Michael Saylor: Bitcoin, Inflation, and the Future of Money

Michael Saylor (03:12.080)

because everybody you've listed, not everybody, but most people you've listed is just over the

Michael Saylor (03:17.120)

past couple of centuries. And maybe it stretches a little farther back, but mostly all the cool

Lex Fridman (03:23.040)

stuff we've done in engineering is the past couple of centuries.

Michael Saylor (03:25.680)

I mean, Archimedes had his virtues. I studied the history of science at MIT and I also studied

Michael Saylor (03:34.480)

aerospace engineering. And so I clearly have a bias in favor of science. And if I look at the

Michael Saylor (03:40.720)

past 10,000 years and I consider all of the philosophy and the politics and their impact

Michael Saylor (03:47.760)

on the human condition, I think it's a wash for every politician that came up with a good idea,

Michael Saylor (03:53.360)

another politician came up with a bad idea. And it's not clear to me that most of the

Michael Saylor (03:59.920)

political and philosophical contributions to the human race and the human conditions

Michael Saylor (04:06.880)

have advanced so much. I mean, we're still taking guidance and admiring Aristotle and

Michael Saylor (04:13.680)

Plato and Seneca and the like. And on the other hand, if you think about what has made the human

Lex Fridman (04:22.320)

condition better, fire, water, harnessing of wind energy, try to row across an ocean, right?

Lex Fridman (04:33.520)

Not easy.

Lex Fridman (04:34.080)

And for people who are just listening or watching, there's a beautiful sexy ship from

Lex Fridman (04:40.320)

16th, 17th century.

Michael Saylor (04:42.080)

This is a 19th century handmade model of a 17th century sailing ship, which is of the type that

Michael Saylor (04:48.960)

the Dutch East India's company used to sail the world and trade. So that was made, the original

Michael Saylor (04:56.720)

was made sometime in the 1600s. And then this model is made in the 19th century by individuals.

Lex Fridman (05:04.320)

So both the model and the ship itself is engineering at its best. And just imagine,

Michael Saylor (05:08.240)

just like rockets flying out to space, how much hope this filled people with,

Michael Saylor (05:12.000)

exploring the unknown, going into the mystery, both the entrepreneurs and the business people

Lex Fridman (05:19.520)

and the engineers and just humans. What's out there? What's out there to be discovered?

Lex Fridman (05:24.320)

Yeah, the metaphor of human beings leaving shore or sailing across the horizon,

Michael Saylor (05:29.440)

risking their lives in pursuit of a better life is an incredibly powerful one.

Michael Saylor (05:33.520)

In 1900, I suppose the average life expectancy is 50. During the Revolutionary War,

Michael Saylor (05:42.000)

while our founding fathers were fighting to establish life, liberty, pursuit of happiness,

Michael Saylor (05:47.680)

the Constitution, average life expectancy is like 32, somewhere between 32 and 36.

Lex Fridman (05:54.880)

So all the sound and the fury doesn't make you live past 32, but what does, right? Antibiotics.

Michael Saylor (06:01.120)

Conquest of infectious diseases. If we understand the science of infectious disease, sterilizing

Michael Saylor (06:09.760)

a knife and harnessing antibiotics gets you from 50 to 70. And that happened fast, right? That

Michael Saylor (06:15.680)

happens from 1900 to 1950 or something like that. And I think if you look at the human condition,

Michael Saylor (06:24.720)

you ever get on one of those rowing machines where they actually keep track of your watts output when

Michael Saylor (06:30.080)

you're on that? Yeah. It's like 200 is a lot. Okay, 200 is a lot. So a kilowatt hour is like all

Michael Saylor (06:39.920)

the energy that a human, a trained athlete can deliver in a day. And probably not 1% of the

Michael Saylor (06:48.160)

people in the world could deliver a kilowatt hour in a day. And the commercial value of a kilowatt

Michael Saylor (06:54.160)

hour, the retail value is 11 cents today. And the wholesale value is 2 cents. And so you have to look

Michael Saylor (07:03.760)

at the contribution of politicians and philosophers and economists to the human condition. And it's

Michael Saylor (07:12.320)

like at best a wash one way or the other. And then if you look at the contribution of John D.

Michael Saylor (07:17.680)

Rockefeller when he delivered you a barrel of oil and the energy in oil, liquid energy, or the

Michael Saylor (07:25.840)

contribution of Tesla as we deliver electricity. And what's the impact on the human condition if I

Michael Saylor (07:34.880)

have electric power, if I have chemical power, if I have wind energy, if I can actually set up a

Lex Fridman (07:43.360)

reservoir, create a dam, spend a turbine, and generate energy from a hydraulic source?

Michael Saylor (07:52.160)

That's extraordinary, right? And so our ability to cross the ocean, our ability to grow food,

Michael Saylor (08:00.400)

our ability to live, it's technology that gets the human race from a brutal life where life

Lex Fridman (08:09.360)

expectancy is 30 to a world where life expectancy is 80.

Michael Saylor (08:14.400)

You gave a D minus to the economists. So are they too like the politicians a wash

Lex Fridman (08:20.960)

in terms of there's good ideas and bad ideas and that tiny delta between good and bad?

Lex Fridman (08:26.960)

Is how you squeak past the F plus onto the D minus territory?

Lex Fridman (08:31.440)

I think most economic ideas are bad ideas.

Michael Saylor (08:34.720)

Most.

Michael Saylor (08:35.280)

You know, like take us back to MIT and you want to solve a fluid dynamics problem. Like design

Michael Saylor (08:43.840)

the shape of the hull of that ship, or you want to design an airfoil, a wing, or if you want to

Michael Saylor (08:50.240)

design an engine or a nozzle in a rocket ship, you wouldn't do it with simple arithmetic.

Michael Saylor (08:59.760)

You wouldn't do it with a scaler. There's not a single number, right? It's vector math.

Lex Fridman (09:04.160)

You know, computational fluid dynamics is n dimensional, higher level math,

Michael Saylor (09:10.480)

you know, complicated stuff. So when an economist says the inflation rate is

Michael Saylor (09:15.920)

2%, that's a scaler. And when an economist says it's not a problem to print more money,

Michael Saylor (09:22.800)

because the velocity of the money is very low, monetary velocity is low, that's another scaler.

Michael Saylor (09:29.680)

Okay, so the truth of the matter is inflation is not a scaler. Inflation is an n dimensional vector.

Michael Saylor (09:38.480)

Money velocity is not a scaler.

Michael Saylor (09:40.800)

The saying, what's the velocity of money? Oh, it's slow or it's fast. It ignores the question of

Lex Fridman (09:49.920)

what medium is the money moving through. And the same way that, you know, what's the speed of sound?

Michael Saylor (09:57.360)

Okay, well, what is sound, right? Sound, you know, sound is a compression wave. It's energy

Michael Saylor (10:05.360)

moving through a medium, but the speed is different. So for example, the speed of sound through air is

Michael Saylor (10:11.120)

different than the speed of sound through water. And sound moves faster through water,

Michael Saylor (10:16.000)

it moves faster through a solid, and it moves faster to a stiffer solid. So there isn't one.

Lex Fridman (10:21.840)

What is the fundamental problem with the way economists reduce the world down to a model?

Lex Fridman (10:26.640)

Is it too simple? Or is it just even the first generation?

Michael Saylor (10:30.560)

I think that the fundamental problem is, if you see the world as a scaler, you simply pick

Michael Saylor (10:38.400)

the one number which is, which supports whatever you want to do, and you ignore the universe of

Michael Saylor (10:46.320)

other consequences from your behavior. In general, I don't know if you've heard of the

Michael Saylor (10:53.440)

Eric Weisen has been talking about this with gauge theory. So different kinds of approaches

Michael Saylor (11:01.120)

from the physics world, from the mathematical world to extend past this scaler view of economics.

Lex Fridman (11:08.800)

So gauge theory is one way that comes from physics. Do you find that a way of exploring economics

Lex Fridman (11:15.840)

interesting? So outside of cryptocurrency, outside of the actual technology,

Lex Fridman (11:19.440)

and so on, just analysis of how economics works. Do you find that interesting?

Michael Saylor (11:26.000)

Yeah, I think that if we're going to want to really make any scientific progress in economics,

Michael Saylor (11:31.360)

we have to apply much, much more computationally intensive and richer forms of mathematics.

Lex Fridman (11:38.560)

So simulation, perhaps, or?

Michael Saylor (11:40.720)

Yeah, you know, when I was at MIT, I studied system dynamics at MIT.

Michael Saylor (11:45.760)

You know, when I was at MIT, I studied system dynamics. You know, they taught it at the Sloan

Michael Saylor (11:50.800)

School. It was developed by Jay Forrester, who was an extraordinary computer scientist.

Lex Fridman (11:59.280)

And when we created models of economic behavior, they were all multi dimensional nonlinear models.

Lex Fridman (12:08.400)

So if you want to describe how anything works in the real world, you have to start with the concept

Michael Saylor (12:14.320)

of feedback. If I double the price of something, demand will fall, and attempts to create supply

Michael Saylor (12:22.160)

will increase, and there will be a delay before the capacity increases. There'll be an instant

Michael Saylor (12:28.720)

demand change, and there'll be rippling effects throughout every other segment of the economy,

Michael Saylor (12:34.400)

downstream and upstream of such a thing. So it's kind of common sense. But most economics,

Lex Fridman (12:40.720)

most classical economics, it's always, you know, taught with linear models,

Michael Saylor (12:46.080)

you know, fairly simplistic linear models. And oftentimes, even I'm really shocked today

Michael Saylor (12:52.720)

that the entire mainstream dialogue of economics has been captured by scale or arithmetic.

Michael Saylor (13:00.640)

For example, if you read, you know, read any article in New York Times or the Wall Street

Michael Saylor (13:06.880)

Journal, right, they just refer to there's an inflation number or the CPI or the inflation

Michael Saylor (13:12.720)

rate is X. And if you look at all the historic studies of the impact of inflation, generally,

Michael Saylor (13:20.560)

they're all based upon the idea that inflation equals CPI, and then they try to extrapolate from

Michael Saylor (13:27.840)

that and you just get nowhere with it. So at the very least, we should be considering inflation

Lex Fridman (13:35.760)

and other economics concept as a nonlinear dynamical system. So nonlinearity, and also

Michael Saylor (13:42.080)

just embracing the full complexity of just how the variables interact, maybe through simulation,

Lex Fridman (13:46.960)

maybe some have some interesting models around that.

Michael Saylor (13:49.920)

Wouldn't it be refreshing if somebody for once published a table of the change in price of every

Lex Fridman (13:55.680)

product, every service, and every asset in every place over time?

Michael Saylor (14:00.400)

LR You said table, some of that also is the task of visualization, how to extract from

Michael Saylor (14:06.160)

this complex set of numbers, patterns that somehow indicate something fundamental about

Michael Saylor (14:14.160)

what's happening. So like, summarization of data is still important, perhaps summarization,

Michael Saylor (14:19.760)

not down to a single scale of value. But looking at that whole sea of numbers, you have to find

Michael Saylor (14:27.040)

patterns, like what is inflation in a particular sector? What is maybe change over time, maybe

Michael Saylor (14:33.680)

different geographical regions, you know, things of that nature. I think that's kind of,

Michael Saylor (14:38.640)

I don't know even what that task is. You know, that's what you could look at machine learning,

Michael Saylor (14:43.120)

you can look at AI with that perspective, which is like, how do you represent what's happening

Michael Saylor (14:49.360)

efficiently, as efficiently as possible? That's never going to be a single number, but it might

Michael Saylor (14:54.400)

be a compressed model that captures something, something beautiful, something fundamental

Michael Saylor (14:58.720)

about what's happening.

Michael Saylor (15:00.320)

It's an opportunity, for sure, right? You know, if we take, for example, during the

Michael Saylor (15:09.840)

pandemic, the response of the political apparatus was to lower interest rates to zero, and to

Michael Saylor (15:18.720)

start buying assets, in essence, printing money. And the defense was, there's no inflation.

Lex Fridman (15:26.720)

But of course, you had one part of the economy where it was locked down, so it was illegal

Michael Saylor (15:33.120)

to buy anything. It was either illegal or it was impractical. So it would be impossible

Michael Saylor (15:41.120)

for demand to manifest, so of course, there is no inflation. On the other hand, there

Michael Saylor (15:45.920)

was instantaneous immediate inflation in another part of the economy. For example, you lower

Michael Saylor (15:49.440)

financial decisions. The asset market had hyperinflation within minutes of these

Michael Saylor (15:53.840)

the interest rates to zero. At one point, we saw the swap rate on a 30 year note go

Michael Saylor (15:59.520)

financial decisions.

Michael Saylor (15:59.520)

to 72 basis points. Okay, that means that the value of a long dated bond immediately

Lex Fridman (16:01.360)

So here again, it's about how we insights whether the market will

Lex Fridman (16:07.040)

inflates. So the bond market had hyperinflation within minutes of these

Michael Saylor (16:13.240)

react to the hyperinflation within minutes of these financial decisions.

Michael Saylor (16:17.840)

asset market had hyperinflation. We had what you call a K shape recovery, what we affectionately

Michael Saylor (16:24.000)

call a K shape recovery. Main Street shut down, Wall Street recovered all within six weeks.

Michael Saylor (16:30.800)

The inflation was in the assets, like in the stocks, in the bonds. If you look today, you see

Michael Saylor (16:38.640)

that a typical house, according to the Case Shiller Index today, is up 19.2% year over year. So if

Michael Saylor (16:48.320)

you're a first time home buyer, the inflation rate is 19%. The formal CPI announced a 7.9%.

Michael Saylor (16:58.880)

You can pretty much create any inflation rate you want by constructing a market basket,

Michael Saylor (17:05.840)

a weighted basket of products or services or assets that yield you the answer. I think that

Michael Saylor (17:13.680)

the fundamental failing of economists is, first of all, they don't really have a term for asset

Michael Saylor (17:21.840)

inflation. What's an asset? What's asset hyperinflation? You mentioned bond market swap

Michael Saylor (17:29.200)

rate and asset is where the majority of the hyperinflation happen. What's inflation? What's

Michael Saylor (17:35.920)

hyperinflation? What's an asset? What's an asset market? I'm going to ask so many dumb questions.

Michael Saylor (17:40.720)

In the conventional economic world, you would treat inflation as the rate of increase in

Lex Fridman (17:48.400)

price of a market basket of consumer products defined by a government agency.

Michael Saylor (17:54.000)

LW. So they have like traditional things that a regular consumer would be buying.

Lex Fridman (18:01.040)

The government selects like toilet paper, food, toaster,

Michael Saylor (18:06.960)

refrigerator, electronics, all that kind of stuff. And it's like a representative

Michael Saylor (18:12.320)

basket of goods that lead to a content existence on this earth for a regular consumer.

Michael Saylor (18:19.280)

CM. They define a synthetic metric, right? I mean, I'm going to say you should have a thousand

Michael Saylor (18:25.200)

square foot apartment and you should have a used car and you should eat three hamburgers a week.

Michael Saylor (18:33.040)

Now, 10 years go by and the apartment costs more, I could adjust the market basket by a,

Michael Saylor (18:40.560)

they call them hedonic adjustments. I could decide that it used to be in 1970 you needed

Michael Saylor (18:45.200)

a thousand square feet, but in the year 2020, you only need 700 square feet because we've

Michael Saylor (18:51.280)

miniaturized televisions and we've got more efficient electric appliances and because

Michael Saylor (18:56.880)

things have collapsed out of the iPhone, you just don't need as much space. So now I, you know,

Michael Saylor (19:02.000)

it may be that the apartment costs 50% more, but after the hedonic adjustment, there is no inflation

Michael Saylor (19:07.360)

because I just downgraded the expectation of what a normal person should have.

Lex Fridman (19:11.520)

TG. So the synthetic nature of the metric allows for manipulation by people in power?

Michael Saylor (19:16.400)

CM. Pretty much. I guess my criticism of economists is rather than embracing inflation

Lex Fridman (19:25.840)

based upon its fundamental idea, which is the rate at which the price of things go up, right?

Michael Saylor (19:31.600)

They've been captured by mainstream conventional thinking to immediately equate inflation to the

Michael Saylor (19:40.560)

government issued CPI or government issued PCE or government issued PPI measure, which was never the

Michael Saylor (19:47.840)

rate at which things go up. It's simply the rate at which a synthetic basket of products and

Michael Saylor (19:55.040)

services the government wishes to track go up. Now, the problem with that is that the

Michael Saylor (1:00:04.320)

you know, eight billion or so human beings. There's no other mammal that's got more than

Michael Saylor (1:00:08.800)

eight billion. If you walk through downtown Edinburgh and Scotland and you look up on this

Michael Saylor (1:00:13.760)

hill and this castle up on the hill, you know, and you talk to people and the story is, oh yeah,

Michael Saylor (1:00:21.120)

well that was a British castle, before it's a Scottish castle, before it was a Pict castle,

Michael Saylor (1:00:26.480)

before it was a Roman castle, before it was, you know, some other Celtic castle.

Michael Saylor (1:00:32.720)

Then they found 13 prehistoric castles buried one under the other under the other.

Lex Fridman (1:00:38.240)

And you get to the conclusion that 100,000 years ago, somebody showed up and grabbed the high

Michael Saylor (1:00:44.560)

point, the apex of the city, and they built a stronghold there, and they flourished,

Lex Fridman (1:00:51.280)

and their family flourished, and their tribe flourished until someone came along and knocked

Michael Saylor (1:00:55.040)

them off the hill. And it's been a nonstop, never ending fight by the the aggressive,

Michael Saylor (1:01:02.400)

most powerful entity, family, organization, municipality, tribe, whatever.

Lex Fridman (1:01:08.560)

All for the hill.

Michael Saylor (1:01:09.760)

For that one hill, going back since time immemorial. And, you know,

Michael Saylor (1:01:16.960)

you scratch your head and you think, it seems like it's like just this never ending.

Lex Fridman (1:01:23.600)

But doesn't that lead, if you just, all kinds of metrics, that seems to improve the quality

Michael Saylor (1:01:30.240)

of our cannons and ships as a result. Like, it seems that war, just like your laser eyes,

Michael Saylor (1:01:36.800)

focuses the mind on the engineering tasks.

Lex Fridman (1:01:39.440)

It is that. And it does remind you that the winner is always the most powerful.

Lex Fridman (1:01:48.640)

And we throw that phrase out, but no one thinks about what that phrase means.

Lex Fridman (1:01:53.120)

Like, who's the most powerful, or the, you know, or the most powerful side one,

Lex Fridman (1:01:58.240)

but they don't think about it. And they think about power, energy delivered in a period of

Michael Saylor (1:02:04.560)

time. And then you think a guy with a spear is more powerful than someone with their fist,

Lex Fridman (1:02:10.720)

and someone with a bow and arrow is more powerful than the person with the spear.

Lex Fridman (1:02:14.400)

And then you realize that somebody with bronze is more powerful than without,

Lex Fridman (1:02:19.040)

and steel is more powerful than bronze. And if you look at the Romans, you know,

Michael Saylor (1:02:23.920)

they persevered, you know, with artillery, and they could stand off from 800 meters and

Lex Fridman (1:02:28.880)

blast you to smithereens. You know, you study the history of the Balearic slingers, right?

Michael Saylor (1:02:35.520)

And, you know, you think we invented bullets, but they invented bullets to put in slings

Michael Saylor (1:02:40.960)

thousands of years ago. They could have stood off 500 meters and put a hole in your head,

Michael Saylor (1:02:46.320)

right? And so there was never a time when humanity wasn't vying to come up with an asymmetric form

Michael Saylor (1:02:58.240)

of projecting their own power via technology.

Lex Fridman (1:03:01.920)

And absolute power is when a leader is able to control a large amount of humans, they're

Michael Saylor (1:03:10.480)

they're facing the same direction, working in the same direction to leverage energy.

Lex Fridman (1:03:17.200)

The most organized society wins.

Michael Saylor (1:03:20.080)

Yeah.

Michael Saylor (1:03:20.800)

When the Romans were dominating everybody, they were the most organized civilization

Michael Saylor (1:03:26.720)

in Europe. And as long as they stayed organized, they dominated, and at some point they overexpanded

Lex Fridman (1:03:33.680)

and got disorganized and they collapsed. And I guess you could say that, you know,

Michael Saylor (1:03:39.600)

the struggle of human condition, it catalyzes the development of new technologies one after

Michael Saylor (1:03:45.680)

the other. It penalizes anybody that rejects ocean power, right, gets penalized. You reject

Michael Saylor (1:03:53.600)

artillery, you get penalized. You reject atomic power, you get penalized. If you reject digital

Michael Saylor (1:03:59.200)

power, cyber power, you get penalized. And the underlying control of the property keeps

Michael Saylor (1:04:07.600)

shifting hands from, you know, one institution or one government to another based upon how

Michael Saylor (1:04:14.560)

rationally they're able to channel that energy and how well organized or coordinated they are.

Michael Saylor (1:04:20.400)

Well, that's a really interesting thing about both the human mind and governments,

Michael Saylor (1:04:24.880)

that they, once they get a few good, and companies, once they get a few good ideas,

Michael Saylor (1:04:28.960)

they seem to stick with them. They reject new ideas. It's almost, whether that's emergent or

Michael Saylor (1:04:35.520)

or however that evolved, it seems to have a really interesting effect because when you're young,

Michael Saylor (1:04:43.120)

you fight for the new ideas. You push them through. Then a few of us humans find success.

Michael Saylor (1:04:50.720)

Then we get complacent. We take over the world using that new idea. And then the new young person

Michael Saylor (1:04:58.640)

with the better new idea challenges you. And you, as opposed to pivoting, you stick with the old

Lex Fridman (1:05:06.320)

and lose because of it. And that's how empires collapse. And it's just both at the individual

Michael Saylor (1:05:11.280)

level that happens when two academics fighting about ideas or something like that, and at the

Michael Saylor (1:05:16.960)

at the human civilization level, governments, they hold on to the ideas of old. It's fascinating.

Michael Saylor (1:05:23.520)

Jay Famiglietti An ever persistent theme in the history of science is the paradigm shift. And

Michael Saylor (1:05:29.280)

the paradigms shift when the old guard dies and a new generation arrives, or the paradigm shifts

Michael Saylor (1:05:36.720)

when there's a war and everyone that disagrees with the idea of aviation finds bombs dropping

Michael Saylor (1:05:44.240)

on their head, or everyone that disagrees with whatever your technology is has a rude awakening.

Lex Fridman (1:05:49.440)

And if they totally disagree, their society collapses, and they're replaced by that new thing.

Lex Fridman (1:05:56.160)

Trey Lockerbie A lot of the engineering you talked

Michael Saylor (1:05:58.560)

about had to do with ships and cannons and leveraging water. What about this whole digital

Michael Saylor (1:06:05.680)

thing that's happening, been happening over the past century? Is that still engineering in your

Lex Fridman (1:06:13.840)

mind? You're starting to operate in these bits of information?

Lex Fridman (1:06:17.600)

Jay Famiglietti I think there's two big ideas.

Michael Saylor (1:06:21.520)

The first wave of ideas were digital information. And that was the internet way been running since

Michael Saylor (1:06:28.240)

1990 or so for 30 years. And the second wave is digital energy. So if I look at digital information,

Michael Saylor (1:06:37.920)

this idea that we want to digitally transform a book, I'm going to dematerialize every book

Michael Saylor (1:06:44.560)

in this room into bits. And then I'm going to deliver a copy of the entire library to a billion

Michael Saylor (1:06:52.400)

people. And I'm going to do it for pretty much de minimis electricity. If I can dematerialize music,

Michael Saylor (1:07:01.520)

books, education, entertainment, maps, that is an incredibly exothermic transaction. It

Michael Saylor (1:07:13.920)

gives... It's a crystallization when we collapse into a lower energy state as a civilization and

Michael Saylor (1:07:19.280)

we give off massive amounts of energy. If you look at what Carnegie did, the richest man in the world

Michael Saylor (1:07:25.200)

created libraries everywhere at the time, and he gave away his entire fortune. And now we can give

Michael Saylor (1:07:30.720)

a better library to every six year old for nothing. And so what's the value of giving a

Michael Saylor (1:07:36.960)

million books to eight billion people? That's the explosion in prosperity that comes from

Michael Saylor (1:07:44.480)

digital transformation. And when we do it with maps, I transform the map, I put it into a car,

Michael Saylor (1:07:52.400)

you get in the car and the car drives you where you want to go with the map. And how much better

Michael Saylor (1:07:58.080)

is that than a Rand McNally Atlas right here? It's like a million times better. So the first wave of

Michael Saylor (1:08:06.320)

digital transformation was the dematerialization of all of these informational things which are

Michael Saylor (1:08:13.760)

non conservative. I could take Beethoven's Fifth Symphony, played for by the best orchestra in

Michael Saylor (1:08:20.000)

Germany, and I could give it to a billion people and they could play it a thousand times each

Michael Saylor (1:08:26.560)

at less than the cost of the one performance. So I deliver culture and education and erudition and

Michael Saylor (1:08:33.680)

intelligence and insight to the entire civilization over digital rails. And the consequences of the

Michael Saylor (1:08:40.560)

human race are first order, generally good, right? The world is a better place, it drives growth,

Lex Fridman (1:08:47.200)

and you create these trillion dollar entities like Apple and Amazon and Facebook and Google

Lex Fridman (1:08:52.560)

and Microsoft, right? That is the first wave. The second wave...

Michael Saylor (1:08:57.680)

I'm sorry to interrupt, but that first wave, it feels like the impact that's positive,

Michael Saylor (1:09:07.680)

you said the first order impact is generally positive. It feels like it's positive in a way

Michael Saylor (1:09:12.240)

that nothing else in history has been positive. And then we may not actually truly be able to

Michael Saylor (1:09:20.320)

understand the orders and magnitude of increase in productivity and just progress of human

Michael Saylor (1:09:28.960)

civilization until we look back centuries from now. It just feels, or maybe, just looking at

Michael Saylor (1:09:36.080)

the impact of Wikipedia, giving access to basic wisdom or basic knowledge and then perhaps wisdom

Michael Saylor (1:09:46.160)

to billions of people. If you can just linger on that for a second, what's your sense of the

Lex Fridman (1:09:51.920)

impact of that? You know, I would say if you're a technologist philosopher,

Michael Saylor (1:10:03.600)

the impact of a technology is so much greater on the civilization and the human condition

Michael Saylor (1:10:09.920)

than a non technology that is almost not worth your trouble to bother trying to fix things that

Michael Saylor (1:10:15.920)

conventional way. So let's take example. I have a foundation, the Saylor Academy, and the Saylor

Michael Saylor (1:10:23.680)

Academy gives away free education, free college education to anybody on earth that wants it.

Lex Fridman (1:10:30.880)

And we've had more than a million students. And if you go and you take the physics class,

Lex Fridman (1:10:36.720)

the lectures were by the same physics lecturer that taught me physics at MIT.

Michael Saylor (1:10:40.560)

Except when I was at MIT, the cost of the first four weeks of MIT would have drained my family's

Michael Saylor (1:10:48.240)

life, collective life savings for the first last hundred years. Like a hundred years worth of my

Michael Saylor (1:10:54.160)

father, my grandfather, my great grandfather, they saved every penny they had after a hundred

Michael Saylor (1:10:58.480)

years. They could have paid for one week or two weeks of MIT. That's how fiendishly expensive and

Michael Saylor (1:11:04.160)

inefficient it was. So I went on scholarship. I was lucky to have a scholarship. But on the other

Michael Saylor (1:11:11.360)

hand, I sat in the back of the 801 lecture hall and I was like right up in the rafters.

Michael Saylor (1:11:18.240)

It's an awful experience on these like uncomfortable wooden benches and you can

Michael Saylor (1:11:22.720)

barely see the blackboard. And you got to be there synchronously. And the stuff we upload,

Michael Saylor (1:11:29.360)

you can start it and stop it and watch it on your iPad or watch it on your computer

Lex Fridman (1:11:34.560)

and rewind it multiple times and sit in a comfortable chair and you can do it from

Michael Saylor (1:11:38.640)

anywhere on earth and it's absolutely free. So I think about this and I think you want to improve

Michael Saylor (1:11:44.960)

the human condition. You need people with postgraduate level education. You need PhDs.

Lex Fridman (1:11:52.880)

And I know this sounds kind of elitist, but you want to cure cancer and you want to go to the

Michael Saylor (1:11:58.000)

stars, fusion drive. We need new propulsion, right? We need extraordinary breakthroughs

Michael Saylor (1:12:06.800)

in every area of basic science, you know, be it biology or propulsion or material science or

Michael Saylor (1:12:14.640)

computer science. You're not doing that with an undergraduate degree. You're certainly not doing

Michael Saylor (1:12:19.280)

it with a high school education. But the cost of a PhD is like a million bucks. There's like 10

Michael Saylor (1:12:26.000)

million PhDs in the world if you check it out. There's 8 billion people in the world. How many

Michael Saylor (1:12:31.680)

people could get a PhD or would want to? Maybe not 8 billion, but a billion, 500 million. Let's just

Michael Saylor (1:12:38.720)

say 500 million to a billion. How do you go from 10 million to a billion highly educated people,

Michael Saylor (1:12:46.480)

all of them specializing in, and I don't have to tell you how many different fields of human

Michael Saylor (1:12:52.800)

endeavor there are. I mean, your life is interviewing these experts and there's so many,

Lex Fridman (1:12:59.280)

right? You know, it's amazing. So how do I give a multimillion dollar education to a billion people?

Lex Fridman (1:13:07.680)

And there's two choices. You can either endow a scholarship, in which case you pay $75,000 a year.

Michael Saylor (1:13:14.720)

Okay. $75,000. Let's pay a million dollars a person. I can do it that way. And you're never,

Michael Saylor (1:13:24.320)

even if you had a trillion dollars, if you had $10 trillion to throw at the problem,

Lex Fridman (1:13:30.160)

and we've just thrown $10 trillion at certain problems, you don't solve the problem, right?

Michael Saylor (1:13:36.640)

If I put $10 trillion on the table and I said educate everybody, give them all a PhD,

Michael Saylor (1:13:40.880)

you still wouldn't solve the problem. Harvard University can't educate 18,000 people

Michael Saylor (1:13:47.200)

simultaneously, or 87,000, or 800,000, or 8 million. So you have to dematerialize the

Michael Saylor (1:13:53.440)

professor and dematerialize the experience. So you put it all as streaming on demand,

Michael Saylor (1:13:58.880)

computer generated education, and you create simulations where you need to create simulations,

Lex Fridman (1:14:05.600)

and you upload it. It's like the human condition is being held back by 500,000 well meaning

Michael Saylor (1:14:16.720)

average algebra teachers. I love them. I mean, please don't take offense if you're an algebra

Michael Saylor (1:14:23.440)

teacher, but instead of 500,000 algebra teachers going through the same motion over and over again,

Lex Fridman (1:14:30.400)

what you need is like one, or five, or 10 really good algebra teachers, and they need to do it a

Michael Saylor (1:14:37.440)

billion times a day, or a billion times a year for free. And if we do that, there's no reason

Lex Fridman (1:14:45.920)

why you can't give infinite education, certainly in science, technology, engineering, and math,

Michael Saylor (1:14:53.120)

right? Infinite education to everybody with no constraint. And I think the same is true,

Michael Saylor (1:15:01.280)

right? With just about every other thing. If you want to bring joy to the world,

Michael Saylor (1:15:06.880)

you need digital music. If you want to bring enlightenment to the world, you need digital

Michael Saylor (1:15:12.160)

education. If you want to bring anything of consequence in the world, you got to digitally

Michael Saylor (1:15:19.360)

transform it. And then you got to manufacture it something like a hundred times more efficiently

Michael Saylor (1:15:25.920)

as a start, but a million times more efficiently is probably, you know, that's hopeful. Maybe you

Michael Saylor (1:15:35.040)

have a chance. And if you look at all of these space endeavors and everything we're thinking

Michael Saylor (1:15:40.240)

about getting to Mars, getting off the planet, getting to other worlds, number one thing you

Michael Saylor (1:15:45.120)

got to do is you got to make a fundamental breakthrough in an engine. People dreamed

Lex Fridman (1:15:50.160)

about flying for thousands of years, but until the internal combustion engine,

Michael Saylor (1:15:56.000)

you didn't have enough, you know, enough energy, enough power in a light enough package

Michael Saylor (1:16:03.200)

in order to solve the problem. And the human race has all sorts of those fundamental

Michael Saylor (1:16:09.680)

all engines and materials and techniques that we need to master. And each one of them is a lifetime

Michael Saylor (1:16:19.040)

of experimentation of someone capable of making a seminal contribution to the body of human

Michael Saylor (1:16:26.880)

knowledge. There are certain problems like education that could be solved through this

Michael Saylor (1:16:30.800)

process of dematerialization. And by the way, to give props to the 500k algebra teachers,

Michael Saylor (1:16:37.520)

when I look at YouTube, for example, one possible approach is each one of those 500,000 teachers

Michael Saylor (1:16:43.440)

probably had days and moments of brilliance. And if they had the ability to contribute to

Michael Saylor (1:16:49.280)

in the natural selection process, like the market of education, where the best ones rise up, that's

Michael Saylor (1:16:56.080)

a really interesting way, which is like the best day of your life, the best lesson you've ever

Michael Saylor (1:17:03.200)

the best lesson you've ever taught could be found and sort of broadcast to billions of people.

Lex Fridman (1:17:14.560)

So all of those kinds of ideas can be made real in the digital world. Now traveling across planets,

Michael Saylor (1:17:21.520)

you still can't solve that problem with dematerialization. What you could solve

Michael Saylor (1:17:27.680)

potentially is dematerializing the human brain where you can transfer, like you don't need to

Michael Saylor (1:17:34.480)

have astronauts on the ship, you can have a floppy disk carrying a human brain.

Michael Saylor (1:17:41.040)

Touching on those points, you'd love for the 500,000 algebra teachers to become 500,000 math

Michael Saylor (1:17:47.600)

specialists, and maybe they clump into 50,000 specialties as teams, and they all pursue 50,000

Michael Saylor (1:17:53.600)

new problems, and they put their algebra teaching on autopilot. That's the same as when I give you

Michael Saylor (1:17:59.760)

11 cents worth of electricity and you don't have to row a boat eight hours a day before you can

Michael Saylor (1:18:08.800)

eat. It would be a lot better that you would pay for your food in the first eight seconds of your

Michael Saylor (1:18:15.440)

day and then you could start thinking about other things, right? With regard to technology, one

Michael Saylor (1:18:23.920)

thing that I learned studying technology when you look at S curves is until you start the S curve,

Michael Saylor (1:18:31.840)

you don't know whether you're a hundred years from viability, a thousand years from viability,

Michael Saylor (1:18:39.040)

or a few months from viability. Isn't that fun? That's so fun. The early part of the S curve is

Lex Fridman (1:18:47.200)

so fun because you don't know. In 1900, you could have got any number of learned academics to give

Michael Saylor (1:18:55.040)

you 10,000 reasons why humans will never fly, right? And in 1903, the Wright brothers flew,

Lex Fridman (1:19:01.200)

and by 1969, we're walking on the moon. So the advance that we made in that field was extraordinary,

Lex Fridman (1:19:09.600)

but for the hundred years and 200 years before, they were just back and forth and nobody was

Michael Saylor (1:19:14.320)

close. And that's the happy part. The happy part is we went from flying 20 miles an hour or whatever

Michael Saylor (1:19:23.440)

to flying 25,000 miles an hour in 66 years. The unhappy part is I studied aeronautical

Michael Saylor (1:19:33.360)

engineering at MIT in the 80s. And in the 80s, we had Gulfstream aircraft, we had Boeing 737s,

Michael Saylor (1:19:41.280)

we had the Space Shuttle. And you fast forward 40 years and we pretty much had the same exact

Michael Saylor (1:19:48.160)

aircraft. The efficiency of the engines was 20, 30% more. We slammed into a brick wall around

Michael Saylor (1:19:59.440)

69 to 75. In fact, the Global Express, the Gulfstream, these were all engineered in the 70s,

Michael Saylor (1:20:10.320)

some in the 60s. The fuselage silhouette of a Gulfstream of a G5 was the same shape as a G4,

Michael Saylor (1:20:19.200)

is the same shape as a G3, is the same shape as a G2. And that's because they were afraid to change

Michael Saylor (1:20:24.480)

the shape for 40 years because they worked it out in a wind tunnel, they knew it worked.

Lex Fridman (1:20:29.280)

And when they finally decided to change the shape, it was like a $10 billion exercise with modern

Michael Saylor (1:20:36.240)

supercomputers and computational fluid dynamics. Why was it so hard? What is that wall made of

Michael Saylor (1:20:44.880)

that you slammed into? The right question is, so why does a guy that went to MIT that got an

Michael Saylor (1:20:49.440)

aeronautical engineering degree spend his career in software? Why is it that I never a day in my

Michael Saylor (1:20:54.800)

life, with the exception of some Air Force Reserve work, I never got paid to be an aeronautical

Michael Saylor (1:21:00.720)

engineer and I worked in software engineering my entire career. Maybe software engineering

Michael Saylor (1:21:04.800)

is the new aeronautical engineering in some way. Maybe you hit fundamental walls uncertain

Michael Saylor (1:21:12.160)

until you have to return to it centuries later. Or no.

Lex Fridman (1:21:16.560)

STUART The National Gallery of Art was endowed by a very rich man,

Michael Saylor (1:21:22.240)

Andrew Mellon. And you know how he made his money? Aluminum. Okay? And so,

Lex Fridman (1:21:29.360)

and you know what kind of airplanes you can create without aluminum? Nothing. Nothing, right?

Michael Saylor (1:21:36.240)

LARRY So it's a materials problem.

Michael Saylor (1:21:38.320)

STUART Okay, so 1900, we made massive advances in metallurgy, right? I mean, that was US steel,

Michael Saylor (1:21:46.000)

that was iron to steel, aluminum, massive fortunes were created because this was a massive technical

Michael Saylor (1:21:52.640)

advance. And then we also had the internal combustion engine and, you know, the story of Ford

Lex Fridman (1:21:58.080)

and General Motors and Daimler Chrysler and the like is informed by that. So you have no jet

Michael Saylor (1:22:04.720)

engines, no rocket motors, no internal combustion engines, you have no aviation. But even if you had

Michael Saylor (1:22:10.320)

those engines, if you were trying to build those things with steel, no chance. You had to have

Michael Saylor (1:22:15.760)

aluminum. So there's like two pretty basic technologies. And once you have those two

Michael Saylor (1:22:23.120)

technologies, stuff happens very fast. So tell me the last big advance in like jet engines,

Michael Saylor (1:22:33.200)

there hasn't been one. Like the last big advance in rocket engines, hasn't been one. The big

Michael Saylor (1:22:39.520)

advances in spaceship design from what I can see are in the control systems, the gyros and the

Michael Saylor (1:22:45.760)

ability to land, right, in a stable fashion. That's pretty amazing, landing a rocket. Also in the,

Michael Saylor (1:22:54.480)

at least according to Elon and so on, the manufacture of the more efficient and less

Michael Saylor (1:23:03.120)

expensive manufacture of rockets. So like it's a production, whatever that you call that

Michael Saylor (1:23:07.760)

discipline of at scale manufacture, at scale production, so factory work. But it's not 10X.

Lex Fridman (1:23:13.360)

I mean, maybe it's 10X over a period of a few decades.

Michael Saylor (1:23:16.320)

When we figure out how to operate a spaceship, you know, on the water in your water bottle for

Michael Saylor (1:23:23.600)

a year, right? Now, then you've got to break through. So the bottom line is propulsion,

Michael Saylor (1:23:29.840)

propellant, propulsion technology, propellants and the materials technology, they were critical

Michael Saylor (1:23:36.720)

to getting on that aviation S curve. And then we slammed into a wall. And then we had to

Michael Saylor (1:23:42.960)

switch to a new S curve in the 70s. And the Boeing 747, the Global Express, the Gulf Stream,

Michael Saylor (1:23:51.520)

these things were, the Space Shuttle, they were all pretty much reflective of that. And then we

Michael Saylor (1:23:56.400)

kind of, then we stopped. And at that point, you have to switch to a new S curve. So the next

Michael Saylor (1:24:02.800)

equivalent to the internal combustion engine was the CPU. And the next aluminum equipment was

Michael Saylor (1:24:08.640)

the S curve. And then we actually started developing CPUs. The transistor gave way to CPUs.

Lex Fridman (1:24:14.800)

And if you look at the power, right, the bandwidth that we had on computers and Moore's law, right?

Lex Fridman (1:24:22.480)

What if the efficiency of jet engines had doubled every three years, right, in the last 40 years,

Michael Saylor (1:24:31.040)

where we'd be right now, right? So I think that if you're a business person, if you're looking for

Michael Saylor (1:24:38.240)

a real application of your mind, then you have to find that S curve. And ideally,

Michael Saylor (1:24:46.800)

you have to find it in the first five, six, 10 years. But people always miss this. Let's take

Michael Saylor (1:24:53.200)

Google Glass, right? Google Glass was an idea in 2013. The year is 2022. And people were quite sure

Michael Saylor (1:25:02.080)

this was going to be a big thing. And it could have been at the beginning of the S curve.

Lex Fridman (1:25:06.960)

But fundamentally, we didn't really have an effective mechanism. I mean, people getting

Michael Saylor (1:25:12.720)

vertigo and they're, you know. But you didn't know that at the beginning of the S curve, right? I mean,

Michael Saylor (1:25:17.680)

maybe some people had a deep intuition about the fundamentals of augmented reality. But you don't

Michael Saylor (1:25:23.520)

know that. You don't have those, you're looking through the fog. You don't know. So the point is,

Michael Saylor (1:25:29.280)

we're year zero in 2013. And we're still year zero in 2022 on that augmented reality. And when

Michael Saylor (1:25:37.520)

somebody puts out a set of glasses that you can wear comfortably without getting vertigo,

Michael Saylor (1:25:44.720)

right? Without any disorientation that managed to have the stability and the bandwidth necessary to

Michael Saylor (1:25:51.600)

sync with the real world, you'll be in year one. And from that point, you'll have a 70 year or

Michael Saylor (1:25:58.800)

some interesting future until you slam into a limit to growth. And then it'll slow down.

Lex Fridman (1:26:06.320)

And this is the story of a lot of things, right? I mean, John D. Rockefeller got in the oil business

Michael Saylor (1:26:13.120)

in the 1860s. And the oil business, as we understood it, became fairly mature by the 1920s,

Michael Saylor (1:26:24.240)

the 30s. And then it actually stayed that way until we got to fracking, which was like seven

Michael Saylor (1:26:29.760)

years later, and then it burst forward. So... The interesting story about Moore's law, though,

Michael Saylor (1:26:34.960)

is that you get this constant burst of S curves on top of S curves on top of S curve. It's like

Michael Saylor (1:26:41.920)

the moment you start slowing down, or almost ahead of you slowing down, you come up with another

Lex Fridman (1:26:48.480)

innovation, another innovation. So Moore's law doesn't seem to happen in every

Michael Saylor (1:26:52.560)

technological advancement. It seems like you only get a couple of S curves and then you're done

Michael Saylor (1:26:58.880)

for a bit. So I wonder what the pressures there are that resulted in such success over several

Michael Saylor (1:27:04.560)

decades and still going. Humility dictates that nobody knows when the S curve kicks off,

Lex Fridman (1:27:12.560)

and you could be 20 years early or 100 years early. Leonardo da Vinci, you know,

Michael Saylor (1:27:20.000)

they were... Michelangelo, they were designing flying machines hundreds and hundreds of years ago.

Lex Fridman (1:27:25.520)

So humility says you're not quite sure when you really hit that commercial viability,

Lex Fridman (1:27:30.560)

and it also dictates you don't know when it ends. Like, when will the party stop? When will

Michael Saylor (1:27:36.800)

Moore's law stop and we'll get to the point where they're exponentially diminishing returns on

Michael Saylor (1:27:42.320)

silicon performance? And when you... Just like we got exponentially diminishing returns on jet

Michael Saylor (1:27:48.560)

engines, you know, and it just takes an exponential increase in effort to make it 10% better.

Lex Fridman (1:27:56.480)

But while you're in the middle of it, then you know you can do things. So the reason that the

Michael Saylor (1:28:02.000)

digital revolution is so important is because the underlying platforms, the bandwidth of and the

Michael Saylor (1:28:09.920)

performance of the components, and I say the components are the radio protocols, mobile

Michael Saylor (1:28:17.280)

protocols, the batteries, the CPUs, and the displays, right? Those four components are

Michael Saylor (1:28:26.880)

pretty critical. They're all critical in the creation of an iPhone. I wrote about it in the

Michael Saylor (1:28:31.440)

book, The Mobile Wave, and they catalyzed this entire mobile revolution. Because they have

Michael Saylor (1:28:38.880)

advanced and continue to advance, they created the very fertile environment for all these digital

Michael Saylor (1:28:46.320)

transformations. And the digital transformations themselves, right? They call for creativity in

Michael Saylor (1:28:56.080)

their own, right? Like, I think the interesting thing about... Let's take digital maps, right? When

Michael Saylor (1:29:03.120)

you conceptualize something as a dematerialized map, right? It becomes a map because I can put it

Michael Saylor (1:29:11.200)

on a display, like an iPad, or I can put it in a car, like a Tesla. But if you really want to

Michael Saylor (1:29:18.400)

figure it out, you can't think like an engineer. You need to think like a fantasy writer. Like,

Michael Saylor (1:29:23.440)

this is where it's useful if you studied... If you read... Played Dungeons and Dragons, and you read

Michael Saylor (1:29:28.560)

Lord of the Rings, and you studied all the fantasy literature. Because when I dematerialize the map,

Michael Saylor (1:29:36.080)

first I put 10 million pages of satellite imagery into the map, right? That's a simple physical

Michael Saylor (1:29:43.040)

transform. But then I start to put telemetry into the map, and I keep track of the traffic

Michael Saylor (1:29:50.320)

rates on the roads. And I tell you whether you'll be in a traffic jam if you drive that way, and I

Michael Saylor (1:29:54.560)

tell you which way to drive. And then I start to get feedback on where you're going, and I tell

Michael Saylor (1:29:58.960)

you the restaurants closed, and people don't like it anyway. And then I put an AI on the map, and

Michael Saylor (1:30:05.040)

then I put an AI on top of it, and I have it drive your car for you. And eventually, the implication

Michael Saylor (1:30:12.720)

of digital transformation of maps is, I get in a self driving car, and I say, take me someplace

Michael Saylor (1:30:17.680)

cool where I can eat. And how did you get to that last step, right? It wasn't simple engineering.

Michael Saylor (1:30:27.360)

There's a bit of fantasy in there, a bit of magic. Design, art, whatever the heck you call it.

Michael Saylor (1:30:33.280)

It's whatever, yeah, fantasy injects magic into the engineering process. Imagination

Michael Saylor (1:30:41.760)

precedes great revolutions in engineering. It's like imagining a world of what you can do with

Michael Saylor (1:30:50.480)

the display. How will the interaction be? That's where Google Glass actually came in, augmented

Michael Saylor (1:30:54.400)

reality, virtual reality. People were playing in the space of sci fi, imagination.

Michael Saylor (1:30:59.840)

They called a moonshot. They tried. It didn't work, but to their credit, they stopped trying,

Michael Saylor (1:31:03.840)

right? And then there's new people. They keep dreaming. Dreamers all around us. I love those

Michael Saylor (1:31:10.000)

dreamers, and most of them fail and suffer because of it. But some of them win Nobel prizes or become

Michael Saylor (1:31:16.800)

billionaires. Well, what I would say is, if half the civilization dropped what they were doing

Lex Fridman (1:31:24.480)

tomorrow and eagerly started working on launching a rocket to Alpha Centauri,

Michael Saylor (1:31:34.000)

it might not be the best use of our resources because it's kind of like if half of Athens

Michael Saylor (1:31:41.360)

in the year 500 BC eagerly started working on flying machines. If you went back and you said,

Lex Fridman (1:31:47.200)

what advice would you give them? You would say, you know, it's not going to work till you get to

Michael Saylor (1:31:52.000)

aluminum. And you're not going to get to aluminum until you work out the steel and certain other

Michael Saylor (1:31:56.800)

things. And you're not going to get to that until you work out the calculus of variations and some

Michael Saylor (1:32:01.280)

metallurgy. And there's a dude, Newton, that won't come along for quite a while, and he's going to

Michael Saylor (1:32:05.920)

give you the calculus to do it. And until then, it's hopeless. So you might be better off to work

Michael Saylor (1:32:11.520)

on the aqueduct or to focus upon sails or something. So if I look at this today, I say,

Michael Saylor (1:32:18.640)

there's massive, profound civilization advances to be made through digital transformation of

Michael Saylor (1:32:25.280)

information. And you can see them like that. This is the story of today. This is not the story of

Michael Saylor (1:32:31.040)

today, right? It's 10 years old, what we've been seeing. We're living through different manifestations

Michael Saylor (1:32:36.400)

of that story today, too, though. Like social media, the effects of that is very interesting

Michael Saylor (1:32:42.960)

because ideas spread even, you talk about velocity of money, the velocity of ideas keeps increasing.

Lex Fridman (1:32:49.760)

So like Wikipedia is a passive store. It's a store of knowledge. Twitter is like a water hose

Michael Saylor (1:33:00.560)

or something. It's like spraying you with knowledge, whether you want it or not. It's like

Michael Saylor (1:33:04.240)

social media is just like this explosion of ideas. And then we pick them up, and then we

Michael Saylor (1:33:10.800)

pick them up. And then we try to understand ourselves because the drama of it also plays

Michael Saylor (1:33:16.400)

with our human psyche. So sometimes there's more ability for misinformation, for propaganda to take

Michael Saylor (1:33:22.800)

hold. So we get to learn about ourselves. We get to learn about the technology that can decelerate

Michael Saylor (1:33:27.760)

the propaganda, for example, all that kind of stuff. But like the reality is we're living,

Michael Saylor (1:33:32.320)

I feel like we're living through a singularity in the digital information space. And we're not,

Lex Fridman (1:33:38.880)

we don't have a great understanding of exactly how it's transforming our lives.

Michael Saylor (1:33:43.760)

This is where money is useful as a metaphor for significance, because if money is the economic

Michael Saylor (1:33:52.480)

energy of the civilization, then something that's extraordinarily lucrative that's going to generate

Michael Saylor (1:34:00.080)

a monetary or a wealth increase is a way to increase the net energy in the civilization.

Lex Fridman (1:34:05.440)

And ultimately, if we had 10 times as much of everything, we'd have a lot more

Michael Saylor (1:34:11.520)

free resources to pursue all of our advanced scientific and mathematical and theoretical

Michael Saylor (1:34:16.560)

endeavors. So let's take Twitter. Twitter is something that could be 10 times more

Michael Saylor (1:34:20.880)

valuable than it is. Twitter could be made 10 times better.

Michael Saylor (1:34:27.040)

No, by the way, I should say that people should follow you on Twitter. Your Twitter

Michael Saylor (1:34:29.680)

account is awesome. Thank you. It could be made 10 times better. Yeah.

Michael Saylor (1:34:33.920)

Yeah. Twitter can be made 10 times better. If we take YouTube or take education,

Michael Saylor (1:34:42.320)

we could generate a billion PhDs. And the question is, do you need any profound

Michael Saylor (1:34:48.800)

breakthrough in materials or technology to do that? And the answer is not really.

Lex Fridman (1:34:53.840)

So if you want to, you could make Apple, Amazon, Facebook, Google, Twitter, all these things

Michael Saylor (1:35:00.160)

better. The United States government, if they took 1% of the money they spend on the Department

Michael Saylor (1:35:08.080)

of Education and they simply poured it into digital education and they gave degrees to

Michael Saylor (1:35:15.920)

people that actually met those requirements, they could provide 100x as much education for

Michael Saylor (1:35:22.400)

one one hundredth of the cost and they could do it with no new technology. That's a marketing

Lex Fridman (1:35:28.720)

and political challenge. So I don't think every objective is equally practical.

Lex Fridman (1:35:36.640)

And I think the benefit of being an engineer or thinking about practical achievements is

Michael Saylor (1:35:45.200)

when the government pursues an impractical objective or when anybody, an entrepreneur,

Michael Saylor (1:35:53.120)

not so bad with entrepreneur because they don't have that much money to waste,

Michael Saylor (1:35:55.760)

when a government pursues an impractical objective, they squander trillions and trillions

Michael Saylor (1:36:00.480)

of dollars and achieve nothing. Whereas if they pursue a practical objective or if they simply

Michael Saylor (1:36:07.920)

get out of the way and do nothing and they allow the free market to pursue the practical objectives,

Michael Saylor (1:36:15.040)

then I think you can have a profound impact on the human civilization.

Lex Fridman (1:36:19.040)

And if I look at the world we're in today, I think that there are multi trillion, 10, 20,

Michael Saylor (1:36:31.440)

50 trillion dollars worth of opportunities in the digital information realm yet to be obtained.

Lex Fridman (1:36:40.800)

But there's hundreds of trillions of dollars of opportunities in the digital energy realm

Michael Saylor (1:36:47.520)

that not only are they not obtained, the majority of people don't even know what digital energy is.

Michael Saylor (1:36:54.640)

Most of them would reject the concept. They're not looking for it. They're not expecting to find it.

Michael Saylor (1:37:00.960)

It's inconceivable because it is a paradigm shift. But in fact, it's completely practical.

Michael Saylor (1:37:07.280)

Right under our nose, it's staring at us and it could make the entire civilization

Michael Saylor (1:37:13.840)

work dramatically better in every respect.

Lex Fridman (1:37:18.880)

So you mentioned in the digital world, digital information is one, digital energy is two,

Lex Fridman (1:37:26.960)

and the possible impact on the world and the set of opportunities available in the digital energy

Lex Fridman (1:37:34.240)

space is much greater. So how do you think about digital energy? What is it?

Lex Fridman (1:37:39.680)

So I'll start with Tesla. He had a very famous quote. He said, if you want to understand the

Michael Saylor (1:37:44.960)

universe, think in terms of energy, vibration, and frequency. And it gets you thinking about

Lex Fridman (1:37:52.960)

what is the universe? And of course, the universe is just all energy. And then what is matter?

Michael Saylor (1:37:58.880)

Matter is low frequency energy. And what are we? You know, we're vibrating, you know, ashes to ashes,

Michael Saylor (1:38:06.880)

dust to dust. I can turn a tree into light. I can turn light back into a tree. If I consider

Michael Saylor (1:38:16.000)

the entire universe, and it's very important because we don't really think this way. Let's

Michael Saylor (1:38:20.640)

take the New York disco model. If I walk into a nightclub and there's loud music blaring in

Michael Saylor (1:38:29.120)

New York City, what's really going on there, right? If you blast out 15, 14 billion years ago,

Michael Saylor (1:38:37.520)

the universe is formed. Okay, that's a low frequency thing. The universe formed a billion

Michael Saylor (1:38:43.200)

years ago, the sun, maybe the earth, or form. The continents are 400 million years old. The schist

Michael Saylor (1:38:50.240)

that New York City is on is some hundreds of millions of years. But the Hudson River is only

Michael Saylor (1:38:55.520)

20,000 years. There's a building that's probably 50 years old. There's a company operating that

Michael Saylor (1:39:02.960)

disco or that club, which is five to 10 years old. There's a person, a customer walking in there

Michael Saylor (1:39:09.680)

for an experience for a few hours. There's music that's oscillating at some kilohertz. And then

Michael Saylor (1:39:17.760)

there's light. And you have all forms of energy, all frequencies, all layered, all moving through

Michael Saylor (1:39:26.400)

different medium. And how you perceive the world is the question of at what frequency do you want

Michael Saylor (1:39:33.520)

to perceive the world. And I think that once you start to think that way, you're catalyzed to think

Michael Saylor (1:39:44.480)

about what would digital energy look like? And why would I want it? And what is it? So

Lex Fridman (1:39:54.560)

why don't we just start right there? What is it? The most famous manifestation of digital energy

Michael Saylor (1:40:00.160)

is Bitcoin. Bitcoin is a crypto asset. It's a crypto asset that has monetary value.

Michael Saylor (1:40:06.560)

Can we just link on that? Bitcoin is a digital asset that has monetary value.

Lex Fridman (1:40:18.480)

What is a digital asset? What is monetary? Why use those terms versus the words of

Lex Fridman (1:40:23.920)

money and currency? Is there something interesting in that disambiguation of different terms?

Michael Saylor (1:40:29.760)

I'd call it a crypto asset network. The goal is to create a billion dollar block of pure energy

Michael Saylor (1:40:39.760)

in cyberspace. One that I could then move with no friction at the speed of light.

Michael Saylor (1:40:49.440)

It's the equivalent to putting a million pounds in orbit. How do I actually launch

Lex Fridman (1:40:56.320)

something into orbit? How do I launch something into cyberspace such that it moves friction free?

Lex Fridman (1:41:02.160)

And the solution is a decentralized proof of work network. Satoshi's solution was,

Michael Saylor (1:41:10.880)

I'm going to establish a protocol running on a distributed set of computers that will maintain

Michael Saylor (1:41:17.280)

a constant supply of never more than 21 million Bitcoin subdividable by 100 million Satoshis each.

Michael Saylor (1:41:24.800)

Transferable via transferring private keys. Now, the innovation is to create that in an ethical,

Michael Saylor (1:41:42.320)

durable fashion. The ethical innovation is I want it to be property and not a security.

Michael Saylor (1:41:49.280)

A bushel of corn, an acre of land, a stack of lumber and a bar of gold and a Bitcoin are all

Michael Saylor (1:41:58.400)

property. And that means they're all commonly occurring elements in the world. You could call

Michael Saylor (1:42:04.240)

them commodities, but commodity is a little bit misleading and I'll tell you why in a second.

Lex Fridman (1:42:08.880)

But they're all distinguished by the fact that no one entity or person or government controls them.

Michael Saylor (1:42:15.040)

If you have a barrel of oil and you're in Ukraine versus Russia versus Saudi Arabia versus the U.S.,

Michael Saylor (1:42:23.600)

you have a barrel of oil. And it doesn't matter what the premier in Japan or the mayor of Miami

Michael Saylor (1:42:32.560)

Beach thinks about your barrel of oil. They cannot wave their hand and make it not a barrel of oil

Michael Saylor (1:42:39.200)

or a cord of wood, right? And so property is just a naturally occurring element in the universe,

Michael Saylor (1:42:48.400)

right? Why use the word ethical? Sorry to, I may interrupt occasionally. Why ethical assigned

Michael Saylor (1:42:55.760)

to property? Because if it's a security, a security would be an example of a share of a stock

Michael Saylor (1:43:03.440)

or a crypto token controlled by a small team. And in the event that something is a security because

Michael Saylor (1:43:12.720)

some small group or some identifiable group can control its nature, character, or supply,

Michael Saylor (1:43:20.880)

then it really only becomes ethical to promote it or sell it pursuant to fair disclosures.

Lex Fridman (1:43:28.560)

So I give you maybe practical example. I'm the mayor of Chicago. I give a speech. My speech,

Michael Saylor (1:43:36.400)

I say, I think everybody in Chicago should own their own farm and have chicken, a chicken in the

Michael Saylor (1:43:42.160)

backyard and their own horse and an automobile. That's ethical. I give the same speech and I say,

Michael Saylor (1:43:50.240)

I think everybody in Chicago should buy Twitter stock, sell their house, or sell their house,

Michael Saylor (1:43:56.960)

or sell their cash and buy Twitter stock. Is that ethical? Not really. But at that point,

Michael Saylor (1:44:04.080)

you've entered into a conflict of interest because what you're doing is you're promoting

Michael Saylor (1:44:09.120)

an asset which is substantially controlled by a small group of people, the board of directors or

Michael Saylor (1:44:15.120)

the CEO of the company. So how would you feel if the president of the United States said,

Michael Saylor (1:44:20.960)

I really think Americans should all buy Apple stock, especially if you work to Google.

Lex Fridman (1:44:27.920)

But you worked anywhere. You'd be like, why isn't he saying buy mine? Right? A security is a

Michael Saylor (1:44:34.960)

proprietary asset in some way, shape, or form. And the whole nature of securities law, it starts from

Michael Saylor (1:44:42.720)

this ancient idea, thou shalt not lie, cheat, or steal. Okay? So if I'm going to sell you securities

Michael Saylor (1:44:53.760)

or I'm going to promote securities as a public figure or as an influencer or anybody else,

Michael Saylor (1:45:01.280)

if I create my own yo yo coin or Mikey coin, and then there's a million of them, and I tell you

Michael Saylor (1:45:08.400)

that I think that it's a really good thing, and Mikey coin will go up forever, right? And everybody

Michael Saylor (1:45:13.120)

buys Mikey coin, and then I give 10 million to you and don't tell the public, right? I've cheated

Michael Saylor (1:45:19.680)

them. Maybe if I have Mikey coin, and I think there's only 2 million Mikey coin, and I swear

Michael Saylor (1:45:26.080)

to you, there's only 2 million, and then I get married, and I have three kids, and my third kid

Michael Saylor (1:45:31.440)

is in the hospital, and my kid's going to die, and I have this ethical reason to print 500,000

Michael Saylor (1:45:37.200)

more Mikey coin or else people are going to die, and everybody tells me it's fine. You know,

Michael Saylor (1:45:41.920)

I've still abused, you know, the investor, right? It's an ethical challenge. If you look at ethics

Michael Saylor (1:45:50.720)

laws everywhere in the world, they all boil down to having a clause which says that if you're a

Michael Saylor (1:45:58.960)

public figure, you can't endorse a security. You can't endorse something that would cause you to

Michael Saylor (1:46:05.120)

have a conflict of interest. So if you're a mayor, a governor, a country, a public figure, an

Michael Saylor (1:46:10.960)

influencer, and you want to promote or promulgate or support something using any public influence

Michael Saylor (1:46:19.040)

or funds or resources you may have, it needs to be property. It can't be security. So it goes

Michael Saylor (1:46:27.360)

beyond that, right? I mean, like would the Chinese want to support an American company, right? As

Michael Saylor (1:46:33.760)

soon as you look at what's in the best interest of the human race, the civilization, you realize

Michael Saylor (1:46:40.880)

that if you want an ethical path forward, it needs to be based on common property, which is fair.

Lex Fridman (1:46:50.720)

And the way you get to a common property is through an open permissionless protocol. If it's

Michael Saylor (1:46:56.800)

not open, right, if it's proprietary, and I know what the code says, and you don't know what the

Michael Saylor (1:47:01.120)

code says, that makes it a security. If it's permissioned, if you're not allowed on my network,

Michael Saylor (1:47:10.800)

or if you can be censored or booted off my network, that also makes it a security.

Lex Fridman (1:47:19.440)

So when I talk about property, I mean, the challenge here is how do I create something

Michael Saylor (1:47:25.920)

that's equivalent to a barrel of oil in cyberspace? And that means it has to be a nonsovereign bearer

Michael Saylor (1:47:35.520)

instrument, open, permissionless, not censorable, right? If I could do that, then I could deliver

Michael Saylor (1:47:45.440)

you 10,000 dematerialized barrels of oil, and you would take settlement of them, and you would know

Michael Saylor (1:47:54.240)

that you have possession of that property, irregardless of the opinion of any politician

Michael Saylor (1:48:00.240)

or any company or anybody else in the world. That's a really critical characteristic. And

Michael Saylor (1:48:08.240)

it actually is, it's probably one of the fundamental things that makes Bitcoin special.

Michael Saylor (1:48:14.480)

Bitcoin isn't just a crypto asset network. It's easy to create a crypto asset network.

Michael Saylor (1:48:19.120)

It's very hard to create an ethical crypto asset network, because you have to create one

Michael Saylor (1:48:29.760)

without any government or corporation or investor exercising in due influence to make it successful.

Lex Fridman (1:48:37.440)

So open, permissionless, noncensorable. So basically no way for you without explicitly

Michael Saylor (1:48:47.680)

saying so, outsourcing control to somebody else. So it's a kind of, you have full control.

Lex Fridman (1:48:54.960)

Even with a barrel of oil, what's the difference between a barrel of oil and a Bitcoin to you?

Michael Saylor (1:49:03.360)

Because you kind of mentioned that both are property. You mentioned Russia and China and

Lex Fridman (1:49:09.600)

so on. Is it the ability of the government to confiscate? In the end, governments can

Michael Saylor (1:49:14.960)

probably confiscate no matter what the asset is, but you want to lessen the effort involved.

Michael Saylor (1:49:21.280)

A barrel of oil is a bucket of physical property, liquid property, and Bitcoin is a digital property.

Lex Fridman (1:49:27.680)

But it's easier to confiscate a barrel of oil.

Michael Saylor (1:49:32.320)

It's easier to confiscate things in the real world than things in cyberspace. Much easier.

Lex Fridman (1:49:38.640)

So that's not universally true. Some things in the digital space are actually easier to

Lex Fridman (1:49:43.120)

confiscate because just the nature of how things move easily with information, right?

Lex Fridman (1:49:50.000)

So I think in the Bitcoin world, what we would say is that Bitcoin is the most difficult

Michael Saylor (1:49:56.160)

property that the human race possesses or has yet invented to confiscate. And that's

Michael Saylor (1:50:02.640)

by virtue of the fact that you could take possession of it via your private keys.

Lex Fridman (1:50:06.560)

So if you got your 12 seed phrases in your head, then that would be the highest form of property,

Michael Saylor (1:50:13.200)

right? Because I literally have to crack your head open and read your mind to take it.

Michael Saylor (1:50:18.960)

It doesn't mean I couldn't extract it from you under duress, but it means that it's harder than

Michael Saylor (1:50:25.360)

every other thing you might own. In fact, it's exponentially harder. If you consider every other

Michael Saylor (1:50:30.960)

thing you might own, a car, a house, a share of stock, gold, diamonds, property rights,

Michael Saylor (1:50:38.800)

intellectual property rights, movie rights, music rights, anything imaginable, they would all be

Michael Saylor (1:50:44.320)

easier by orders and orders of magnitude to seize. So digital property in the form of a

Lex Fridman (1:50:53.360)

set of private keys is by far the apex property of the human race.

Michael Saylor (1:50:57.120)

In terms of ethics, I want to make one more point. I might say to you, Lex, I think Bitcoin is the

Michael Saylor (1:51:02.960)

best, most secure, most durable crypto asset network in the world. It's going to go up forever,

Lex Fridman (1:51:08.320)

and there's nothing better in the world. I might be right. I might be wrong.

Lex Fridman (1:51:14.480)

But the point is, because it's property, it's ethical for me to say that if I were to turn

Michael Saylor (1:51:21.040)

around and say, you know, Lex, I think the same about microstrategy stock, MSTR. That's a security.

Michael Saylor (1:51:27.520)

Okay? If I'm wrong about that, I have civil liability or other liability because I could go

Michael Saylor (1:51:36.320)

to a board meeting tomorrow and I could actually propose we issue a million more shares of

Michael Saylor (1:51:40.800)

microstrategy stock, whereas the thing that makes Bitcoin ethical for me to even promote is the

Michael Saylor (1:51:48.560)

knowledge that I can't change it. If I knew that I could make it 42 million instead of 21 million

Lex Fridman (1:51:56.240)

and I had the button back here, right, then I have a different degree of ethical responsibility.

Michael Saylor (1:52:04.320)

Now, I could tell you your life will be better if you buy Bitcoin, and it might not. You might go

Michael Saylor (1:52:08.480)

buy Bitcoin, you might lose the keys and be bankrupt and your life ends and your life is not

Michael Saylor (1:52:12.960)

better because you bought Bitcoin, right? But it wouldn't be my ethical liability any more than if

Michael Saylor (1:52:19.840)

I were to say, Lex, I think you ought to get a farm. I think you should be a farmer. I think a

Michael Saylor (1:52:26.480)

chicken in every pot, you should get a horse. I think you'd be better. I mean, these are all

Michael Saylor (1:52:32.480)

opinions expressed about property, which may or may not be right, that you may or may not agree with,

Lex Fridman (1:52:40.000)

but in a legal sense, if we read the law, if we understand securities law, and I would say,

Michael Saylor (1:52:47.120)

you know, most people in the crypto industry, you know, they didn't take companies public,

Lex Fridman (1:52:52.400)

and so they're not really focused on the securities law. They don't even know the securities law.

Michael Saylor (1:52:57.120)

If you focus on the securities law, that would say you just can't legally sell this stuff to

Michael Saylor (1:53:03.040)

the general public or promote it without a full set of continuing disclosures signed off on by

Michael Saylor (1:53:10.640)

a regulator. So there's a fairly bright line there with regard to securities. But when you get to the

Michael Saylor (1:53:19.600)

secondary issue, it's how do you actually build a world based on digital property if public figures

Michael Saylor (1:53:29.360)

can't embrace it or endorse it? You see, so you're not going to build a better world based upon

Michael Saylor (1:53:38.000)

Twitter stock, if that's your idea of property, because Twitter stock is a security and Twitter

Lex Fridman (1:53:44.000)

stock is never going to be a non sovereign bearer instrument in Russia, right, or in China, right?

Michael Saylor (1:53:50.240)

It's not even legal in China, right? So it's not a global permissionless open thing. It will never

Michael Saylor (1:53:55.680)

be trusted by the rest of the world. And legally, it's impractical. But, you know, would you really

Michael Saylor (1:54:02.320)

want to put $100 trillion worth of economic value on Twitter stock if there's a board of directors

Lex Fridman (1:54:06.880)

and a CEO that could just get up and like take half of it tomorrow? The answer is no. So if you

Michael Saylor (1:54:12.720)

want to build a better world based on digital energy, you need to start with constructing a

Michael Saylor (1:54:20.000)

digital property. And I'm using property here and open permissionless in a legal sense. Okay,

Lex Fridman (1:54:28.480)

but I would also go to the next step and say property is low frequency money. So if you if I

Michael Saylor (1:54:37.280)

give you a million dollars, and you want to hold it for a decade, you might go buy a house with it.

Michael Saylor (1:54:44.640)

Right. And the house is low frequency money, you converted the the million dollars of economic

Michael Saylor (1:54:51.120)

energy into a structure called a house. Maybe an after a decade, you might convert it back into

Michael Saylor (1:54:57.040)

energy, you might sell the house for currency. And it'll be more worth more or less depending

Michael Saylor (1:55:03.040)

upon the monetary climate. The frequency means what here? How quickly it changes state? How

Michael Saylor (1:55:10.080)

quickly does something vibrate? So if I transfer $10 from me to you for a drink, and then you turn

Michael Saylor (1:55:21.200)

around, you buy another right, we're vibrating on a frequency of every few hours, right? The energy

Michael Saylor (1:55:26.720)

is changing hands. But it's not likely that you sell and buy houses every few hours. Right? The

Michael Saylor (1:55:32.960)

frequency of a transaction in real estate is every 10 years, every five years, it's a much lower

Michael Saylor (1:55:39.920)

frequency transaction. And so when you think about what's going on here, you have extremely low

Michael Saylor (1:55:49.600)

frequency things, which we'll call property, then you have mid frequency things, I'm going to call

Michael Saylor (1:55:58.160)

them money or currency. And then you have high frequency, that's energy. And that's why I use

Michael Saylor (1:56:05.840)

the illustration of you got the building, you got the light, and you got the sound, and they're all

Michael Saylor (1:56:11.440)

just energy moving at different frequencies. Now, Bitcoin is magical. And it is truly the innovation.

Michael Saylor (1:56:22.160)

It's like a singularity, because it represents the first time in the history of human race

Michael Saylor (1:56:28.240)

that we managed to create a digital property, properly understood. It's easy to create something

Michael Saylor (1:56:37.040)

digital, right? Every coupon and every scan on Fortnite and Roblox and Apple TV credits and all

Michael Saylor (1:56:45.120)

these things, they're all digital something, but they're securities. And that's why I use the

Michael Saylor (1:56:51.040)

word something, but they're securities, right? Shares of stock are securities. Whenever anybody

Michael Saylor (1:56:56.480)

transfers, when you transfer money on PayPal or Apple Pay, you're transferring in essence a

Michael Saylor (1:57:01.360)

security or an IOU. And so transferring a bearer instrument with final settlement in the internet

Michael Saylor (1:57:11.280)

domain or in cyberspace, that's a critical thing. And anybody in the crypto world can do that.

Michael Saylor (1:57:18.880)

All the crypto is going to do that. But what they can't do, what 99% of them fail to do,

Michael Saylor (1:57:24.320)

is be property. They're securities, correct? Well, there's a line there I'd like to explore

Michael Saylor (1:57:29.280)

a little further. For example, what about when you, like Coinbase or something like that,

Michael Saylor (1:57:36.000)

when there's an exchange that you buy Bitcoin in, you start to move away from this kind of,

Lex Fridman (1:57:43.760)

some of the aspects that you said makes up a property, which is this

Michael Saylor (1:57:53.840)

noncensorable and permissionless and open. So in order to achieve the convenience,

Michael Saylor (1:58:01.520)

the effectiveness of the transfer of energy, you have to leverage some of these places that remove

Michael Saylor (1:58:10.960)

the aspects of property. So maybe you can comment on that. Let me give you a good model for that.

Michael Saylor (1:58:16.960)

If you think about the layer one of Bitcoin, the layer one is the property settlement layer,

Lex Fridman (1:58:23.920)

and we're going to do 350,000 transactions or less a day, 100 million transactions a year is

Michael Saylor (1:58:29.760)

the bandwidth on the layer one. And it would be an ideal layer one to move a billion dollars from

Michael Saylor (1:58:36.480)

point A to point B with the massive security. The role of the layer one is two things.

Michael Saylor (1:58:44.080)

One thing is I want to move a large sum of money through space with security. I can move

Michael Saylor (1:58:52.560)

any amount of Bitcoin in a matter of minutes for dollars on layer one. The second important

Michael Saylor (1:59:00.720)

feature of the layer one is I need the money to last forever. I need the money indestructible,

Michael Saylor (1:59:06.960)

immortal. So the bigger trick is not to move a billion dollars from here to Tokyo. The big trick

Michael Saylor (1:59:13.440)

is to move a billion dollars from here to the year 2140. And that's what we want to solve with

Michael Saylor (1:59:22.320)

layer one. And the best real metaphor in New York City would be the granite or the schist.

Lex Fridman (1:59:27.520)

What you want is a city block of bedrock. And how long has it been there? Like millions of years

Michael Saylor (1:59:34.800)

it's been there. And how fast do you want it to move? You don't. In fact, the single thing that's

Michael Saylor (1:59:40.640)

most important is that it not deflect. If it deflects a foot in 100 years, it's too much.

Michael Saylor (1:59:47.600)

If it deflects an inch in 100 years, you might not want that. So the layer one of Bitcoin is

Michael Saylor (1:59:53.440)

a foundation upon which you put weight. How much weight can you put on it? You put a trillion,

Lex Fridman (1:59:58.640)

10 trillion, 100 trillion, a quadrillion? How much weight's on the bedrock in Manhattan, right?

Michael Saylor (20:00.480)

problem with that is two big things. One thing is the government gets to create the market basket,

Lex Fridman (20:08.640)

and so they keep changing what's in the basket over time. So I mean, if I said three years ago,

Michael Saylor (20:16.960)

you should go see 10 concerts a year and the concert tickets now cost $200 each. Now it's

Michael Saylor (20:22.000)

$2,000 a year to go see concerts. Now I'm in charge of calculating inflation. So I redefine,

Michael Saylor (20:28.640)

you know, your entertainment quota for the year to be eight Netflix streaming concerts,

Lex Fridman (20:33.440)

and now they don't cost $2,000. They cost nothing, and there is no inflation,

Lex Fridman (20:37.680)

but you don't get your concerts, right? So the problem starts with continually changing

Michael Saylor (20:44.240)

the definition of the market basket. But in my opinion, that's not the biggest problem.

Michael Saylor (20:49.840)

The more egregious problem is the fundamental idea that assets aren't products or services.

Lex Fridman (21:00.720)

Assets can't be inflated. What's an asset?

Michael Saylor (21:03.600)

A house, a share of Apple stock, a bond, a Bitcoin is an asset, or a Picasso painting.

Michael Saylor (21:15.280)

LW. Not a consumable good. Not an Apple that you can eat.

Michael Saylor (21:22.400)

RL. Right. If I throw away an asset, then I'm not on the hook to track the inflation rate for it.

Lex Fridman (21:30.160)

So what happens if I change the policy such that, let's take the classic example,

Michael Saylor (21:35.520)

a million dollar bond at a 5% interest rate gives you $50,000 a year in risk free income.

Michael Saylor (21:40.960)

You might retire on $50,000 a year in a low cost jurisdiction. So the cost of social security

Michael Saylor (21:47.760)

or early retirement is $1 million when the interest rate is 5%. During the crisis of March

Michael Saylor (21:55.040)

of 2020, the interest rate went on a 10 year bond went to 50 basis points. So now the cost

Michael Saylor (22:01.760)

of that bond is $10 million. The cost of social security went from a million dollars to $10 million.

Lex Fridman (22:08.160)

So if you wanted to work your entire life, save money, and then retire risk free and live happily

Michael Saylor (22:14.000)

ever after on a $50,000 salary, live in on a beach in Mexico, wherever you wanted to go,

Michael Saylor (22:20.320)

you had hyperinflation. The cost of your aspiration increased by a factor of 10

Michael Saylor (22:26.560)

over the course of some amount of time. In fact, in that case, that was over the course of about 12

Michael Saylor (22:32.320)

years. As the inflation rate ground down, the asset traded up. But the conventional view is,

Michael Saylor (22:41.680)

oh, that's not a problem, because it's good that the bond is highly priced because we own the bond.

Michael Saylor (22:49.840)

Or what's the problem with the inflation rate in housing being 19%? It's an awful problem for a

Michael Saylor (22:57.200)

22 year old that's starting their first job, that's saving money to buy a house. But it would

Michael Saylor (23:02.720)

be characterized as a benefit to society by a conventional economist who would say, well, housing

Michael Saylor (23:09.440)

asset values are higher because of interest rate fluctuation, and now the economy has got more

Michael Saylor (23:14.400)

wealth. And so that's viewed as a benefit. So what's being missed here, like the suffering

Michael Saylor (23:24.240)

of the average person, or the struggle, the suffering, the pain of the average person,

Michael Saylor (23:34.080)

like metrics that captured that within the economic system? Is that when you're talking

Lex Fridman (23:37.760)

about different... One way to say it is a conventional view of inflation as CPI

Michael Saylor (23:43.680)

understates the human misery that's inflicted upon the working class and on mainstream companies by

Michael Saylor (23:56.720)

the political class. And so it's a massive shift of wealth from the working class to the property

Michael Saylor (24:01.920)

class. It's a massive shift of power from the free market to the centrally governed or the

Michael Saylor (24:09.280)

controlled market. It's a massive shift of power from the people to the government. And maybe one

Michael Saylor (24:17.680)

more illustrative point here, Alexis, is what do you think the inflation rate's been for the past

Michael Saylor (24:23.840)

100 years? Oh, you're talking about the scalar again? If you took a survey of everybody on the

Michael Saylor (24:30.000)

street and you asked them, what do they think inflation was? What is it? You remember when

Michael Saylor (24:35.680)

Jerome Powell said our target's 2%, but we're not there. If you go around the corner, I have posted

Michael Saylor (24:43.920)

the deed to this house sold in 1930. Okay. And the number on that deed is $100,000, 1930. And if you

Michael Saylor (24:55.120)

go on Zillow and you get the Z estimate. Is it higher than that? $30,500,000. So that's 92

Michael Saylor (25:05.520)

years, 1930 or 2022. And in 92 years, we've had 305x increase in price of the house. Now,

Michael Saylor (25:17.520)

if you actually back calculate, you come to a conclusion that the inflation rate was approximately

Michael Saylor (25:23.040)

6.5% a year every year for 92 years. Okay. And there's nobody, nobody in government,

Michael Saylor (25:33.200)

no conventional economists that would ever admit to an inflation rate of 7% a year in the US dollar

Michael Saylor (25:39.840)

over the last century. Now, if you dig deeper, I mean, one guy that's done a great job working on

Michael Saylor (25:48.400)

this is Seyfettin Amos who wrote the book, The Bitcoin Standard. And he notes that on average,

Michael Saylor (25:54.320)

it looks like the inflation rate and the money supply is about 7% a year all the way up to the

Michael Saylor (26:00.560)

year 2020. If you look at the S&P index, which is a market basket of scarce desirable stocks,

Michael Saylor (26:09.120)

it returned about 10%. If you talk to 10% a year for 100 years, the money supply is expanding at

Michael Saylor (26:17.200)

7% 100 years. If you actually talk to economists or you look at the economy and you ask the question,

Lex Fridman (26:24.400)

how fast does the economy grow in its entirety year over year? Generally about 2% to 3%. Like

Michael Saylor (26:32.000)

the sum total impact of all this technology and human ingenuity might get you a 2.5, 3% improvement

Michael Saylor (26:39.040)

a year. As measured by GDP. Are you okay with that? I'm not sure. I'm not sure I'd go that far yet,

Lex Fridman (26:45.600)

but I would just say that if you had the human race doing stuff and if you asked the question,

Lex Fridman (26:53.520)

how much more efficiently will we do this stuff next year than this year? Or what's the value of

Michael Saylor (26:59.200)

all of our innovations and inventions and investments in the past 12 months? You'd be

Michael Saylor (27:05.280)

hard pressed to say we get 2% better. Typical investor thinks they're 10% better every year.

Lex Fridman (27:13.600)

So if you look at what's going on, really, when you're holding a million dollars of stocks and

Michael Saylor (27:19.200)

you're getting a 10% gain a year, you really get a 7% expansion of the money supply. You're getting

Michael Saylor (27:25.680)

a 2% or 3% gain under best circumstances. And another way to say that is if the money supply

Michael Saylor (27:34.080)

stopped expanding at 7% a year, the S&P yield might be 3% and not 10%. It probably should be.

Lex Fridman (27:42.640)

Now, that gets you to start to ask a bunch of other fundamental questions. Like

Michael Saylor (27:47.280)

if I borrow a billion dollars and pay 3% interest and the money supply expands at 7% to 10% a year,

Lex Fridman (27:54.240)

and I ended up making a 10% return on a billion dollar investment paying 3% interest, is that fair?

Lex Fridman (28:03.200)

And who suffered so that I could do that? Because in an environment where you're just

Michael Saylor (28:10.160)

inflating the money supply and you're holding the assets constant, it stands the reason that

Michael Saylor (28:15.760)

the price of all the assets is going to appreciate somewhat proportional to the money supply.

Lex Fridman (28:22.400)

And the difference in asset appreciations is going to be a function of the scarce desirable

Michael Saylor (28:27.360)

quality of the assets, and to what extent can I make more of them, and to what extent are they

Michael Saylor (28:33.440)

truly limited in supply? Yeah, so we'll get to a lot of the words you said there. The scarcity,

Michael Saylor (28:41.440)

the scarcity, and so connected to how limited they are and the value of those

Michael Saylor (28:49.120)

assets. But you also said, so the expansion of the money supply, which is put another way,

Lex Fridman (28:55.200)

is printing money. And so is that always bad, the expansion of the money supply?

Michael Saylor (29:01.440)

Just to put some terms on the table so we understand them. You nonchalantly say it's

Michael Saylor (29:07.840)

always on average expanding every year, the money supply is expanding every year by 7%.

Michael Saylor (29:13.600)

That's a bad thing? That's universally a bad thing? It's awful. I guess to be precise,

Michael Saylor (29:21.200)

it's the currency. I would say money is monetary energy or economic energy. And the economic

Michael Saylor (29:31.360)

energy has to find its way into a medium. So if you want to move it rapidly as a medium of exchange,

Michael Saylor (29:37.120)

it has to find its way into currency. But the money can also flow into property, like a house

Michael Saylor (29:42.800)

or gold. If the money flows into property, it'll probably hold its value much better if the money

Michael Saylor (29:50.400)

flows into currency. If you had put $100,000 in this house, you would have 305x return over 92

Michael Saylor (29:59.040)

years. But if you had put the money, $100,000, in a safe deposit box and buried it in the basement,

Michael Saylor (2:00:06.320)

Think about 100 story buildings. So the real key there is the foundational asset needs to be there

Michael Saylor (2:00:14.560)

at all. So the fact that you can create a hundred trillion dollar layer one that would stand for

Michael Saylor (2:00:20.880)

100 years, that is the revolutionary breakthrough first time. And the fact that it's ethical,

Michael Saylor (2:00:27.680)

right? It's ethical and it's common property, global, permissionless. Extremely unlikely that

Michael Saylor (2:00:33.520)

would happen. People tried 50 times before and they all failed. They tried 15,000 times after,

Lex Fridman (2:00:40.000)

and they've all generally failed. 98% have failed and a couple have been less successful. But

Michael Saylor (2:00:47.200)

for the most part, that's an extraordinary thing. Now,

Michael Saylor (2:00:52.240)

just really quickly pause just to define some terms. If people don't know, layer one is that

Michael Saylor (2:00:58.880)

Michael's referring to is in general what people know of as the Bitcoin technology originally

Michael Saylor (2:01:06.560)

defined, which is the blockchain. There's a consensus mechanism of proof of work,

Michael Saylor (2:01:11.840)

low number of transactions, but you can move a very large amount of money. The reason he's

Michael Saylor (2:01:20.000)

using the term layer one is now that there's a lot of ideas of layer two technologies built on top

Michael Saylor (2:01:25.120)

of this bedrock that allow you to move a much larger number of transactions,

Michael Saylor (2:01:33.600)

sort of higher frequency. I don't know what terminology you want to use, but basically be

Michael Saylor (2:01:38.800)

able to use now something that is based on Bitcoin to then buy stuff, be a consumer,

Lex Fridman (2:01:45.840)

to transfer money, to use it as currency, just to define some terms.

Michael Saylor (2:01:51.040)

Yeah, so the layer one is the foundation for the entire cyber economy, and we don't want it to move

Michael Saylor (2:02:02.960)

fast. What we want is immortality, immortal, incorruptible, indestructible, right? That's

Lex Fridman (2:02:13.280)

what you want, integrity from the layer one. Now there's layer two and layer three, and layer

Michael Saylor (2:02:18.640)

two I would define as an open, permissionless, noncustodial protocol that uses the underlying

Michael Saylor (2:02:27.840)

layer one token as its gas fee. So what's custodial mean and how does the different markets,

Michael Saylor (2:02:35.520)

like is lightning network? So lightning network would be an example of a layer two, noncustodial.

Lex Fridman (2:02:41.680)

So the lightning network will sit on top of layer one, it'll sit on top of Bitcoin,

Lex Fridman (2:02:48.640)

and it solves the, what you want to do is solve the problem of it's well and fine, I don't want

Michael Saylor (2:02:54.480)

to move a billion dollars every day, what I want to move is five dollars a billion times a day.

Lex Fridman (2:03:02.000)

So if I want to move five dollars a billion times a day, I don't really need to put the entire

Michael Saylor (2:03:07.520)

trillion dollars of assets at risk every time I move five dollars. All I really need to do is put

Michael Saylor (2:03:15.680)

a hundred thousand dollars in a channel or a million dollars in a channel, and then I do

Michael Saylor (2:03:19.840)

ten million transactions where I have a million dollars at risk. And of course it's kind of

Lex Fridman (2:03:25.120)

simple, if I put, if I lower my security requirement by a factor of a million,

Michael Saylor (2:03:33.040)

I could probably move the stuff a million times faster, right? And that's how lightning works.

Michael Saylor (2:03:38.480)

It's noncustodial because there's no corporation or custodian or counterparty you're trusting,

Michael Saylor (2:03:46.160)

right? There's the risk of moving through the channel. But lightning is an example of how I go

Michael Saylor (2:03:53.840)

from 350,000 transactions a day to 350 million transactions a day. So on that layer too, you

Michael Saylor (2:04:00.640)

could move the Bitcoin in seconds for fractions of pennies. Now that's not the end all be all,

Michael Saylor (2:04:07.280)

because the truth is there are a lot of open protocols. Lightning probably won't be the only

Michael Saylor (2:04:12.240)

one. You know, there's an open market competition of other permissionless open source protocols to

Michael Saylor (2:04:18.080)

do this work. And in theory, any other crypto network that was deemed to be property, deemed to

Michael Saylor (2:04:28.160)

be non a security, you could also think of as potentially a layer two to Bitcoin, right? There's

Michael Saylor (2:04:34.400)

a debate about are there any and what are they, and we can leave that for a little bit of a

Michael Saylor (2:04:38.640)

debate about are there any and what are they, and we can leave that for a later time.

Lex Fridman (2:04:43.360)

But why do you think of them as layer two, as opposed to contending for layer one?

Michael Saylor (2:04:50.400)

Yeah, actually, if they're using their own token, then they are a layer one. If you create an open

Michael Saylor (2:04:55.920)

protocol that uses the Bitcoin token as the fee, then it becomes a layer two, right? Bitcoin itself,

Michael Saylor (2:05:05.040)

right, incentivizes his own transactions with its own token, and that's what makes it layer one.

Lex Fridman (2:05:11.840)

Okay, what's layer three, then?

Michael Saylor (2:05:13.840)

Layer three is a custodial layer. So if you want to move Bitcoin in milliseconds for free,

Michael Saylor (2:05:21.360)

you move it through Binance or Coinbase or Cash App. So this is a very straightforward thing. I

Michael Saylor (2:05:27.840)

mean, it seems pretty obvious when you think about it that there are going to be hundreds of thousands

Michael Saylor (2:05:32.640)

of layer threes. There may be dozens of layer twos. I mean, Lightning is a one, but it's not the only

Michael Saylor (2:05:39.600)

one. Anybody can invent something, right? And we can have this debate about custodial, noncustodial.

Lex Fridman (2:05:50.720)

Don't you think there's a monopolization possibilities at layer three?

Michael Saylor (2:05:56.240)

So, you know, Coin, you mentioned Binance, Coinbase. What if they start to dominate,

Lex Fridman (2:06:03.200)

and basically everybody's using them, practically speaking, and then it becomes too costly to

Michael Saylor (2:06:09.840)

memorize the private key in your brain? I mean, or like the cold storage of layer one technology.

Michael Saylor (2:06:18.160)

The idealists fear the layer threes because they think, and especially they detest,

Michael Saylor (2:06:23.920)

they would detest it. There's almost like a layer four, by the way, if you want to.

Michael Saylor (2:06:28.960)

A layer four would be, I've got Bitcoin on an application, but I can't withdraw it.

Lex Fridman (2:06:35.600)

So I've got an application that's backed by Bitcoin, but the Bitcoin is sealed.

Michael Saylor (2:06:40.560)

It's a proprietary example. And I'll give you an example of that. That would be like

Michael Saylor (2:06:44.240)

Grayscale. If I own a share of GBTC, and so I own a security, actually, you know, you could own MSTR.

Michael Saylor (2:06:54.240)

If you own a security or you own a product that has Bitcoin embedded in it, you get the benefits

Michael Saylor (2:06:59.600)

of Bitcoin, but you don't have the ability to withdraw the asset.

Lex Fridman (2:07:04.240)

To get out of the security market at layer four? Am I understanding this correctly?

Michael Saylor (2:07:09.040)

I don't know if I would say, I don't, not all securities are layer four, but anything that's

Michael Saylor (2:07:15.120)

a proprietary product based upon what with Bitcoin embedded in it, where you can't withdraw the

Michael Saylor (2:07:21.680)

Bitcoin is another application of Bitcoin. So if you think about different ways you can use this,

Michael Saylor (2:07:29.840)

you can either stay completely on the layer one and use the base chain for your transactions,

Michael Saylor (2:07:34.960)

or you can limit yourself to layer one and layer two lightning. And the purist would say we stay

Michael Saylor (2:07:41.040)

there, get your Bitcoin off the exchange. But you could also go to the layer three.

Michael Saylor (2:07:46.400)

When Cash App supported Bitcoin, they made it very easy to buy it, and then they gave you the

Michael Saylor (2:07:51.840)

ability to withdraw. When PayPal or I think Robinhood let you buy it, they wouldn't let

Michael Saylor (2:07:56.800)

you withdraw it, and there was a big community uproar, and people wanted to withdraw.

Michael Saylor (2:08:01.200)

They want these layer threes to make it possible to withdraw the Bitcoin so you can take it to

Michael Saylor (2:08:06.000)

your own private wallet and get it off the exchange. I think the answer to the question

Michael Saylor (2:08:11.840)

of, well, is corruption possible? Corruption is possible in all human institutions and all

Michael Saylor (2:08:18.880)

governments everywhere. The difference between digital property and physical property is when

Michael Saylor (2:08:25.200)

you own a building in Los Angeles and the city politics turn against you, you can't move the

Michael Saylor (2:08:31.520)

building. And when you own a share of a security that's like a U.S. traded security and you wish

Michael Saylor (2:08:39.760)

to move to some other country, you can't take the security with you either. And when you own

Michael Saylor (2:08:47.440)

a bunch of gold and you try to get through the airport, they might not let you take it.

Lex Fridman (2:08:51.680)

So Bitcoin is advantageous versus all those because you actually do have the option to

Michael Saylor (2:08:59.200)

withdraw your asset from the exchange. And if you had Bitcoin with Fidelity and you had shares of

Michael Saylor (2:09:06.240)

stock with Fidelity, and if you had bonds and sovereign debt with Fidelity, and if you own some

Michael Saylor (2:09:12.800)

mutual funds and some other random limited partnerships with Fidelity, none of those things

Michael Saylor (2:09:18.960)

can be removed from the custodian. But the Bitcoin, you can take off the exchange, you can remove

Michael Saylor (2:09:25.040)

from the custodian. So there's a deterrent that's an anti corrupting element. And the phrase is an

Michael Saylor (2:09:36.080)

armed society is a polite society, right? Because you have the optionality to withdraw all your

Michael Saylor (2:09:43.440)

assets from the crypto exchange, you can enforce fairness. And at the point where you disagree

Michael Saylor (2:09:50.320)

with their policies, you can within an hour, move your assets to another counterparty or take

Michael Saylor (2:09:56.720)

personal custody of those assets. And you don't have that option to withdraw all your assets.

Lex Fridman (2:10:02.960)

And you don't have that option with most other forms of property. Maybe you don't have as much

Michael Saylor (2:10:08.480)

optionality with any other form of property on Earth. And so what makes digital property distinct

Michael Saylor (2:10:15.600)

is the fact that it has the most optionality for custody. Now coming back to this digital energy

Michael Saylor (2:10:22.800)

issue, the real key point is the energy moves in milliseconds for free on layer threes. It moves in

Michael Saylor (2:10:30.960)

seconds or less than seconds on layer twos, it moves in minutes on the layer one. And I don't

Michael Saylor (2:10:39.600)

think it makes any sense to even think about trying to solve all three problems on the layer one

Michael Saylor (2:10:44.880)

because it's impossible to achieve the security and the incorruptibility and immortality if you

Michael Saylor (2:10:51.600)

try to build that much speed and that functionality and performance. In fact, if you come back to the

Michael Saylor (2:10:58.480)

New York model, you really wanted a block of granite, a building and a company. That's what

Michael Saylor (2:11:04.640)

makes the economy, right? If I said to you, you're going to build a building, but you can only have

Michael Saylor (2:11:10.400)

one company in it for the life of the building, it would be very fragile, like very brittle. What

Michael Saylor (2:11:16.240)

company a hundred years ago is still relevant today? You want all three layers because they

Michael Saylor (2:11:21.680)

all oscillate at different frequencies. And there's a tendency to think, well, it's got to be

Michael Saylor (2:11:29.360)

this L1 or that L1, not really. And sometimes people think, well, I don't really want any L3.

Lex Fridman (2:11:36.560)

But companies, it's not an even or, companies are better than crypto asset networks at certain

Michael Saylor (2:11:44.240)

things. If you want complexity, you want to implement complexity, or you want to implement

Michael Saylor (2:11:49.280)

compliance or customer service, right? Companies do these things well, right? You couldn't

Michael Saylor (2:12:00.880)

decentralize Apple or Netflix or even YouTube. The performance wouldn't be there and the subtlety

Michael Saylor (2:12:07.680)

wouldn't be there. And you can't really legally decentralize certain forms of banking and insurance

Michael Saylor (2:12:14.640)

because they will become illegal in the political jurisdiction they're in. So, unless you're a

Michael Saylor (2:12:19.440)

crypto anarchist and you believe in no companies and no nation states, right? Which is just not

Michael Saylor (2:12:27.440)

very practical, not anytime soon. Once you allow that nation states will continue and companies

Michael Saylor (2:12:33.680)

have a role, then the layered architecture follows and the free market determines who wins.

Michael Saylor (2:12:43.120)

For example, there are layer threes that let you acquire Bitcoin and withdraw Bitcoin.

Michael Saylor (2:12:51.760)

There are other applications that let you acquire but not withdraw it. And they don't get the same

Michael Saylor (2:12:58.640)

market share, but they might give you some other advantage. There are certain layer threes like

Michael Saylor (2:13:04.560)

Jack Dorsey's Cash App, where they just incorporated lightning, an implementation of it.

Michael Saylor (2:13:10.800)

So, that makes it more, that makes it advantageous versus an application that doesn't incorporate

Michael Saylor (2:13:21.120)

lightning. If you think about the big picture, the big picture is 8 billion people with mobile phones

Michael Saylor (2:13:28.640)

served by 100 million companies doing billions of transactions an hour. And the companies are

Michael Saylor (2:13:38.080)

settling with each other on the base layer in blocks of 80 million at a time. And then the

Michael Saylor (2:13:45.200)

companies are trading with the consumers, right, in proprietary layers, like layer three. And then

Michael Saylor (2:13:55.040)

on occasion, people are shuffling assets across custodians with lightning layer two,

Michael Saylor (2:14:00.800)

because you don't want to pay $5 to move $50. You want to pay a 20th of a penny.

Michael Saylor (2:14:06.080)

You want to pay a 20th of a penny to move $50. And so, all of these things create efficiency

Michael Saylor (2:14:15.440)

in the economy. And, Lex, if you want to consider how much efficiency, if you gave me a billion

Michael Saylor (2:14:21.600)

dollars in 20 years, I couldn't find a way to trade with another company or a counterparty in Nigeria.

Michael Saylor (2:14:28.080)

Like, no amount of money. Give me $10 billion. I couldn't do it because you get shut down at

Michael Saylor (2:14:37.040)

the banking level. You can't link up a bank in Nigeria with a bank in the US. You get shut down

Michael Saylor (2:14:43.520)

at this credit card level because they don't have the credit card, so they won't clear.

Michael Saylor (2:14:47.360)

You would get shut down at the compliance FCPA level because, you know, you wouldn't be able to

Michael Saylor (2:14:57.600)

implement a system that interfaced with somebody else's system if it's not in the right political

Michael Saylor (2:15:02.000)

jurisdiction. On the other hand, three entrepreneurs in Nigeria on the weekend could

Michael Saylor (2:15:08.080)

create a website that would trade in this lightning economy using open protocols without asking

Michael Saylor (2:15:14.320)

anybody's permission. So, you're talking about something that's, like, a million times cheaper,

Michael Saylor (2:15:20.160)

less friction, and faster to do it if you want to get money to move.

Lex Fridman (2:15:27.520)

What do you think that looks like so that now there's a war going on in Ukraine,

Michael Saylor (2:15:31.680)

there's other wars, Yemen, going out throughout the world in this most difficult of states that

Michael Saylor (2:15:40.560)

a nation can be in, which is a war, a civil war, or war with other nations? What's the role of

Michael Saylor (2:15:47.600)

Bitcoin in this context? I mean, Bitcoin's a universal trust protocol, right? A universal

Michael Saylor (2:15:55.680)

energy protocol, if you will. English is one, okay? What I see is a bunch of fragmentation

Michael Saylor (2:16:02.880)

of applications. For example, you know, the Russian payment app is not going to work in

Michael Saylor (2:16:08.240)

Ukraine. The Ukraine payment app is not going to work in Russia. You know, US payment apps won't

Michael Saylor (2:16:14.000)

work either of those places, as far as I know. So, you know, and in Argentina, their payment

Michael Saylor (2:16:20.720)

app may not work in certain parts of Africa. So, what you have is different local economies

Michael Saylor (2:16:29.200)

where people spin up their own applications compliant with their own local laws, or,

Lex Fridman (2:16:35.280)

you know, in war zones, not compliant, but just spinning up, you know?

Michael Saylor (2:16:41.280)

So, how do you build something that's not compliant? What is the revolutionary act here

Lex Fridman (2:16:47.600)

when you don't agree with the government or what you want to free yourself from the constitution?

Michael Saylor (2:16:52.560)

So, here's the thing. When a nation is really at war, especially if it's an authoritarian regime,

Michael Saylor (2:17:01.200)

it's going to try to control the pop, like lock everything down, the spread of information.

Lex Fridman (2:17:06.160)

How do you break through that? Do you do the thing that you mentioned, which is you have to build

Michael Saylor (2:17:09.920)

another app, essentially, that allows the flow of money outside the legal constraints placed on you

Lex Fridman (2:17:17.200)

by the government? So, basically, break the law? Is that possible?

Michael Saylor (2:17:22.000)

Metaphorically speaking, if you want to break out of the constraints of your culture,

Michael Saylor (2:17:25.600)

you learn to speak English. For example, it's not illegal to speak English, or even if it is,

Michael Saylor (2:17:30.960)

right? It doesn't matter, but English works everywhere in the world if you can speak it,

Lex Fridman (2:17:36.160)

and then you can tap into a global commerce and intelligence network. So, Bitcoin is a language,

Lex Fridman (2:17:43.760)

so you learn to speak Bitcoin, or you learn to speak Lightning, and then you tap into that network

Michael Saylor (2:17:49.440)

in, you know, whatever manner you can. But the problem is it's still very difficult

Michael Saylor (2:17:54.480)

to move Bitcoin around in Russia and Ukraine now, during the war. And there was a sense to me that

Michael Saylor (2:18:02.800)

the cryptocurrency in general could be the savior for helping people. There's millions of refugees

Michael Saylor (2:18:08.880)

that are moving all around. It's very difficult to move money around in that space to help people.

Michael Saylor (2:18:17.920)

I think we're very early. Like, we're very embryonic here. If you look at the...

Lex Fridman (2:18:23.200)

Who's we, sorry? We as a human civilization, or we operating in the cryptocurrency space?

Michael Saylor (2:18:28.240)

I think the entire crypto economy is very embryonic, and the human race's adoption of it

Michael Saylor (2:18:35.440)

is embryonic. We're like one, two percent down that adoption curve. If you take Lightning,

Michael Saylor (2:18:42.320)

for example, you know, the first real commercial applications of Lightning are just in the last

Michael Saylor (2:18:47.440)

12 months. So we're like year one. We might be approaching year two of commercial Lightning

Michael Saylor (2:18:53.760)

adoption. And if you look at Lightning adoption, Lightning's not built into Coinbase, it's not

Michael Saylor (2:18:59.920)

built into Binance, it's not built into FTX. Cash App just implemented the first implementation,

Lex Fridman (2:19:07.600)

but not all the features are built into it. There's a few dozen, a dozen Lightning wallets

Michael Saylor (2:19:12.960)

circulating out there. So I think that, you know, we're probably going to be 36 months of

Michael Saylor (2:19:19.600)

software development. At the point that every Android phone and every iPhone has a Bitcoin

Michael Saylor (2:19:29.200)

wallet or a crypto wallet in it of sorts, that's a big deal. If Apple embraced Lightning,

Michael Saylor (2:19:36.400)

that's a big deal. So the adoption is the thing, like in a war zone adoption, the people who

Michael Saylor (2:19:44.720)

struggle the most in war are people who weren't doing that great before the war started. They

Michael Saylor (2:19:51.040)

don't have the technological sophistication. The hackers and all those kinds of people will find

Michael Saylor (2:19:55.600)

a way. It's just regular people who are just struggling to make day by day living. And so

Michael Saylor (2:20:01.840)

if the adoption permeates the entire culture, then you can start to move money around in the

Michael Saylor (2:20:09.840)

digital space. If you can psychoanalyze Jack Dorsey for a second. So he's one of the early

Michael Saylor (2:20:18.160)

adopters, or he's one of the people pushing the early adoption, this layer three, so inside Cash

Michael Saylor (2:20:24.400)

App. What do you make of the man of this decision as a business owner, as somebody playing in the

Michael Saylor (2:20:32.320)

space? Like what, why did he do it? And what does that mean for others at this scale that might be

Michael Saylor (2:20:40.640)

doing the same? So incorporating Lightning networking, incorporating Bitcoin into their

Michael Saylor (2:20:45.280)

products. I think he's been pretty clear about this. He feels that Bitcoin is an instrument of

Michael Saylor (2:20:51.120)

economic empowerment for billions of people that are unbanked and have no property rights

Michael Saylor (2:20:58.000)

in the world. If you want to give an incorruptible bank

Lex Fridman (2:21:07.600)

to eight billion people on the planet, that's the same as asking the question,

Lex Fridman (2:21:14.480)

how do you give a full education through PhD to eight billion people on the planet? And the answer

Michael Saylor (2:21:22.800)

is a digital version of the 20th century thing running on a mobile phone. And Bitcoin is a bank

Michael Saylor (2:21:31.120)

in cyberspace. It's run by incorruptible software and it's for everybody on earth.

Lex Fridman (2:21:35.600)

So I think when Jack looks at it, he's very sensitive to the plight of everybody in Africa.

Michael Saylor (2:21:39.360)

If you look at Africans, you're going to give them banks, you're not going to put a bank branch on

Michael Saylor (2:21:43.280)

every corner. That's an obscene waste of energy. You're not going to run copper wires across the

Michael Saylor (2:21:47.840)

continent. That's an obscene waste of energy. You're not going to give them gold. So how are

Michael Saylor (2:21:56.640)

you going to provide people with a decent life? The metaphor I think is relevant here,

Michael Saylor (2:22:03.840)

the biological metaphor, Lex, is a type one diabetic. If you're a type one diabetic,

Michael Saylor (2:22:09.520)

you can't form fat. And if you can't form fat, then you can't store excess energy. So

Michael Saylor (2:22:15.840)

that means that, I mean, fat is the ultimate organic battery. And if you've got 30 pounds of it,

Michael Saylor (2:22:20.640)

you can go 60 days without eating. But if you can't generate insulin, you can't form fat cells.

Lex Fridman (2:22:27.040)

And if you can't form fat cells and store energy, then you can eat yourself to death.

Michael Saylor (2:22:32.160)

I mean, you will eat and you will die. You'll starve to death. So the lack of property rights

Michael Saylor (2:22:38.560)

is like being a type one diabetic. And so if you look at most people everywhere in the world,

Michael Saylor (2:22:46.800)

they don't have property rights, they don't have effective bank, and their currency is broken.

Michael Saylor (2:22:53.680)

Like what are the two things that in theory would serve as the equivalent of a

Michael Saylor (2:22:57.360)

organic battery or an economic battery to civilization? It would be, I have a currency

Michael Saylor (2:23:03.360)

which holds its value and I can store it in a bank. So a risk free currency derivative.

Michael Saylor (2:23:13.920)

I pay you your money, you take your life savings, you put it in a bank, you save up for your

Michael Saylor (2:23:18.800)

retirement, you'll have happily ever after. That's the American dream.

Lex Fridman (2:23:22.240)

Right? That's the idyllic situation. The real situation is there are no banks,

Michael Saylor (2:23:28.320)

you can't get a bank account. So I give you your pay in currency, and then I double the supply and

Michael Saylor (2:23:34.960)

I give it to my cousin, or I give it to whatever cause I want, or I use it to buy weapons. And then

Michael Saylor (2:23:40.800)

you find a loaf of bread cost triple next month is what it costs. And your life savings is worthless.

Lex Fridman (2:23:47.040)

And so in that environment, everybody's ripped back to Stone Age barter. And the problem with

Michael Saylor (2:23:53.280)

that even Stone Age barter is you're going to carry your life savings on your back. And what

Michael Saylor (2:23:58.080)

happens when the guy with a machine gun points it at your head and just takes your life savings.

Lex Fridman (2:24:01.600)

So I think from Jack's point of view, he thinks that life is, this is maybe too strong, but these

Michael Saylor (2:24:10.080)

are my words, life is hopeless. It's hopeless. It's hopeless. It's hopeless. It's hopeless.

Michael Saylor (2:24:14.560)

It's hopeless for a lot of people. And Bitcoin is hope. Right? Because it gives everyone

Michael Saylor (2:24:26.800)

an engineered monetary asset that's a bearer instrument. And it gives them a bank on their

Michael Saylor (2:24:34.160)

mobile phone. And they don't have to trust their government or another counterparty

Michael Saylor (2:24:41.600)

with their life force. So there's a secondary thing I think he's interested in, which is the

Michael Saylor (2:24:50.400)

first thing is the human rights issue. And the second thing would be the friction to trade cross

Michael Saylor (2:24:57.680)

borders is so great. Right? Like, you know, you like AI. So I'll give you a beautiful notion.

Michael Saylor (2:25:07.680)

Maybe one day there'll be an artificially intelligent creature in cyberspace that is

Lex Fridman (2:25:14.560)

self sufficient and rich. Like that, we would have sovereignty. Can a robot own money or property?

Lex Fridman (2:25:26.320)

How about kind of Tesla car? Can I actually put enough money in a car for it to drive itself and

Michael Saylor (2:25:32.240)

maintain itself forever? Or can I create an artificially intelligent creature in cyberspace

Lex Fridman (2:25:38.400)

that is endowed such that it would live a thousand years and continue to do its job?

Michael Saylor (2:25:44.640)

Right? You know, we have a word for that in the real world is institution, Harvard, Cambridge,

Michael Saylor (2:25:50.400)

Stanford, right? There are institutions with endowments that go on in perpetuity.

Lex Fridman (2:25:55.040)

But what if I wanted to perpetuate a software program? And with something like digital property

Michael Saylor (2:26:05.760)

with Bitcoin and lightning, you could do it. And on the other hand, with banks and credit cards,

Michael Saylor (2:26:15.440)

you couldn't, right? You couldn't ever. So, so you can create things that are beautiful and lasting.

Lex Fridman (2:26:25.200)

And what's the difference in speed? Well, so I can either trade with everybody in the world

Michael Saylor (2:26:32.880)

at the speed of light, friction free in 24 hours writing a Python script, or I can spend $100 billion

Michael Saylor (2:26:41.200)

to trade with a few million people in the world after it takes them six months of application.

Michael Saylor (2:26:48.560)

The impedance is like a 10 million to one difference, right? And the metaphors are

Michael Saylor (2:26:56.080)

literally like launching something in orbit versus almost orbit or vacuum sealing something.

Lex Fridman (2:27:03.440)

Does it last forever and does it orbit forever or does it go away?

Lex Fridman (2:27:07.120)

Does it last forever and does it orbit forever or does it go up and come down and burn up?

Michael Saylor (2:27:13.760)

Right. And I think Jack is interested in, you know, putting freedom in orbit. All right.

Michael Saylor (2:27:21.280)

Putting freedom.

Lex Fridman (2:27:22.960)

Putting freedom in orbit. And he said it many times. He said,

Michael Saylor (2:27:26.400)

this is the internet needs a native currency. Right. And no political construct or security

Michael Saylor (2:27:34.640)

can be a native currency. You need a property and you need a property that can be moved a million

Michael Saylor (2:27:40.080)

times a second. Can you oscillate it at 10 kilohertz or a hundred kilohertz? And the answer

Michael Saylor (2:27:46.800)

is only if it's a pure digital construct, permissionless and open. And so I think

Michael Saylor (2:27:54.880)

that he's enthusiastic as the technologist and he's enthusiastic as the humanitarian.

Lex Fridman (2:28:00.400)

And what he's doing is support both those areas. He's supporting the Bitcoin and the lightning

Michael Saylor (2:28:05.520)

protocol by building them into his products, but he's also building the applications,

Michael Saylor (2:28:10.800)

which you need at the cash app level in order to commercialize and deliver the functionality

Lex Fridman (2:28:17.280)

and the compliance necessary and they're related.

Lex Fridman (2:28:21.760)

And I should also say he's just a fascinating person. I, for a random reason that

Michael Saylor (2:28:28.240)

I couldn't even explain. If I tried, I met him a few days ago and gave him a great big hug in the

Michael Saylor (2:28:35.040)

middle of nowhere. There was no explanation. He just appeared. That's a fascinating human,

Michael Saylor (2:28:40.400)

his relationship with art, with the world, with human suffering, with technology is fascinating.

Michael Saylor (2:28:47.760)

I don't know what his path looks like, but it's interesting that people like that exist.

Lex Fridman (2:28:53.440)

And in part, I'm saddened that he no longer is involved with Twitter directly as a CEO,

Michael Saylor (2:29:00.080)

because I was hoping something inside Twitter would also integrate some of these ideas of what

Michael Saylor (2:29:07.200)

you're calling digital energy to see how social networks, something I'm really interested in and

Michael Saylor (2:29:13.600)

passionate about could be transformed. Let me ask you just for educational purposes,

Michael Saylor (2:29:18.320)

what's the, can you please explain to me what web three and the beef between Jack and Mark

Michael Saylor (2:29:24.080)

Andreessen is exactly? Did you see what happened? Sorry to have you analyze Twitter like it's

Lex Fridman (2:29:30.560)

Shakespeare, but can you please explain to me why, why there was any, any drama over this topic?

Lex Fridman (2:29:37.440)

First of all, web three is a term that's used to refer to, you know,

Michael Saylor (2:29:43.840)

the part of the economy that's token financed. So if I'm launching an application and my idea

Michael Saylor (2:29:49.280)

is to create a token along with the application and issue the token to the community so as to

Michael Saylor (2:29:55.600)

finance the application and build support for it, I think that that's the most common

Michael Saylor (2:30:03.280)

interpretation of web three. There are other interpretations too. So I'm just going to refer

Michael Saylor (2:30:08.000)

to that one. And I think the beef in a nutshell, not articulated, but I'll articulate it is whether

Michael Saylor (2:30:15.120)

or not you should focus all your energy creating applications on top of an ethical digital property

Michael Saylor (2:30:21.520)

like Bitcoin, or whether you should attempt to create a competitor to it, which generally would

Michael Saylor (2:30:32.320)

be deemed as a security by the Bitcoin community. So I'm going to put on my Bitcoin hat here. Yeah.

Michael Saylor (2:30:38.000)

Right. All the tokens that are, if it's driven by a venture capitalist, well, it's a security.

Michael Saylor (2:30:42.720)

If there's a CEO and a CTO, it's a security. All these projects, they're companies. Foundations

Michael Saylor (2:30:49.200)

are companies, right? If you call them a project or a foundation, it doesn't make it not a security.

Michael Saylor (2:30:55.600)

They're all, in essence, collections of individuals that are issuing equity in the form of a token.

Lex Fridman (2:31:03.360)

And if there's a pre mine, an IPO, an ICO, a foundation, or any kind of protocol where there's

Lex Fridman (2:31:15.600)

a group of engineers that have influence over it, then that's a security.

Michael Saylor (2:31:21.840)

If there's a group of engineers that have influence over it, then to a securities lawyer, or to most

Michael Saylor (2:31:32.080)

Bitcoiners and definitely to anybody that's steeped in securities law, you're looking to say,

Michael Saylor (2:31:35.920)

well, that passes the Howey test. It looks like a security. It should be sold to the public pursuant

Michael Saylor (2:31:43.440)

to disclosures and regulations. And you're just ducking the IPO process, right? And so now we get

Michael Saylor (2:31:52.240)

back to the ethical issue. The ethical issue is if you're trading it as a commodity and representing

Michael Saylor (2:31:59.840)

it as a commodity, while truthfully it's a security, then it's a violation of ethics rules,

Lex Fridman (2:32:05.920)

and it's probably illegal. Well, you keep leaning on this. Let me push back on that part. Maybe you

Michael Saylor (2:32:10.640)

hit me, but you keep leaning on this line of securities law as if it would all do respect to

Michael Saylor (2:32:17.440)

lawyers, as if that line somehow defines what is and isn't ethical. I think there's a lot of

Michael Saylor (2:32:25.520)

correlation as you've discussed, but I'd like to leave the line aside. If the law calls something

Michael Saylor (2:32:32.640)

as a security, it doesn't mean in my eyes that it is unethical. I mean, there could be some

Michael Saylor (2:32:39.520)

technicalities and lawyers and people play games with this kind of stuff all the time. But I take

Michael Saylor (2:32:44.480)

your bigger point that if there's a CEO, if there's a project lead, that's fundamentally,

Lex Fridman (2:32:49.520)

well, that to you is fundamentally different than the structure of Bitcoin.

Michael Saylor (2:32:54.560)

It's not that creating securities is unethical. I created security. I took a company public,

Michael Saylor (2:32:59.840)

right? That's not the unethical part. It's completely ethical to create securities.

Michael Saylor (2:33:04.320)

A block is a security. All companies are securities. The unethical part is to

Michael Saylor (2:33:09.520)

represent it as property when it's a security and to promote it or trade it as such.

Michael Saylor (2:33:16.480)

This whole promotion, that's also a technical thing because what counts and not as promotion

Michael Saylor (2:33:25.760)

is a legal thing and you get in trouble for all these things, but that's the game that lawyers

Michael Saylor (2:33:31.280)

play. There's an ethical thing here, which is what's right to promote and not. To me, propaganda is

Lex Fridman (2:33:39.120)

unethical, but it's usually not illegal. If you roll the clock back 20 years,

Michael Saylor (2:33:48.320)

all the boiler room pump and dump schemes were all about someone pitching a penny stock,

Michael Saylor (2:33:53.200)

selling Swampland in Florida. And if you roll the clock back forward 20 years and I create my own

Michael Saylor (2:34:00.480)

company and I represent it as the same thing and I don't make the disclosures, you're just one step

Michael Saylor (2:34:06.880)

removed from the boiler room scheme and that's what's distasteful about it. There are ways to

Michael Saylor (2:34:13.840)

sell securities to the public, but there are expectations. Maybe we could forget about whether

Michael Saylor (2:34:20.960)

the security laws are ethical or not. I will leave that alone. We'll just start with the biblical

Michael Saylor (2:34:27.200)

definition of ethics. Don't lie, cheat, or steal. So if I'm going to sell something to you, I need

Michael Saylor (2:34:33.920)

to fully disclose what I'm selling to you, right? And that's a matter of great debate right now.

Lex Fridman (2:34:42.400)

And so I think that that's part of the debate. But the other part of the debate is

Michael Saylor (2:34:47.840)

whether or not we need more than one token. We need at least one, right? We need at least one

Michael Saylor (2:34:56.560)

digital property because zero means there is no digital economy. And by the way, the conventional

Michael Saylor (2:35:05.440)

view of maximalists is they think there's only one and everything else isn't. That's not the point

Michael Saylor (2:35:10.240)

I'm going to make. I would say we know that there is at least one digital property.

Lex Fridman (2:35:16.080)

And that is Bitcoin. If you can create a truly decentralized, noncustodial, bearer instrument

Michael Saylor (2:35:26.880)

that is not under the control of any organization that is fairly distributed, then you might create

Lex Fridman (2:35:34.720)

another or multiple. And there may be others out there. But I think that

Michael Saylor (2:35:42.080)

the frustration of a lot of people in the Bitcoin community, and I share this with Jack, is we could

Michael Saylor (2:35:48.960)

create $100 trillion of value in the real world simply by building applications on top of Bitcoin

Michael Saylor (2:35:56.320)

as a foundation. And so continually trying to reinvent the wheel and create competitive things

Michael Saylor (2:36:06.080)

is a massive waste of time and it's diversion of human creativity. It's like we have an ethical good

Lex Fridman (2:36:16.800)

thing. And now we're going to try to create a third or a fourth one. Why?

Michael Saylor (2:36:23.680)

Well, let's talk about it. So first of all, I'm with you. But let me ask you this interesting

Michael Saylor (2:36:28.800)

question because we talked about properties and securities, and we talked about how you

Michael Saylor (2:36:32.320)

have a popular Twitter account. It's hilarious and insightful. You do promote Bitcoin, in a sense.

Michael Saylor (2:36:43.120)

I don't know if you would say that. But do you think there's a conflict of interest in anyone

Lex Fridman (2:36:48.160)

who owns Bitcoin promoting Bitcoin? Is it the same as you promoting the first Bitcoin?

Michael Saylor (2:36:54.320)

I would say no, there's an interest. I think that you can promote a property or an idea to the extent

Michael Saylor (2:37:07.120)

that you don't control it. I think that the point at which you start to have a conflict of interest

Michael Saylor (2:37:15.120)

is that you don't control it. I think that the point at which you start to have a conflict of

Michael Saylor (2:37:22.080)

interest is when you're promoting a proprietary product or a proprietary security. A security,

Michael Saylor (2:37:28.160)

in general, is a proprietary asset. So for example, if you look at my Twitter, you will find

Michael Saylor (2:37:34.320)

that I make lots of statements about Bitcoin. You won't ever see me making a statement that,

Michael Saylor (2:37:39.200)

say, MicroStrategy stock will go up forever. I'm not promoting a security MSTR because at the end

Michael Saylor (2:37:47.120)

of the day, MSTR is a security. It is proprietary. I have proprietary interest in it. I have

Michael Saylor (2:37:54.480)

a disproportionate amount of control and influence on the direction.

Michael Saylor (2:37:59.600)

The control is the problem. The control is the problem. Because you have interest in both.

Michael Saylor (2:38:04.640)

If Bitcoin is as successful as we're talking about, you very possibly can become the richest

Michael Saylor (2:38:12.880)

human on earth, given how much you own in Bitcoin, right? The wealthiest, not the richest. I don't

Michael Saylor (2:38:19.680)

know what those words mean.

Lex Fridman (2:38:20.800)

I would benefit economically.

Michael Saylor (2:38:22.960)

You would benefit economically.

Lex Fridman (2:38:24.720)

That's true.

Lex Fridman (2:38:25.360)

So the reason that's not conflict of interest is because the word property, that Bitcoin is an idea

Lex Fridman (2:38:35.280)

and Bitcoin is open.

Michael Saylor (2:38:37.600)

It's because I don't own it. I don't control it. In essence, the ethical line here is,

Lex Fridman (2:38:45.920)

could I print myself 10 million more Bitcoin or not, right?

Lex Fridman (2:38:51.120)

Or can anyone, right? It's not just you. Can anyone? Because can you promote somebody else's?

Lex Fridman (2:38:57.520)

Yes, I guess you can. Like, can you promote Apple when you have no stake?

Michael Saylor (2:39:04.640)

You could have a Twitter account where you promote oil or you promote camping or you promote

Lex Fridman (2:39:11.280)

family values or promote, you know, a carnivore diet or promote the Iron Man, right?

Michael Saylor (2:39:17.520)

You're not going to get wealthier if you promote camping because you can't own a stake. I mean,

Lex Fridman (2:39:24.880)

you own a lot of Bitcoin. What is that? Don't you own the stake in the idea?

Michael Saylor (2:39:30.480)

Yeah, I would grant you that.

Lex Fridman (2:39:34.720)

But the lack of control is the fundamental ethical line that you just, you don't have,

Michael Saylor (2:39:41.040)

all you are is you're a fan of the idea. You believe in the idea and the power of the idea.

Lex Fridman (2:39:47.760)

You can't take that idea away from others.

Michael Saylor (2:39:50.240)

Let's come back to, let me give you some maybe easier examples. If you were the head of the

Michael Saylor (2:39:54.800)

Marine Corps, right? And someone came to you and said, I created MarineCoin. And the twist on

Michael Saylor (2:40:05.920)

MarineCoin is I want you to tell every Marine that they'll get an extra MarineCoin when they

Michael Saylor (2:40:13.280)

get their next stripe. And then I'm going to let you buy MarineCoin now. And then after you buy

Michael Saylor (2:40:19.360)

MarineCoin, I want you to promote it to them, right? At some point, if you start to have a

Michael Saylor (2:40:29.120)

disproportional influence on it, or if you're in a conversation with people with disproportionate

Michael Saylor (2:40:34.240)

influence becomes conflict of interest, and it would make you profoundly uncomfortable, I think,

Michael Saylor (2:40:39.680)

if the head of the Marine Corps started promoting anything that looked like a security.

Michael Saylor (2:40:44.320)

Now, if the head of the Marine Corps started promoting canoeing, you might think he's kind

Michael Saylor (2:40:50.480)

of wacky, like maybe, like that's kind of a waste of time and distraction. So, but to the extent

Michael Saylor (2:40:58.240)

that canoeing is not a security, not a problem, unless you, you know, ultimately, the issue of

Michael Saylor (2:41:05.520)

decentralization is really a critical one. So not having a head. So is it something,

Michael Saylor (2:41:11.280)

can Bitcoin be replicated? So the, all the things that you're saying that make it a property,

Lex Fridman (2:41:18.960)

can that be replicated? Have any other...

Michael Saylor (2:41:20.960)

I think it's possible to create other crypto properties.

Michael Saylor (2:41:24.480)

Does it, does the having a head, like of a project, a thing that limits its ability to be a

Lex Fridman (2:41:32.080)

property, if you try to replicate a project? Is that the fundamental flaw?

Michael Saylor (2:41:38.480)

No, I, look, I think the real fundamental issue is you just never want it to change.

Michael Saylor (2:41:46.480)

Like, like, if you really want something decentralized, you want a genetic template

Michael Saylor (2:41:54.000)

that substantially is not going to change for a thousand years. So I think Satoshi said it at one

Michael Saylor (2:42:00.480)

point, he said the nature of the software is such that by version 0.1, its genetic code was set.

Michael Saylor (2:42:06.160)

If, if there was any development team that's continually changing it, you know, on a routine

Michael Saylor (2:42:11.280)

basis, it becomes harder and harder to maintain its decentralization because now, now there's the

Michael Saylor (2:42:18.240)

issue of who's influencing the changes. So what you really want is, is a very, very simple idea,

Michael Saylor (2:42:28.400)

right? The simplest idea, I'm just going to keep track of who owns 21 million parts of energy.

Lex Fridman (2:42:33.680)

And when someone proposes big functional upgrades, you almost don't, you don't really want that

Michael Saylor (2:42:40.160)

development to go on the base layer. You want that development to go on the layer threes, because

Lex Fridman (2:42:46.000)

now, cache app has a proprietary set of functionality and it's a security.

Lex Fridman (2:42:51.440)

And if you're going to promote the use of this thing, you're not going to, you're not going to

Michael Saylor (2:42:56.400)

promote the layer three security because that's a, an edge to a given entity and you're trusting

Michael Saylor (2:43:04.080)

the counterparty, you're going to promote the layer one or at most the layer two.

Michael Saylor (2:43:09.440)

Okay. So one of the fascinating things about Bitcoin, and sorry to romanticize certain notions,

Lex Fridman (2:43:18.640)

but Satoshi Nakamoto, that the founder is anonymous. Maybe you can speak a little bit

Michael Saylor (2:43:24.640)

about that. Maybe you can speak to whether that's useful, but also I just like the psychology of

Michael Saylor (2:43:31.680)

that to imagine that there's a human being that was able to create something special and walk away.

Lex Fridman (2:43:37.040)

So first are you Satoshi Nakamoto?

Michael Saylor (2:43:40.240)

I'm certain I'm not. No, actually I, you know, I think the providence is really important. And

Michael Saylor (2:43:49.200)

if I were to look at the highlighted points, I think having a founder that was anonymous

Michael Saylor (2:43:55.200)

or should anonymous is important. I think the founder disappearing is also important. I think

Michael Saylor (2:44:00.320)

that the fact that the Satoshi coins never moved is also important. I think the lack of an initial

Michael Saylor (2:44:07.600)

coin offering is also important. I think the lack of a corporate sponsor is important. I think the

Michael Saylor (2:44:14.720)

fact that it traded for 15 months with no commercial value was also important. I think that

Michael Saylor (2:44:24.720)

the simplicity of the protocol is very important. I think that the outcome of the block size wars

Michael Saylor (2:44:31.840)

is very important. And all of those things add up to common property. They're all indicia,

Michael Saylor (2:44:40.800)

indicators of a digital property as opposed to security. If there was a Satoshi sitting around,

Lex Fridman (2:44:47.360)

sitting on top of $50 billion worth of Bitcoin, I don't think it would

Michael Saylor (2:44:55.200)

cripple Bitcoin as property, but I think it would undermine its digital property.

Lex Fridman (2:45:02.080)

And if I wanted to undermine a crypto asset network, I would do the opposite of all those

Michael Saylor (2:45:07.040)

things. I would launch one myself, I would sell 25% or 50% of the general public, I would keep some

Michael Saylor (2:45:14.560)

of the initial, I would pre mine some stuff or early mine it, you know, and I would keep an

Michael Saylor (2:45:19.040)

influence on it. Those are all the opposite of what you would do in order to create common property.

Lex Fridman (2:45:28.400)

And so I see the entire story as Satoshi giving a gift of digital property to the human race

Lex Fridman (2:45:36.160)

and disappearing.

Lex Fridman (2:45:37.440)

Do you think it was one person? Do you have ideas of who it could be?

Michael Saylor (2:45:41.040)

I don't care to speculate.

Lex Fridman (2:45:44.960)

But do you think it was one person?

Michael Saylor (2:45:47.040)

It was one person, maybe in conjunction with a bunch of others. I mean, it might have been a

Lex Fridman (2:45:51.920)

group of people that were working together, but certainly there's a Satoshi.

Michael Saylor (2:45:55.520)

I mean, it's just so fascinating to me that one person could be so brave and thoughtful. Or do you

Michael Saylor (2:46:01.520)

think a lot of his accent, like the block size wars, the decision to make a block a certain size,

Michael Saylor (2:46:07.600)

all the things you mentioned led up to the characteristics that make Bitcoin property.

Lex Fridman (2:46:14.080)

Do you think that's an accident? Or it was deeply thought through? Like how does this is almost like

Michael Saylor (2:46:19.680)

a history of science question.

Michael Saylor (2:46:21.040)

They tried 40 of them, right? I mean, I think there's a there's a history of attempting to

Michael Saylor (2:46:26.160)

create something like this. And it was tried many, many times and, and they failed for different

Michael Saylor (2:46:30.960)

reasons. And I think that it's like Prometheus tried to start a fire 47 times and maybe the 48th

Michael Saylor (2:46:36.960)

time it sparked. And that's how I see this. This is the first one that sparked. And it sets a

Michael Saylor (2:46:44.720)

roadmap for us. And I think if you're looking for any one word that characterizes it, it's fair.

Michael Saylor (2:46:51.760)

The whole point of the network is it's a fair launch, a fair distribution. Like, yeah, I have

Michael Saylor (2:46:59.840)

Bitcoin, but I bought it. In fact, I, you know, at this point, we've paid $4 billion of you real

Michael Saylor (2:47:08.560)

cash to buy it. If I was sitting on the same position, and I had it for free, then there's

Michael Saylor (2:47:16.240)

always this question of, did I, you know, or I bought it for a nickel, a coin or a penny, a coin.

Michael Saylor (2:47:21.520)

The question is, was it fair? And that's a very hard question to answer, right? Did you acquire

Michael Saylor (2:47:28.160)

the Bitcoin that you own fairly? And if you roll the clock back, you know, you could have bought it

Michael Saylor (2:47:34.880)

for a nickel or a dime, but that was when it was a million times more likely to fail, right? When

Michael Saylor (2:47:40.880)

the risk was greater, the cost was lower. And then over time, the risk became lower and the cost

Michael Saylor (2:47:47.920)

became greater. And the real critical thing was to allow the marketplace, absent any powerful

Michael Saylor (2:47:55.920)

interested actor, right? It's almost like if Satoshi had held a million coins and then stayed

Michael Saylor (2:48:01.440)

engaged for 10 more years, tweaking things in the background, there'd still be that question.

Lex Fridman (2:48:08.080)

But what we've got is really a beautiful thing. We've got a chain reaction in cyberspace or an

Michael Saylor (2:48:14.960)

ideology spreading virally in the world that has seasoned in a fair ethical fashion. Sometimes it's

Michael Saylor (2:48:26.880)

a very violent, brutal fashion with all the volatility, right? And there's been a lot of,

Michael Saylor (2:48:32.240)

you know, a lot of sound and fury along the way.

Lex Fridman (2:48:34.960)

How do you psychoanalyze? How do you deal from a financial, from a human perspective with the

Michael Saylor (2:48:41.360)

volatility? You mentioned you could have gotten it for a nickel and the risk was great. Where's the

Lex Fridman (2:48:46.880)

risk today? What's your sense?

Michael Saylor (2:48:48.720)

You know, we're 13 years into this entire activity. I think the risk has never been lower.

Michael Saylor (2:48:56.240)

If you look at all the risks, right, the risks in the early years are, is the engineering protocol

Michael Saylor (2:49:03.600)

proper? Like one megabyte block size, 10 minute clock frequency cryptography is first, will it be

Michael Saylor (2:49:12.560)

hacked or will it crash? 730,000 blocks and it hasn't crashed. Will it be hacked? Hasn't been

Michael Saylor (2:49:19.360)

hacked. But you know, it's a Lindy thing, right? You wait 13 years to see if it'll be hacked.

Lex Fridman (2:49:23.600)

But on the other hand, with a billion dollars, it's not as interesting a target as it is with

Michael Saylor (2:49:28.960)

a hundred billion. And when it gets to be worth a trillion, then it's a bigger target. So the

Michael Saylor (2:49:35.600)

risk has been bleeding off over time as the network monetized. I think the second question is,

Michael Saylor (2:49:43.840)

will it be banned? You couldn't know. It literally could have been banned at any time, many times

Michael Saylor (2:49:49.440)

early on. In fact, in 2013, I tweeted on that subject. I thought it would be banned. I made a

Michael Saylor (2:49:54.880)

very infamous tweet. I thought it was going to be banned. In 2014, the IRS designated it as

Michael Saylor (2:50:03.760)

property and gave it property tax treatment, okay? So they could have given it a tax treatment where

Michael Saylor (2:50:09.680)

you had to pay tax on the unrealized capital gains every year and it probably would have

Michael Saylor (2:50:15.360)

crushed it to death, right? So it could have been in any number of places banned by a government.

Lex Fridman (2:50:25.040)

But in fact, it was legitimized as property. And then the question is, would it be hacked

Michael Saylor (2:50:29.920)

or would it be copied? Well, it'd be something better than that. And it was copied 15,000 times.

Lex Fridman (2:50:34.640)

And you know the story of all those. And they either diverged to be something totally different

Lex Fridman (2:50:41.040)

and not comparable or someone trying to copy a non sovereign bearer instrument store of value

Michael Saylor (2:50:48.000)

found that their networks crashed to be 1% of what Bitcoin is. So now we're sitting at a point where

Michael Saylor (2:50:56.240)

all those risks are out of the way. I would say that year one of institutional adoption

Michael Saylor (2:51:02.560)

is it started August 2020. That's when MicroStrategy bought $250 million worth of

Michael Saylor (2:51:08.800)

Bitcoin and we put that on the wire. We were the first publicly traded company to actually buy

Michael Saylor (2:51:15.120)

Bitcoin. I don't think you could have found a $5 million purchase from a public company

Michael Saylor (2:51:18.720)

before we did that. So that was kind of like a gun going off. And then in the next 12 months,

Michael Saylor (2:51:26.400)

Tesla bought Bitcoin, Square bought Bitcoin. And I'd say now we're in year two of institutional

Michael Saylor (2:51:32.720)

adoption. And there are about 24, should be 24 publicly traded Bitcoin miners by the end of this

Michael Saylor (2:51:38.640)

quarter. So you're looking at 36 publicly traded companies. And you've got 50, at least in the

Michael Saylor (2:51:48.800)

range of $50 billion of Bitcoin on the balance sheet of publicly traded companies and hundreds

Michael Saylor (2:51:55.600)

of billions of dollars of market cap of Bitcoin exposed companies. So I would say the asset,

Michael Saylor (2:52:04.720)

decade one was entrepreneurial, experimental. Decade two is a rotation from entrepreneurs

Michael Saylor (2:52:14.000)

institutions and is becoming institutionalized. So maybe decade one, you go from zero to a trillion

Lex Fridman (2:52:19.280)

and a decade two, you go from one trillion to a hundred trillion.

Michael Saylor (2:52:22.080)

Trey Lockerbie What about governments, government adoption,

Michael Saylor (2:52:25.600)

institutional adoption? Are governments important in this? Maybe making it some governments

Lex Fridman (2:52:32.160)

incorporating it into as a currency into their banks, all that kind of stuff. Is that important?

Lex Fridman (2:52:39.120)

And if it is, when will it happen?

Michael Saylor (2:52:41.680)

John Ligato It's not essential for the success of the asset

Michael Saylor (2:52:45.360)

class, but I think it's inevitable in various degrees over time. But the most likely thing

Michael Saylor (2:52:52.560)

to happen next is large acquisitions by institutional investors of Bitcoin as a digital

Michael Saylor (2:53:02.800)

gold, where they're just swapping out gold for digital gold and thinking of it like that.

Lex Fridman (2:53:08.560)

And the government entities most likely to be involved with that would be sovereign wealth

Michael Saylor (2:53:12.160)

funds. If you look at all the sovereign wealth funds that are holding big tech stock, equities,

Michael Saylor (2:53:18.160)

the Swiss, the Norwegians, the Middle Easterners, if you can hold big tech, then holding digital

Lex Fridman (2:53:24.800)

gold would be not far removed from that. That's a noncontroversial adoption.

Michael Saylor (2:53:33.440)

I think there are opportunities for governments that are much more profound. If a government

Michael Saylor (2:53:40.320)

started to adopt Bitcoin as a treasury reserve asset, that's much bigger than just an asset

Michael Saylor (2:53:48.880)

investment. That's 100x bigger. And you could imagine that's like a trillion dollar opportunity.

Michael Saylor (2:53:56.640)

Like any government that wanted to adopt it as a treasury reserve asset would probably

Michael Saylor (2:54:01.040)

generate trillions of dollars, a trillion or more of value. And then the thing that people

Lex Fridman (2:54:08.560)

think about is, well, will oil ever be priced in Bitcoin or any other export commodity?

Michael Saylor (2:54:15.680)

I think there's like $1.8 trillion or more of export commodities in the world. And right now,

Michael Saylor (2:54:21.840)

they're all priced in dollars. I think that this is a colorful thing, but not really that relevant.

Michael Saylor (2:54:27.520)

Like you could sell all that stuff in dollars. The relevant decision that any institution makes,

Michael Saylor (2:54:33.360)

whether they're a nonprofit, a university, a corporation, or a government, is what's your

Michael Saylor (2:54:38.720)

treasury reserve asset? And if your treasury reserve asset is the peso, and if the peso is

Michael Saylor (2:54:45.760)

losing 20% or 30% of its value a year, then your balance sheet is collapsing within five years.

Lex Fridman (2:54:56.160)

And if the treasury reserve asset is dollars and currency derivatives and US treasuries,

Michael Saylor (2:55:04.080)

then you're getting your seven. Right now, it's probably 15% or more monetary inflation. We're

Michael Saylor (2:55:12.000)

running double the historic average. You could argue triple, somewhere between double and triple,

Michael Saylor (2:55:16.640)

depending upon what your metric is. So do I think it'll happen? I think that they're conservative,

Lex Fridman (2:55:23.360)

but they have to be shocked. And I think there is a shock. The late Russian sanctions are a big

Michael Saylor (2:55:30.560)

shock. When the West sees $300 billion worth of Russian gold and currency derivatives, I think

Michael Saylor (2:55:37.440)

you got the famous quote by Putin that we have to rethink our treasury strategies. And that pushes

Michael Saylor (2:55:45.520)

everybody toward a commodity strategy. What commodities do I want to hold? I think that's

Michael Saylor (2:55:50.880)

got a lot of people thinking. I think it's got the Chinese thinking. Everybody wants to be the

Michael Saylor (2:55:54.720)

reserve currency, right? So if I buy $50 billion worth of dollars every year, then I buy $500

Michael Saylor (2:56:03.280)

billion over a decade, and I probably pay $250 billion of inflation cost on the backs of my

Michael Saylor (2:56:15.280)

on the backs of my citizens in a decade. So inflation could be one of the sources of shock.

Lex Fridman (2:56:23.040)

And you wonder if there is a switch to Bitcoin, whether it will be a bang or a whimper. Like,

Lex Fridman (2:56:29.840)

what is the nature of the shock or the transition? I think that the year 2022 is pretty catalytic

Michael Saylor (2:56:38.000)

for digital assets in general and for Bitcoin in particular. The Canadian trucker crisis,

Michael Saylor (2:56:43.840)

I think, educated hundreds of millions of people and made them start questioning their property

Michael Saylor (2:56:50.480)

rights and their banks. I think the Ukraine war was a second shock. But I think that the Russian

Michael Saylor (2:56:59.760)

sanctions was a third shock. Yeah, I think all three of them. And I think hyperinflation in the

Michael Saylor (2:57:08.160)

rest of the world is a fourth shock. And then persistent inflation in the US is a fifth shock.

Lex Fridman (2:57:12.720)

So I think it's a perfect storm. And if you put all these events together, what do they signify?

Michael Saylor (2:57:19.840)

They signify the rational conclusion for any person thinking about this is, I'm not sure if I

Michael Saylor (2:57:27.120)

can trust my property. I don't know if I have property rights. I don't know if I can trust the

Michael Saylor (2:57:32.720)

bank. And if I'm politically at odds with the leader of my own country, I'm going to lose my

Michael Saylor (2:57:40.880)

property. And if I'm politically at odds with the owner of another country, I'm still going to lose

Michael Saylor (2:57:47.040)

my property. And when push comes to shove, the banks will freeze my assets and seize them.

Lex Fridman (2:57:54.640)

And I think that that is playing out in front of everybody in the world, such that your logical

Michael Saylor (2:58:05.280)

response would be, I'm going to convert my weak currency to a strong currency. Like I'll convert

Michael Saylor (2:58:13.520)

my peso and lira to the dollar. I'm going to convert my weak property to strong property.

Michael Saylor (2:58:20.640)

I'm going to sell my building downtown Moscow. And I'd rather own a building in New York City. I'd

Michael Saylor (2:58:29.040)

rather own in a powerful nation than be stuck with a building in Nigeria or a building in Argentina

Michael Saylor (2:58:36.560)

or whatever. So I'm going to sell my weak properties to buy strong properties. I'm going to

Michael Saylor (2:58:41.520)

convert my physical assets to digital assets. I'd rather own a digital building than own a physical

Lex Fridman (2:58:47.440)

building. Because if I had a billion dollar building in Moscow, who can I rent that to?

Lex Fridman (2:58:53.440)

But if I have a billion dollar digital building, I can rent it to anybody in any city in the world,

Michael Saylor (2:58:59.040)

anybody with money. And the maintenance cost is almost nothing. And I can hold it for 100 years.

Lex Fridman (2:59:05.040)

So it's an indestructible building. And then finally, I want to move from having my assets

Michael Saylor (2:59:11.280)

in a bank with a counterparty to self custody assets. And this is not just Ukraine, but this is

Michael Saylor (2:59:19.360)

like the story in Turkey, Lebanon, Syria, Afghanistan, Iraq, South America. You don't

Michael Saylor (2:59:26.480)

really want to be sitting with $10 million in a bank in Istanbul, the bank's going to freeze your

Lex Fridman (2:59:32.320)

money converted to lira, devalue the lira and then feed it back to you over 17 years, right?

Lex Fridman (2:59:39.440)

So self custody assets will be layer one Bitcoin.

Michael Saylor (2:59:42.720)

Self custody assets, it's like, if I if I got my own hardware wallet, and I've either got

Michael Saylor (2:59:50.800)

your highest form of self custody would be Bitcoin on your own hardware wallet or Bitcoin

Lex Fridman (2:59:56.560)

and your own self custody. And the other the other thing people think about is how do I get crypto

Michael Saylor (30:04.320)

you would have lost 99.7% of your wealth over the same time period. So the expansion of the currency

Michael Saylor (30:16.000)

creates a massive inefficiency in the society, what I'll call an adiabatic lapse. What we're

Lex Fridman (30:22.880)

doing is we're bleeding the civilization to death. What's the adiabatic, what's that word?

Michael Saylor (30:30.240)

Adiabatic lapse. Right. In aerospace engineering, you want to solve any problem, they start with

Michael Saylor (30:38.880)

the phrase, assume an adiabatic system. And what that means is a closed system. So I've got a

Michael Saylor (30:46.000)

container and in that container, no air leaves and no air enters, no energy exits or enters.

Lex Fridman (30:52.320)

So it's a closed system. So you got the closed system lapse.

Lex Fridman (30:56.320)

There's a leak in the ship.

Michael Saylor (31:01.920)

I'm going to use a physical metaphor for you because you're the jujitsu, right? Like you've

Michael Saylor (31:06.640)

got 10 pints of blood in your body. And so before your next workout, I'm going to take one pint from

Michael Saylor (31:13.520)

you. Now you're going to go exercise, but you've lost 10% of your blood. You're not going to perform

Michael Saylor (31:22.240)

as well. It takes about one month for your body to replace the red blood platelets. So what if I

Michael Saylor (31:28.160)

tell you every month you got to show up and I'm going to bleed you? Yeah. Okay. So if I'm draining

Michael Saylor (31:34.480)

the energy, I'm draining the blood from your body, you can't perform. If you, adiabatic lapse is when

Michael Saylor (31:41.600)

you go up in altitude, every thousand feet, you lose three degrees. You go at 50,000 feet, you're

Michael Saylor (31:47.280)

150 degrees colder than sea level. That's why you look at your instruments and instead of 80 degrees,

Michael Saylor (31:54.720)

you're minus 70 degrees. Why is the temperature falling? Temperature is falling because it's not

Michael Saylor (32:00.720)

a closed system, it's an open system. As the air expands, the density falls, the energy per cubic

Michael Saylor (32:13.040)

whatever falls and therefore the temperature falls. The heat's falling out of the solution.

Lex Fridman (32:18.800)

So when you're inflating, let's say you're inflating the currency supply by 6%,

Michael Saylor (32:25.520)

you're sucking 6% of the energy out of the fluid that the economy is using to function.

Lex Fridman (32:34.400)

So the currency, this kind of ocean of currency, that's a nice way for the economy to function.

Michael Saylor (32:39.680)

It's the most kind of, it's being inefficient when you expand the money supply, but it's

Michael Saylor (32:47.600)

the liquid. I'm trying to find the right kind of adjective here. It's how you do transactions at

Michael Saylor (32:53.040)

a scale of billions. Currency is the asset we use to move monetary energy around and you could use

Michael Saylor (33:00.240)

the dollar or you could use the peso or you could use the bolivar. Selling houses and buying houses

Michael Saylor (33:06.160)

is much more inefficient or like you can't transact between billions of people with houses.

Michael Saylor (33:14.560)

Yeah. Properties don't make such good mediums of exchange. They make better stores of value

Lex Fridman (33:20.720)

and they have utility value if it's a ship or a house or a plane or a bushel of corn, right?

Lex Fridman (33:29.280)

Can I zoom out just for, can we zoom out? Keep zooming out until we reach

Michael Saylor (33:33.200)

the origin of human civilization. But on the way, ask, you gave economists a D minus.

Lex Fridman (33:39.600)

I'm not even going to ask you what you give to governments.

Lex Fridman (33:44.080)

Do you think their failure, economists and government failure is malevolence or incompetence?

Michael Saylor (33:52.880)

I think policymakers are well intentioned, but generally all government policy is inflationary

Lex Fridman (34:00.400)

and all government, it's inflammatory and inflationary. So what I mean by that is

Michael Saylor (34:05.920)

when you have a policy pursuing supply chain independence, if you have an energy policy,

Michael Saylor (34:13.840)

if you have a labor policy, if you have a trade policy, if you have any kind of foreign policy,

Michael Saylor (34:20.880)

a domestic policy, a manufacturing policy, every one of these, a medical policy,

Michael Saylor (34:26.960)

every one of these policies interferes with the free market and generally prevents some rational

Michael Saylor (34:35.600)

actor from doing it in a cheaper, more efficient way. So when you layer them on top of each other,

Michael Saylor (34:42.320)

they all have to be paid for. If you want to shut down the entire economy for a year,

Michael Saylor (34:46.960)

you have to pay for it, right? If you want to fight a war, you have to pay for it,

Michael Saylor (34:50.880)

pay for it, right? If you don't want to use oil or natural gas, you have to pay for it.

Michael Saylor (34:56.880)

If you don't want to manufacture semiconductors in China and you want to manufacture them in the

Michael Saylor (35:02.080)

US, you got to pay for it. If I rebuild the entire supply chain in Pennsylvania and I hire a bunch of

Michael Saylor (35:08.000)

employees and then I unionize the employees, then not only am I idle the factory in the Far East,

Michael Saylor (35:16.640)

it goes to 50% capacity. So whatever it sells, it has to raise the price on. And then I drive up

Michael Saylor (35:23.360)

the cost of labor for every other manufacturer in the US because I'm competing against them,

Michael Saylor (35:29.600)

right? I'm changing that condition. So everything gets less efficient, everything gets more

Michael Saylor (35:34.240)

expensive. And of course, the government couldn't really pay for its policies and its wars with

Michael Saylor (35:41.200)

taxes. We didn't pay for World War I with tax. We didn't pay for World War II with tax. We didn't

Michael Saylor (35:46.320)

pay for Vietnam with tax. In fact, when you trace this, what you realize is the government never

Michael Saylor (35:52.240)

pays for all of its policies with tax. Because it's too painful to ask to raise the taxes to

Michael Saylor (35:57.680)

truly transparently pay for the things you're doing with taxes, with taxpayer money because

Michael Saylor (36:04.400)

they feel the pain. That's one interpretation or it's just too transparent. If people understood

Michael Saylor (36:10.560)

the true cost of war, they wouldn't want to go to war. If you were told that you would lose 95%

Michael Saylor (36:18.960)

of your assets and 90% of everything you ever will be taken from you, you might reprioritize

Michael Saylor (36:28.160)

your thought about a given policy and you might not vote for that politician. But you're still

Michael Saylor (36:32.560)

saying incompetence, not malevolence. So fundamentally, government creates a bureaucracy

Michael Saylor (36:38.640)

of incompetence is kind of how you look at it. I think a lack of humility. If people had more

Michael Saylor (36:48.400)

humility, then they would realize. Humility about how little they know, how little they understand

Michael Saylor (36:55.280)

about the function of complex systems. There's a phrase from Quint Eastwood's movie, Unforgiven,

Michael Saylor (36:59.200)

where he says a man's got to know his limitations. I think that a lot of people overestimate

Lex Fridman (37:06.560)

what they can accomplish and experience. Experience in life causes you to reevaluate that.

Lex Fridman (37:17.600)

So I mean, I've done a lot of things in my life and generally, my mistakes were always my good

Michael Saylor (37:24.480)

ideas that I enthusiastically pursued to the detriment of my great ideas that required 150%

Michael Saylor (37:33.200)

of my attention to prosper. So I think people pursue too many good ideas. They all sound good,

Lex Fridman (37:41.600)

but there's just a limit to what you can accomplish. And everybody underestimates the

Michael Saylor (37:47.680)

challenges of implementing an idea. And they always overestimate the benefits of the pursuit

Michael Saylor (37:58.000)

of that. And so I think it's an overconfidence that causes an overexuberance in pursuit of

Michael Saylor (38:04.400)

policies. And as the ambition of the government expands, so must the currency supply. Well,

Michael Saylor (38:13.200)

I could say the money supply, but let's say the currency supply. You can triple the number of

Michael Saylor (38:19.040)

pesos in the economy, but it doesn't triple the amount of manufacturing capacity in the set

Michael Saylor (38:25.440)

economy. And it doesn't triple the amount of assets in the economy, it just triples the pesos. So

Michael Saylor (38:31.760)

as you increase the currency supply, then the price of all those scarce desirable things

Michael Saylor (38:39.440)

will tend to go up rapidly. And the confidence of all of the institutions, the corporations,

Lex Fridman (38:47.920)

and the individual actors and trading partners will collapse.

Michael Saylor (38:52.640)

TK If we take a tangent on a tangent, and we will return soon to the big human civilization

Michael Saylor (38:59.920)

question. So if government naturally wants to buy stuff it can't afford,

Michael Saylor (39:10.080)

what's the best form of government? Anarchism, libertarianism. So there's not even armies,

Michael Saylor (39:19.920)

there's no borders, that's anarchism. The smallest possible, the best government would

Michael Saylor (39:28.400)

be the least and the debate will be over that. TK When you think about this stuff,

Lex Fridman (39:33.600)

do you think about, okay, government is the way it is, I as a person that can generate great ideas,

Lex Fridman (39:39.520)

how do I operate in this world? Or do you also think about the big picture if we start a new

Lex Fridman (39:44.080)

TK civilization somewhere on Mars, do you think about what's the ultimate form of government?

Lex Fridman (39:50.240)

What's at least a promising thing to try?

Michael Saylor (39:58.320)

TK You know, I have laser eyes on my profile on Twitter, Lex.

Michael Saylor (3:00:01.600)

dollars like tether, like some stable coin? Yeah, like I'd rather if you had a choice, would you

Michael Saylor (3:00:08.560)

rather have your money in a bank in a warzone in dollars or have your money in a stable coin on

Michael Saylor (3:00:15.200)

your mobile phone in dollars? Right? I mean, you take the latter risk rather than the former

Michael Saylor (3:00:22.400)

warzone. Definitely. Yeah. And you can see that happening. Like we've gone from 5 billion in

Michael Saylor (3:00:27.200)

stable coins to 200 billion. Yeah. In the last 24 months. Yeah. So I do think there's massive demand

Michael Saylor (3:00:34.480)

for crypto dollars in the form of a US dollar asset. And there's and everybody in the world

Michael Saylor (3:00:42.800)

would say, Yeah, I want that. Well, unless you're just an extreme patriot, but most people in the

Michael Saylor (3:00:48.960)

world would say I want that. And then a lesser group of people would say, I think I want to be

Michael Saylor (3:00:53.520)

able to carry my property in the palm of my hand. So I have self custody of it. So the

Michael Saylor (3:01:00.000)

Bitcoin price has gone through quite a roller coaster. What do you think is the high point

Michael Saylor (3:01:05.120)

is going to hit? I think it'll go forever. Right? I mean, I think the Bitcoin is going to,

Michael Saylor (3:01:12.800)

it's going to climb in a serpentine fashion, it's going to advance and come back and it's going to

Michael Saylor (3:01:18.560)

keep, it's going to keep climbing. I think that the volatility attracts all the capital

Michael Saylor (3:01:25.360)

into the marketplace. And so the volatility makes it the most interesting thing in the financial

Michael Saylor (3:01:31.040)

universe. It also generates massive yield and massive returns for traders. And that attracts

Michael Saylor (3:01:38.240)

capital. Like we're talking about the difference between 5% return and 500% return. So the fast

Michael Saylor (3:01:46.800)

money is attracted by the volatility. The volatility has been decreasing year by year by

Michael Saylor (3:01:53.120)

year. I think that it's stabilizing. I don't think we'll see as much volatility in the future as we

Michael Saylor (3:02:00.080)

have in the past. I think that if we look at Bitcoin and model it as digital gold, the market

Michael Saylor (3:02:10.480)

cap goes to between 10 and 20 trillion. But gold is, remember, gold is defective property. Gold is

Michael Saylor (3:02:18.880)

dead money. You have a billion dollars of gold that sits in a vault for a decade. It's very hard

Michael Saylor (3:02:23.760)

to mortgage the gold. It's also very hard to rent the gold. You can't loan the gold. No one's going

Michael Saylor (3:02:28.960)

to create a business with your gold. So gold doesn't generate much of a yield. So for that

Michael Saylor (3:02:35.120)

reason, most people wouldn't store a billion dollars for a decade in gold. They would buy a

Michael Saylor (3:02:42.560)

billion dollars of commercial real estate property. And the reason why is because I can rent it and

Michael Saylor (3:02:48.960)

generate a yield on it that's in excess of the maintenance cost. So if you consider digital

Michael Saylor (3:02:54.320)

property, that's 100 to 200 trillion dollar addressable market. So I would think it goes from

Michael Saylor (3:03:04.000)

10 trillion to 100 trillion as people start to think of it as digital property.

Lex Fridman (3:03:08.160)

What does that mean in terms of price per coin?

Michael Saylor (3:03:11.680)

At 500,000, that's a 10 trillion dollar asset. At 5 million, that's a 100 trillion dollar asset.

Lex Fridman (3:03:20.800)

So I think it crosses a million. It can go even higher.

Michael Saylor (3:03:24.240)

Yeah, I think it keeps going up forever. I mean, there's no reason it couldn't go to 10 million

Michael Saylor (3:03:27.680)

a coin, right? Because digital property isn't the highest form, right? Gold was that low frequency

Michael Saylor (3:03:34.080)

money. Property is a mid frequency money. But when I start to program it faster, it starts to

Michael Saylor (3:03:43.600)

look like digital energy. And then it doesn't just replace property, then you're starting to replace

Michael Saylor (3:03:52.000)

bonds. It's 100 trillion in bonds, there's 50 to 100 trillion in other currency derivatives.

Lex Fridman (3:04:00.960)

And these are all conventional use cases, right? I think that there's 350 trillion to 500 trillion

Michael Saylor (3:04:09.840)

dollars worth of currency derivatives in the world. And when I say that, I mean things that

Michael Saylor (3:04:16.960)

are valued based upon fiat cash flows, any commercial real estate, any bond, any sovereign

Michael Saylor (3:04:23.040)

debt, any currency itself, any derivatives to those things, they're all derivatives,

Lex Fridman (3:04:30.640)

and they're all defective. And they're all defective because of this persistent 7% to 14%

Michael Saylor (3:04:37.760)

lapse, which we call inflation or monetary expansion.

Lex Fridman (3:04:41.760)

Can we switch subjects to talk about the energy side of it, like the innovative piece?

Michael Saylor (3:04:48.000)

Yeah.

Michael Saylor (3:04:48.320)

Let's just start with this idea that I've got a hotel worth a billion dollars with a thousand

Michael Saylor (3:04:53.920)

rooms. When it becomes a dematerialized hotel.

Lex Fridman (3:04:57.920)

I love that word so much, by the way, dematerialized hotel.

Michael Saylor (3:05:00.880)

We're crossing the fountain blow here. Imagine the fountain blow is dematerialized.

Michael Saylor (3:05:05.200)

The problem with a physical hotel is it got to hire real people moving subject to the speed of

Michael Saylor (3:05:09.920)

sound and physics laws and Newton's laws, and I can rent it to people in Miami Beach.

Lex Fridman (3:05:16.320)

But if it was a digital hotel, I could rent the room to people in Paris, London, and New York

Michael Saylor (3:05:21.680)

every night, and I can run it with robots. And as soon as I do that, I can rent it by the room hour,

Lex Fridman (3:05:28.240)

and I can rent it by the room minute. And so I start to chop my hotel up into

Michael Saylor (3:05:33.840)

a hundred thousand room hours that I sell to the highest bidder anywhere in the world.

Lex Fridman (3:05:40.800)

And you can see all of a sudden the yield, the rent, and the income of the property

Michael Saylor (3:05:47.920)

is dramatically increased. I can also see the maintenance cost of the property falls.

Lex Fridman (3:05:54.640)

I get on Moore's Law, and I'm operating in cyberspace. So I got rid of Newton's

Michael Saylor (3:05:59.920)

laws. I got rid of all the friction and all those problems. I tapped into the benefits of cyberspace.

Michael Saylor (3:06:07.680)

I created a global property. I started monetizing at different frequencies. And of course, now I can

Michael Saylor (3:06:14.880)

mortgage it to anybody in the world. You're not going to be able to get a mortgage on a Turkish

Michael Saylor (3:06:21.200)

building from someone in South Africa. You have to find someone that's local to the culture you're in.

Lex Fridman (3:06:28.320)

So when you start to move from analog property to digital property, it's not just a little bit

Lex Fridman (3:06:34.960)

better. It's a lot better. And what I just described, Lex, is like the DeFi vision, right?

Michael Saylor (3:06:41.520)

It's the beauty of DeFi, flash loans, money moving at high velocity. At some point,

Michael Saylor (3:06:48.800)

if the hotel is dematerialized, then what's the difference between renting a hotel room

Lex Fridman (3:06:57.040)

and loaning a block of stock, right? I'm just finding the highest best use of the thing.

Michael Saylor (3:07:03.120)

It feels like the magic really emerges, though, when you build a market of layer two and layer

Michael Saylor (3:07:10.240)

three technologies on top of that. It's like, maybe you can correct me if I'm wrong, but for

Michael Saylor (3:07:16.560)

all these hotels and all these kinds of ideas, it's always touching humans at some point. And

Michael Saylor (3:07:25.280)

consumers or humans, business owners, and so on. So you have to create interface, you have to create

Michael Saylor (3:07:31.120)

services that make all that super efficient, super fun to use, pleasant, effective, all those kinds

Michael Saylor (3:07:38.000)

of things. So you have to build a whole economy on top of that. Yeah, and I happen to think that won't

Michael Saylor (3:07:42.480)

be done by the crypto industry at all. I think that'll be done by centralized applications.

Michael Saylor (3:07:48.800)

I think it'll be the citadels of the world, the high speed traders of the world, the New Yorkers.

Michael Saylor (3:07:55.520)

I think it'll be Binance, FTX, and Coinbase as a layer three exchange that will give you the yield

Lex Fridman (3:08:03.920)

and will give you the loan and the best terms. Because ultimately, you have to jump these

Michael Saylor (3:08:10.000)

compliance hoops. It comes like BlockFi can give you yield, but they have to do it in a compliant

Michael Saylor (3:08:16.720)

way with the United States jurisdiction. So ultimately, those applications to use that digital

Michael Saylor (3:08:23.280)

property and either generate a loan, give you a loan on it or give you yield on it are going to

Michael Saylor (3:08:29.920)

come from companies. But the difference, the fundamental difference is it could be companies

Michael Saylor (3:08:37.520)

anywhere in the world. So if a company in Singapore comes up with a better offering,

Michael Saylor (3:08:44.640)

right, then the capital is going to start to flow to Singapore. I can't send 10 city blocks of

Michael Saylor (3:08:50.560)

LA to Singapore to rent during a festival, but I can send 10 blocks of Bitcoin to Singapore.

Lex Fridman (3:08:59.280)

So you've got a truly global market that's functioning in this asset. And is there second

Michael Saylor (3:09:05.360)

order asset? For example, maybe you're an American citizen and you own 10 Bitcoin and someone in

Michael Saylor (3:09:10.560)

Singapore will generate 27% yield in the Bitcoin. But legally, you can't send the money to them or

Michael Saylor (3:09:16.720)

the Bitcoin to them. It doesn't matter because the fact that that exists means that someone in Hong

Michael Saylor (3:09:22.000)

Kong will borrow the 10 Bitcoin from somebody in New York, and then they will put on the trade

Michael Saylor (3:09:28.880)

in Singapore. And that will create a demand for Bitcoin, which will drive up the market.

Michael Saylor (3:09:33.680)

A demand for Bitcoin, which will drive up the price of Bitcoin, which will result in an effective

Lex Fridman (3:09:38.960)

tax free yield for the person in the US that's not even in the jurisdiction.

Lex Fridman (3:09:43.760)

So there's nothing that's going on in Singapore to drive up the price of your land in LA.

Lex Fridman (3:09:50.160)

But there is something going on everywhere in the world to drive up the price of

Michael Saylor (3:09:54.720)

property and cyberspace if there's only one digital Manhattan. And so there's a dynamic

Michael Saylor (3:10:02.000)

there which is profound because it's global. But now let's go to the next extreme. I'm still

Michael Saylor (3:10:07.760)

giving you a fairly conventional idea, which is let's just loan the money fast on a global network

Lex Fridman (3:10:15.440)

and let's just rent the hotel room fast in cyberspace. But let's move to maybe a more

Michael Saylor (3:10:23.280)

innovative idea. The first generation of internet brought a lot of productivity, but there's also

Michael Saylor (3:10:29.360)

just a lot of flaws in it. For example, Twitter is full of garbage. Instagram DMs are full of

Michael Saylor (3:10:36.480)

garbage. Your Twitter DMs are full of garbage. YouTube is full of scams. Every 15 minutes,

Michael Saylor (3:10:42.880)

there's a Michael Saylor Bitcoin giveaway spun up on YouTube. My Office 365 inbox is full of garbage,

Michael Saylor (3:10:50.720)

millions of spam messages. I'm running four different email filters. My company spends

Michael Saylor (3:10:57.520)

million dollars a year to fight denial of service attacks and all sorts of other

Michael Saylor (3:11:01.840)

security things. There are denial of service attacks everywhere against everybody in cyberspace

Michael Saylor (3:11:07.920)

all the time. It's extreme. And we're all beset with hostility. You've been a victim of it in

Michael Saylor (3:11:14.000)

Twitter. You go on Twitter and people post stuff they would never say to your face. And then if you

Michael Saylor (3:11:20.560)

look, you find out that the account was created like three days ago and it's not even a real

Michael Saylor (3:11:26.000)

person. So, you know, we're beset with phishing attacks and scams and spam bots and garbage.

Lex Fridman (3:11:33.600)

And why? And the answer is because the first generation of internet was digital information

Lex Fridman (3:11:38.880)

and there's no energy. There's no conservation of energy in cyberspace. The thing that makes

Michael Saylor (3:11:45.120)

the universe work is conservation of energy. Like if I went to a hotel room, I'd have to post a

Michael Saylor (3:11:53.200)

credit card. And then if I smashed the place up, there'd be economic consequences. Maybe there'd

Michael Saylor (3:12:00.160)

be criminal consequences. There might be reputational consequences. You know, a lamp

Michael Saylor (3:12:06.160)

might fall on me. But in the worst case, I can only smash up one hotel room. Now, imagine I could

Michael Saylor (3:12:12.800)

actually write a Python script to send myself to every hotel room in the world every minute,

Michael Saylor (3:12:18.560)

not post a credit card and smash them all up anonymously. The thing that makes the universe

Michael Saylor (3:12:26.560)

work is friction, speed of sound, speed of light, and the fact that it's ultimately it's conservative.

Michael Saylor (3:12:34.480)

You're either energy or your matter, but once you've used the energy, it's gone and you can't

Michael Saylor (3:12:39.760)

do infinite everything. That's missing in cyberspace right now. And if you look at all of

Michael Saylor (3:12:47.600)

the moral hazards and all of the product defects that we have in all of these products, most of

Michael Saylor (3:12:55.360)

them, 99% of them could be cured if we introduced conservation of energy into cyberspace. And

Michael Saylor (3:13:04.720)

that's what you can do with high speed digital property, high speed Bitcoin. And by high speed,

Michael Saylor (3:13:10.320)

I mean, not 20 transactions a day, I mean, 20,000 transactions a day. So how do you do that? Well,

Michael Saylor (3:13:20.320)

I let everybody on Twitter post 1000 or 10,000 Satoshis via lightning wallet, a lightning badge,

Michael Saylor (3:13:28.320)

give me an orange check. If you put up 20 bucks once in your life, you could give 300 million

Michael Saylor (3:13:35.200)

people an orange check. Right now, you don't have a blue check, Lex. You're a famous person. I don't

Michael Saylor (3:13:42.560)

know why you don't have a blue check. Have you ever applied for a blue check? No. There are 360,000

Michael Saylor (3:13:48.320)

people on Twitter with a blue check. There are 300 million people on Twitter. So the conventional

Lex Fridman (3:13:55.360)

way to verify accounts is elitist archaic. Yeah, how does it work? How do you get a blue check?

Michael Saylor (3:14:03.920)

You go to apply and wait six months and you have to post like three articles in the public

Michael Saylor (3:14:11.200)

mainstream media that illustrates you're a person of interest. Generally, they would grant them to

Michael Saylor (3:14:17.520)

CEOs of public companies. The whole idea is to verify that you are who you say you are.

Lex Fridman (3:14:26.320)

But the question is, why isn't everybody verified? And there's a couple of threads on that. One is

Michael Saylor (3:14:31.760)

some people don't want to be doxxed. They want to be anonymous. But there are even anonymous people

Michael Saylor (3:14:37.920)

that should be verified. Because otherwise, you're subjecting their entire following to

Michael Saylor (3:14:45.440)

phishing attacks and scams and hostility. But the other... What's the orange verification? So

Michael Saylor (3:14:53.600)

this idea, can you actually elaborate a little bit more if you put up 20 bucks? Yeah, I think

Michael Saylor (3:14:58.000)

everybody on Twitter ought to be able to get an orange check if they could come up with like $10.

Lex Fridman (3:15:02.640)

And what is the power of that orange check? What does that verify exactly? You basically post a

Michael Saylor (3:15:09.520)

security deposit for your safe passes through cyberspace. So the way it would work is if you've

Michael Saylor (3:15:16.400)

got $10 once in your life, you can basically show that you're credit worthy. And that's your pledge

Michael Saylor (3:15:23.440)

to me that you're going to act responsibly. So you put the 10 or the $20 into the lightning wallet,

Michael Saylor (3:15:31.120)

you get an orange check. Then Twitter just gives you a setting where I can say the only people that

Michael Saylor (3:15:36.720)

could DM me are orange checks. The only people that can post on my tweets are orange checks.

Lex Fridman (3:15:41.120)

So instead of locking out the public and just letting your followers comment, you lock out

Michael Saylor (3:15:47.600)

all the unverified. And that means people that don't want to post $10 security deposit can't

Michael Saylor (3:15:52.960)

comment. Once you've done those two things, then you're in position to monetize malice,

Michael Saylor (3:16:01.520)

monetize motion or malice for that matter. But let's just say for the sake of argument,

Michael Saylor (3:16:06.080)

you post something and 9,700 bots spin up and pitch their whatever scam. Right now,

Michael Saylor (3:16:15.680)

you sit and you go report, report, report, report, report, report. And if you spend an hour,

Michael Saylor (3:16:21.280)

you get through half of them, you waste an hour of your life. They just spin up another 97

Michael Saylor (3:16:26.640)

gazillion because they've got a Python script spinning it up, so it's hopeless. But on the

Michael Saylor (3:16:30.880)

other hand, if you report them, and they really are a bot, Twitter's got a method to actually

Michael Saylor (3:16:37.920)

delete the account. They know that they're bots. The problem is not they don't know how to delete

Michael Saylor (3:16:42.320)

the account. The problem is there are no consequences when they delete the account.

Lex Fridman (3:16:45.520)

So if there are consequences, Twitter could give, they could just seize the $10 or seize the $20

Michael Saylor (3:16:52.240)

because it's a bot. It's a malicious criminal act or whatever. It is a violation of the platform

Michael Saylor (3:16:58.560)

rules. You end up seizing $10,000, give half the money to the reporter and half the money to the

Michael Saylor (3:17:05.040)

Twitter platform. And... It's a really powerful idea, but that's tying it, that's adding friction

Michael Saylor (3:17:10.880)

akin to the kind of friction you have in the physical world. You're tying, you have consequences,

Lex Fridman (3:17:15.920)

you have real consequences.

Michael Saylor (3:17:17.280)

It's putting conservation of energy.

Lex Fridman (3:17:19.280)

Conservation of energy.

Michael Saylor (3:17:20.240)

There's no friction, there's no nothing on this earth. Right? I mean, you can't walk across the

Michael Saylor (3:17:25.280)

room without friction. Right? So friction is not bad, right? Unnecessary friction

Michael Saylor (3:17:33.280)

is bad. So in this particular case, you're introducing conservation of energy. And in essence,

Michael Saylor (3:17:39.680)

you're introducing the concept of consequence or truth into cyberspace. And that means if you do

Lex Fridman (3:17:46.320)

want to spend up 10 million fake less Freedmen's, right?

Michael Saylor (3:17:51.920)

It's going to cost you a hundred million dollars to spend up 10 million fake Lexus.

Lex Fridman (3:17:56.640)

But the thing is you could do that with the dollar, but your case, you're saying

Lex Fridman (3:18:00.080)

that it's more tied to physical reality when you do that with Bitcoin.

Michael Saylor (3:18:06.480)

Yeah. Well, let's follow up on that idea a bit more. If you did do it with the dollar,

Michael Saylor (3:18:12.640)

then the question is how to 6 billion people deposit the dollars, right? Because what you're

Michael Saylor (3:18:19.120)

doing is, yeah, could you do it with a credit card? Like how do you send dollars? You have to

Michael Saylor (3:18:25.200)

docks yourself. Like it's not easy. So you're talking about inputting a credit card transaction,

Michael Saylor (3:18:31.840)

docksing yourself. And now you've just eliminated the 2 billion people that don't have credit cards

Michael Saylor (3:18:36.560)

or don't have banks. You've also got a problem with everybody that wants to remain anonymous,

Lex Fridman (3:18:41.120)

but you've also got this other problem, which is credit. You know, credit cards are expensive

Michael Saylor (3:18:47.600)

transactions, low frequency, slow settlement. So do you really want to pay two and a half percent

Michael Saylor (3:18:55.200)

every time you actually show a $20 deposit? And maybe you could do a Kluge version of this for

Michael Saylor (3:19:02.720)

a subset of people. It's like it's 10% as good if you did it with conventional payment rails.

Lex Fridman (3:19:10.880)

But what you can't do is the next idea, which is I want the orange badge to be used to give

Michael Saylor (3:19:20.240)

me safe passage through cyberspace, tripping across every platform. So how do I solve the

Michael Saylor (3:19:27.520)

denial of service attacks against a website? I publish a website. You hit it with a million

Michael Saylor (3:19:34.000)

requests. OK, now how do I deal with that? Well, I can lock you out and I can make it a zero trust

Michael Saylor (3:19:41.680)

website and then you have to be coming at me through a trusted firewall with a trusted credential. But

Michael Saylor (3:19:47.760)

that's that's a pretty draconian thing. Or I could put it behind a lightning wall. A lightning wall

Michael Saylor (3:19:55.440)

would be, you know, I just challenge you, Lex, you want to browse the web, you want to

Michael Saylor (3:20:02.000)

show me your 100000 Satoshis. Do you have 100000 Satoshis? Click. OK, now you click away 100 times

Michael Saylor (3:20:11.280)

or 1000 times. And after 1000 times, you know, well, now, Lex, you're getting offensive to take

Michael Saylor (3:20:16.800)

a Satoshi from you or 10 Satoshis, a microtransaction. You want to hit me a million

Michael Saylor (3:20:21.360)

times? I'm taking all your Satoshis and locking you out. What you want to do is you want to go

Michael Saylor (3:20:27.440)

through 200 websites a day. And what you want every time you cross a domain, you need to be

Michael Saylor (3:20:35.760)

able to, in a split second, prove that you've got some asset. And now when you cross back,

Michael Saylor (3:20:41.520)

when you exit domain, you want to fetch your asset back. So how do I, in a friction free fashion,

Michael Saylor (3:20:48.480)

browse through dozens or hundreds of websites, post a security deposit for state, state, state

Michael Saylor (3:20:55.200)

passage, and then get it back? You couldn't afford to pay a credit card fee each time.

Michael Saylor (3:21:01.600)

When you think about two and a half percent as a transaction fee, it means you trade the money

Michael Saylor (3:21:08.080)

40 times and it's gone. Yeah, it's gone. Yeah. So you can't do this kind of hopping around through

Michael Saylor (3:21:14.960)

the internet with this kind of verification that grounds you to physical reality. It's a really,

Michael Saylor (3:21:21.280)

really interesting idea. Why hasn't that been done? I think you need two things. You need an

Michael Saylor (3:21:28.480)

idea like a digital asset like Bitcoin that's a bearer instrument for final settlement. And then

Michael Saylor (3:21:34.400)

you need a high speed transaction network like Lightning where the transaction cost might be a

Michael Saylor (3:21:40.640)

20th of a penny or less. And if you roll the clock back 24 months, I don't think you had the Lightning

Michael Saylor (3:21:50.800)

network in a stable point. It's really just the past 12 months. It's an idea you could think about

Michael Saylor (3:21:56.800)

this year. And I think you need to be aware of Bitcoin as something other than like a scary

Michael Saylor (3:22:05.280)

speculative asset. So I really think we're just the beginning. The embryonic stage. I have to ask

Lex Fridman (3:22:12.480)

Michael Saylor, you said before, there's no second best to Bitcoin. What would be the second best?

Michael Saylor (3:22:19.280)

Traditionally, there's Ethereum with smart contracts, Cardano with proof of stake,

Michael Saylor (3:22:23.600)

Polkadot with interoperability between blockchains. Dogecoin has the incredible power of the meme.

Michael Saylor (3:22:31.840)

Privacy with Monero. I just can keep going. There's of course, after the block size wars,

Michael Saylor (3:22:40.640)

the different offshoots of Bitcoin.

Michael Saylor (3:22:43.680)

I think if you decompose or segment the crypto market, you've got crypto property.

Michael Saylor (3:22:50.000)

Bitcoin is the king of that. And other Bitcoin forks that wanted to be a bearer instrument store

Lex Fridman (3:22:56.480)

of value would be a property, a Bitcoin cash or Litecoin, something like that.

Michael Saylor (3:23:02.960)

Then you've got crypto currencies. I don't think Bitcoin is a currency because a currency I define

Michael Saylor (3:23:10.240)

in nation states since a currency is a digital asset that you can transfer in a transaction

Michael Saylor (3:23:18.240)

without incurring a taxable obligation. So that means it has to be a digital asset.

Michael Saylor (3:23:23.360)

It's a taxable obligation. So that means it has to be a stable dollar or a stable euro or a stable

Michael Saylor (3:23:29.200)

yen, a stable coin. So I think you've got crypto currencies, Tether, Circle, most famous.

Michael Saylor (3:23:34.640)

Then I think you've got crypto platforms. And Ethereum is the most famous of the crypto platforms,

Michael Saylor (3:23:39.680)

the platform upon which with smart contract functionality, et cetera.

Lex Fridman (3:23:45.600)

And then I think you've got just crypto securities. It's just like my favorite

Michael Saylor (3:23:49.200)

or whatever meme coin. And I love it because I love it. And it's attached to my game or my

Lex Fridman (3:23:54.400)

company or my persona or my whatever. I think if you push me and said, what's the second best?

Michael Saylor (3:24:01.680)

I would say the world wants two things. It wants crypto property as a savings account,

Lex Fridman (3:24:06.800)

and it wants cryptocurrency as a checking account. And that means that the most popular thing really

Michael Saylor (3:24:13.920)

is going to be a stable coin dollar. Right. And there's a maybe a fight right now. It might be

Michael Saylor (3:24:20.320)

Tether. Right. But a stable dollar, because I feel like the market opportunity, it's not clear that

Michael Saylor (3:24:28.960)

there'll be one that will win. The class of stable dollars is probably a one to ten trillion dollar

Michael Saylor (3:24:34.240)

market easily. I think that in a crypto platform space, Ethereum will compete with Solana and

Michael Saylor (3:24:41.760)

Binance Smart Chain and the like. Are there certain characteristics of any of them that

Michael Saylor (3:24:46.560)

kind of stand out to you? Don't you think the competition is based on a set of features? Also,

Michael Saylor (3:24:54.320)

the set of features that a cryptocurrency provides, but also the community that it provides.

Lex Fridman (3:24:59.600)

Do you think the community matters in sort of the adoption, the dynamic of the adoption,

Michael Saylor (3:25:04.080)

both across the developers and the investors? If I'm looking at them, I mean, the first question is,

Lex Fridman (3:25:08.400)

what's the regulatory risk? How likely is it to be deemed a property versus security?

Lex Fridman (3:25:13.520)

And the second is, what's the competitive risk? And the third is, what's the speed and the

Lex Fridman (3:25:18.640)

performance? And all those things lead to the question of what's the security risk?

Lex Fridman (3:25:26.160)

How likely is it to crash and burn? And how stable or unstable is it? And then there's the marketing

Michael Saylor (3:25:34.560)

risk. I mean, there are different teams behind each of these things and communities behind them.

Michael Saylor (3:25:40.400)

I think that the big cloud looming over the crypto industry is regulatory treatment of

Michael Saylor (3:25:48.800)

cryptocurrencies and regulatory treatment of crypto securities and crypto platforms. And I think that

Michael Saylor (3:25:54.000)

won't be determined until the end of the first Biden administration. For example, there are

Michael Saylor (3:25:58.960)

people that would like only US FDIC insured banks to issue cryptocurrencies. They want JP Morgan to

Michael Saylor (3:26:06.640)

issue a crypto dollar backed one to one. But then in the US right now, we have Circle and we have

Michael Saylor (3:26:12.720)

other companies that are licensed entities that are backed by cash and cash equivalents, but

Michael Saylor (3:26:18.480)

they're not FDIC insured banks. There's also a debate in Congress about whether state chartered

Michael Saylor (3:26:24.080)

banks should be able to issue these things. And then we have Tether and others that are outside

Michael Saylor (3:26:30.800)

of the US jurisdiction. They're probably not backed by cash and cash equivalents. They're

Michael Saylor (3:26:35.280)

backed by stuff, and we don't know what stuff. And then finally, you have UST and DAI, which are

Michael Saylor (3:26:43.120)

algorithmic stable coins that are even more innovative further outside the compliance

Michael Saylor (3:26:50.480)

framework. So if you ask who's going to win, the question is really, I don't know, will the market

Michael Saylor (3:26:56.320)

decide or will the regulators decide if the regulators get out of the way and the market

Michael Saylor (3:27:01.200)

fall out? Well, then it's an interesting discussion. And then I think that all bets are off if the

Michael Saylor (3:27:07.360)

regulators get more heavy handed with this. And I think you could have the same discussion with

Michael Saylor (3:27:11.600)

crypto properties like the DeFi exchanges and the crypto exchanges. The SEC would like to regulate

Michael Saylor (3:27:18.000)

the crypto exchanges. They'd like to regulate the DeFi exchanges. That means they may regulate the

Michael Saylor (3:27:22.480)

crypto platforms and at what rate and in what fashion. And so I think that I could give you

Michael Saylor (3:27:30.000)

an opinion if it was limited to competition and the current regulatory regime. But I think that

Michael Saylor (3:27:38.080)

the regulations are so fast moving and it's so uncertain that you can't make a decision

Michael Saylor (3:27:48.480)

without considering the potential actions of the regulators.

Michael Saylor (3:27:53.680)

I hope the regulators get out of the way. Can you steel me on the case that Dogecoin is,

Michael Saylor (3:27:59.680)

I guess, the second best cryptocurrency if you don't consider Bitcoin a cryptocurrency,

Lex Fridman (3:28:04.480)

Bitcoin a cryptocurrency, but instead a crypto property?

Michael Saylor (3:28:08.800)

I would classify it as crypto property because the US dollar is a currency. So unless your

Michael Saylor (3:28:14.560)

crypto asset is pegged algorithmically or stably to the value of the dollar is not a currency,

Michael Saylor (3:28:20.160)

it's a property or it's an asset.

Lex Fridman (3:28:22.880)

So then can you steel me on the case that Dogecoin is the best cryptocurrency then?

Michael Saylor (3:28:29.520)

Because Bitcoin is not even in that list.

Michael Saylor (3:28:31.840)

The debate is going to be whether it's property or security. And there's a debate whether it's

Michael Saylor (3:28:36.320)

decentralized enough. So let's assume it was decentralized.

Lex Fridman (3:28:40.480)

Yeah.

Michael Saylor (3:28:41.600)

Well, it's increasing at not quite five, what, 5% a year inflation rate, but it's not 5%

Michael Saylor (3:28:48.000)

exponentially. It's like a plus 5 million, 5% something captain is less. I forget the

Michael Saylor (3:28:55.840)

exact number, but it's an inflationary property. It's got a lower inflation rate

Michael Saylor (3:29:01.040)

than the US dollar. And it's got a much lower inflation rate than many other fiat currencies.

Lex Fridman (3:29:08.960)

So I think you could say that.

Lex Fridman (3:29:10.640)

But don't you see the power of meme, the power of ideas, the power of fun or whatever mechanism

Lex Fridman (3:29:18.880)

is used to captivate a community?

Michael Saylor (3:29:24.160)

I do, but there are meme stocks. It doesn't absolve you of your ethical and securities

Michael Saylor (3:29:29.520)

liabilities if you're promoting it. So I don't have a problem with people buying a stock.

Michael Saylor (3:29:37.920)

It's just the way I divide the world is there's investment, there's saving, and there's speculation

Lex Fridman (3:29:46.640)

and there's trading. So Bitcoin is an asset for saving. If you want to save money for

Michael Saylor (3:29:53.280)

100 years, you don't really want to take on execution risk or the like. So you're just

Michael Saylor (3:30:00.400)

buying something to hold forever. For you to actually endorse something as a property,

Michael Saylor (3:30:06.400)

like if you said to me, Mike, what should I buy for the next 100 years? I say, well,

Michael Saylor (3:30:10.400)

some amount of real estate, some amount of scarce collectibles, some amount of Bitcoin,

Michael Saylor (3:30:15.760)

right? You can run your company, right? But running your company is an investment. So

Michael Saylor (3:30:20.640)

the savings are properties. If you said, what should I invest in? I'd say, well, here's

Michael Saylor (3:30:24.960)

a list of good companies, private companies. You can start your own company. That's an

Michael Saylor (3:30:29.120)

investment, right? If you said, what should I trade? Well, I'm trading as like a proprietary

Michael Saylor (3:30:36.880)

thing. I don't have any special insight into that. If you're a good trader, you know you

Michael Saylor (3:30:42.640)

are. If you said to me, what should you speculate in? We talk about meme stocks and meme stocks

Lex Fridman (3:30:49.840)

and meme coins, and it kind of sits up there. It sits right in the same space with what

Michael Saylor (3:30:56.560)

horse should you bet on and what sports team should you gamble on and should you bet on

Michael Saylor (3:31:01.120)

black six times in a row and double down each time. I mean, it's fun, but at the end of

Michael Saylor (3:31:07.840)

the day, it's a speculation, right? You can't build a civilization on it. It's not an institutional

Michael Saylor (3:31:17.200)

asset. And in fact, where I'd leave it, right, is Bitcoin is clearly digital property, which

Michael Saylor (3:31:23.600)

makes it an institutional grade investable asset for a public company, a public figure,

Michael Saylor (3:31:28.800)

a public investor, or anybody that's risk adverse. I think that the top 100 other cryptos

Michael Saylor (3:31:37.200)

are like venture capital investments. And if you're a VC and if you're a qualified technical

Michael Saylor (3:31:42.640)

investor and you have a pool of capital and you can take that kind of risk, then you can

Michael Saylor (3:31:47.200)

parse through that and form opinions. It's just orders of magnitude more risky because

Michael Saylor (3:31:52.640)

of competition, because of ambition, and because of regulation. And if you take the meme coins,

Michael Saylor (3:31:59.120)

it's like when some rapper comes out with a meme coin, it's like maybe it'll peak when

Michael Saylor (3:32:05.680)

I hear about it, right? I mean, SHIB was created as the coin such that it had so many zeros

Michael Saylor (3:32:13.360)

after the decimal point that when you looked at it on the exchanges, it always showed zero,

Michael Saylor (3:32:18.720)

zero, zero, zero. And it wasn't until like six months after it got popular that they

Michael Saylor (3:32:24.320)

started expanding the display so you could see whether the price had changed.

Michael Saylor (3:32:27.680)

That's speculation. You've been, maybe you can correct me, but you've been critical of Elon

Michael Saylor (3:32:33.680)

Musk in the past in the crypto space. Where do you stand on Elon's effect on Bitcoin and

Michael Saylor (3:32:39.600)

cryptocurrency in general these days? I believe that Bitcoin is a massive breakthrough for the

Michael Saylor (3:32:46.080)

human race that will cure half the problems in the world and generate hundreds of trillions of

Michael Saylor (3:32:51.360)

dollars of economic value to the civilization. And I believe that it's in an early stage

Michael Saylor (3:32:59.280)

where many people don't understand it, and they're afraid of it, and there's FUD,

Lex Fridman (3:33:04.000)

and there's uncertainty, there's doubt, and there's fear, and there's a very noisy crypto

Michael Saylor (3:33:09.760)

world. And there's 15,000 other cryptos that are seeking relevance. And I think most of the FUD

Michael Saylor (3:33:19.360)

is actually fueled by the other crypto entrepreneurs. So the environmental FUD and

Michael Saylor (3:33:24.880)

the other types of uncertainty that surround Bitcoin, generally they're not coming from

Michael Saylor (3:33:31.040)

legitimate environmentalists. They don't come from legitimate critics. They actually are guerrilla

Michael Saylor (3:33:37.520)

marketing campaigns that are being financed and fueled by other crypto entrepreneurs

Michael Saylor (3:33:45.840)

because they have an interest in doing so. So if I look at the constructive path forward,

Michael Saylor (3:33:52.320)

first, I think it'd be very constructive for corporations to embrace Bitcoin and build

Michael Saylor (3:33:59.200)

applications on top of it. You don't need to fix it. There's nothing wrong with it, right? Like

Michael Saylor (3:34:06.000)

when you put it on a layer two and a layer three, it moves a billion times a second at the speed of

Michael Saylor (3:34:10.880)

light. So every beautiful, cool DeFi application, every crypto application, everything you could

Michael Saylor (3:34:18.960)

imagine you might want to do, you can do with a legitimate company and a legitimate website or

Michael Saylor (3:34:27.760)

mobile application sitting on top of Bitcoin or Lightning if you want to. So I think that

Michael Saylor (3:34:37.120)

to the extent that people do that, that's going to be better for the world. If you consider what

Michael Saylor (3:34:42.480)

holds people back, I think it's just misperceptions about what Bitcoin is. So I'm a big fan of just

Michael Saylor (3:34:50.160)

educating people. If you're not going to commercialize it, then just educate people on

Lex Fridman (3:34:56.880)

what it is. So for example, Bitcoin is the most efficient use of energy in the world by far,

Michael Saylor (3:35:05.040)

right? Most people don't necessarily perceive that or realize that. But if you were to take

Michael Saylor (3:35:09.840)

any metric, energy intensity, you put like $2 billion worth of electricity in the network

Michael Saylor (3:35:16.400)

every year and it's worth $850 billion. There is no industry in the real world, right, that is that

Michael Saylor (3:35:25.600)

energy efficient. Not only that energy efficient, it's also the most sustainable industry. We do

Michael Saylor (3:35:32.240)

surveys. 58% of Bitcoin mining energy is sustainable. So there's a very good story.

Michael Saylor (3:35:40.640)

In fact, every other industry, planes, trains, automobiles, construction, food, medicine,

Michael Saylor (3:35:46.080)

everything else is less clean, less efficient. So the basic debate was...

Michael Saylor (3:35:54.400)

I wouldn't say there is a debate. I would just say that to the extent that the Bitcoin community

Michael Saylor (3:35:58.800)

had any issue with Elon, it was just this environmental uncertainty that he fueled

Lex Fridman (3:36:07.600)

in a couple of his tweets, right? Which I think just is very distracting.

Lex Fridman (3:36:13.040)

But that was one of them. But I think it's like the Bitcoin maximalists, but generally,

Michael Saylor (3:36:17.440)

the crypto community, what you call the crypto entrepreneurs are... It's also... They're using

Michael Saylor (3:36:25.120)

it for investment, for speculation, and therefore get very passionate about people's celebrities,

Michael Saylor (3:36:35.280)

including you, like famous people, saying positive stuff about any one particular

Michael Saylor (3:36:43.920)

crypto thing you can buy in Coinbase. And so they might be unhappy with Elon

Michael Saylor (3:36:51.280)

Musk that he's promoting Bitcoin and then not, and then promoting Dogecoin, then not.

Michael Saylor (3:37:00.480)

There's so much emotion tied up in the communication on this topic.

Lex Fridman (3:37:05.360)

And I think that's where a lot of the...

Michael Saylor (3:37:08.480)

Look, I don't have a criticism of Elon Musk. He's free to do whatever he wishes to do.

Michael Saylor (3:37:13.520)

It's his... In fact, Elon Musk is the second largest supporter of Bitcoin in the world.

Michael Saylor (3:37:21.280)

I think that the Bitcoin community tends to eat its own quite a bit. It tends to be very

Lex Fridman (3:37:27.920)

self critical. And instead of saying, well, Elon is more supportive of Bitcoin

Michael Saylor (3:37:34.640)

than the other 10,000 people in the world with serious amounts of money, they focus upon...

Lex Fridman (3:37:41.440)

Yeah, this is strange. Eating your own is just...

Michael Saylor (3:37:46.080)

I mean, I think he's free to do what he wants to do. And I think he's done a lot of good for

Michael Saylor (3:37:51.200)

Bitcoin in putting it on the balance sheet of Tesla and holding it. And I think that

Lex Fridman (3:37:56.800)

sent a very powerful message. Do you have advice for young people?

Lex Fridman (3:38:02.640)

You've had a heck of a life. You've done quite a lot of things.

Michael Saylor (3:38:07.120)

Start before MIT, but starting with MIT. Is there advice here for young people in high school and

Lex Fridman (3:38:12.880)

college, how to have a career they can be proud of, how to have a life they can be proud of?

Michael Saylor (3:38:23.040)

I was asked by somebody for quick advice for his young children. He had twins when they

Michael Saylor (3:38:32.080)

enter adulthood. He said, give me your advice for them in a letter. I'm going to give it to them

Michael Saylor (3:38:37.760)

when they turn 21 or something. So then he handed... I was at a party and then he handed me

Michael Saylor (3:38:44.800)

this sheet of paper and I thought, oh, he wants me to write it down right now. So I sat down,

Lex Fridman (3:38:48.320)

I started writing and I figured, well, what would you want to tell someone at age 21?

Lex Fridman (3:38:53.200)

You wrote it down.

Lex Fridman (3:38:54.320)

So I wrote it down. And then I tweeted it and it's sitting on Twitter, but I tell you what I said.

Michael Saylor (3:38:58.080)

I said, my advice if you're entering adulthood, focus your energy, guard your time, train your

Michael Saylor (3:39:08.560)

mind, train your body, think for yourself, curate your friends, curate your environment,

Michael Saylor (3:39:20.640)

keep your promises, stay cheerful and constructive, and upgrade the world. That was the 10.

Michael Saylor (3:39:30.480)

Upgrade the world. That's an interesting choice of words. Upgrade the world. Upgrade the world.

Lex Fridman (3:39:37.600)

It's like an engineering train.

Michael Saylor (3:39:39.280)

Focus your energy. It's a very, yeah, it's a very engineering themed...

Lex Fridman (3:39:43.200)

Keep your promises too. That's an interesting one.

Michael Saylor (3:39:50.560)

I think most people suffer because they don't focus. I think the big risk in this world is

Michael Saylor (3:39:59.360)

there's too much of everything. You can sit and watch chess videos 100 hours a week and

Michael Saylor (3:40:06.080)

you'll never get through all the chess videos. There's too much of every possible thing,

Michael Saylor (3:40:12.880)

too much of every good thing. So figuring out what you want to do and then everything will suck

Michael Saylor (3:40:20.400)

up your time, right? There's 100 streaming channels to binge watch on. So you got to

Michael Saylor (3:40:25.280)

guard your time and then train your body, train your mind and control who's around you, control

Lex Fridman (3:40:33.680)

what surrounds you. So ultimately in a world where there's too much of everything, then

Lex Fridman (3:40:41.520)

It's like those laser eyes. It's like those laser eyes. You have to focus

Michael Saylor (3:40:48.720)

on just a few of those things.

Michael Saylor (3:40:51.280)

Yeah. I mean, I got a thousand opinions we could talk about and I could pursue a thousand things,

Lex Fridman (3:40:56.400)

but I don't expect to be successful. And I'm not sure that my opinion in any of the 999 is any more

Michael Saylor (3:41:04.080)

valid than the leader of thought in that area. So how about if I just focus upon one thing

Lex Fridman (3:41:13.520)

and then deliver the best I can in the one thing. That's the laser eye message.

Lex Fridman (3:41:20.560)

The rest get you distracted.

Michael Saylor (3:41:22.320)

Well, how do you achieve that? Do you find yourself, given where you are in life,

Lex Fridman (3:41:26.640)

having to say no a lot? Or just focus comes naturally when you just ignore everything?

Lex Fridman (3:41:32.960)

So how do you achieve that focus?

Lex Fridman (3:41:36.640)

I think it helps if people know what you're focused on.

Lex Fridman (3:41:40.160)

So everything about you just radiates that people know.

Michael Saylor (3:41:44.480)

If they know what you're focused on, then you won't get so many other things coming your way.

Michael Saylor (3:41:52.800)

If you dolly or if you flirt with 27 different things,

Lex Fridman (3:41:59.040)

then you're going to get approached by people in each of the 27 communities, right?

Michael Saylor (3:42:03.760)

You mentioned getting a PhD and giving your roots at MIT. Do you think there's all kinds of

Lex Fridman (3:42:12.080)

journeys you can take to educate yourself? Do you think a PhD or school is still worth it?

Michael Saylor (3:42:20.160)

Or is there other paths through life that...

Lex Fridman (3:42:23.360)

Is it worth it if you have to pay for it? Is it worth it if you spend the time on it?

Michael Saylor (3:42:26.640)

Yeah. The time and the money is a big cost.

Lex Fridman (3:42:32.880)

Time probably the bigger one, right?

Michael Saylor (3:42:34.640)

It seems clear to me that the world wants more specialists. It wants you to be an expert

Lex Fridman (3:42:43.680)

and to focus on one area. And it's punishing generalists, jack of all trades,

Michael Saylor (3:42:52.240)

especially people that are generalists in the physical realm. Because if you're a specialist

Michael Saylor (3:42:56.880)

in the digital realm, you might very well... You're the person with 700,000 followers on

Michael Saylor (3:43:02.720)

Twitter and you show them how to tie knots. Or you're the banjo player with 1.8 million followers.

Lex Fridman (3:43:10.320)

And when everybody types banjo, it's you, right? And so the world wants people that do something

Michael Saylor (3:43:19.120)

well. And then it wants to stamp out 18 million copies of them. And so that argues in favor of

Michael Saylor (3:43:28.000)

focus. Now, the definition of a PhD is someone with enough of an education that they're capable

Michael Saylor (3:43:34.240)

of or have made. I guess to get a PhD, technically, you have to have done a dissertation where you

Michael Saylor (3:43:41.040)

made a seminal contribution to the body of human knowledge. And if you haven't done that,

Michael Saylor (3:43:47.120)

technically, you have a master's degree, but you're not a doctor. So if you're interested

Michael Saylor (3:43:53.200)

in any of the academic disciplines that a PhD would be granted for, then I can see that being

Lex Fridman (3:44:00.400)

a reasonable pursuit. But there are many people that are specialists. You know the agitator?

Lex Fridman (3:44:07.120)

Yeah, yeah, yeah.

Lex Fridman (3:44:08.800)

The agitator on YouTube?

Lex Fridman (3:44:10.160)

Yeah, yeah, yeah.

Michael Saylor (3:44:11.040)

He's the world's greatest chess commentator.

Lex Fridman (3:44:13.920)

Yeah.

Lex Fridman (3:44:14.560)

And I've watched his career, and he's gotten progressively better, and he's really good.

Lex Fridman (3:44:18.640)

He's going to love hearing this.

Michael Saylor (3:44:20.640)

Yeah, if the agitator hears this, I'm a big fan of the agitator. I have to cut myself off,

Michael Saylor (3:44:25.680)

right? Because otherwise, you'll watch the entire Paul Morphy saga for your weekend.

Lex Fridman (3:44:30.640)

But the point really is YouTube is full of experts who are specialists in something,

Lex Fridman (3:44:36.640)

and they rise to the top of their profession. And Twitter is too, and the internet is. So I

Michael Saylor (3:44:45.520)

would advocate that you figure out what you're passionate about and what you're good at, and you

Michael Saylor (3:44:54.240)

do focus on it. Especially if the thing that you're doing can be automated. The problem is,

Michael Saylor (3:45:03.360)

back to that 500,000 algebra teacher type comment, the problem is if it is possible to be automated,

Michael Saylor (3:45:10.640)

then over time, someone's probably going to automate it, and that squeezes the state space

Michael Saylor (3:45:20.080)

of everybody else. It's like after the lockdowns, it used to be there were all these local bands

Michael Saylor (3:45:26.400)

that played in bars, and everyone went to the bar to see the local band. And then during the

Michael Saylor (3:45:31.360)

lockdown, you would have like these six super groups, and they would all get 500,000 or a

Michael Saylor (3:45:37.200)

million followers, and all these smaller local bands just got no attention at all.

Michael Saylor (3:45:45.840)

Well, the interesting thing is one of those 500,000 algebra teachers is likely to be part of

Michael Saylor (3:45:51.440)

the automation. So it's like, it's an opportunity for you to think, where's my field, my discipline,

Michael Saylor (3:46:00.080)

evolving into? I talked to a bunch of librarians, just happened to be friends with librarians,

Lex Fridman (3:46:04.560)

and libraries will probably be evolving. And it's up to you as a librarian to be one of the few

Michael Saylor (3:46:12.400)

that remain in the rubble. If you're going to give commentary on Shakespeare plays,

Michael Saylor (3:46:18.800)

I want you to basically do it for every Shakespeare play. I want you to be the Shakespeare dude,

Lex Fridman (3:46:23.520)

because once I, just like Lex, you're like, you're the deep thinking podcaster, right?

Michael Saylor (3:46:33.600)

You're the podcaster that goes after the deep intellectual conversations. And once I get

Michael Saylor (3:46:42.560)

comfortable with you, and I like you, then I start binge watching Lex. But if you changed

Michael Saylor (3:46:49.840)

your format through 16 different formats, so that you could compete with 16 different other

Michael Saylor (3:46:55.680)

personalities on YouTube, you probably wouldn't beat any of them, right? You would probably just

Michael Saylor (3:47:01.760)

kind of sink into the, you're the number two or number three guy, you're not the number one guy

Michael Saylor (3:47:06.880)

in the format. And I think that the algorithm, right, the Twitter algorithm and the YouTube

Michael Saylor (3:47:14.480)

algorithm, they really reward the person that's focused on message, consistent. The world wants

Michael Saylor (3:47:21.200)

somebody they can trust that's consistent and reliable. And they kind of want to know what

Michael Saylor (3:47:26.720)

they're getting into because, and this is taken for granted maybe, but there's 10 million people

Michael Saylor (3:47:35.280)

vying for every hour of your time. And so the fact that anybody gives you any time at all is a huge

Michael Saylor (3:47:42.640)

privilege, right? And you should be thanking them. And you should respect their time.

Michael Saylor (3:47:48.240)

It's interesting. Like everything you said is very interesting. But of course, from my perspective,

Lex Fridman (3:47:52.720)

and probably from your perspective, my actual life has nothing to do with, it's just being focused

Michael Saylor (3:47:58.800)

on stuff. And in my case, it's like focus on doing the thing I really enjoy doing and being myself

Lex Fridman (3:48:06.960)

and not caring about anything else. Like I don't care about views or likes or attention. And that,

Michael Saylor (3:48:12.800)

just maintaining that focus is the way, from an individual perspective, you live that life.

Lex Fridman (3:48:17.840)

But yeah, it does seem that there's the world and technology is rewarding the specialization

Lex Fridman (3:48:24.800)

and creating bigger and bigger platforms for the different specializations. And that lifts all

Michael Saylor (3:48:31.520)

boats, actually, because the specializations get better and better and better at teaching people to

Michael Saylor (3:48:36.080)

do specific things and they educate themselves. And it's just, everybody gets more and more

Michael Saylor (3:48:40.720)

knowledgeable and more and more empowered. The reward for authenticity more than offsets

Michael Saylor (3:48:47.360)

the specificity with which you pursue your mission. It's like, another way to say it is like,

Michael Saylor (3:48:53.680)

nobody wants to read advertising. Like if you were to spend a hundred million dollars

Michael Saylor (3:48:58.640)

advertising your thing, I probably wouldn't want to watch it. But we see the death of that.

Lex Fridman (3:49:08.240)

And so the commercial shows are losing their audiences and the authentic

Michael Saylor (3:49:15.040)

specialists or the authentic artists are gaining their audience.

Lex Fridman (3:49:21.120)

And that's a beautiful thing. Speaking of deep thinking, you're just a human. Your life ends.

Lex Fridman (3:49:29.520)

You've accumulated so much wisdom, so much money, but the ride ends. Do you think about that?

Lex Fridman (3:49:36.480)

Do you ponder your death, your mortality? Are you afraid of it?

Michael Saylor (3:49:41.520)

When I go, all my assets will flow into a foundation and the foundation's mission is to make

Michael Saylor (3:49:50.880)

education free for everybody forever. And if I'm able to contribute to the creation of a more

Michael Saylor (3:50:01.520)

perfect monetary system, then maybe that foundation will go on forever.

Lex Fridman (3:50:06.640)

The idea, the foundation of the idea. So each of the foundations.

Michael Saylor (3:50:14.320)

It's not clear we're on the S curve of immortal life yet. Like that's a biological question.

Lex Fridman (3:50:19.280)

And you asked that, you know, on some of your other interviews a lot. I think that we are on

Michael Saylor (3:50:24.480)

the threshold of immortal life for ideas or immortal life for certain institutions.

Michael Saylor (3:50:33.440)

Or computer programs. So if we can fix the money, then you can create a technically perfected

Lex Fridman (3:50:40.640)

endowment. And then the question really is, what are your ideas? What do you want to leave behind?

Lex Fridman (3:50:47.360)

And so if it's a park, then you endow the park, right? If it's free education, you endow that.

Lex Fridman (3:50:53.280)

If it's some other ethical idea, right?

Michael Saylor (3:50:58.640)

Does it make you sad that there's something that you've endowed, some very powerful idea

Michael Saylor (3:51:07.280)

of digital energy that you put out into the world, you help put it into the world,

Lex Fridman (3:51:13.680)

and your mind, your conscious mind will no longer be there to experience it.

Michael Saylor (3:51:21.680)

It's just gone forever.

Michael Saylor (3:51:23.040)

I'd rather think that the thing that Satoshi taught us is you should do your part during

Michael Saylor (3:51:30.640)

some phase of the journey, and then you should get out of the way.

Michael Saylor (3:51:35.440)

I think Steve Jobs said something similar to that effect in a very, very famous speech one day,

Michael Saylor (3:51:42.800)

which is, you know, death is a natural part of life, and it makes way for the next generation.

Lex Fridman (3:51:47.920)

And I think the goal is you upgrade the world, right? You leave it a better place,

Lex Fridman (3:51:53.520)

but you get out of the way. And I think when that breaks down, you know, bad things happen.

Lex Fridman (3:52:04.800)

I think nature cleanses itself. There's a cycle of life.

Lex Fridman (3:52:09.360)

And speaking of one of great people who did a great job,

Lex Fridman (3:52:13.600)

and speaking of one of great people who did also get out of the way is George Washington,

Lex Fridman (3:52:19.760)

so hopefully when you get out of the way, nobody's bleeding you to death in hope of helping you.

Lex Fridman (3:52:29.200)

What do you think, to do a bit of a callback, what do you think is the meaning of this whole thing?

Michael Saylor (3:52:34.720)

What's the meaning of life? Why are we here? We talked about the rise of human civilization.

Michael Saylor (3:52:39.840)

It seems like we're engineers at heart. We build cool stuff, better and better use of energy,

Lex Fridman (3:52:47.040)

channeling energy to be productive. Why? What's it all for?

Lex Fridman (3:52:55.280)

You're getting metaphysical on me.

Michael Saylor (3:52:57.040)

Very. There's a beautiful boat to the left of us. Like, why do we do that? This

Michael Saylor (3:53:01.200)

boat that sailed the ocean. Then we build models of it to celebrate great engineering of the past.

Michael Saylor (3:53:07.360)

To engineer is divine. You can make lots of arguments as well. We're here to entertain

Michael Saylor (3:53:15.840)

ourselves or we're here to create something that's beautiful or something that's functional.

Michael Saylor (3:53:22.160)

I think if you're an engineer, you entertain yourself by creating something that's both

Michael Saylor (3:53:25.600)

beautiful and functional. So I think all three of those things, it's entertaining, but it's ethical.

Michael Saylor (3:53:31.600)

You know, you got to admire, you know, the first person that built a bridge, crossing a chasm,

Michael Saylor (3:53:38.000)

or the first person to work out the problem of how to get running water to a village,

Michael Saylor (3:53:44.000)

the first person to figure out how to, you know, dam up a river, or mastered agriculture,

Michael Saylor (3:53:52.080)

or the guy that figured out, you know, how to grow fruit on trees or created orchards,

Michael Saylor (3:53:56.800)

you know, and maybe one day he had like 10 fruit trees, he's pretty proud of himself.

Lex Fridman (3:54:02.160)

So that's functional. There is also something to that, just like you said, that's just beautiful.

Michael Saylor (3:54:08.480)

It does get you closer to, like you said, the divine. Something,

Michael Saylor (3:54:17.200)

when you step back and look at the entirety of it, a collective of humans using a beautiful

Michael Saylor (3:54:25.760)

invention, or creation, or just something about this instrument is creating a beautiful piece of music.

Michael Saylor (3:54:37.440)

That seems just right. That's what we're here for. Whatever the divine is, it seems like we're here

Michael Saylor (3:54:42.480)

for that. And I, of course, love talking to you because from the engineering perspective,

Lex Fridman (3:54:47.520)

the functional is ultimately the mechanism towards the beauty.

Michael Saylor (3:54:50.480)

Isn't there something beautiful about making the world a better place for people that you love,

Lex Fridman (3:54:56.080)

your friends, your family, or yourself?

Michael Saylor (3:55:02.800)

When you think about the entire arc of human existence, and you roll the clock back 500,000

Michael Saylor (3:55:11.120)

years, and you think about every struggle of everyone that came before us and everything

Michael Saylor (3:55:16.320)

they had to overcome in order to put you here right now, you got to admire that, right? You

Michael Saylor (3:55:25.120)

got to respect that. That's a heck of a gift they gave us, but it's also a heck of a responsibility.

Michael Saylor (3:55:33.280)

Don't screw it up. If I dropped you 500,000 years ago, and I said, figure out steel refining,

Lex Fridman (3:55:40.160)

or figure out silicon chips, fabric production, or whatever it is.

Michael Saylor (3:55:48.160)

Fly, or fire.

Lex Fridman (3:55:50.000)

And so now we're here, and I guess the way you repay them is you fix everything in front

Michael Saylor (3:55:55.280)

of your face you can, right? And that means to someone like Elon, it means get us off the planet,

Michael Saylor (3:56:02.880)

right? To someone like me, it's like, I think, you know, fix the energy in the system.

Lex Fridman (3:56:09.280)

And that gives me hope. Michael, this was an incredible conversation. You're an incredible

Michael Saylor (3:56:13.280)

human. It's a huge honor you would sit down with me. Thank you so much for talking to me.

Michael Saylor (3:56:18.160)

Yeah, thanks for having me, Lex.

Michael Saylor (3:56:20.480)

Thanks for listening to this conversation with Michael Saylor. To support this podcast,

Michael Saylor (3:56:24.800)

please check out our sponsors in the description. And now, let me leave you with a few words from

Michael Saylor (3:56:33.840)

Francis Bacon. Money is a great servant, but a bad master. Thank you for listening,

Lex Fridman (3:56:42.160)

and hope to see you next time.

Lex Fridman (40:05.440)

TK What does that mean?

Michael Saylor (40:06.640)

TK And the significance of laser eyes is to focus on the thing that can make a difference.

Lex Fridman (40:12.880)

TK Yes.

Michael Saylor (40:14.240)

TK And if I look at the civilization,

Michael Saylor (40:19.120)

I would say half the problems in the civilization are due to the fact that our understanding of

Michael Saylor (40:27.840)

economics and money is defective, half, 50%. I don't know, it's worth $500 trillion worth of

Michael Saylor (40:34.480)

problems. Like money represents all the economic energy in the civilization and it kind of equates

Michael Saylor (40:43.920)

to all the products, all the services and all the assets that we have and we're ever gonna have.

Lex Fridman (40:49.440)

So that's half. The other half of the problems in the civilization are medical and military and

Michael Saylor (40:58.320)

political and philosophical and natural. And I think that there are a lot of different solutions

Michael Saylor (41:09.600)

to all those problems and they are all honorable professions and they all merit a lifetime of

Michael Saylor (41:18.880)

consideration for the specialists in all those areas. I think that what I could offer it's

Michael Saylor (41:26.480)

constructive is inflation is completely misunderstood. It's a much bigger problem

Michael Saylor (41:34.640)

than we understand it to be. We need to introduce engineering and science

Michael Saylor (41:39.360)

techniques into economics if we wanna further the human condition. All government policy is

Michael Saylor (41:45.920)

inflationary. And another pernicious myth is inflation is always and everywhere a monetary

Michael Saylor (41:54.560)

phenomenon. A famous quote by Milton Friedman, I believe, it's like, it's a monetary phenomenon

Michael Saylor (42:00.400)

that is inflation comes from expanding the currency supply. It's a nice phrase and it's

Michael Saylor (42:05.840)

oftentimes quoted by people that are anti inflation. But again, it just signifies a lack

Michael Saylor (42:12.160)

of appreciation of what the issue is. Inflation is, if I had a currency which was completely

Michael Saylor (42:19.440)

noninflationary, if I never printed another dollar, and if I eliminated fractional reserve

Michael Saylor (42:25.360)

banking from the face of the earth, we'd still have inflation. And we have inflation as long

Michael Saylor (42:31.360)

as we have government that is capable of pursuing any kind of policies that are in themselves

Michael Saylor (42:40.240)

inflationary and generally they all are. So in general, inflationary is the big

Michael Saylor (42:46.320)

the big characteristic of human nature that governments collection of groups that have

Michael Saylor (42:52.160)

power over others and allocate other people's resources will try to intentionally or not hide

Michael Saylor (42:59.920)

the costs of those allocations, like in some tricky ways, whatever the options ever available.

Michael Saylor (43:07.760)

You know, hiding the cost is like, is like the tertiary thing, like, the primary goal

Michael Saylor (43:14.640)

is the government will attempt to do good. Right. And that's the fundamental, that's

Michael Saylor (43:19.600)

the primary problem. They will attempt to do good and they will and they will do it.

Lex Fridman (43:24.160)

They will do good imperfectly and they will create oftentimes as much damage,

Michael Saylor (43:30.960)

more damage than the good they do. Most government policy will be iatrogenic. It will,

Lex Fridman (43:35.280)

it will create more harm than good in the pursuit of it. But it is what it is.

Michael Saylor (43:39.840)

The secondary, the secondary issue is they will unintentionally pay for it

Michael Saylor (43:47.200)

by expanding the currency supply without realizing that they're, they're actually

Michael Saylor (43:54.880)

paying for it in in a suboptimal fashion. They'll collapse their own currencies while they attempt

Michael Saylor (44:01.680)

to do good. The tertiary issue is they will mismeasure how badly they're collapsing the

Michael Saylor (44:08.320)

currency. So for example, if you go to the Bureau of Labor Statistics, you know, and look at the

Michael Saylor (44:14.320)

numbers printed by the Fed, they'll say, oh, it looks like the dollar's lost 95% of its purchasing

Michael Saylor (44:19.920)

power over 100 years. Okay, they sort of fess up that there's a problem, but they make it 95%

Michael Saylor (44:26.400)

loss over 100 years. What they don't do is realize it's a 99.7% loss over 80 years. So they will

Michael Saylor (44:34.560)

mismeasure just the horrific extent of the monetary policy in pursuit of the foreign

Michael Saylor (44:43.360)

policy and the domestic policy, which they overestimate their budget and their means to

Michael Saylor (44:52.320)

accomplish their ends, and they underestimate the cost. And they're oblivious to the horrific

Michael Saylor (45:00.400)

damage that they do to the civilization because the mental models that they use that are

Michael Saylor (45:06.640)

conventionally taught are wrong, right? The mental model that, like, it's okay, we can print all this

Michael Saylor (45:13.760)

money because the velocity of the money is low, right? Because money velocity is a scalar and

Michael Saylor (45:21.040)

inflation is the scalar, and we don't see 2% inflation yet, and the money velocity is low,

Lex Fridman (45:25.920)

and so it's okay if we print trillions of dollars. Well, the money velocity was immediate,

Michael Saylor (45:33.120)

right? The velocity of money through the crypto economy is 10,000 times faster than the velocity

Michael Saylor (45:41.360)

of money through the consumer economy, right? I think Nick pointed out when you spoke to him,

Michael Saylor (45:47.440)

he said it takes two months for a credit card transaction to settle, right? So you want to

Michael Saylor (45:52.480)

spend a million dollars in the consumer economy, you can move it six times a year.

Michael Saylor (45:58.320)

You put a million dollars into gold, gold will sit in a vault for a decade, okay? So the velocity

Michael Saylor (46:04.160)

of money through gold is 0.1. You put the money in the stock market and you can trade it once a

Michael Saylor (46:10.240)

week, the settlement is T plus 2, maybe you get to 2 to 1 leverage. You might get to a money

Michael Saylor (46:15.520)

velocity of 100 a year in the stock market. You put your money into the crypto economy,

Lex Fridman (46:21.920)

and these people are settling every four hours. And you know, if you're offshore,

Michael Saylor (46:27.840)

they're trading with 20x leverage. So if you settle every day and you trade the 20x leverage,

Michael Saylor (46:34.400)

you just went to 7,000. So the velocity of the money varies. I think the politicians,

Michael Saylor (46:44.160)

they don't really understand inflation and they don't understand economics, but you can't blame

Michael Saylor (46:49.440)

them because the economists don't understand economics. Because if they did, they would be

Michael Saylor (46:55.760)

creating multivariate computer simulations where they actually put in the price of every piece of

Michael Saylor (47:04.160)

housing in every city in the world, the full array of foods, and the full array of products,

Lex Fridman (47:09.600)

and the full array of assets. And then on a monthly basis, they would publish all those

Michael Saylor (47:16.320)

results. And that's a high bandwidth requirement. And I think that people don't really want to

Michael Saylor (47:24.000)

embrace it. And also, the most pernicious thing, there's that phrase, you know, you can't tell

Michael Saylor (47:32.480)

people what to think, but you can tell them what to think about. The most pernicious thing is I get

Michael Saylor (47:38.640)

you to misunderstand the phenomena so that even when it's happening to you, you don't appreciate

Michael Saylor (47:47.760)

that it's a bad thing and you think it's a good thing. So if housing prices are going up 20% year

Michael Saylor (47:53.200)

over year, and I say, this is great for the American public because most of them are homeowners,

Michael Saylor (47:58.480)

then I have misrepresented a phenomena. Inflation is 20%, not 7%. And then I have misrepresented it

Michael Saylor (48:08.000)

as being a positive rather than a negative. And people will stare at it and you could even show

Michael Saylor (48:15.200)

them their house on fire and they would perceive it as being great because it's warming them up

Lex Fridman (48:20.800)

and they're going to save on their heat costs. It does seem that the cruder the model,

Michael Saylor (48:25.520)

whether it's economics, whether it's psychology, the easier it is to weave whatever the heck

Michael Saylor (48:31.840)

narrative you want and not in a malicious way, but just like it's some kind of emergent phenomena,

Michael Saylor (48:41.360)

this narrative thing that we tell ourselves. So you can tell any kind of story about inflation.

Michael Saylor (48:46.160)

Inflation is good, inflation is bad. The cruder the model, the easier it is to tell a narrative

Michael Saylor (48:51.040)

about it. So if you take an engineering approach, I feel like it becomes more and more difficult

Michael Saylor (48:58.880)

to run away from sort of a true deep understanding of the dynamics of the system.

Michael Saylor (49:05.920)

I mean, honestly, if you went to 100 people on the street and you asked them to define inflation,

Lex Fridman (49:10.800)

how many would say it's a vector tracking the change in price of every product service

Michael Saylor (49:18.560)

asset in the world over time? Not many. Now, if you went to them and you said,

Lex Fridman (49:25.760)

do you think 2% inflation a year is good or bad? The majority would probably say,

Michael Saylor (49:30.800)

well, I hear it's good. The majority of economists would say 2% inflation a year is good.

Lex Fridman (49:37.920)

And of course, look at the ship next to us. What if I told you that the ship leaked 2% of its

Michael Saylor (49:48.240)

volume every something, right? The ship is rotting 2% a year. That means the useful life of the ship

Michael Saylor (49:54.000)

is 50 years. Now, ironically, that's true. Like a wooden ship had a 50 year to 100 year life,

Michael Saylor (50:00.640)

100 would be long, 50 years, not unlikely. So when we built ships out of wood,

Michael Saylor (50:05.520)

they had a useful life of about 50 years and then they sunk, they rotted. There's nothing good about

Michael Saylor (50:12.480)

it, right? You build a ship out of steel and it's zero as opposed to 2% degradation. And how much

Michael Saylor (50:20.400)

better is 0% versus 2%? Well, 2% means you have a useful life of, you know, it's half life of 35

Michael Saylor (50:29.760)

years. 2% is a half life of 35 years. That's basically the half life of money and gold.

Michael Saylor (50:35.680)

If I store your life force in gold, under perfect circumstances, you have a useful life of 35 years.

Michael Saylor (50:42.400)

0% is a useful life of forever. So 0% is immortal. 2% is 35 years average life expectancy.

Lex Fridman (50:53.200)

So the idea that you would think the life expectancy of the currency and the civilization

Michael Saylor (50:58.880)

should be 35 years instead of forever is kind of a silly notion. But the tragic notion is it was,

Michael Saylor (51:05.840)

you know, seven into 70 or 10 years. The money has had a half life of 10 years except for the fact

Michael Saylor (51:13.360)

that in weak societies in Argentina or the like, the half life of the money is three to four years

Michael Saylor (51:21.920)

in Venezuela, one year. So the United States dollar and the United States economic system

Michael Saylor (51:30.080)

was the most successful economic system in the last hundred years in the world. We won every war.

Michael Saylor (51:36.000)

We were the world superpower. Our currency lost 99.7% of its value. And that means, horrifically,

Michael Saylor (51:43.280)

every other currency lost everything. In essence, the other ones were 99.9% except for most that

Michael Saylor (51:51.840)

were 100% because they all completely failed. And, you know, you've got a mainstream economic

Michael Saylor (51:59.680)

community, you know, that thinks that inflation is a number and 2% is desirable. It's kind of like,

Michael Saylor (52:11.360)

you know, remember George Washington? You know how he died? Well meaning physicians bled him to

Michael Saylor (52:18.000)

death. Okay, the last thing in the world you would want to do to a sick person is bleed them,

Michael Saylor (52:26.160)

right? In the modern world, I think we understand that oxygen is carried by the blood cells and,

Michael Saylor (52:32.320)

you know, there's that phrase, right? A triage phrase, what's the first thing you do in an

Michael Saylor (52:42.800)

injury? Stop the bleeding. Single first thing, right? You show up after any accident, I look at

Michael Saylor (52:49.120)

you, stop the bleeding because you're going to be dead in a matter of minutes if you bleed out.

Lex Fridman (52:54.960)

So it strikes me as being ironic that orthodox conventional wisdom was bleed the patient to

Michael Saylor (53:01.920)

death. And this was the most important patient in the country, maybe in the history of the country,

Lex Fridman (53:07.600)

and we bled him to death trying to help him. So when you're actually inflating the money supply

Michael Saylor (53:14.320)

at 7% but you're calling it 2% because you want to help the economy, you're literally bleeding

Michael Saylor (53:22.160)

the free market to death. But the sad fact is George Washington went along with it because he

Michael Saylor (53:28.800)

thought that they were going to do him good. And the majority of the people who were in the

Michael Saylor (53:35.840)

majority of the society, most companies, most conventional thinkers, you know, the working class,

Michael Saylor (53:45.040)

they go along with this because they think that someone has their best interest of mind and the

Michael Saylor (53:50.560)

people that are bleeding them to death believe that prescription because their mental models

Michael Saylor (53:57.440)

are just so defective. And then an understanding of energy and engineering and the economics that

Michael Saylor (54:06.960)

are at play is crippled by these mental models. But that's both the bug in the future of human

Michael Saylor (54:13.680)

civilization that ideas take hold, they unite us, we believe in them, and we make a lot of cool stuff

Michael Saylor (54:22.320)

happen by, as an average, sort of just the fact of the matter, a lot of people believe the same

Michael Saylor (54:31.200)

thing, they get together and they get some shit done because they believe that thing. And then

Michael Saylor (54:36.240)

some ideas can be really bad and really destructive, but on average the ideas seem to be progressing

Michael Saylor (54:43.840)

in a direction of good. Let me just step back. What the hell are we doing here, us humans on

Michael Saylor (54:49.840)

this earth? How do you think of humans? How special are humans? How did human civilization

Lex Fridman (54:57.040)

originate on this earth? And what is this human project that we're all taking on?

Michael Saylor (55:03.040)

You mentioned fire and water and apparently bleeding you to death is not a good idea.

Michael Saylor (55:08.480)

I always thought you can get the demons out in that way, but that was a recent

Michael Saylor (55:13.120)

invention. So what's this thing we're doing here? I think what distinguishes human beings from

Lex Fridman (55:23.440)

all the other creatures on the earth is our ability to engineer. We're engineers, right?

Lex Fridman (55:31.680)

To solve problems or just build incredible cool things?

Michael Saylor (55:37.280)

Engineering, harnessing energy and technique to make the world a better place than you found it.

Michael Saylor (55:45.200)

Right? From the point that we actually started to play with fire, right? That was a big leap forward.

Michael Saylor (55:53.520)

Harnessing the power of kinetic energy and missiles, another step forward. Every city

Michael Saylor (56:01.440)

built on water. Why water? Well, water is bringing energy, right? If you actually put a turbine

Michael Saylor (56:11.360)

on a river or you capture a change in elevation of water, you've literally harnessed gravitational

Michael Saylor (56:17.840)

energy. But water is also bringing you food. It's also giving you a cheap form of getting

Michael Saylor (56:26.080)

rid of your waste. It's also giving you free transportation. You want to move one ton blocks

Michael Saylor (56:31.680)

around. You want to move them in water. So I think, I mean, the human story is really the

Michael Saylor (56:38.080)

story of engineering a better world. And the rise in the human condition is determined by those

Lex Fridman (56:49.120)

groups of people, those civilizations that were best at harnessing energy.

Michael Saylor (56:53.280)

Right? If you look at the Greek civilization, they built it around ports and seaports and

Michael Saylor (57:02.320)

water and created a trading network. The Romans were really good at harnessing all sorts of

Michael Saylor (57:08.880)

engineering. I mean, the aqueducts are a great example. If you go to any big city,

Michael Saylor (57:14.720)

you travel through cities in the Med, you find that the carrying capacity of the city or the

Michael Saylor (57:19.760)

island is 5,000 people without running water. And then if you can find a way to bring water to it,

Michael Saylor (57:25.120)

it increases by a factor of 10. And so human flourishing is really only possible through

Michael Saylor (57:31.840)

that channeling of energy, right? That eventually takes the form of air power, right? I mean,

Michael Saylor (57:42.720)

that ship, I mean, look at the intricacy of those sails. I mean, it's just the model is intricate.

Michael Saylor (57:49.120)

Now think about all of the experimentation that took place to figure out how many sails to put

Michael Saylor (57:53.680)

on that ship and how to rig them and how to repair them and how to operate them.

Michael Saylor (57:59.840)

There's thousands of lives spent thinking through all the tiny little details,

Michael Saylor (58:06.640)

all to increase the efficiency of this, the effectiveness, the efficiency of this ship

Michael Saylor (58:12.560)

as it sails to water. And we should also note there's a bunch of cannons on the side.

Lex Fridman (58:17.120)

So obviously another form of engineering, right? Energy harnessing with explosives

Michael Saylor (58:23.520)

to achieve what end? That's another discussion. Exactly. Suppose we're trying to get off the

Michael Saylor (58:28.720)

planet, right? I mean, well, there's a selection mechanism going on. So natural selection,

Michael Saylor (58:33.680)

this, whatever, however evolution works, it seems that one of the interesting inventions on earth

Lex Fridman (58:39.280)

was the predator prey dynamic that you want to be the bigger fish.

Michael Saylor (58:43.760)

That violence seems to serve a useful purpose. If you look at earth as a whole,

Michael Saylor (58:48.720)

we as humans now like to think of violence is really a bad thing. It seems to be one of the

Michael Saylor (58:55.920)

amazing things about humans is we're ultimately tend towards cooperation. We want to, we like peace.

Lex Fridman (59:03.440)

If you just look at history, we want things to be nice and calm and

Michael Saylor (59:08.160)

calm. But just wars break out every once in a while and lead to immense suffering

Lex Fridman (59:16.080)

and destruction and so on. And they have a kind of like resetting the palette

Michael Saylor (59:25.040)

effect. It's one that's full of just immeasurable human suffering, but it's like a way to start over.

Michael Saylor (59:32.800)

We're quite the apex predator on the planet. And I Googled something the other day,

Lex Fridman (59:40.000)

you know, what's the most common form of mammal life on earth?

Lex Fridman (59:46.640)

By number of organisms?

Michael Saylor (59:48.640)

Count.

Lex Fridman (59:49.120)

By count.

Lex Fridman (59:49.760)

And the answer that came back was human beings. I was shocked. I couldn't believe it, right? It says

Michael Saylor (59:55.520)

apparently if we're just looking at mammals, the answer was human beings are the most common,

Michael Saylor (59:59.280)

which was very interesting to me. I almost didn't believe it, but I was trying to,