After some “twitter-gentle” feedback about the Michael Saylor interview (“you’re an idiot for enjoying it!”), I wanted to do a quick follow up and point out that BTC is, IMO, not the most interesting thing discussed.

There’s a lot more here, so let’s point it out explicitly.
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Bitcoin, of course, always gets most of the attention.

But if we look past that there is another theme on display: an accomplished CEO’s tale of his relationship with production functions over time.

And the overuse of capital.
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As background: Saylor is one of the more accomplished operators around, and has been a public CEO for longer than many of us have had careers. The man runs a nicely profitable business.

And as a result he was, until recently, sitting on a bundle of cash.
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In gaming out the BTC purchase, he walks through various other uses for said capital and notes things like “acquisitions most often fail” and “prices of assets like real estate are so high right now it’s hard to see how you get a return on them.”
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He’s broadly right, but still - this is all just a pricing problem!

Acquisition failure rate is only problematic if you can’t bake it into the sale price.

Real estate is only hard to get a ROI on when the purchase price is too spendy to model sane risk-adjusted-returns.
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Let’s think about this for a minute: a very experienced operator is, in a moment of candor, describing what it’s like to experience challenges effectively deploying capital in this current environment in a fashion that’s likely to get a return.

There is valuable signal here!
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In fact, it’s exactly the kind of thing Lacy Hunt talks about: overuse of one of the factors of production (capital, in this case) eventually leads to lower ROI scaling for that function.

Saylor is describing how his relationship with capital has materially changed.
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In the old days, he used to be able to deploy capital hyper-effectively. In fact, in the @RealVision interview he walks through numerous examples of having deployed capital quite effectively in the past.

But not so much anymore - and he’s not alone.
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Look how much cash Apple, Berkshire, and some of the other incredible companies have lying around.

These companies are all run by seasoned operators who are not seeing great opportunities to deploy that capital.

Perhaps stock buybacks hint at more than simple greed?
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Perhaps the world is so fat with capital that when we add capital to the world, it’s just… increasingly less useful - even to seasoned operators.

And, in absence of deployment opportunities, they buy back stock to tax-efficiently return unused capital to shareholders.
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With regard to BTC, Saylor thinks he has an edge in seeing its potential before the pack.

Time will tell if he’s right about Bitcoin, but note the other side of that equation: the opportunity cost of being wrong is not huge, because other returns kinda suck right now.
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And in fact, this has to be part of why the other fiduciaries in the company (board, CFO, etc.) can see that a somewhat speculative bet like Bitcoin is… well, quite rational, really.

Because that capital is difficult to deploy productively right now!
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In fact, one of the funnier framings of the whole Bitcoin thesis is something like:

“Bitcoin - could be a legit big deal. Also: what the hell else are we gonna do with capital in this environment?”

And you know what? I kinda buy that argument.
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BTC aside - note that part of what’s happening here is *a decrease in the utility of capital.*

Much of the discussion revolves around “how do we store this capital long term?”

Think about that - the goal here is to warehouse capital until we reach a time where it’s useful!
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This notion is part of why there is a strong debate around inflation and deflation: many can kind of sense capital costs are messed up in relation to other things.

We feel like balance must return, either by a drop in asset prices or a rise in the price of everything else.
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Again - highly recommend giving this interview a listen, and particularly with some focus on the non-bitcoin aspects of what’s being said.

Access to a public CEO at this level being this candid is a pretty rare thing, and @RaoulGMI is a master interviewer.
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