← The Hurdle Rate Podcast
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- [00:00]
A
Sam, welcome back to the hurdle rate episode 67. We're recording on Thursday, July 30th after market close, after the strategy earnings call. We're going to make this a quick one. So topics on the table, we have four of them. The FOMC meeting, the strategy earnings call, Hong Kong and New York City Insurance. I have some thoughts on the first two, but Jeff, I'll throw it right over to you. We can get into it.
- [00:50]
B
Yeah, let's just jump right into it. Long winded earnings call, as usual with strategy. Just went two and a half hours straight and just continued to deliver, deliver alpha to the entire market. If they are very clear one, if the one thing is very clear, they target getting STRC back to par. That was the entire theme. They're doing everything in their power to get STRC back to par. How they're thinking about the cash reserve, how they're thinking about buybacks, how they're thinking about capital structure, how they're thinking about credit quality. And it was an overwhelming theme throughout the entire earnings call presentation. So maybe I'll kick it over to you guys on how your first initial reactions. That was the most overwhelming one from my perspective is that they are laser focused on getting STRC back to par because that is their product. They view it as a trillion dollar opportunity and that's, that's where they're, they're focused.
- [01:54]
C
Yeah, I like that. They've made this very simple for the market. Right. The delivery was unambiguous. They were very clear about what their intentions are. And what I thought really drove it home was when he was getting questions about, you know, moving into several different lines of business, offering different types of securities out there. And the point that he kept making over and over is, look, if this is the only thing that I do with the rest of my career is I open up and capitalize on this trillion dollar opportunity in front of me. That's all I need.
- [02:29]
D
Right?
- [02:29]
C
Like there's a thousand opportunities out there that might be a $1 billion opportunity or a $10 billion opportunity, but they believe that digital credit is the trillion opportunity. And because of that it requires hyper focus.
- [02:43]
B
Right.
- [02:43]
C
It's not something that you shift course on in the middle just because markets get rough. Right? This is where they're focusing because the amount of capital it unlocks is outsized so significantly relative to anything else that they could possibly consider. So I thought that that was a really good message for them to send, you know, all the way to the point where they were talking about how they're more likely to have less credit products on the balance sheet than to ever have more.
- [03:07]
D
Right.
- [03:07]
C
They could, you know, they obviously want to get rid of the bonds. They've been very clear about that. They even talked about the potential for swaps from other prefs and Stretch. Right. It's just clear that their focus is on getting Stretch back to par and making that the product here that they want to drive forward. The other thing that I thought was really interesting from this earnings report was there was a huge amount of focus on liquidity. And we've talked about liquidity over the years here several times because when you're running one of these types of strategies, that is the holy grail, right? That is what you are trying to foster. You want to have the most liquid equity, you want to have the most liquid credit product because that's what drives in investors the ability to move in and out. And when he started talking about consolidating liquidity and not wanting to fragment their own liquidity by having too many products out there in the market, I thought that they did a really good job at highlighting the importance of that liquidity and they've done a significantly good job at growing and fostering that liquidity here over the years. When you look at them and they're trading several billion dollars a day in MSTR and they're trading hundreds of millions of dollars in strc, right, They've done a really good job in building that liquidity. But it's important to continue to hyper focus on that and make sure that you're not spreading out your own investors into too many products and cannibalizing the liquidity from the others. So I thought that both of those were really good messages for them to send to the market to help them understand what and why they're focusing on certain things.
- [04:39]
D
Yeah, focus and also patience. Part of what they talked about on the call was that obviously they want to get Stretch back to par as quickly as possible, but they're not going to overreact to do it multiple times. Saylor invited others to participate on, you know, making some money as STRC goes back to par. And I think that discipline ties into. I think this is the first time I saw this, but a slide that said they want to be the largest company in the world. Uh, I, I think I've said that on at least two panels when I've been on with Fong that I think that that's what they're going to be. And, and you know, the last podcast I did with them, he he thanked me for saying that, said that is a goal of them and to see them have that slide, I think makes a lot of sense that when you're thinking in terms of trillions, not billions, what that means is you need focus, you need a clear strategy. You need to focus on the biggest ideas, not spread yourself out on all these different little hobbies. And so I think they're thinking about that the right way. And it reminds me in a sense, back to managing money at a half a trillion dollar pension fund where we would turn down opportunities to invest in things that were small billions of dollars, where other people, and sometimes people would write articles criticizing those decisions. And there's no one that probably has dunked on CalPERS more than me over the last several years. But I actually really agree with that decision there, that investing and spreading yourself out in all these different hobbies, you lose track of the most important thing for whatever the most important thing is for yourself. And obviously for strategy, that most important thing is their CornerStone product in STRC and doing everything they can to foster that product to be as large and successful as they can be. And so I think that was an encouraging mess message because it would be easy to think that after the last month that they've had with STRC, with it trading down to the degree that it had for it still to be in the high 80s as going into this earnings call, that they might shift focus, that they might start to lose conviction, that they might start to waver, that they might start to hedge their bets. And they did the opposite. And I think one of those analogies in there in that earnings call was talking about innovating. If you're building a rocket ship, you're not concerned if it takes a month, a year, two years, five years to get it right. You're just concerned with getting it right because you see how big that opportunity is. And so I think that that is an encouraging message and one that I think people, you know, there will be a lot of haters that say there's no chance, but I think with any big idea, that's always going to be the case. And I think that focus substantially increases the likelihood of success here.
- [07:46]
C
The other thing that's been a recurring theme that I've heard come out of them is fostering the environment around their products. You know, and he hit on it once again today. And it comes up a lot because. And I think it's because the market does see the potential in all of these products, right? There's so many ways that you can Monetize. There's so many things that you can do with your balance sheet when you have such a significant, you know, treasure trove of the asset on it that people try to push you in that direction. But one of the points that he keeps making is there's all these other firms out there who can do that. Right. He wants the guys with the Bloomberg terminals out there figuring out how to package up products around the volatility of the products he's creating. Let them expand those markets and bring those unique flavors out there. What he's focusing on is creating the infrastructure that they can't create. Right. They can't create the securities. They don't have the same access to the capital markets that he does. And so he's focused on the foundational elements of it. And that's enough for that to be a trillion dollar opportunity. He wants everybody else focused on creating those 10 and $100 billion opportunities by building on top of those products and leaving those opportunities for others. And I think that's been a really good message that they've continued to deliver. Anytime you're trying to execute on a big idea, you don't want to fragment the focus of a dedicated team. The teams that are running these are not that large and that's by design because you have to be hyper focused on both the markets and on the long term strategy and figuring out what direction you're going. And if you start fragmenting your team on all of these other projects and trying to capture every billion dollar opportunity that's out there in the market, you're going to lose focus on the really big opportunity and you're likely to underperform what the potential could have been. And so you hyper focus on whatever the biggest opportunity is that you can find and you help communicate out to the market the potential to build on that. Right. To build that next layer of opportunities for people using the products that now exist, that would not exist if the corporation hadn't created them in the, and put them out there into the market. And so I like that they continue to push on that theme as they move forward, which is we're going to build the strong foundation, we're going to be responsible stewards of this capital. We're going to be transparent with the market. So you know what to depend on over years, long timeframe. And we want people to take that and run and build out these opportunities and services to offer to the market.
- [10:16]
B
Yeah. And they're observing, right? They're continuing to observe as well and understand and learn and Identify as much data and information about the market as possible. And he flipped the saying. He said, don't just do something, stand there and observe. See what the market is telling you. See what you understand about the entire marketplace. So I guess the guidance on maintaining the dividend at 12% is a, is an indicator that they're, they're seeing some things happen in the market and they're identifying how, how some specific data points are impacting the credit quality, impacting the investor sentiment, impacting institutional capital, and how it's all evolving with this. So just in classic strategy fashion, just so much data, right? Just an incredible amount of data. Different metrics that they're looking at. They've got the new Bitcoin dashboard and even identifying that STRC is now the largest holding in some of these preferred equity ETFs.
- [11:24]
D
Right?
- [11:24]
B
Like that's, that's all data that you can use to understand your perspective of the market and how the market sees your credit quality. So that, that continues to be incredibly important. And we're doing the same thing, right? We're watching how our, our instrument interacts with their instrument and the, the entire credit landscape and how these things are trading together. And that all ties into a couple of the questions that were asked at the end. And the overwhelming emphasis on the purity of the instruments is just so incredibly important. Like, I could go sell covered calls on, you know, $50 billion of my Bitcoin with a $75,000 Bitcoin price. But, you know, how would the equity, how would the equity market feel about that? How would the call option market feel about completely ripping away the upside from the common stock? That's a, that's a difficult equation. And maintaining that, the purity, that pure expression helps facilitate the, the trading pairs, the entire liquidity market, that, that liquidity surface that can continue to evolve. So, yeah, it's a lot of the stuff that we've been talking about, and it's, it's really coming together. I thought there was a very well thought out presentation. It was very clear that, you know, they're incredibly focused on getting SCRC back to par. They're learning from the environment. They're talking to investors every single day. They're watching the instruments trade. And they're, they're not scared to deploy capital to bring SDRC back to par. How much will it take? How long will it take? You know, unknown. But if it takes a billion dollars or $2 billion or $3 billion to get STRC back to par, they're going to do it. So you know, as a, as a corporate holder of strc, that's a great message. Seeing that they're incredibly focused and they're not deviating from that yet and also not trying to do anything irrational or short term mindset, they're thinking long term about the sustainability of this market. Recognizing the opportunity is just incredibly vast. Yeah.
- [13:32]
D
I think for both them and us, I think what's so clear is this almost like tunnel vision on digital credit, whether it's Stretch or SATA and making these products as successful as possible. And the questions from the analysts I did think kept kind of pointing to different hobbies and you kept seeing sailor kind of like, no, no, no, no. And, and you know, but like the reality is, is that, you know, for both strategy and us, there has been revision. Learnings were not always right. And I think one of the interesting things just to like highlight is I think right now there is a small difference in opinion at least between Saylor and me on, on, on how to manage short interest and whether that's a good thing or a bad thing. And. But I think that the important thing is that the tunnel vision of what is important, which is minimizing volatility, is the same. Right. And so when you have that tunnel vision and if that tunnel vision was directed in a way that's not the right way, it's really easy to reverse course and correct. Like if we, we started with say to having a 95 to 105 range, we tightened it in, they had no cash reserve. We had a cash reserve, they put a cash reserve in. Right. When, when the goal is the same. It's so easy to learn when one path is right and one path is wrong to reverse course. So like, I'm not really worried about which one's right. We will learn which one path is the right path because the goal ultimately is to maximize the number of days for these instruments at 100. Right. And whether having high short interest or pop up is going to decrease or increase volatility. I think we'll learn over time. I think there's a, there's a reasonable chance that either side's right doesn't really matter. But the point is, is that neither of those are a long term position. Like if you did something like encumber your bitcoin, that's something that could take a long time to get out of if start to enter into all these sorts of complex contracts if you're wrong in that it could materially harm in a longer term manner the volatility of these instruments. If you create a very complex capital structure, like if strategy went from whatever, 12 instruments to 24 instruments and you decided that's wrong, to reverse course takes a long time to do. And so I think all the things that they're doing is towards simplification where those principles, if you know one, you know, one thing gets updated, you could literally just say, oh, you know what, I was wrong. Update the guidance and then you're aligned in the best path. So I think I just thought it was interesting because that was one part I was like, in my view, when you see a large short interest pop up, if there's effectively no downside to them, then you could encourage overly shorting and actually introduce more volatility into the instrument over time. Maybe I'm right, maybe he's right. Doesn't really matter. The reality is that those viewpoints probably will converge over the next year or two, be my guess.
- [16:40]
C
Yeah, most likely. The other thing that kept coming up on this call, and I think it's a classic marker for where we're at in the cycle, was you start to hear all the ideas for how to generate cash. And there were two in particular. There was one question that came up about whether they would go borrow against the Bitcoin to top up the US dollar reserve and strengthen that. And clearly the problem with that is you're putting a senior obligation on top of all the other credit instruments. And they learned their lesson from taking out secured debt several years ago. So that just muddies up the capital structure. The other one is all the derivative strategies. And we get pitched derivative strategies constantly. Right. If you have a significant amount of an asset, obviously there's opportunities to monetize it. Whether it's Bitcoin, whether it's US dollars you're holding on the balance sheet. The problem is you're never generating money for nothing. It doesn't come with no downside. So for instance, if we were to go and Saylor made this example when he was talking through it, if he went and sold, you know, billions of dollars of covered calls on Bitcoin at 75, you know, you've got a risk there because he's selling away the upside from the common equity investors, which is why they're in that security, right? They are betting on that long term outperformance of Bitcoin. They need that volatility. That's what makes it perform over the long term. And now he's created this weird scenario, not only may he give away the upside, right? Remember, Bitcoin makes most of its moves in 10 days out of the year and you don't know which ones those are going to be. So if you have a significant amount of those contracts that are at the wrong time, you may have to give up that Bitcoin. You may have given up a significant amount of upside to your investors and now you may have created an entire host of tax liabilities and all other complex things. And if you're selling cash secured puts, which is another very common one, what you'd find is during market periods like we just saw, well, yes, if those get put to you, you're getting more bitcoin. But you're also giving up your cash at exactly the moment where the market wants you to have that cash for stability, right? So you're playing this two way game where you've got negatives to both sides of those trades, which is why you haven't seen companies like us take on a lot of these derivative strategies. And so it's classic what you tend to see during these cycles, right? People start to focus on the cash flow. But when bitcoin goes the other way, then the question you have to answer is, is your quest to generate that cash flow now hindering the upside performance of your equity? Because are the activities you're undertaking, if those don't beat the hurdle rate of bitcoin, you're behind. Same thing if you go and invest in another type of business and now you've got to invest in keeping that going and growing it, right? Is the performance of that business going to outperform whatever your expected hurdle rate is on Bitcoin? If your expected hurdle rate is 30%, there are very few businesses out there that are growing at a 30% CAGR, that's a very difficult hurdle to beat. And so, you know, it's very common to hear these conversations spin up during these time periods where people start to focus on the cash flow during the bears. But as soon as it goes the other way, now you've got the other question that you have to answer, which is, did you just give away some of that upside? Because if what you invested in for the bear market doesn't perform well in the bull market, now you're a drag.
- [20:02]
D
I was just going to say what ultimately is going to matter is the total return of the common equity over a four year plus period. So effectively a bitcoin cycle, that that is what matters, that is the North Star. And, and when you actually start to model out the math of all of the different types of strategies that you said talked about, Ben and it's why that we have been consistently so bearish on the cash flow operating company model. And it's not actually that I think the risk return profile of them are bad or unattractive. I actually think that operating cash flow plus bitcoin is a really attractive model. It's just a model that is very likely to underperform pure Bitcoin itself over time. Because if an operating company has value, you could monetize that value today, buy more Bitcoin today, which by the way, bitcoin's at its 200 week moving average. So you could buy more bitcoin at its 200 week moving average and hold that for the next four years. Or you can own an H vac company, or you can own an operating company that you're pouring your blood, sweat and tears in. Now. Is that bad? No, I actually think some of those companies are going to like crush it, but I just think they're going to underperform the amplified Bitcoin model substantially by the way, not by a little bit substantially over the course of a market cycle. And so it's why this strict focus on not selling the volatility is so important. And you know, a lot of institutional investment strategies outside of the Bitcoin world are built on monetizing convexity. So selling negative convexity and generating income by doing that. And what you find in all of these strategies is that they basically reduce the risk, but they also reduce the total return in almost every scenario, in almost every instance versus holding the raw underlying asset. So this is not unique to Bitcoin. It's true when you look at it with option strategies around like the S P500, it's, it's true when with any of these things. And so if you have an asset that has a lot of upside potential, you simply want to amplify that. And it's the last thing I'll say about this is when strive, when we did our first presentation about the potential alpha strategies, so before we saw this opportunity to lead in digital credit. So if you rewind back to May of last year, one of the things I talked about was potentially actually buying puts to hedge the downside risk. Now the reality is, is that in Bitcoin that is so expensive that it, and it's so illiquid that it's, it's hard to actually do in practice. But, but that at least has positive convexity to it, like more amplification with buying puts to manage the downside risk. And all these other ones are likely Bitcoin minus return generating over a market cycle. And so I think it's why this strict focus that Saylor's talking about is also very similar to what we do on amplifying exposure and basically saying no to every other idea that we've seen.
- [23:28]
B
You nailed it. You went the direction I was planning to go as well. The last thing on this, I love that they gave that Saylor gave MSTR some love and was focused on the mathematics of the duration holding period. It's been, you know, a lot of focus on the credit instruments, but the, the downstream impact or the second or the third order effect is that the excess return and the excess risk goes to the common stock. And I love that they pulled up the duration perspective. You know, every four year return, every four year return period of holding, MSTR has outperformed Bitcoin. And so you think about duration holding profile of an equity. If you have a high volatility equity, you have to hold it for a long duration. That's just Capital Management 101. And the beauty of MSTR or ASST, the common stock in this digital credit equity model is that the leverage on the equity is structurally aligned with, from a duration perspective to the underlying commodity. And I think that's what makes it incredibly interesting to institutions and as an interesting trading pair and an interesting vehicle is that it is leverage on the underlying commodity without a duration or a maturity. And that becomes a fascinating instrument when you're thinking about the purity and how it can fit into portfolio. Shall we shift to Hong Kong? Ben and Matt, you guys were just in Hong Kong. What were some of your takeaways there? What'd you learn about the Chinese market?
- [25:03]
D
Learned a lot. So Ben and I actually yesterday just got back from a six day trip to Hong Kong for a conference with a principal network of high net investors. So people that are obviously high net worth often in mainland China and you know, out of respect for them, probably like a little bit limited in some of the things I can say versus want to say versus not say. But I'll just say that a lot of your perceptions about how Chinese investments work are likely wrong and they're likely misinformed. And, and it gets into the importance of like going and actually meeting real people. And this isn't unique to China. Chinese market, this is the same in the US markets. It's the same when we go, when all, you know, all the bitcoiners are like, why are you selling digital credit? Why are you selling amplify Bitcoin? Sell, just sell Bitcoin and you're like, well, this person can't buy Bitcoin. And similar types of problems exist around global capital markets. And so you go meet these people and you see their needs and the path to actually how to provide a solution that fits their needs becomes substantially more clear right there. There are massive pools of capital, obviously in the United States, it's the biggest capital market in the world, but also in China, in the Middle East. And you have to go meet these people and you have to understand the solutions. You can't just as an example, launch a tokenized version of digital credit, be like up like they're, they're probably going to be defi oriented. I'm going to launch this and they're going to go buy it. That that will fail. Can guarantee you that that will fail. You have to understand the needs of the potential customers and then meet them where they are. Which has been, you know, a big part of the reason why SATA has been a massive unlock, a big part of the reason why Amplify Bitcoin is going to be unlock. And I think there's a lot more work to be done to open up the various capital markets. And I know, Jeff, you have some thoughts on that with the insurance market over the last couple of weeks. But Ben, anything I missed from, from Hong Kong?
- [27:19]
C
No, I think that was a really good summary. You know, when you're, when you're in these rooms and you're hearing the way that they think about the investments, you know, it really does change your perspective. You know, in the US and particularly when, you know, we've been talking to a lot of the investors here, we become more prescriptive in our approach. And what you realize is there's a lot of flexibility out there, particularly as the markets are becoming more and more global and there's more and more ways to open access to different types of investments out there. You know, you realize that what people want isn't always what you would think that they want. Now we learned a lot being in Hong Kong about the way that they view things like yield, about the way they view leverage, right about the way they access the, the markets. And those are all learnings that we'll be able to implement in our approaches going forward. But you also realize how meticulous they are, how much study goes into each individual investment and the teams of each individual company that they want to invest in. It was really eye opening for me to have those discussions and to hear the way that they think about this and the way they approach it. And what makes a good investment versus a bad one. What can change in a market that'll change their mind and how they'll react. And it was a really eye opening trip. It's a really long flight, I can tell you that. It's a lot of time on an airplane, but it was a really cool experience to have to kind of be in there in the middle of one of these really unique conferences. It's very different than any of the other conferences. Matt, he gave a talk and did some Q and A in a room where nobody spoke English. It was all Mandarin. And so you're just in a very different environment and a different culture. But the learnings that you take away from that are invaluable because it gives you a much more global perspective to everything that you're considering and all the ways that we're planning to execute this down the line. So it was a really great trip. I'm really glad that we went and I'm looking forward to implementing on the things that we learned.
- [29:19]
B
All right, so you guys got Hong Kong, I'm here in New York. Bitcoin is in the gates of Wall Street. Right. And so I was here for our DNO insurance renewal and a couple other meetings while I was here as well. And so I had the opportunity to sit in a room with about 15 insurance companies and have about 40 other insurance companies on a call and talk about our company, answer questions about how we operate, our business model, how we compare to other companies. And so I got to hear just some really interesting questions and how they were interacting with our company. And also had dinner and lunch and a couple takeaways. There were a lot of digital asset treasury companies that came to market in 2025 and that everybody pretty much just got lumped in together as the same essential risk. There was no differentiation between any of the companies. And the insurance industry was just looking at all of them exactly the same and they were going to get their pound of flesh because nobody understood exactly what they were. And so this presentation that we had was the first opportunity that we had to start to differentiate our strategy. And one thing that I primarily focused on because some of the conversations we had beforehand is they kept calling us DATs. It's like DATs, DATs, DATS, DATs. And I got fed up with it. And I said, you don't call an insurance company a fat, right? A fiat asset treasury company. No, you call them an insurance company. You call them a balance sheet company. So I had one of our main slides in our presentation Was like, we are strive. We are a balance sheet company. We just hold a digital asset. We have a digital asset that's a majority of our holdings, but we also hold cash, we also hold a security, and we are managing a balance sheet just like any other balance sheet company on the planet. So, like, stop calling us a debt. You don't call an insurance company a fat. Like, let's, let's just get to, you know, let's get the business here, the important stuff that matters. And so, so a lot of focus on just really differentiating us and trying to wrap their heads around it. The. An interesting takeaway like these. The insurance market is just so reactive. So they're understanding things, you know, very. They're just behind. Like the insurance industry is just generally behind on what's happening in the marketplace and they're conservative. And I think one of the other last anecdote I'll share is just nuance and communication in capital markets is so incredibly important. And so I was speaking with an underwriter and this. And I don't, I don't have this belief, but I was speaking with an underwriter and the underwriter says, hey, who was. Who is that guy that just got fired from 21? And I was like, what? And she was talking about Jack, Jack Mellers at 21. And. And they were saying, you know, oh, like, I was, I was really turned off by how they talked about they, they don't hold any dollars. And it's like, I don't believe you. I don't like this entire space. And they ended, like, based on some of those conversations, they pulled out of the entire industry. They didn't write a single other digital asset insurance piece of business that year in 2025. So they said, you know what, we're out of it. I'll come back next year. So this conversation that we had was the beginning of starting to reestablish that communication and re. Establish some of the understanding of what's going on in the marketplace. And it just goes to show that everything matters. Every way you communicate, every word that you say matters. Building a track record matters. And that's what we're continuing to do here. So I look forward to next year when we can talk about our balance sheet and how it's improved and how we've paid our dividend and how we're managing our balance sheet. In that analysis. One of the most interesting takeaways that I had in prepping this presentation since we've started our strategy at Strive the price of Bitcoin is down 44%, but our balance sheet is up 90% in terms of balance sheet size. So we have been operating while capital markets are down. It's primarily because of the structure we built and our, our team and how we've, we've been able to communicate with the market. So big kudos to the team. I think we're doing a great job. I think we're communicating incredibly well and got a lot of really good feedback from the market while we're here.
- [33:56]
D
Reminds me of the image that you posted of the Trojan horse going to Wall street that Saylor reposted today, right? That when, and you know, you can like Wall street, you can hate Wall Street. I have mixed feelings about Wall Street. I wouldn't call it definitely like a pure hate, but there's things about Wall street that I don't like. But the reality is that one of the things that Saylor talked about today is that bitcoiners have already allocated basically all their money to bitcoin. And the bitcoiners are a small percentage of the overall capital universe. So if you're going to open up access to bitcoin and bring bitcoin to the 99% of capital that's out there, you have to meet them where they are. You have to talk in terms that they understand. You have to translate to them. You say it's not, you know, you don't call an insurance company a fat, you know, we're not a debt, you know, you, you, you, you help them understand in a way that's not off putting to these fiat maxis, right, that like, we can go hang out as bitcoiners and I'll laugh about, you know, how they don't have bitcoin exposure. They don't get it. They still don't get it, you know, and, and, you know, and, and you know, we all probably have some truth and agreement with that. But when you, when you go talk to them, you know, they're obviously like, mostly like, they're not like bad people. They just, they don't understand it. They're within their own mandates, their own jobs, their own way that they see the world. And when you can bridge that gap, you can basically create that, you know, what we call the SATA cord, right, connecting this new asset to the old world economy. Then you can unlock trillions of dollars of capital, right? And that becomes that trojan horse. Because they don't actually hate bitcoin itself. They don't understand it. It's not reachable to them in the way that they view the world. So when you make it understandable, you take bitcoin to the masses. And does bitcoin need that to win? No. But will that increase and accelerate bitcoin hyper adoption? Yes. And that's what we're doing. And it's pretty fun and rewarding when you have those connections and those light bulbs go on and you see a new opportunity that didn't exist before because you explained it in a way that connected to them, to things that they understand.
- [36:22]
C
I think the story that Jeff told, it really does highlight the importance of the way that you're talking about the these things. Because for most of these people, when they start getting interested in bitcoin, you start going down the rabbit hole and you find, you know, a lot of the people that are prominent in the space, you hear their talks. And the way to bring somebody into bitcoin is not to tell them that their very existence today makes them evil. And I think that's been a really big shortcoming of a lot of bitcoiners is you go look at anybody that works in Wall street and you know they'll tell you that when what you're doing is evil, what you're doing is immoral, all these different things. And I don't think that that's a way to foster the exploration of bitcoin for those individuals. All these corporations are made up of people and people all have different motives and they all have different backgrounds to them. And they're all looking for something unique to themselves. And you have to be able to go meet them where they're at. And one of the big challenges when we're doing this is part of what we're doing is finding ways to go to them and not have to have them go all the way to the beginning of bitcoin, not have to have them go down the full self custody route to begin with and understand all of that to get going. We're showing them that we can create products that make a meaningful difference in their life today. Whether they're an institutional investor with a mandate, whether they're a hedge fund, whether they're investing in things for their personal accounts and they just want exposure. We're taking bitcoin and we're showing the value of bitcoin to, to them in their lives today. Showing you don't have to wait, you don't have to go down the rabbit hole, you don't have to do all the things right to get started. And as soon as you're started, your interest starts to expand. You start to see the opportunities, you start to wonder why this is possible. And we're not going to make, we're not going to cover more ground, we're not going to bring in more believers that understand the long term benefits of bitcoin. If the way we do it is by talking them down and telling them that what they do today doesn't matter and that we're going to replace their entire existence and that everything they're doing is evil and wrong with the world. These are people that are in their roles, doing the best they can, doing what they were trained to do, trying to make a difference for themselves, for their families. We were all in very different places when we found bitcoin as well. We were in the corporate fiat world. Bitcoin didn't exist for a lot of our careers, so we were all in these seats and we had to find bitcoin on our own. The benefit of today is you've now got an army of people that are incentivized to help accelerate that understanding, help people figure out how they can integrate bitcoin in their lives. When they understand it, they're going to make it their own. Right? That's the thing about bitcoin. Not one person is going to use it the exact same as somebody else. Even you look at the people on this call. We all have very different approaches to how we use bitcoin, to how we invest in bitcoin, to how we do all the things. And we've got a foundational thesis about what bitcoin does over the long term. But the way it impacts our own personal lives is different. And that's the importance, right? One person may connect with someone out there in the world better than somebody else, but I don't think doing it from a place of negativity is ever going to be the right starting point to get people more interested into onboarding more people to bitcoin.
- [39:36]
B
Every single conversation matters, every single one. And, and we're infilt, we're infiltrating trust. Networks like these are, these are very trustworthy people in their communities and their neighborhoods. And as they have conversations or they go to lunch with a friend and somebody talks crap about bitcoin, this person might now stick up for it and say, hey, you know, I had this interesting conversation with this guy that works at a bitcoin treasury. And that's actually really interesting that it starts to, you know, increase the perception, I guess, the, the marketing, the independent marketing of the underlying bitcoin ecosystem.
- [40:16]
C
So there's a Responsibility. If you're the first person that is talking, if you're the first person they've encountered talking to them about Bitcoin or taking the time to talk with them in depth about Bitcoin, when they walk away from that, you are the representation of how they think about Bitcoin. And so if the very first thing that they hear, the first conversation they have is one that makes them, they'll remember how they felt during that conversation. And it goes back to that old adage, there's no bad question, right? People don't understand this stuff yet. They're very early on the learning curve. They want to ask the dumb questions, but they don't want to be chastised for it. And so for a lot of us, we just have to remember that this may be the very first time somebody has had the opportunity to actually go in depth and ask the questions they've always wanted answered and to give them that opportunity and that respect, to let them evaluate this from where they're at. Right. And help them understand how it can fit into what they already know. Right. Make it familiar to them versus telling them they have to throw away everything that they know and rewire today. Otherwise you're on the wrong track. So it's a responsibility all of us in the community have, and the way we communicate out there matters because it's going to be the first impression that a lot of people have.
- [41:33]
A
All of this reminds me of in AI right now, right? You have a lot of AI executives out there being crazy and saying AI is going to take away your jobs and it's bad. Well, then you have a company like Meta that comes out and says, we're betting on humans. They're still talking about AI, but they're approaching it from a more constructive position. Obviously. Before we wrap, wanted to see what your thoughts were on the FOMC meeting because you have some commentators like Larry Lepard saying that Warsh was being arrogant, while you have other people like Mike Alfred saying like, no, this is a positive, that he's not giving forward guidance because he's basically saying, hey, market, you make your own decision and then we'll go off of that. So I just thought that was pretty interesting.
- [42:20]
D
I guess, I guess I'll go first. So I have been of the opinion for a long time that the Fed was making errors in over communicating, reducing volatility. It was pushing more, I would say, irresponsible leverage into the system. And so I think volatility and a little bit of surprise from the Fed is a good thing. But I still go back to that. The Fed is the doctor, the patient's the treasury, and the treasury has terminal cancer and there's no actual cure. And so it's like, is the doctor, in my view, a better doctor? Yes. Do I think it's going to resolve the problem? Absolutely not. I actually think that in the short term, a change. So it's like you change doctors, you went to one doctor, and now you're going to a different doctor. That change in itself, I think, is probably likely to have another spook spell or two before people even understand if the new doctor is a better doctor or not. But like I said, it's. It's. It's not. The doctor is not the problem here.
- [43:40]
B
Yeah, I saw a funny meme, and it was a dove wearing a cowboy hat. That was a hawk. He's a. He's a hawk. That's a dove. And thinking about these committees that we've talked about previously, he's got Jackson Holes coming up next month, and he's got to think about what he wants to talk about. He's going to lean on those committees that he's put in place to give him the data, to give them perspective of what does the actual economy look like. Not necessarily this legacy data that we have, but what's really happening with AI data, energy, and how that's infiltrating through the economy. Because I think that they're operating on bad data. And I wouldn't be surprised if we see some changes in tone over the next month.
- [44:27]
C
Yep, I agree. I mean, the last one was all about the task force. Right. You know, spinning up all kinds of task force. They were revamping all the data. This time, they decided to stay put, and I think that that was the right move. Still saw the long end of the curve spike out there, but overall, I think that the analogy there with the dove wearing the hawk hat, that's a good definition for what we saw here.
- [44:52]
A
Awesome. Well, thanks, everybody, for listening to episode 67 of the hurdle Rate. We're playing for trillions for Matt Cole, Ben Workman and his dog, Jeff Walton, I'm Tim Kotsman. We'll see you back here next week for another edition of the Hurdle Rate.