Michael Saylor's MASTERCLASS in Cryptocurrency Investing and the Future of BITCOIN

Last updated: Jun 1, 2023

The video is a masterclass in cryptocurrency investing and the future of Bitcoin, featuring Michael Saylor, the founder and CEO of MicroStrategy, discussing his experiences and strategies for handling existential threats in business.

The video is a conversation between Tom and Michael Saylor, the founder and CEO of MicroStrategy, about his experience in investing in cryptocurrency, particularly Bitcoin. They also discuss Saylor's approach to facing existential threats in business, using his experience with MicroStrategy as an example. Saylor shares how he took risks and made unconventional choices, such as using a product called Wings instead of Excel, which ultimately led to the success of his company. The conversation provides insights into Saylor's investment philosophy and his vision for the future of Bitcoin.

  • Michael Saylor started MicroStrategy with limited resources and used computer simulations to predict the future for executives.
  • He believes in Bitcoin as a store of value and invested $425 million of MicroStrategy's treasury into Bitcoin.
  • He sees Bitcoin as a solution to the problem of inflation and believes that Bitcoin will become the dominant digital property in the world.
  • Investors should invest in something they believe in for the long term, not invest more than they can afford to lose, and not try to time the market.
  • Rebuilding a product on a new technology can lead to exponential growth, and companies need to adapt to new technologies to stay relevant.
  • The chambered nautilus is a model for growth under pressure, and technology companies must constantly grow and adapt to new technologies.
  • Bitcoin is a digital asset that can be used as a store of value and a medium of exchange, and investing in Bitcoin requires a long-term perspective.
  • Michael Saylor has navigated through various existential threats in business, and he learned to think from first principles at MIT.
  • Michael Saylor applies first principles to his analysis of Bitcoin, which are scarcity, security, and trust.

Michael Saylor's MASTERCLASS in Cryptocurrency Investing and the Future of BITCOIN - YouTube

Michael Saylor

Michael Saylor's Experience with Existential Threats

  • Started MicroStrategy with limited resources
  • Used computer simulations to predict the future for executives
  • Found an opportunity to create a software that lets them plug in the assumptions
  • Couldn't afford to write it in C plus, so they used a product called Wings
  • Competitor told him to use Excel instead of Wings, but he chose to try something new and succeeded
Michael Saylor

Michael Saylor's Investment Strategy

  • Believes in Bitcoin as a store of value
  • Sees Bitcoin as a digital property that can be owned and held for a long time
  • Compares Bitcoin to gold, but with better properties
  • Invested $425 million of MicroStrategy's treasury into Bitcoin
  • Believes in the long-term potential of Bitcoin to increase in value
Michael Saylor

The Future of Bitcoin

  • Sees Bitcoin as a solution to the problem of inflation
  • Believes that Bitcoin will become the dominant digital property in the world
  • Sees Bitcoin as a hedge against the devaluation of fiat currencies
  • Believes that Bitcoin will become a trillion-dollar asset class
  • Sees Bitcoin as a way to transfer value across borders without intermediaries
Michael Saylor

Michael Saylor's MASTERCLASS in Cryptocurrency Investing and the Future of BITCOIN - YouTube

Advice for Investors

  • Invest in something that you believe in for the long term
  • Don't invest more than you can afford to lose
  • Don't try to time the market
  • Understand the risks and potential rewards of your investment
  • Be patient and don't panic during market downturns
Michael Saylor

Lessons from Michael Saylor's Experience

  • Rebuilding a product on a new technology can lead to exponential growth.
  • Technology companies need to take risks and pursue new architectures.
  • Companies need to adapt to new technologies to stay relevant.
  • Respect for the past and integrity must be balanced with the opportunity and challenge of the future.
  • Investing in new technologies can lead to significant returns.
Michael Saylor

Chambered Nautilus as a Model for Growth

  • The chambered nautilus is a creature that grows under deep sea pressure and builds a shell.
  • The shape of the chambered nautilus is a spiral because the creature is rebuilding the next shell to be twice as big as the last shell.
  • The previous work is used as the structure to support the next piece of work.
  • The design of the chambered nautilus is nature's solution for growth under pressure.
  • Technology companies must constantly grow and adapt to new technologies.
Michael Saylor

The Future of Bitcoin

  • Bitcoin is a digital asset that can be used as a store of value and a medium of exchange.
  • Bitcoin is decentralized and operates on a peer-to-peer network.
  • Bitcoin has a finite supply, which makes it a scarce asset.
  • Bitcoin is a hedge against inflation and the devaluation of fiat currencies.
  • Bitcoin has the potential to become a global reserve currency.
Michael Saylor

Investing in Bitcoin

  • Investing in Bitcoin requires a long-term perspective.
  • Bitcoin is a volatile asset and can experience significant price fluctuations.
  • Investors should only invest what they can afford to lose.
  • Investors should educate themselves about Bitcoin and its potential risks and rewards.
  • Investors should consider dollar-cost averaging to mitigate the risk of market volatility.
Michael Saylor

Michael Saylor's Ability to Navigate Existential Threats

  • Michael Saylor has navigated through various existential threats in business, including the dot-com crash, the 2008 crisis, and COVID-19.
  • He managed to keep his job despite a 98% loss in shareholder value.
  • His ability to analogize something like the chambered nautilus and think from first principles helped him navigate these storms.
Michael Saylor

Thinking from First Principles

  • Michael Saylor learned to think from first principles at MIT.
  • Thinking from first principles means being intellectually fearless and not being afraid of looking stupid or breaking something.
  • MIT is full of intellectually fearless people who are capable of doing something.
  • Education often consists of rote learning, but at some point, you have to reason from first principles.
  • First principles include a grasp of math, the scientific method, and elements like material science.
Michael Saylor

Example of Thinking from First Principles

  • Michael Saylor shared an example of thinking from first principles in his material science class at MIT.
  • The professor asked a unique question that no one in the world knew the answer to.
  • He expected the students to reason their way through it to figure out a methodology to solve the problem.
  • Education often consists of rote learning, but at some point, you have to reason from first principles.
  • Engineering is about learning enough math, science, and engineering to put things together and make them stand or not stand.
Michael Saylor

Applying First Principles to Cryptocurrency Investing

  • Michael Saylor applies first principles to his analysis of Bitcoin.
  • He reduces Bitcoin down to its first principles, which are scarcity, security, and trust.
  • Bitcoin is scarce because there will only ever be 21 million Bitcoins.
  • Bitcoin is secure because it is protected by the most powerful computer network in the world.
  • Bitcoin is trustworthy because it is decentralized and not controlled by any government or institution.
Michael Saylor

Reasoning from First Principles

  • Constructing a mechanism that works under any circumstance requires reasoning from first principles.
  • Reasoning from first principles means starting with a clean sheet of paper and designing based on the physics of the situation.
  • For example, designing a plane that flies requires understanding lift, thrust, and weight.
  • Understanding the foundational layer allows for the creation of new designs.
  • Engineering is the discipline of constructing mechanisms to channel energy.
Michael Saylor

Channeling Energy

  • Human beings rise through channeling energy, such as fire and hunting.
  • Designing mechanisms to channel energy requires understanding physics and math.
  • Designing a bow and arrow, for example, requires choosing the right rock for the arrowhead and experimenting with arrow length.
  • Manufacturing the best arrow design allows for successful hunting without wrestling with animals.
  • Channeling wind energy led to the creation of sailboats, which required experimenting with sail shape and size.
Michael Saylor

Existential Threats in Business

  • Existential threats in business require a first principles approach to problem-solving.
  • MicroStrategy faced an existential threat when their business model became obsolete.
  • Michael Saylor reasoned from first principles and decided to invest in Bitcoin as a store of value.
  • Bitcoin's scarcity and security make it a reliable store of value.
  • Investing in Bitcoin allowed MicroStrategy to survive and thrive in the new digital economy.
Michael Saylor

The Future of Bitcoin

  • Bitcoin's scarcity and security make it a superior store of value compared to traditional assets.
  • Bitcoin's network effect and adoption rate make it a reliable investment for the future.
  • Bitcoin's price volatility is a feature, not a bug, as it allows for price discovery and adoption.
  • Bitcoin's potential to become a global reserve asset could lead to a new monetary system.
  • Investing in Bitcoin requires a long-term perspective and a willingness to weather short-term price fluctuations.
Michael Saylor

Engineering and Common Sense

  • The shape of a boat affects its speed and carrying capacity.
  • Aspect ratio determines the maximum speed at which a boat can be pushed through water.
  • The best aspect ratio depends on the boat's purpose.
  • Material also affects a boat's performance.
  • Methodical problem-solving is important, especially in matters of life and death.
Michael Saylor

Bitcoin and Engineering Theory

  • Bitcoin is the first digital monetary asset that respects the laws of conservation of energy.
  • Sound money is mathematically proper, which is the same as thermodynamic soundness.
  • Engineering theory and math and sciences are integral to the way a monetary asset functions.
  • Up until Bitcoin, people did not embrace the idea of energy theory and engineering theory in economics.
  • Bitcoin is a pure digital token on a pure digital network.
Michael Saylor

Reasoning from First Principles

  • Reasoning from first principles allows one to act in moments of tremendous uncertainty.
  • Consultants can tell you which boat to buy, but reasoning from first principles allows you to know which boat to buy.
  • Intelligence is evenly distributed, but the right frame of reference is necessary for problem-solving.
  • Conveying mindset to people is important for solving novel problems.
  • Financial experts often cannot provide street-level advice for investing.
Michael Saylor

Michael Saylor's Background and Motivation

  • Michael Saylor started out broke and transformed his life through hard work.
  • He is obsessed with conveying mindset to people so they can solve problems and improve their lives.
  • He is scared for people who have no sense of how to invest or protect against inflation.
  • He brings on financial experts to provide advice for people at all income levels.
  • He found that none of the financial experts he brought on could provide street-level advice.
Michael Saylor

Shift in Balance of Power

  • The pandemic was the catalytic event that caused a shift in balance of power.
  • Main street shut down while Wall Street had an initial panic and a rapid recovery.
  • If you had a large portfolio of stocks or assets, you could have done nothing the entire year and still gained 25-30% wealth.
  • If you had a main street company, you had to work 20% harder to get nothing.
  • Inflation is the rate at which the things you want to buy are going up in price.
Michael Saylor

Devaluation of Currency

  • The value of assets that money buys is being devalued by 30% if the currency is devalued at some rate.
  • The currency devalued, which means that if you're a main street company, you had to work 20% harder to get nothing.
  • If you're a Wall Street company, you had to do nothing to get 20% better.
  • Inflation equals the rate at which the things you want to buy are going up in price.
  • Inflation is not just the consumer price index (CPI).
Michael Saylor

Understanding Inflation

  • Inflation is the rate at which the things you want to buy are going up in price.
  • The things you want to buy can be assets, luxury goods, commodity goods, or services.
  • The inflation rate varies depending on what you want to buy.
  • There are some things you don't have to pay for, such as streaming, YouTube, and ad finance.
  • Inflation is not just the consumer price index (CPI).
Michael Saylor

Bitcoin as a Solution

  • Bitcoin is a solution to the problem of currency devaluation.
  • Bitcoin is a scarce digital asset that is not subject to devaluation.
  • Bitcoin is a hedge against inflation.
  • Bitcoin is a store of value that is superior to gold.
  • Bitcoin is a once in a thousand year opportunity.
Michael Saylor

Inflation as a Vector

  • Inflation is the cost of stuff and if the money supply is expanding, the currency is devaluing.
  • The price gradient or the change in price for everything you might want to buy is different at every point in time.
  • If people can't buy something, the price won't go up.
  • Inflation is a vector, meaning it varies by time, space, and every item.
  • To calculate the inflation index, a market basket of goods, services, and assets that people would want to acquire must be constructed.
Michael Saylor

Hyperinflation after Lockdowns

  • After lockdowns, hyperinflation occurred in some things, such as bonds, equities, and cryptocurrencies.
  • The cost of scarce art and luxury real estate also inflated or hyperinflated.
  • Things that people can't buy didn't inflate.
  • A market basket of things that don't go up in price can be defined.
  • Highly manufactured goods with very low variable cost can be included in the market basket.
Michael Saylor

Rational Human Behavior

  • Rational human behavior causes people to take their money and buy things they want.
  • During lockdowns, people moved out into the country and lived in houses with green grass.
  • People go to the places where they want to go.
  • The price of land in the middle of North Dakota didn't go up by 50%.
  • Stampeding people cause assets to become scarce and desirable.
Michael Saylor

Inflation Calculation

  • Inflation is calculated by constructing a market basket of goods, services, and assets that people would want to acquire.
  • The rate at which that market basket of goods and services and assets is changing is given every month or every week.
  • Inflation varies by time, space, and every item.
  • Inflation is a vector, meaning it's not a scalar.
  • Every person has a different inflation index.
Michael Saylor

The Problem of Inflation

  • The value of goods and services is not the same as the price.
  • The cost of production does not inflate at the same rate as the value of goods.
  • The value of goods can increase with an increase in the money supply if there is demand.
  • Arithmetic cannot solve the problem of inflation.
  • Calculus is necessary to solve complex problems in engineering and economics.
Michael Saylor

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Michael Saylor's MASTERCLASS in Cryptocurrency Investing and the Future of BITCOIN - YouTube

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