Sam and Shaan explore three stories of “crazy or genius” rich guys: a Bitcoin millionaire who hid $2-3M in treasure across America, Ralph Lauren’s obsessive brand-building philosophy, and Michael Saylor’s leveraged Bitcoin acquisition strategy with MicroStrategy. The episode weaves in discussions of viral marketing, brand investment, and the risks of the current crypto cycle.
Speakers: Sam Parr (host, co-founder of The Hustle), Shaan Puri (host, founder of Milk Road)
Intro: Crazy or Genius? [00:00:00]
Shaan: 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 he’s either crazy or he’s a genius, right? Is he crazy or is he awesome? Ralph Lauren — crazy or genius? Looks like he came down on the side of genius. I have another one for you.
Sam: Dude, have you heard about this guy who’s doing the $2 million treasure hunt?
Shaan: No, I have no idea what you’re talking about.
Sam: Okay, well can I interest you in a treasure hunt story?
Shaan: Yeah. $2 million? That sounds good to me.
The $2 Million American Treasure Hunt [00:00:30]
Sam: There’s this guy named John Collins Black and 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 in different treasure chests. He’s got five treasure chests out there, each with a bunch of treasure inside. And specifically it’s not just like cash — it’s things that are valuable.
He spent the last five years buying valuable artifacts. So one of them has rare Pokémon cards — a 2002 holographic Charizard card. He’s got one with George Washington’s jelly glass that he bought at an auction. There are things 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 them in physical locations across America.
Then he released a book — it’s called There’s a Treasure or something like that. And it’s basically just clues to find his treasure. There are maps and clues and you can buy this book right now and go find this treasure.
Shaan: Dude, wait — hold on. It’s on Amazon?
Sam: It’s even funnier. It’s a book on Amazon called There’s a Treasure Inside and the book is $35. So he’s going to recoup a little bit of it.
Shaan: A little bit of it, yeah. Probably not as much.
Sam: He’s got a hidden Colombian green emerald and all kinds of stuff inside. I find this kind of fascinating. So his story is interesting — he was like a musician in LA and that didn’t really work out. Then he started creating websites for helping people find jobs, and that started going well. He used that to buy Bitcoin early-ish on, and the story is he’s a Bitcoin multi-millionaire who was also fascinated by adventure.
The Forrest Fenn Connection [00:02:15]
Sam: So there’s this thing called the Fenn Treasure — have you ever heard of this?
Shaan: Yeah, the Fenn treasure. It’s a cache of gold and jewels that Forrest Fenn, an art dealer, 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.
Sam: How did he do?
Shaan: I don’t think anyone has found it. Five people died trying to find this treasure because it was up in the mountains, people were climbing. Five confirmed deaths chasing the treasure. Then he announces somebody found it — I think this was in 2020 or 2022. He says somebody found it, and then he dies months later. It was revealed that former journalist and medical student Jack Stuef found it, and then he auctioned it off for a total of $1.3 million.
Sam: So this guy John Collins Black was searching for that in 2020. During COVID he had searched for the treasure and thought it was really cool. When we were all in lockdown he decided he was going to do one of two things — either create a children’s book publisher or create a treasure hunt. He did both. And so he started accumulating assets for this treasure hunt.
I have a friend named Chip Forsyth — Chip is a crazy person, I’ve been friends with him for ten years. His brother is AJ Forsyth who started ick. And Chip will go out — he’s friends with these guys who raise funding to go find shipwrecks that they think have valuable cargo. Some of them are just valuable because they’re shipwrecks, but some of them are valuable because they were ships that had gold or other valuable stuff on them. They raise money to go out and find these shipwrecks. 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, you know what I mean?
Shaan: Yes. It’s intoxicating. There’s a romantic idea about a treasure hunt, right? Like it’s awesome. I understand why it’s not my obsession but I understand why it is other people’s obsession.
The Missed Opportunity: Social Media Treasure Hunt [00:04:30]
Sam: The other thing I think is interesting is his choice to release a book. I feel like there’s a missed opportunity. I feel like he should have done something with TikTok or social media — there was a more viral way to release the clues, or to let people unlock the clues, or to search for this thing together. Like a weekly or monthly announcement.
Shaan: You know, I don’t know if you’ve seen this, but there are things that go really really viral on TikTok. It’ll be like some woman telling this 39-part story of how her husband cheated on her. These things are like true crime — they amass tens of millions of followers who just wait for that next piece of the story to drop. I do think there was a way to do this where you use TikTok to uncover the clues as they go, and then people go into the real world using those clues rather than a book.
Sam: Steve Bartlett — the podcast host of Diary of a CEO — before that he had an ad agency, and before that he worked for me when he was maybe 19 or 20 years old. Just a young guy we had as a growth marketer, and his job was to come up with great growth ideas. One of the things he did at the time was he grew his Twitter and Instagram accounts like crazy by doing a very simple thing — these cash drops where he’d put just $200 in an envelope and he would post a video of him hiding it. Then there would be videos of people going out and searching for it. They would tweet where he’d hidden it and then tweet themselves going to find it.
Shaan: That’s a great idea.
Sam: It was a great idea. And it was like $200 — it wasn’t even that much money. They were doing these mystery cash drops as a way to just generate hype. But the genius of it was the content they created 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” or “hidden cash.” Actually I think the guy who ran that account messaged us. Before we even started the podcast — this was a long time ago.
Shaan: I don’t remember this.
Sam: Let me read this article. This was back in 2014, so 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. They left money under chairs, in public parks, in stairways, in public bathrooms.” And their quote was: “I’ve made millions of dollars the last few years, more than I could ever imagine, and yet many friends of mine cannot afford to buy a 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 to do fun creative things like this.” And they would leave it once or twice a week.
Shaan: Someone should just do this again. This would work today.
Sam: I think this is awesome. The other day — it’s like a hobby, it’s like running. I think I’ll pick up this hobby. I want to play real-life Willy Wonka. I just want to start controlling people’s lives $100 at a time and see if I can make all the monkeys dance. That’s kind of what this is — you just want to be a puppeteer $100 at a time.
Shaan: I think maybe the takeaway is what’s old is new. What the hidden cash guy was doing isn’t really all that different than what Mr. Beast does and has done to great effect.
Ralph Lauren: The Director of His Own Life [00:09:15]
Shaan: All right, can I tell you a story about a different way to look at adventure? About someone who I think you know of — and I think you’re going to be into this person more than before. So the story is about a guy named Ralph Lifshitz.
He was a Jewish kid from New York City, grew up in the 1930s. The story is basically that he wanted to be an actor. He grew up poor but he loved seeing all these movie stars on TV and he was like, “I love that you can dress up and pretend to be another person. And if you pretend hard enough, people start treating you like that person. And I love the idea that you can write a story and make it a movie and I can live my life through the lens of that movie. It gives me hope.”
So he was intoxicated by this — but he sucked at acting. He’s like, “I can’t go to Hollywood, I can’t become an actor. However, what I can do is shape these movies and direct these movies — not with a camera, but with clothing.”
Sam: What kind of leap of faith was that? “I can shape these movies not through writing or acting but through clothing” — that’s a pretty ridiculous statement.
Shaan: No it’s not! I’ll give you an example. He had this quote where he was like: “I love how you can dress up as a military person and you kind of feel a little bit tougher, or I could dress up like a farmer and I actually want to go outside and get dirty, or I could dress up like a cowboy and I want to go do cowboy stuff. If you dress up in a suit, people take you seriously.” And he’s like — what’s the difference between pretending and reality if you do it long enough? It kind of becomes the same thing.
So Ralph Lifshitz — he got made fun of a lot because of his name. Even the Jewish kids were like, “Dude, your name has a bad word in it.” So he changed his name to Ralph Lauren.
He starts selling clothes for Brooks Brothers in their store, and then eventually at the age of 28 he starts his own business. His first thing he’s going to sell is ties. He loves ties. He goes and pitches Bloomingdale’s. The guy’s like, “These are great ties, I would love to sell them, but it has this name ‘Ralph Lauren’ on the back — no one knows who you are.” And he had this Sylvester Stallone moment where he was like, “Look, I’m a nobody, but I need my name to be on these ties. Is this a deal breaker?” And Bloomingdale’s is like, “All right, well, we’re not doing this deal.”
So eventually he keeps hustling and gets his ties into Macy’s or somewhere like that. In the first year of business he does like half a million dollars in revenue, which is a home run — in the 60s, that’s the equivalent of like $3.5 million today.
The Polo Brand and Living as a Character [00:13:00]
Shaan: After year three or four he starts coming up with different ideas and he comes up with the Polo brand. What’s the backstory of the shirt, do you know?
Sam: The inspiration was basically — he grew up as this poor Jewish kid in New York, but what he loved was this idea of class and old money. This idea of sophistication. And to him, the sport of polo screamed both utility because it’s a sport, but also sophistication because it’s supposed to be a rich-people sport. The collar that polo players wear — they would always wear a button-down collar. An Oxford button-down cloth shirt comes from the sport of polo. So there was already a certain style associated with it — certain boots, certain pants — it was already considered a fashionable sport.
Shaan: So he says, “I’m going to name my brand Polo.” And over the course of a handful of years it takes off. Now Ralph Lauren is worth something like $10 billion and still owns I think 80% of the company. And he’s a great businessman, but that’s not actually what I’m impressed by.
What I’m impressed by is two things. The first is this idea of “you are the director of your own life and your life is basically a movie.” He was saying something like what Tony Robbins said — you told me that Tony Robbins said this — where he’s like, “If I want to act tough or confident, I make my body tough or confident.” Power posing — you flex your chest when you’re not feeling comfortable, you put your body into a confident position, and your brain follows. Ralph Lauren was saying the same thing but with clothing. “If I want to feel a little more sophisticated than I actually feel at the moment, I would dress a certain way, and my brain would follow.” I find that to be a really cool idea.
Sam: I respect that.
Ralph Lauren’s Movie-Set Advertising [00:16:30]
Shaan: The second thing that he did that was really interesting — do you remember Ralph Lauren advertisements? The photos in magazines?
Sam: What was interesting about them?
Shaan: What he would do is use a lot of the same models — and the models oftentimes were not professional models — but he would set the stage as if he was filming an entire movie. So they would rent a home in the Hamptons. Let’s say the ad is for some type of summer beachwear. He would rent a Hamptons house and say, “Well, if I’m a wealthy family in the Hamptons who has this beautiful home, what would you guys be doing right now? Maybe you’d be playing football. Maybe you’d all be sitting in the parents’ bed in the morning as if the kids just woke you up.” He would create these elaborate sets where everyone would live like they were on a movie set. Just for a handful of photos.
But if you look at a lot of the ads, they’re really in-depth. And it made me start thinking a lot about how — with startups, what you and I do — we sometimes are just reactive to whatever customers are saying. Not thinking more about: how do we set the stage for what we want the world to be?
Amazon used to do this small thing where before they launch any product, they want you to write the press release. “Tell me what do you want a customer to feel about this? How do you want this to be described when it’s all said and done?” Because the internet has such a low barrier to entry and it’s really easy to adapt and change things, rarely do we think ahead and say — this is my vision for the world, at least in my small world. How do I want my customers to think? How do I want them to feel?
Sam: I do think there’s something cool about this. I’m looking up vintage Ralph Lauren ads and I see what you’re saying — a really heavy lean into lifestyle shoots rather than studio or framed “turn and burn” shots. It looks a lot more authentic. There are family photos in the background and whatnot.
This is one of those things that’s interesting because as a business person it never pencils out on a spreadsheet to do this. Up front there is no way to justify it. But there are things in your gut. And the people who actually make the bet and pull it off — in retrospect it sounds obvious.
The Courage to Make Unmeasurable Bets [00:20:00]
Sam: I’ll give you an example. There’s an e-commerce brand that was talking about an influencer campaign — they were going to spend a million dollars on an influencer campaign with these Instagram moms. I asked what the return on ad spend would be. They said it might be 50% — meaning we might put in a dollar and get 50 cents back. I said, what’s your Facebook ads return on ad spend? And they’re like, 1.4x — put in a dollar and get $1.40 out. So I’m like, why are you spending a million dollars on these influencers? Are you able to measure the halo effect?
And the guy goes, “Hey, does your wife follow any of these people?” I showed my wife and she’s like, “Yeah, all of these people.” He goes, “Ask her a couple of questions.” And my wife could just rattle off from memory — how many kids they have, their names, what products they use, what’s the last product she bought that she heard them mention. And my wife’s memory is — we watched all of Game of Thrones, if I asked her today what a Lannister is, she’d have no idea. She thinks it’s part of a staircase. But she knows exactly what’s going on with these influencers.
And the guy goes, “That’s why we’re spending a million dollars with influencers.”
Sam: And I was like, okay. There are these things that if the result is not easy to measure but it is true — it’s got to be both, it’s got to be actually real and not easy to measure — those things are usually pretty mispriced. Not as many people are willing to do them because most of us want the safety and comfort of things that are proven and measurable.
Shaan: It’s basically all rooted in: can I justify this if I’m about to get fired? Even with my own companies — I’m not always thinking I’m going to get fired, who’s going to fire me, I own the company — but I don’t want to be an idiot, I don’t want to lose, I don’t want to fail, I don’t want to lose money. And it takes courage to make bets. Courage is easier when you can logic your way there, when you can spreadsheet your way there.
Do you do any of these courageous bets that aren’t spreadsheet-able? Because I think part of the reason you idolize these stories is that you didn’t typically do those.
Sam: I didn’t typically do that and I still struggle with it. But I have to — when I watch some of these things, like we talked about Martha Stewart recently, now we’re talking about Ralph Lauren. When you talk about some of these culture-changing brands or companies or people, we internet and startup people think we’re above the fold, like we’re logical. “It’s easy — you put this much money in, you get this much money out. Why would anyone do anything otherwise?” But then there’s one step above that, which is: it’s the right thing because it’s the right thing. You can’t measure this thing but you know it’s awesome. Do it because it’s awesome.
Shaan: Yeah. And Peter Thiel — who is the savant of savants — has said there’s this fifth tent pole of the equation called brand. “I don’t understand brand, but I know it exists.” That’s what we’re talking about. It just feels right.
Sam: So long story short — I don’t do this, but I respect it and I know it’s necessary. I want to do more of it.
Are you doing any of it with Hampton? Is there one you could think of?
Shaan: Yeah, like we own this podcast called MoneyWise and the only way we think it returns an ROI is if someone joins and says they heard about it through us. But that’s the low end of the totem pole for “is it easily trackable.” I don’t do enough, but I do need to do more of this.
The problem is you get caught in the day-to-day and you also get caught in the bills. There are a lot of stories of Ralph Lauren where he almost lost the company many many times — he just didn’t pay attention to the profit. Sometimes the thing that makes the most profit doesn’t make sense right off the bat. You need a visionary who doesn’t pay attention to the profit, because sometimes the thing that makes the most profit doesn’t make sense right away.
Michael Saylor and the Bitcoin Infinite Money Glitch [00:25:30]
Shaan: So I think the theme of this episode is rich guys — crazy or genius. We’ve got the Bitcoin guy doing the treasure hunt, we’ve got Ralph Lauren. I have another one for you. It’s Michael Saylor. Have you seen what Michael Saylor is currently doing with the market and Bitcoin and his stock?
Sam: I don’t understand it exactly but I understand he’s always up to something. He’s like the Barry Bonds of business — there’s always an asterisk next to everything he does.
Shaan: Okay, so let me explain what’s going on. MicroStrategy is a software company — at the time they were selling software products and the software business might make like $75 million a year of profit. It was a small-cap stock, it had been doing great for a long time. He’s been the CEO for like 24 plus years — I think he’s the longest-tenured CEO of a public company.
But the stock had been flat. If you zoom out on the chart it looks like a very flat line. 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, their treasury, which normally you either keep in cash or treasury bills or use to buy back stock, and instead he used it to buy Bitcoin.
Sam: So MicroStrategy was a software company with hundreds of millions of dollars in their bank account that they’re supposed to just hold in case they need it, and his plan was to invest that money in Bitcoin.
Shaan: September 14th, 2020, Bitcoin’s priced at $10,000 a coin and he buys $175 million worth. Then a month later or so he buys another $250 million of it — which looking back at it sounds great, at $10,000 when it’s now $111,000 a coin. He’s since been buying more and more Bitcoin. He now holds $37 billion of Bitcoin.
MicroStrategy — does he himself personally own like hundreds of millions if not a billion dollars of Bitcoin?
Sam: Wow.
Shaan: They are up $15 billion on their Bitcoin position in four years. So he’s generated $15 billion of value doing this strategy.
How Saylor’s Model Works [00:28:45]
Shaan: So it starts out: step one, convert our company’s idle cash into Bitcoin. Did that. But then over time he starts doing more aggressive bets. He starts issuing these convertible bonds. He goes to the market and says: “Here’s a corporate bond you can buy. We’re going to take the proceeds from the bond sale and go buy Bitcoin.” And he does that over and over and over again. On top of that, if you look at MicroStrategy’s stock — in March of 2020 the stock was $10. In March of 2021 the stock was $78. Today it’s $410. It’s up in the last five years by 2,600%.
Sam: Okay, so it’s shot up. If you compare it to Nvidia stock this year, it’s outperformed Nvidia, which is pretty insane. So what is going on here?
Shaan: His company is now worth $80 billion. And how much value and profit does the actual business generate?
Sam: The actual software business is declining 10% a year and does something like a couple hundred million in revenue and under $100 million of net income.
Shaan: So it is a rounding error. It is no longer relevant to the stock price.
Sam: Does he still have employees who work there?
Shaan: Yeah, they still have employees running that software business. But the stated strategy is that their job is to acquire Bitcoin in the most effective ways possible and hold forever. That’s the goal.
Sam: That’s an inspiring all-hands every Friday. “Bitcoin price is up — great job everybody, we did our job.”
Shaan: And to his credit he’s been buying throughout all the dips. Bitcoin price went up to $60,000, then goes down to $16,000. In December 2022 when Bitcoin is at $17,000, he buys another $50 million. He buys another $14 million. He buys another $150 million. He has continued to buy throughout the whole process. And Bitcoin’s at an all-time high and as of today he just bought another $5.4 billion of Bitcoin at all-time high prices.
Sam: How did he have the money to do that?
Shaan: He’s raising money in these bonds. So here’s what’s interesting. He goes to the bond market. The bond market has trillions of dollars invested in it, and one of the things — you might say, why would anyone buy a MicroStrategy bond instead of just buying Bitcoin themselves? The answer is the arbitrage he found: there’s a trillion-dollar-plus market of people who buy bonds because their fund mandate says they can only buy bonds. They can’t buy stocks, they can’t buy real estate, they can’t buy Bitcoin directly, they can’t buy the Bitcoin ETF. The bond market cannot access Bitcoin unless it accesses it through a bond.
So it’s a convertible bond — 0% interest rate, but you can convert it into MicroStrategy stock at a certain price: $300, $400, $500, $600 a share, higher than the current price. So it’s like a long-term call option on MicroStrategy.
Sam: That’s a crazy loophole.
Shaan: Supply and demand. He’s the only supply on the market to absorb this demand from people who want Bitcoin-type exposure through a bond structure.
So then he buys Bitcoin and he tells the whole market: “I’m a forever buyer of Bitcoin. I will increasingly be buying billions and billions of dollars of Bitcoin at the market price and I will continue doing that.” That instills confidence in the Bitcoin market because Bitcoin says: wow, there’s this whale who doesn’t give a damn, he’s deep-pocketed, and he’s going to keep doing this. He takes supply off the market, signals he’s a forever holder, and says he’s going to keep buying bigger and bigger amounts as they go.
So the Bitcoin price goes up. That causes his stock to go up because his stock is based on the fact that they have $30 billion of Bitcoin. Stock goes up, then he sells more equity at a premium and buys even more Bitcoin. Rinse and repeat.
Sam: Is he selling any of his personal equity in the company?
Shaan: I’m not sure. And is he personally liable for any of these convertible bonds?
Sam: No, it’s a corporate bond — not a personal guarantee. If this goes south and collapses, then his net worth — which is highly based on his holdings of MicroStrategy — is going to go down. And his reputation.
Shaan: What’s his net worth now? How much of MicroStrategy does he own?
Sam: He owns 99.9% of MicroStrategy stock — no wait, that’s too much. He owns a huge chunk. As of today just off MicroStrategy he’s worth about $8 billion. In 2020 the company was worth $1.4 billion so he was worth a measly $140 million. So he’s grown from $140 million net worth all the way up to close to $10 billion. It definitely had asymmetric upside versus downside for him — hitching his wagon to the Bitcoin rocket ship represented a way for him to go up in a way he was never going to be able to do with just MicroStrategy’s declining software business.
The Genius Calls and the Red Flags [00:35:30]
Shaan: So how is it going? They’ve basically acquired almost 400,000 Bitcoin. They’ve outperformed every company in the S&P 500. Last week alone it saw $1.136 billion of trading volume. To put that in perspective, even GameStop during the GameStop frenzy never saw this.
He’s intentionally turned MicroStrategy into a meme stock — detached it from the underlying business the way GameStop did, and created a product that the options traders want, that the bond traders want, that the Bitcoin maximalists want, that the Bitcoin skeptics hate and want to go short.
Sam: Now what could go wrong? Let’s go there.
And by the way, let’s also say: the craziness of not only doing this but then spending the last four years on tour being a Bitcoin evangelist. There were no half measures. This is an Elon Musk-style all-in — reputationally all-in, financially all-in. And he seemed like he had the personality for it — super high IQ, super low in normal human emotions. “The math says this, therefore I do that, even if that’s ridiculous to most people.”
Shaan: High IQ, high T count. Yeah, he ponies up.
So here’s the thing. I’m maybe just PTSD’d from past crypto cycles. I mentioned every crypto cycle this happens — somebody gets uber aggressive, they’re seen as a genius, they get hailed by everybody, they’re on the cover of magazines. And then it all comes crashing down either due to bad acting or bad risk management.
Last cycle it was FTX, it was Do Kwon, it was Three Arrows Capital — multi-billion dollar vehicles created very quickly, burned bright, then fizzled out. So I’m on the lookout. Right now Bitcoin’s at an all-time high and instead of jubilation I’m just keeping an eye out. “Fool me once, shame on you, fool me twice, shame on me” type of thing.
Sam: And actually there’s a specific red flag I caught on the podcast. So I don’t remember exactly but I think it was 30 or 45 minutes into the interview when I asked him: “Michael, you’re buying all this Bitcoin with your company’s money — cool. What are the downsides? It appears as though one downside could be losing focus on your main money-making software business. But what are some other downsides?”
And his answer was: “There are no downsides.”
And I was like — well, every decision has a downside. The downside of being healthy is that you have to go to bed early when you want to hang out with friends. But it’s worth it. There are downsides. He kept insisting: there are no downsides. And in my head I thought — if you can’t be honest with me about this pretty straightforward thing, is there anything else you’re being dishonest about?
Shaan: “There are no downsides” — said every charlatan ever. It can be a red flag. It doesn’t mean it’s damning.
Sam: Let me give you the generous interpretation. I actually agree with Michael Saylor in one weird way when he said there’s no downsides — for him personally, at that specific time.
Why Saylor Had Nothing to Lose [00:39:00]
Shaan: The true story, if you go back and listen carefully to Michael Saylor’s interviews — most of the interviews he just talks about how he had the epiphany and realized Bitcoin is the way. But 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, profitable, and had been growing. And he was getting zero credit in the stock market for it. He’s like: “What am I supposed to do? We’re a successful company, we’ve been operating successfully for 15 plus years, and the market is basically saying give us back the cash. We will not value you for how you might invest it or how you might grow your business — we’re going to give you zero credit for it.”
So he had this problem — 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. In some ways he had nothing to lose because he’d been stuck in this plateau for so long. The market was giving him a very clear message: “We don’t believe that you can invest this cash in any way that’s going to grow your business.”
So then he’s like: well, screw that. Why don’t I do something else with it? He went and looked at real estate, gold, all the different ways he could invest the money. And he basically deduced that Bitcoin was his best bet to actually grow the stock.
Sam: Was he a crypto guy? Because 2020 for a lot of the hardcores was late in the game.
Shaan: He was skeptical. He did not believe in Bitcoin. Somebody had told him about it, he didn’t believe them. He was not one of these early advocates. He went and watched a bunch of Pomp’s interviews, started reading about it, started learning about it. The other thing that was true was that he looked at inflation and realized the stated goal of 2-3% inflation was misleading — it didn’t count a bunch of other things. And he also didn’t take into account the fact that if you were an investor just putting money in the S&P 500 it was growing at 10-15% a year, and he’s like: if I can’t beat that, there’s really no reason to invest in my company.
Like most Bitcoin maximalists, at the end of the day they look at fiat currency and believe: here you have a weak currency, and if you can borrow a weak currency at 0% interest rate and use it to buy a hard currency like Bitcoin, that’s a good trade.
What Could Go Wrong: The Downside Scenario [00:43:15]
Shaan: Okay so back then he wasn’t doing this thing where he’s borrowing billions of dollars to buy Bitcoin. Let me walk you through the model of what he’s doing now. MicroStrategy issues debt. Today they just did a $5 billion corporate bond offer. They raise it from bond buyers — there are trillions of dollars that get invested in bonds.
Now, MicroStrategy stock today trades at like a 2.5x multiple of NAV — net asset value, meaning the underlying assets it holds. It owns $33 billion of Bitcoin. So why is it an $83 billion company? It should be — whatever the asset is worth plus some multiple of profit for the software — it should be like a $35 billion company. But you could argue there’s some premium for the fact that it’s able to acquire Bitcoin on leverage, and it can do things that a Bitcoin ETF can’t. But is 2.5x the right multiple?
Sam: That’s crazy. So the down spiral looks like — what exactly?
Shaan: The down spiral looks like: MicroStrategy, for whatever reason — either because Bitcoin price goes down or the stock market changes its tune — starts to not trade at such a premium to NAV. Now all this money it’s borrowed, these bonds expire 2027, 2028, 2029. If those were to convert, he would be forced into selling Bitcoin. And once he becomes a forced seller, the whole Bitcoin market will start to crash because it’ll say: oh my God, MicroStrategy is going to have to unwind its entire Bitcoin position. That’s going to be $35 billion or more of Bitcoin hitting the market.
Sam: How much of Bitcoin’s float does he own?
Shaan: About 1% today, and he’s trying to get to 2%. Dude, this guy’s intense.
Sam: My short story is: I don’t know what’s going to happen. My disclaimer is I’m a novice when it comes to this. But I’ve been in a few crypto cycles before. In every single crypto cycle when crypto goes up, somebody starts being very aggressive using leverage to buy crypto, just like he’s doing right now. 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 “MicroStrategy infinite money glitch” — he’s a god, he’s the best.
And it always makes you wonder: what is the scenario where this unravels? There is no strategy that is risk-free, there is no free lunch. And right now the entire narrative is about how this is a free lunch, how this is a free money glitch. And I don’t believe that. I don’t know enough to know the specifics, but my spidey sense is tingling.
Finding Someone Rational to Explain It [00:47:15]
Shaan: Who’s the most conservative Bitcoin person you’d trust? Conservative meaning rational — they could explain the pros and the cons without being overly emotional.
Sam: That’s a good question. Who could give you the honest take?
Shaan: There’s a guy like Andreas Antonopoulos who I believe is that, but he’s a technologist, so you listen to him about how Bitcoin as a technology has great potential. He wrote a book called The Internet of Money and he’s extremely rational, he’s a good-faith actor. But who’s the person who says: “If we all buy into this and it works, the upside is X; if we don’t, the downside is Y. Here are all the potential outcomes”?
Sam: I think a lot of people say that. A lot of people understand this — most people fall into the bucket of they don’t price that as 100% certainty. They say it’s possible and there’s potential, 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 there’s a technical flaw, or that governments beat it down, or that it becomes unpopular for these reasons. That’s the risk.
Shaan: What do those vocal, rational thought leaders say about Michael Saylor?
Sam: They don’t take a position. Right now, even as I’m saying this, I’m thinking to myself — yeah, I’m going to cut this and not post it. Why take a position? The upside is you might look right a few years from now. And there’s also the upside of doing what’s right and telling everyone, “Don’t put your money into this.” But you have to be A) smart enough to understand it and B) have the desire to look right by putting your neck on the line with a prediction.
Shaan: The Bitcoin community doesn’t mind expressing themselves. They’re very vocal. But if someone thinks you’re full of it, they’re also very wishful about their bags. They want it to be true so much that they convince themselves it’s true and risk-free. That’s what I’m trying to get at — who’s the person I can trust to find out what the rational opinion of Michael Saylor is?
I have searched long and hard. Before this podcast I did research. I literally tweeted this out — so if you think I’m an idiot, I also think I’m an idiot. My tweet today was: “Can someone with a better brain than me explain what Saylor is doing? A) No strategy is without risk — what are the risks? What is the math? If Bitcoin drops to X dollars, at what point does it become a problem? And B) why is the stock trading at such a premium to NAV?”
That post has maybe 100 plus replies. I read every single one. I read other threads that people put out about this. If there was one great explanation, I would have just pointed you to it and read it out loud. I have not found one.
Sam: I’m only recently at the age where I don’t just trust everyone. Like up until recently my logic was constantly: well, the institutions are buying into this, therefore it must be safe. Or: whoever’s raising the money for this guy, surely they know what they’re talking about. I’ve just two years ago gotten to the age where — they’re flawed humans, just like me. And so I don’t know who to trust with these types of situations because I’m so uneducated on the topic. But my spidey sense is tingling. With my own money, I wouldn’t touch any of this.
Shaan: Yeah. I have no proof other than it just doesn’t feel good.
You know, I think the Supreme Court or someone defined pornography by saying it’s hard to define but you know it when you see it. I don’t exactly know it when I see it in this situation with him, but I know something doesn’t feel right and I can’t explain why.
Committing to Part Two [00:52:00]
Sam: Okay. So here’s my commitment. I brought this up today half-baked and I admit that. I’m going to go and try to find the smartest people I can to explain this to me until I’m satisfied with a simple explanation of what’s going on, and then I’ll share that.
If I leave this segment in, I’m saying that as a bookmark — let’s hold opinions until Part Two. I might just take this whole part out because I’m uncomfortable with the level of half-informed speculation.
Shaan: I think it’s interesting. But shockingly, people look to you for some level of — like I asked you that question of who’s rational, who could you trust. And there are many people who would say, “Shaan, I am rational.” Two criteria: who’s rational and intelligent? I fall a little short on the second one for these things. I’m still working through this problem. And I think that’s actually quite valuable to vocalize.
Sam: I guess I’m just 10% of the way working through it. Maybe I should have gone to 50% before coming on the pod and talking about it.
The Simple Bitcoin Thesis Always Wins [00:53:30]
Shaan: But I will say this: a lot of the people who’ve done well with Bitcoin and the people who understand Bitcoin — it is the “midwit meme.” They look at Bitcoin and all the information and reduce it down to a very simple way of looking at things. Which is either: this is a better version of gold, it’s a tech improvement on gold. Or they whittle it down to basically: would I rather have hard money or soft money? Would I rather store wealth in a currency that can’t inflate mathematically, or a currency that will inflate? If you just whittle things down to that level of simplicity, you can be right without even knowing all the details.
The challenge 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, like eight years ago — told me a very simple thing: bought it, put it in cold storage, and moved on with their life. They don’t follow all the twists and turns. They don’t try to hop on the next wave and the next trend. They don’t do crazy options trading or 100x leverage. They don’t do any of those things. They made a simple opinion based on a very simple assessment, and they’ve proven to be right. Not overcomplicating it — this has been the signal of who’s actually intelligent about this, versus somebody who’s on the news every day with an opinion on every single thing, trying to outsmart everybody. Those tend to not be the people whose opinion I actually trust.
Sam: Have you seen that show Love on the Spectrum?
Shaan: Yeah, I have actually. A show about autistic people dating.
Sam: Right. And there’s this one episode where these two guys are on a date with this girl, and one of them says: “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 want to let you know I’m having a good time. And I want to normalize that.”
Both in dating and on this podcast — that’s sort of how I feel right now. I don’t have anything else to say, but I want to let you know I really enjoy this topic.
Shaan: That’s it. That’s the ending.