I remember was he grew his Twitter and Instagram accounts like crazy. By doing a very simple thing. He was doing these like cash drops where he'd put just two hundred bucks in an envelope. And he would

6:20 Say at a college town, I think it was, he'd be like We've dropped it here, he would post a video of him hiding it. And Then there would be videos of people going and trying to search for it and they'd be basically they would tweet where they hid it.

6:34 Um in some way. And then they would tweet people Going and finding that I don't remember if it was him that did this or somebody else that was doing this, but it was a effective strategy. That's a great idea. It was a great idea. And it was like two hundred bucks. It wasn't even that much money. that they were doing and they were doing these mystery cash drops. as a way to just generate hype, but the genius of it was

6:54 the content that they created kind of before the drop and then after the drop of people searching, it made it feel like a big deal. And then they would do the next one. And the next one. I think it was just an account called like Mystery Cash Drop that was doing this that was working that's getting really big. This was I had like 10 years ago. So I'm Trying to remember. The guy who ran that account messaged me. He listens to the pot. Like it's you never heard of this guy, Mystery Castrap?

7:18 Uh he messed up. I mean this was before we even started the podcast. A long time ago. No, but he still does it. Oh yeah, it was at hidden cash. I think it's hidden cash. One of these guys just messaged us. You don't remember this? And uh what if for some reason w it came into our world where I I forget what happened. Someone tagged us on his Twitter thing and he was like, I love those guys. And then he DMed me and just said, Hey Something like that. So maybe I got this wrong. Maybe Steve wasn't the guy doing it. Maybe Steve

7:43 t showed me this and we were gonna like copy the strategy. I'm I don't remember the link. Steve definitely put me on to this because it was happening Both in the in San Francisco and also in the UK. The account now is suspended for hidden cash, which I remember happened back then. It got suspended. I'm not a hundred percent sure but why, but let me just read this article. This was back in twenty fourteen. So this is literally ten years ago. It says an anonymous benefactor has been leaving cash hidden across San Francisco, inviting strangers to find it via a series of clues.

8:09 They left money under chairs in public parks, in stairways, or in public bathrooms. And they basically post a picture of them holding the cash. And then like a zoomed in thing of where they put it. Like it's like under a toilet, but you don't know which toilet. And then they they their quote was, I've made millions of dollars the last few years, more than I could ever imagine. And yet.

8:27 Many friends of mine cannot afford to buy home in the Bay Area. This has caused me quite a bit of reflection, and I'm determined to give away some of the money I make. To charity and it and to do fun, creative things like this. And that Uh he or she will leave it once or twice a week. Did somebody should just do this again? This is to work it would work today.

8:44 I think this is awesome. Uh I think I'm gonna start doing this. The the other day like a hobby. It's like uh running, we just w jogging we're talking about. Like I think I'll s I think I'll pick up this hobby. It's like I wanna play real life Willy Wonka. Like I just wanna like start control I just wanna like start controlling people's lives one hundred dollars at a time and just seeing like if I can like make all the monkeys dance. That's kind of like what this is. It's like you're just like wanna be a puppeteer a hundred dollars at a time, a little bit. But it is like Kinda fun. I think one of the problems is like you get that initial hit

9:15 of like excitement and attention and everyone loves it. And then it's gonna fade away. And then you're gonna keep hiding the cache, but you're not gonna get that same hit. So you're gonna have to it's like an addict. You have to do more. So then you're like Hm, you know, it'd be a shame if somebody got hurt finding it, but that would make for a whole nother news cycle around this. And then you sort of ex you just keep escalating the prizes and the dangers. It's like Hey, Willie Wonka, why do you have a chocolate river and invite children over all the time? Like this is just dangerous. Do you know like at some point it's like

9:46 Hey, could you s could can we go and touch it dinner and you not like hide Twitter dollars before walking into the restaurant? The funny thing is we're so old that like everybody who's listening to this that's like under the age of twenty five is like Yeah, you know, this is how every YouTuber You know, tries to get famous is doing this exact same thing. Yeah, they're like what are you gonna do, Dex? Go give like a homeless guy a hundred dollars and film yourself like giving him a haircut. Like that's classic stick. Exactly. I think maybe the takeaway is uh you know, what's old is new uh for some of these things. Like the what the hidden cashes guy was doing. It's not really all that different than what Mr Beast does and uh has done to great effect. All right, can I tell you a story about a different way to look at adventure?

10:24 s about someone who's like I've obsessed over a little bit. And I think You know this person. You know of them. And I think I'll t I'll tell you a few facts that kinda like shock you, but also I think you're gonna be into this person more than before. So The story is about a guy named Ralph Lifschitz.

10:41 He was a Jewish kid from New York City. grew up, I believe, in the thirties. And the story is basically that he wanted to be an actor. He grew up poor, but he loved like seeing all these movie stars uh on TV and he was like you know

10:56 I love that you can dress up and pretend to be a another person. And if you pretend hard enough, people kind of start treating you seriously and start treating you like that person. And I love that. I love that and I also love the idea. that you can write a story. And make it a movie and I can live my life through that lens, that that the lens of that movie, and it gives me hope. So he was like intoxicated by this, but

11:19 He sucks at acting. And so he's like I can't go to Hollywood. I can't become an actor. However, what I can do is I can shape these movies and direct these movies not with a camera, but with clothing. And so we get super into clothing. What kind of leap of faith was that? I can shape these movies not through writing or acting, but through clothing. Yeah. So pretty ridiculous statement. No, it's not. I'll give you an example. So he was like, he's got this quote where he was like I love how like these actors like I like you could dress up as like a military person and you kind of feel a little bit tougher sometimes. Or I could dress up like a farmer and like I actually want to go outside and like get dirty a little bit. I could dress up like a cowboy and I wanna go and like do cowboy shit. Like if you dress up with a suit People kind of take you seriously. And I think that's cool that you can like pretend, but it kind of like, what's the difference between pretending and reality if you do it long enough? Like it kind of becomes like the same thing. And so he was like, I can't really act.

12:14 But like I can dress up like these characters and I kinda a little bit start actually feeling like these characters and Eventually rough lipshits. He got made fun of a uh a lot because his name. Even like the Jewish kids were like, dude, your name has the word shit in it. Like that's like like you dork. And so he changed his name to Ralph Lauren. And so he starts um That is Ralph Lauren, the cloak, but he starts

12:38 Selling clothes for Brooks Brothers, like in their store. And then eventually at the age of twenty eight, he starts uh his own business. And he's like, My first thing that I'm gonna sell is ties. He liked ties. And he goes and he pitches something like um Bloomingdales and he's like, Hey, can you guys sell my ties? And and the guy's like, These are great ties. I would love to sell them. But it has this name, Ralph Loren, on the back of the tie. Like no one wants that shit, dude. Like no one knows who you are. I don't give a shit about Ralph Loren. You gotta take that off there. And he had it kind of a Sylvester Stallone moment where he was like

13:09 Look, I'm a nobody, but I need my name to be on these ties. Like this is just a a deal breaker and Little Dales is like all right well No, we're we're not gonna do this deal. And so eventually he keeps on hustling and he gets his ties into like Macy's or something like that. And the first year of business, he does like half a million dollars in revenue. which is a home run. Uh he did this in the sixties. That's the equivalent of like three and a half million dollars today.

13:31 Home run. After year three or four, he starts coming up with different ideas and he comes up with this idea of Polo, so the polo brand. The college shirt that you see everywhere. And he parlays this. By the way, what's the what's the backstory of that? What was his inspo, do you know for the shirt? The inspo was basically, like I said, he grew up as this poor Jewish kid in New York, but what he loved was this idea of like class and old money. Uh, this idea of like wasp, even though he's not a wasp, he like loved the idea of like sophistication.

14:00 And to to him the sport of polo. that like screened like both utility because it's a sport, but also like sophistication because it's like supposed to be like rich people who play it. And the collar. that polo players wear, they would always wear a collar. And in particular, they would button down the collar. So an Oxford button down cloth shirt, that's comes from the the sport of polo. And so do like certain style boots, certain style pants. And so there was a little bit where it was like already considered like a fashionable sport. And so he says like I'm going to name My brand

14:32 Polo. And so he builds polo. And this shit over like The course of a handful of years, it takes off. So now Ralph Loren, he's worth something like 10 billion dollars. He still owns. I think eighty percent of the company

14:45 And he's a great businessman. But that's not what I actually am impressed by him. What I'm impressed by him is two things. The first He has this idea of like you are the director of your own life. And your life is basically a movie. And he has this idea where he was like, I would wear cloth that would

15:04 I almost I think Tony Robbins said this, uh or you told me that Tony Robbins said this, where he was like if I wanna act tough or confident. I make my body Top or confident. So what do you call that thing where you like like flexing. Power posing. Where you like flex your chest when you're not feeling comfortable and you put your body into like a confident position. And your brain kinda follows your body. He sort of is saying the same thing, but with clothing, where he was like, You know, if I wanted to

15:32 feel a little bit more sophisticated than I actually felt at the moment. I would dress a certain way and like my brain would follow. And I find that to be like a really cool Idea. And the second thing that he did that was really interesting is I don't know if you remember this because we were kids. But do you remember Ralph Lorin advertisements? Do do you remember any of those, like the photos and magazines? No, what was it?

15:53 What was interesting is that what he would do is He would he had he used a lot of the same models. And the models oftentimes were not professional models. But what he would do is If he wanted to like he would set the stage. So basically he would f act like he's filming an entire movie. And so they would rent a home in the Hamptons. Let's say it's like a uh the ad is for some type of summer summerware for the beach. He would rent a Hamptons house and he would be like, Well, if I'm a like a wealthy family in the Hamptons who has this like beautiful home, like how what would you guys be doing right now? Like maybe you'd be playing football. Maybe you'd all be sitting on uh in the parents' bed in the morning as if like the kids just like woke you up. But he would create these like elaborate sets where he would like make you live like

16:35 You're in a movie on set. And so he's like, we're gonna all like pretend that this is like real. And they would do this whole elaborate thing just for a handful of photos. But if you look at a lot of the ads, they're really like in depth. And It made me start thinking a lot about

16:51 Like with startups and what you and I do. We sometimes are just reactive to like So like Whatever like customers are saying.

16:59 not more so like how do we set the stage for what what do we want the world to be? And I think Amazon used to do this small thing where they're like before we launch any product I want you to write the press release. Like tell me what do you want a customer to feel about this? Or how do you want this to be described when it's all said and done? Right. And because the internet has such a low barrier to entry and it's really easy to adapt and change things.

17:22 rarely do we sort of think ahead and like this is like My vision for the world and at least everyone in my small world, how I want them to feel, how I want my customers to think, how I want them to uh appreciate us. I do think there's something cool about I'm looking at up all vintage Ralph Loren ads and I see what you're saying, which is like a really heavy lean into like, yeah, like true lifestyle shoots rather than Studio or sort of

17:49 Framed, um, you know, just like Let's go here. Let's get the single shot. You in front of the water. Boom. Yeah. It's churn and burn. It's like, well, this is somebody's house in the Hamptons, wearing these clothes, doing what they do with all of the little you know, family photos in the background and whatnot. Like it's it looks a lot more authentic. And This is one of those things that's i interesting because as a business person

18:13 It never pencils out on a spreadsheet to do this. Right, like up up front, there is no way to sit here and justify This, but then there's things in your gut and there's the the the people who do who actually do make the bet and do pull it off. And then in retrospect, it sounds obvious. You know, I'll give you an example.

18:30 There is a brand um Uh e commerce brand. And they were talking about influencers. It was like, Well, what's the what's they were talking about an influencer campaign. They're gonna spend a million dollars on an influencer campaign. with these Instagram moms. And I said, What's the return on ad spend of that? You put a million dollars in, how much you're gonna get back.

18:48 Directly and they're like Uh it might be, you know, fifty percent. Meaning we might put a dollar and we might get fifty cents back. Uh that's not the way to do it. Well what's your face what's your Facebook ads return on ad spent? And the and they're like uh it's like, you know, a dollar forty, put a dollar in and get a dollar forty out. Like, why are you spending a million dollars on these influencers? And uh Are you are you able to measure the halo effect? I'm like using all this jargon.

19:11 And he goes. Uh Hey, does your wife like Does she follow like any of these people? And I asked my wife and she's like, Yeah, all these people. He goes, Ask him like a qu a couple of questions about these people. Like, hey, do you know like

19:22 How many kids do they have? What's their names? What products do they use? What's the last product you bought that you heard them mention? And like my wife could just rattle these from memory. I've always memory is like I could tell uh you know, we watch all of Game of Thrones. I if I asked her today what's a Lannister, she'd have no idea. She thinks it's part of a staircase.

19:40 And so I'm like She's knows exactly what's going on with these influencers and he goes That's why we're spending a million dollars with influencers. And um I was like, okay, you know, there's these things that

19:50 If the result is not easy to measure. But it is true. Right? It's gotta be both. It's gotta be actually actually work. And not be easy to measure. those things are usually pretty uh mispriced, meaning that not as many people are willing to do them because most of us Want the safety and comfort of things that are

20:08 Proven. measurable and I can spread sheet my way to conviction. Well, it's basically all rooted in Can I justify this if I'm about to get fired? Yeah.

20:17 Yeah, or just my even my own self doubt, right? Even like my companies, I'm not always thinking I'm gonna get fired. Who's gonna fire me? I own the company, but I don't want to be an idiot and I don't want to lose and I don't want to fail and I don't want to lose money. And it takes courage to make bets. And courage is easier. When you can

20:35 When you when the logic when you can logic your way there, when you can spread sheet your way there. Do you do any of these Courageous bets that are non spreadsheet. 'Cause I think you I I think part of the reason you idolize these is that you Didn't typically do that. I didn't typically do that. And I and I still struggle with it, but

20:52 I have to like when I watch some of these things, like uh we talked about Martha Stewart recently and now we're talking about Ralph Lorenz, like when you talk like And when you talk about some of these like culture changing brands or companies or people. Uh us internet or startup y people, there's like We think we are above the full where we're like logical and we are like Well, it's easy. You put this money much money in, you get this much money out. Like, why would anyone do anything otherwise? But then there's one step above that, which is

21:20 It's the right thing'cause it's the right thing. Like you know what I mean? Like it's like It's um Like uh You know, I can't measure this thing, but like I know it's awesome.

21:31 Right. Do it because it's awesome. Yeah. And so there's like we try to act like we are some like savante internet nerds where it's like the math says X, Y, and Z, but there's always there's one above that, which is yeah, but it's it just makes sense. And so and Peter Thiel, who's like The Savantias of Savants. Tent pole of this equation, which is called brand, and he goes I don't understand Brand though. Uh but like I know it exists, but I don't understand it. And that's what we're talking about here, which is like it just feels right.

21:59 Yeah. Yeah, exactly. So so long story short, I don't do this, but I I respect it. And I know that's necessary and I want to do more of it. Yeah. Are you doing any of it with Hampton? Like is there One you can think of that you do? Yeah, like we ha we own this podcast called Money Wise and like it

22:15 Like the only way that we think that it returns an ROI is if someone joins and they said they heard about it through us. But that's not that's like the low end of the totem pole of like Is it easily trackable? Um But then

22:28 No no, like I don't do enough, but I I do need to do certain things like this. The the the problem with this is you get caught in the day to day And you also get caught in the bills. And there's also a lot of stories of Ralph Loren Where like he almost lost the company many, many, many times. Where he like just didn't pay attention.

22:44 And in one hand, you need a visionary who doesn't pay attention to the profit because sometimes the shit that makes the most profit doesn't make sense right off the bat. Right. So I think the theme of this episode is

22:56 Rich guys. Crazy or genius. We've got the Bitcoin guy who's doing the treasure hunt. And He's either crazy or he's a genius, right? Is he crazy or is he awesome? Ralph Loren.

23:08 Crazier genius. Looks like he came down on the side of genius. I have another one for you. Alright. And it's Michael Saylor. Have you seen what Michael Saylor is currently doing with the market and and Bitcoin and his stock. I don't

23:21 Understand it. Exactly. But I understand that he's always up to something. Like I I always I know that He's like the Barry Bonds of business, where like there's always an asterisk next to everything he does. Yeah, that's a good explanation. Um

23:39 Okay, so can I explain what's going on? Micro Strategy is a software company. They sell Um soft you know that at the time they're selling software products and the software business might make like Seventy five million a year of profit. It was like a small cap stock. It had been doing great for like ever. Like it was a great

23:55 Like he'd been rich for a long time, right? Yeah, the uh the business had been he I think he's the longest tenured CEO of a public company. Meaning he's been the CEO of this company for like twenty four plus years or something like that. And um but the stock had been flat.

24:11 If you look if you just zoom out on the chart, it looks like a very flat line. And When he came on the podcast, it was because at the time he was doing something very interesting. He had taken his company's cash reserves, like their treasury. Which normally you either keep in cash, maybe treasury bills. Or you use it to buy back the stock.

24:29 And instead he used it to buy Bitcoin. So basically Micro Strategy was a software company. The software company had hundreds of millions of dollars in their bank account, which they're supposed to just hold in case they need it. And his plan was I'm gonna invest that money in Bitcoin. Yeah, we're gonna switch our treasury strategy to being Bitcoin. So September fourteenth, twenty twenty. Bitcoin's priced at ten thousand dollars a coin, and he buys a hundred and seventy five million dollars worth of it. And then a month later or so, he buys another two hundred fifty million dollars of it. Which looking back at it, that sounds great. Yeah, at ten thousand dollars, eleven thousand dollars a coin.

25:05 And he has since been buying uh more and more Bitcoin. He now Holds. Thirty seven billion dollars. of Bitcoin. Micro strategy.

25:14 Micro Strategy does. He himself also, I think, personally owns. Like. hundreds of millions, if not a billion dollars of Bitcoin. They are up fifteen billion dollars on their Bitcoin position. in four years. So he's generated four fifteen billion dollars of value doing this strategy. So it starts out by saying, I'm gonna convert my

25:33 Yeah, step one, convert our company's idle cash. into Bitcoin. Okay, did that. But now the company doesn't generate the and the the idea was every year when we generate more free cash flow, we're gonna do the same. We're gonna yeah, we make seventy five million bucks, we're gonna buy more. But

25:48 Over time he starts doing More aggressive bets. So what he starts doing is he starts issuing these convertible bonds. And now so he goes to the market, he says, Hey Uh our here's a corporate bond. You can buy the bond. We're gonna take the proceeds from the bond sale. And we're gonna go buy Bitcoin. And he does that over

26:02 And over And over again. And on top of that, if you look at Micro Strategy stock today So when he was last on the podcast Oh, so well, let's just actually say this. In March of twenty the stock was ten dollars. In March of twenty one, the stock was seventy eight dollars, and today it's four hundred and ten dollars.

26:21 Correct. So it's up in the last five years by Two thousand six hundred percent. Okay. So it's shot up. It's uh if you compare it to even NVIDIA stock this year. It's outperformed NVIDIA. Which is pretty insane.

26:36 And so what is going on here? Um this you know, his company is now worth eighty billion dollars as of you know as of today. And how much revenue and profit does the actual Mm business. The actual software business is declining 10% a year. And is something like a couple of hundred million in revenue and under a hundred million of net income.

26:57 So it is A rounding error. It is not it is no longer relevant to the stock price. And does he have employees Who like work there? Yeah. They still have employees that just keep running that software business. But the stated strategy is our job is to

27:12 uh acquire Bitcoin in the most effective ways possible. And hold forever. That's what he wants to do. That's a influent uh that's a that's a like an inspiring um talk every Friday at your all hands. Right. Great job, everybody. We did our job. And uh, you know, to his credit, he's been buying throughout all the dips. So like

27:39 you know, Bitcoin price went up to sixty thousand, then it goes down to sixteen thousand. And even during that process, you know, Bitcoin in December twenty twenty-two. Bitcoin price is 17,000, he buys another 50 million, he buys another 14 million, he buys another hundred fifty million. He has continued to buy throughout the whole process. And Bitcoin's at an all time high. And uh as of today, he just bought another five point four billion dollars of bitcoin at the uh you know sort of all time high price. How did he have the money to do that? Again, he's raising money in these bonds. And so

28:09 There's okay, so what's interesting about this. Here's what I want to talk about. Is Genius or crazy. I guess I I hesitated to even bring this up. Because

28:19 A this is outside of my zone of competence, meaning like I don't know corporate bond strategies. I don't know why Um, I don't know how options traders look at this. I don't know what the bond market is like. That is not something that I've spent twenty years of my career in. I'm a startup guy. Okay. So on one hand, unqualified to talk about this. On the other hand I've been a crypto

28:39 holder and believer since far before Mich Michael Saylor, and have seen throughout each cycle how new players come in with new strategies and Building You know. Massive profiles and success on the upswing and I've seen things go very, very badly.

28:53 Um, you know, last cycle there was Sam Bankman Freed. with FTX, there was Doquan, there was Three Aros Capital, there were several people that for a moment in time looked like absolute geniuses. They were hailed by everybody. They were on the cover of magazines, you know, Sequoia's investing in in FTX, and everything looks incredible. And uh then it all comes crashing down, either due to bad acting or Bad risk management.

29:17 I don't know anything about crypto and I can give you an example of a red flag that was on air on our podcast. So I don't remember exactly. I think it was thirty or forty five minutes in. I asked him a question, I go, So Michael, you're Buying all this Bitcoin with your company's money. Cool. What are the downsides?

29:35 Um because like It appears as though like one of the downsides could potentially be you're losing focus on your main money making software. Um but and I think you think that's worth it, but what are some other downsides? And his answer was There are no downsides.

29:49 And I was like, Well I mean, like every decision has a downside. Like the the downside of being healthy is that you have to go to bed early when you want to go and hang out with your friends. Like but it's worth it. Like there are there are downsides. And he kept insisting there are no downsides. And in my head I thought If you can't be honest to me about this like pretty straightforward thing Is there anything else that you're being dishonest about?

30:09 Yeah. There are no downsides, said every charlatan ever, right? That is a uh it is could be a red flag. That doesn't mean it's damning. No. Let me know. No, it does not mean it's damning, but it was a red flag. Let me give you the generous interpretation of this. So I actually agree with Michael Saylor in one weird way when he said there's no downsides. Which is that for him personally There were really no downsides at the time.

30:31 At that time, th if you go back and you listen carefully to Michael Saylor's interviews. Most of the interviews he just talks about how he had the epiphany and he realized that Bitcoin is the way and he started doing it. The true story is that there's one like precursor to that epiphany. Which was that he was stuck between a rock and a hard place. He had this software business that was successful, it was profitable.

30:52 And I think at the time it was even you know, had shown growth or had been showing growth over the last ten years. And he was getting zero credit in the stock market for it. And it's like What am I supposed to do? Like we're a successful company. We've been

31:05 operating successfully for you know fifteen tw plus years. And the market is basically saying, give us back the cash. We don't We will not value you for Any of the cash you have on hand. You should just give it back to us. We're gonna give you no stock credit for how you might invest it.

31:22 How you might use that cash, how you might grow your business, we're gonna give you zero credit for it. And so he had this problem, which was No matter what he did with his company at the time. He couldn't get the stock price to go up. He couldn't increase shareholder value. And so he had in some ways nothing to lose because he was stuck. He had been stuck in this plateau for so long. And the market he had said he says in some interviews, like the market was giving me a very clear message.

31:47 We don't believe that you can invest this cash in any way that's going to grow your business. Well then he's like, Well Screw that. Why don't I just do something else with it? If I can't grow micro strategy with it, maybe I can grow it through investment. And he went and he looked at real estate, he looked at gold. He looked at all the different ways that he could do it. And he basically At that point deduced That bitcoin was his best bet to invest the money.

32:08 to actually grow the stock. And was he like a crypto? So 2020 for a lot of the hardcores was late in the game for crypto. Was he like No he was he was skeptical. He he did not believe in Bitcoin. Somebody had told him it he didn't believe in B these like early hackers. He went and watched a bunch of Pomps interviews and he started reading about it, he started learning about it. The other thing that was true was that He looked at The amount of uh inflation and he realized that The kind of stated

32:34 goal of two or three percent inflation was misleading, that it didn't count a bunch of other things. It also didn't take into account the fact that If you were an investor, you just put the money in the SP five hundred, it was growing at, you know, ten, fifteen percent a year. And he was like Look, if I can't beat that, there's really no reason to invest in my company if I don't have the ability to beat that rate. And so

32:53 What he wanted to do was Yeah, you know, like m most Bitcoin maximalists, they just at the end of the day, they look at fiat currency and they believe that Here you have a um A weak currency and if you could ever if you could borrow a weak currency at zero percent interest rate and use it to buy a hard currency like Bitcoin, that's a good trade.

33:11 That's the The two things that he wanted to do was he wanted to get out of Fiat. 'Cause he didn't like the direction that Fiat was going. With inflation. And um

33:20 And secondly, he knew his stock was stuck. Okay, so that was that part back then. But at that time he wasn't doing this thing where he's borrowing billions of dollars to buy Bitcoin. And so Uh let me just like kinda walk you through the model of what he's doing now. Okay. So Basically micro strategy issues debt.

33:37 They use that that convertible bond. Corporate bond. And so that like today they just did a five billion dollar whatever corporate bond offering. Who do they raise it from? Um

33:46 Bond buyers, the bond market. So there's trillions of dollars that get invested in bonds. And one of the things that you know you might say, Why does why do why are people buying a micro strategy bond? Is it the because of the underlying business and it was no just buying Bitcoin themselves. Or just buy Bitcoin themselves. So the the re the arbitrage is that he realized there's Yeah, I trillion dollar plus market. Of people who of people who buy bonds.

34:09 that because of their structure, they're not allowed to buy Security. So they can't buy Stocks. They can't buy real estate. They can't buy uh Bitcoin directly, they can't buy the Bitcoin ETF. So the bond market cannot access Bitcoin unless they access it through a bond. Got it. That's it. The mandate of those funds is that they can only buy bonds. That's why people gave them the money was you're gonna buy bonds. It's a zero percent uh interest rate, but it could you can convert the bond.

34:36 intermicro strategy stock at a certain price, at three hundred, four hundred, five hundred, six hundred dollars a share, higher than the current Price of the thing. So it's like a long term call option on MicroStrategy. Okay. So if you were in the bond market and you wanted access to Bitcoin. But your bylaws and your mandate. does not allow you to buy Bitcoin directly. Then

34:54 That's a crazy loop way. That's a crazy loophole. Supply demand. So he's the only supply on the market to absorb this This demand that's there. to to get access to Bitcoin type of yield. By i by issuing these these things. Okay, so that's the first part.

35:08 So then he buys Bitcoin. And he goes and he tells the whole market, I'm I'm a forever buyer of Bitcoin. I will increasingly be buying billions and billions of dollars of Bitcoin. I'm doing it at the market price. And I will continue doing that. That instills a bunch of confidence in the Bitcoin market because Bitcoin says wow, there's this whale. Who says, I don't give a damn. I'm doing this. I'm deep pocketed and I'm gonna keep doing this. And so

35:30 He takes supply off the market. He signals to the market that I'm a forever holder. And he says, I'm gonna keep buying bigger and bigger amounts as we go. So the Bitcoin price goes up. So now Bitcoin price goes up. Which then causes his stock to go up. Cause his stock is based on the fact that they have thirty billion dollars of Bitcoin sitting there.

35:47 And the stock goes up. And then he sells More equity. at a premium and he buys even more Bitcoin. Now he's selling sh equity shares. To buy Bitcoin.

35:56 Rinse and repeat. Is he selling any of his equity in the company? Um, I don't know. I'm not sure. And it's he

36:05 Liable for Any of these uh convertible bonds. No, it's not like a personal guarantee. No, it's a corporate bond. If this goes south and this collapses, then his you know, net worth, which is highly based on his

36:17 holdings of MicroStrategy are gonna go down, right? And his reputation and everything else. And what's his net worth now? How much of Micro Strategy does he own? He owns Nine point nine percent. Oh, Micro Strategy. So as of today, just off micro strategy, he's worth uh eight billion dollars. Okay. In two thousand twenty, the company was worth one point four billion, so he was worth a measly hundred and forty.

36:39 million dollars. So he's grown from a hundred and forty million dollar net worth, uh assuming that it's his only money, which it probably isn't, all the way up to close to ten billion. So it's definitely had asymmetric upside versus downside for him, right? Like uh hitching his wagon to the bitcoin rocket ship. Represented a way for him to like, you know. So Explode up.

36:59 In a good way. in a way that he was never gonna be able to do with just MicroStrategy, the declining software business. At the same time, you know, there obviously is reputational risk and there's capital risk. Now Okay, so how is it going? They've basically acquired almost four hundred thousand bitcoin. Um

37:14 They've outperformed every company in the SP five hundred. And last week alone it saw a hundred and thirty six billion dollars of trading volume. To put that in perspective, even GameStop during the GameStop, GameStop never saw this. So he's basically created he's intentionally turned hims turn MicroStrategy into a meme stock. Meaning He's detached it from the underlying business in the way that GameStop did. And

37:38 And created a a product. That the option traders want, that the bond traders want, that the Bitcoin maximalists want, that the Bitcoin skeptics hate and want to go short. Now, what could go wrong? Let's go to let's go to there. Um by the way, I let's also say The craziness of not only doing this, but then spending the last four years just on tour.

37:57 being a Bitcoin evangelist is also like a really extreme step to take, right? Like There were no Half measures. In what he did. This is a uh you know, sort of Elon Musk style all in

38:09 Reputationally all in, financially all in. And he has that personality. He's got the type of I've I don't know him other than the sixty minutes we spent virtually with him, but he seemed like he had the personality where he's Super high IQ. Super low like emotional. normal human emotions where he's like

38:29 But it makes sense. The bath says this. Therefore I do that. ridiculous thing to most people's standards. High IQ, high T count. Yeah. Like Yeah, like he he ponies up. Okay.

38:48 Yeah, at the same time. Maybe I'm just uh like a uh PTSD from Past crypto cycles. But like I mentioned, every crypto cycle, this happens. Somebody Gets uber aggressive.

39:00 Mm. They're seen as a genius. They overextend or they commit malpractice and they come crashing down when the cycle Yeah, inevitably these things are all cyclical. When it goes down.

39:11 Last cycle it was FTX, it was Do Kwan, it was three Aris Capital. These were multi-billion dollar Vehicles that were created very quickly. They they burned bright and then they fizzled out. Um due to one of those two reasons. So I'm on the lookout right now. Bitcoin's at an all time high. Instead of just jubilation, I'm just keeping an eye out. You know, fool me once.

39:32 Shame on you. Fool me twice. Shame on me type of thing. So I'm just keeping an eye on what might what might it be the cycle. On the other side, he's made a couple of genius calls. So back in I wanna say when was it? Two thousand seven ish time frame. There's a bunch of interviews of Michael Saylor talking about Apple. Maybe two thousand twelve.

39:52 And he basically's talking about he he's on a thing and he's like Apple's gonna go to two thousand dollars a share. And he's like, You don't understand what's happening. Apple is inven and he the same way that he's talking about Bitcoin, how Bitcoin is this. you know, the greatest invention ever, how it's gonna be millions of dollars a coin. He was talking about Apple the same way. He's like, you have a super supercomputer in your pocket. Do you understand what this means? Do you know you know that four billion people are gonna be carrying this thing around and then Apple's gonna be making X all the numbers just sounded insane to people at the time. And when he was talking about it.

40:22 And it's all come true. Like his ins his entire bet on Apple. He's like he's like, I don't know why you would own any stock besides Apple. And like if you had listened to Michael Sellers at that time, he's always had this like You all are stupid. This is obvious. And he's right sometimes. Yeah, I mean, I don't know. It's these are over oversimplifications, but yeah, like I guess the guy's fascinating. He is a fascinating guy. I think he's described him well with He's extremely high IQ.

40:46 He's extremely high cojones. And when he gets conviction on something, he sounds insane. And so okay, w uh you know, I think the the main thing is uh where does this go wrong? So I think the w main place it goes wrong, obviously if Bitcoin's price starts to crash. The problem will be If

41:02 For whatever reason, Micro Strategy stock, which today trades at like a two and a half times Multiple of NAB. You know, NAV is the net asset values like the the underlying asset that it holds, right? It owns thirty three billion dollars of Bitcoin. So the question is, why is it an eighty three billion dollar company? Which is what you think it should be. It should if you own like a thirty five billion dollar company. Yeah, it should be we it should be whatever the asset is, plus like the multiple of profit for software. It's a Bitcoin holding and acquisition company. And so maybe you say, Okay, here's its holdings. Great. And then on top of that, maybe there's some

41:33 Premium for the fact that it's able to acquire them on leverage. It could do things that a Bitcoin ETF can't, right? So a Bitcoin ETF can't issue a bond. It is different, but the question is, is two and a half X the right multiple? Yes. And the question is the down spiral looks like this. The unwinding looks like this. Which is Micro strategy for whatever reason, either because Bitcoin price goes down or the stock market. Just changes its tune on it.

41:56 starts to not trade at such a premium to the nav. And now all this money that it's borrowed Bonds expire twenty twenty seven, twenty twenty eight, twenty twenty nine.

42:06 If those were to convert, he would be forced into selling Bitcoin. And once he becomes a forced seller Now the whole market, the whole Bitcoin market will start to crash because it'll say, Oh my God. Micro Strategy's gonna have to unwind its entire bitcoin position. That's gonna be thirty five billion dollars or more of Bitcoin hitting the market. How much is Bitcoin worth?

42:25 Like how much what percentage uh uh of a player is he? He owns about one percent of the Bitcoin. float today and he's trying to get, you know, two percent basically. Dude, this guy's intense. Yeah. I I I guess my short story is

42:39 I don't know what's gonna happen. I For I guess my disclaimer is this, I do not know what's gonna happen. More than that, I'm a a novice when it comes to this. However, I've been in a few cryp cycles before and I've seen in every script every single cryp cycle when crypto goes up.

42:55 Somebody starts being very aggressive. Acquiring uh buying big buying Crypto. Using leverage. Like he's doing right now.

43:03 It hasn't ended well in previous cycles. And Right now, everybody is calling this the infinite money glitch. You go on YouTube, you search Micro Strategy Infinite Money Glitch. He's a god. He's the best. And it always makes you wonder what is the scenario where this unravels, and do I believe that that could come true here? There is no strategy that is risk-free, there is no free lunch. And I think that right now the entire narrative is about how this is a free lunch, how this is a free money glitch, and uh I don't believe that.

43:30 I don't know enough to know the specifics about this, but my spidey sense is tickling. Who's the um the most conservative Bitcoin Per so uh conservative being um Like they're rational and they could explain the pros and the cons without being overly emotional. Who's that in the Bitcoin world? So that's a good question. Who do I trust the most?

43:53 To have a rational opinion about Bitcoin. That could be a great question. Yeah. Who could be. So there's there's this a guy like Andreas Antonopoulos who I believe is that, but he's a technologist. So you don't You you listen to him about how Bitcoin as a technology. Um has uh

44:09 has great potential. So you know, you read his book Which is called Um The Internet of Money and He's extremely rational and he's a good faith actor.

44:19 Who's who's the person that's like You know, if we all buy into this and if it works. You know, the upside is this, but if we don't, the downside is this and this is like who just says like Like here's all the potential. I think a lot of people say that. I think a lot of people understand this figure. A lot of people say, like look Bitcoin has these properties. It could become X. It could become the next gold. Actually, most people fall into the bucket of they don't price that as a hundred percent certainty, right? They say it's possible.

44:46 And there's a potential for that. That's why I own some of it, but I don't put my entire net worth in it. And it is also possible that it doesn't doesn't get adopted, or that there's a technical flaw, or that governments beat it down in these ways, or that it becomes uh unpopular for these reasons. And that's the risk in this, right? Like there's there's a bunch of people that feel that. Those vocal thought leader rationalists

45:08 What do they say about Michael Saylor? They don't take a position. Like right now, even as I'm saying this, I'm thinking to myself, Yeah, I'm gonna go cut this in post because Why take a position? With the upside.

45:22 Yeah, the upside is some upside right a few years from now. You're gonna look good by like be predicting things. Um and there's also the upside of like just doing what's right and telling everyone, Don't waste your fucking money on this thing. Yeah, but I I guess it's Uh

45:37 You have to be A smart enough to understand it. B, you have to have the desire to like look right by putting your neck on the line with a prediction. Yeah, the Bitcoin community has doesn't seem like it typically has The Like

45:51 The moral fiber. No, no. I wasn't going to say that. I was going to say uh they don't mind expressing they don't They're very vocal. hopefully about their bag. Right. They just they want it to be true so much that they convince themselves it's true and risk free. Well what I'm trying to get at is who's the person who I can trust To find out what the opinion uh of Michael Saylor is. I have searched long and hard because before this podcast I did research to say

46:24 And I literally tweeted this out. So if you think I'm an idiot. Uh I I also think I'm an idiot. My tweet today was Can someone with a better brain than me explain what S Sailor is doing? A no strategies is without risk. What are the risk? What is the math? If Bitcoin drops to X dollars, it becomes a problem. And B, why is the stock trading at such a premium to nap?

46:44 That post has, you know, maybe a hundred plus replies. I read every single one of them. I read other threads that people have put out about this. If there was one great explanation, I would have just pointed you to it and I would have read it out loud. I have not found one myself. That doesn't mean it doesn't exist. I have not found one myself that I can read and I can say, Oh, in simple terms, I understand. Why he's doing this? Why it's working today.

47:04 What the risks are? How it would unravel if it unraveled. I'm only recently at the age. Where I don't trust everyone. Uh like like like up until recently, like my logic was constantly like

47:17 Well, the institutions are buying into this, therefore it must be safe. Or like you don't like whoever's raising the money for this guy, like Surely they know what they're talking about. So now I'm I I've just two years ago got to the age where it's like You know, they're flawed humans just like me.

47:35 And so I don't know who to trust with any with these types of situations because I'm so uneducated on the topic. But I have Uh my spotty sense is tingling. I wouldn't I I with my own money I wouldn't touch any of this. Yeah.

47:50 Yeah, that's what I would say. I have I have no proof Uh other than it just It doesn't feel good. Do you know what the uh I think I think S the Supreme Court or someone like that, like defined Pornography uh like they said, like it's hard to ex they're like it's hard to define

48:08 But you know it when you see it. Yeah, what's the difference between pornography and like a nudity in a national geographic TV show? You know it when you see it. Mm. I don't exactly know it when I see it this s situation with him, but I know that something doesn't feel right. And I can't explain why.

48:26 Okay, so here's my commitment. Um I brought this up today. Half baked. And I admit that. Um

48:33 I'm gonna go and try to find the smartest people I can. to explain this to me until I'm satisfied with the simple explanation of what's going on. And then I'll share that. If I leave this in I'm saying that as a bookmark to say

48:46 Let's hold opinions till part two. I might just take this whole part out because I'm uncomfortable with the uh level of half informed speculation that was in the section. Uh I think it's interesting. I think it's interesting, but

49:01 You know that like Shockingly people look to you. F for like this like you are so like I asked you that question. Uh of like who's rational that people look to. There are many people.

49:13 Who would say Sean? I am rational, but you had two criteria. Who's rational and intelligent. And I think I think that you Vul like vocal like like I'm still working through this problem. Uh I think that's actually quite valuable. Yeah, I guess I'm just like only ten percent of the way working through it and I'm just thinking maybe I should have gone to fifty percent before.

49:37 coming on the pot and talking about it. But I will say this. A lot of bit uh a lot of the uh people have done well with Bitcoin and the people who understand Bitcoin It is the midwip beam. Like

49:49 They they look at Bitcoin and they look at all the information and then they reduce it down into a very simple Way of looking at things. And the w you know, the way simple way of looking at things, which is either Um

50:02 This is uh it's a better version of gold. And so it'll be, you know, it's a it's a tech improvement on gold. Um, there's people who reduce it down and basically just say Uh would I rather have would I rather have hard money or soft money, meaning would I rather save wealth in a would I rather store wealth In a currency that can't inflate mathematically or uh a currency that will inflate?

50:23 And if you just whittle things down like that to a level of simplicity, you can be right without even knowing all the details. And so I think One of the challenges with your question of who are the smart intelligent people is that the smartest, most rational people I know about Bitcoin. A long time ago, you know, eight years ago, told me a very simple thing. Bought it.

50:39 put it in cold cold storage and moved on with their life. Um, and they don't follow all the twists and turns and they don't try to hop on the next wave and the next trend, and they don't do crazy options trading or hundred X leverage. They don't do any of those things. And they made a simple opinion based on a very simple assessment. Um And they prove it to be right.

50:57 And not overcomplicating it, this has been the signal of who's actually intelligent about this. versus somebody who's every day on the news, has an opinion on every single thing, is trying to outsmart everybody. those tend to not be the people that I actually you know, trust their opinion on this stuff. Have you seen that show Love on the Spectrum?

51:16 Yeah. I have actually. The show about autistic people dating, right? Yeah. And there's this one episode where these two a guys dating this girl and he was like, Do you like tacos? And she goes Yeah, I like chicken. And cheese. And he was like I don't have anything else to say, but I wanna let you know I'm having a good time.

51:36 And I wanna normalize that on in both dating and on this podcast, which is um And that's sort of how I feel right now. Which is I don't have anything else to say, but I want to let you know I really enjoy this topic.

52:01 I feel like I can root Well It be what I want to I put my law in it like my day's off On the road less travel never looking back

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