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Semler Scientific's forward-thinking board and contrarian investment philosophy highlight Bitcoin's strategic value for corporate treasuries.
In this episode of TFTC, the discussion centers on financial decision-making, board dynamics, and investment strategies, with a focus on the unique characteristics of Semler Scientific's board that facilitated its Bitcoin treasury decision. Unlike typical risk-averse board members, Semler's directors, having substantial equity in the company, are aligned with shareholder interests, enabling unconventional strategies like Bitcoin adoption. Semler's contrarian investment philosophy, which has historically yielded substantial returns, positions Bitcoin as a natural fit for outsized returns and a hedge against currency debasement. With endorsements from major financial institutions and a generational shift towards digital assets, Bitcoin's future looks promising, making this episode a compelling exploration of its institutional adoption and strategic value.
Semler offers an insightful look into the strategic incorporation of Bitcoin into corporate treasuries, highlighting Semler Scientific's forward-thinking board and contrarian investment philosophy. It underscores the rewards of independent thought and investing in underappreciated assets, positioning Bitcoin as a prime opportunity for outsized returns and a hedge against currency debasement. The discussion reflects broader trends of generational shifts and institutional validation, suggesting that Bitcoin's journey into mainstream finance is gaining momentum, making this episode a compelling case study on the evolving role of Bitcoin in modern finance.
0:00 - Intro
1:07 - Bill Walton
3:39 - TCS Capital and post dotcom
10:03 - River & Unchained
11:18 - Parallel between late 90s and today
15:47 - Journey to bitcoin
23:16 - Themes that lead to shorting the best assets
31:43 - Gradually, Then Suddenly & Zaprite
33:20 - Bitcoin’s relative upside potential
35:19 - Bitcoin as treasury asset
41:39 - Board members need more skin in the game
50:00 - Future of bitcoin
(00:00) I think that board members generally are risk averse you know they're not looking to take to to take a gamble on something like Bitcoin they see it as a gamble you know I don't but they they see it as potentially a threat to their uh paycheck as a board member our board's different our board is um mainly uh directors who own a lot of stock in similar scientific our goal is to create value in the stock and that's that's why we were able to make this decision and why a lot of companies won't be able to do it because they
(00:44) can't get that type of consensus on their board and their board members don't want to take what they perceive as that type of risk this rip of tftc was brought to you by river it's the best place to buy Bitcoin go to river.com tftc and enjoy this episode my uh my favorite Bill Balton memory I only saw him once in person it was at Madison Square Garden had to be 2017 or 2018 when the dead were playing there and I was right side of the stage and I was looking down at the pit and you could just pinpoint Bill
(01:27) Walton in the middle of the pit 7 foot2 with his hands up yeah he was a member of the band you know he um yeah he I had I had we can talk about but I had lunch with him last summer um oh really and it was incredible he he he was the most generous guy with his time could have sat there the entire day talking he just loved people he loved to learn about other people and you know he he um he didn't want to like it was just it was amazing he was just and all I wanted to talk about were the 1977 Blazers but he
(02:06) he wanted to talk about his favorite novels and what he's what I've been reading what he's been reading you know he's just such a he was just such an engaging person yeah uh the world is uh missing a piece of itself without him because uh I remember I would stay up late to watch those West Coast College games just to hear him commentate because he was always hilarious funny as hell yeah so many different chapters in his life you know it just so many such a complex guy and so so unusual for an
(02:39) athlete of his caliber to have all those different kind of chapters yeah yeah because he went through a rough patch too right some severe depression Lots yeah he had a um a stutter you know up until um you know he finishing his professional career I mean the last thing you would ever ever have thought he would do would be a broadcaster right couldn't talk couldn't talk in college and um he met somebody a broadcaster named Mar Marty Glickman I think he was the niick broadcaster and Marty uh taught him how to speak
(03:17) basically uh and then he became you know very successful on air guy yeah did you guys talk about big wiin at all when he got lunch no no uh I not yeah no it didn't come up I I don't know what his views on bitcoin were I'm sure he would have been he was a very open-minded guy so he probably thought it was cool yeah that's why I reached out to you I mean similar scientific scientific excuse me made um made a big splash earlier this year announcing um that they're incorporating Bitcoin as their core treasury asset
(03:53) which was received well obviously by the Bitcoin Community but I think sent a signal across public markets that the strategy seems like it's going to be catching on after micro strategy block and others I put Bitcoin on their balance sheet um but before we get to that I'd love to dive deeper into your background do some research um into your career and I think for the audience it would be really interesting to dive into TCS Capital um launching that in 2001 right after the.com bubble and having all the
(04:28) success that you did there ear um 2000s um so what was it like launching a fund right after the dotcom bubble heroine I didn't really have a choice I um I was kind of out on the street you know I uh I I worked for a a fund that had not done well was down a lot during that time and um Had a Wife and Kids young kids and needed to uh make some money uh to support them and uh and really had no choice but to kind of start my own fund at that at that time which was um a really difficult time to start a a hedge fund um in those days there weren't a
(05:19) lot of hedge fund launches uh they were um fewer and far between and I just decided um to go out on my own really with with um not much of a track record I worked for another hedge fund for a few years a really high quality one that had just hit hit a wall with the NASDAQ crash and um just had the confidence I guess in myself that I could make money in tough environment um though that period of time was extremely difficult if you were a tech investor or media investor which I was but I had confidence in my ability to to to pick
(06:00) both you know companies that were winners and losers and and at that time most of them were losers sadly but I was I had found success shorting stocks and um also being long the right names during that tumultuous time and um when I started TCS in 2001 um uh we you know I would just I I I would I went out on a road show through golden sa they introduced me to uh hedge fund investors they were called fund of funds at the time still are and um the fund of funds who met with me were interested in my strategy which was
(06:43) really to be you know uh boots on the ground my background was as a journalist which was unusual in the hedge fund world at that time there weren't really any there were very few journalists who were working for hedge funds and I had worked at the New York Times and took an investigative realistic approach to investing and so um so that was interesting I think to to potential investors they they like that I came at it kind of with this um journalistic approach and relationship driven idea generation and um what ended up
(07:19) happening was um two things one I love to write and so I would just write all these investors that I met who turned me down and said you know you know you see seem like a smart guy um but we're not ready to invest I had no track record so I can't BL blame them and then um you know I would write them on a weekly basis hey we had a really good week we did this we did that and the other thing that happened is we were doing well when most funds weren't we were shorting stocks we were buying the right Longs
(07:53) and our performance was really um you know good and and and differentiated at that time this is early 2001 and so slowly investors were um getting more interested calling for meetings and um I started my Fund in 2001 with borrowed money uh probably $150,000 under management and um and through per strong performance and sadly you know 911 happened that year which made things even more difficult as an investor in aus as you know human you know from uh it was just an incredibly um jolting sad time in the world somehow uh people you
(08:39) know believed in me and gave me more capital and by the end of the end of the year we had about 150 million of assets under management and then um and then from there we had really strong performance over the next you know seven or eight years and uh we grew the fund to become one of the largest TMT funds at that time one of the largest independent technology and media funds I think at our Peak we were around four billion of assets under management um and uh and and my my strategy evolved into becoming a very long-term investor
(09:18) um very high conviction ideas I tended to like things that other people didn't like uh and I tended to like things that were under researched so I was not a mainstream kind of Trend follower or or I guess her follower is a better way to describe a lot of hedge funds emerg and kind of own the same stocks they still do and there was kind of this herd mentality I tended to go against the grain I like things that other people didn't like and um it's just my nature I come come from a place like I grew up in
(09:50) Oregon we tend to go against the grain out there and think independently and that's how I am as an investor I try to just think on my own and not get too influenced by The Herd mentality this episode was presented by river river is the best most secure place to buy Bitcoin in the United States go to river.
(10:12) com tftc set up an account today you'll be able to DCA into Bitcoin without paying any fees you'll be able to give people Bitcoin via river links you'll be able to send and receive Bitcoin over the lightning Network and you'll be able to set limit orders if you want to buy Bitcoin at a particular price below or above where it is now you can set orders to buy Bitcoin when it hits that price go to river.
(10:31) com tftc and set up your account today this R was also brought to you by our good friends at Unchained Unchained is building a financial services platform for a Bitcoin standard they have over 7,000 clients that are securing over 990,000 Bitcoin with 12,000 keys on their platform their platform leverages bitcoin's native multisig properties their Cornerstone product is their vault product a two or three multisig volt which allows you to hold two of three keys in a multisig quorum that gives you full control over your Bitcoin they also
(11:01) have an IRA product a lending desk and they're rolling out a bunch of other products including inheritance protocol and sound advisory so go to unchain domcom set up a call with our concierge onboarding team today tell them that tftc sent you and use the promo code tftc checkout unchain docomo chaotic it was in the aftermath of do com bubble and obviously 911 um k on the streets probably a lot of fear looking back was probably one of the best times to the market and begin putting long-term positions on particularly in Tech and media where you
(11:41) had the wash out of the early internet days and then media with the probably 2001 the emergence of micro blogs which eventually formed into Independent Media that exists today yeah yeah in and there's a lot of parallels to that time you know a lot of people who were investing today weren't around then to invest but in uh in that 2201 time frame um you know you had that bubble bursting experience that that we've seen more recently um there's a lot of concern that AI is kind of headed in that direction that you're going to
(12:17) see it burst before it actually emerges as a real thing so um that's kind of help that's very helpful background in terms of uh understanding the stock market today um that per period of time is very instructive I I think do you think we're in late 90s uh territory in terms of a parallel to that time period today I think I think we could head in that direction I think the differ the biggest difference to me is that the companies back then um you know weren't making any money um and or you know we
(12:55) losing a lot of money weren't weren't really fleshed out as comp so they were more Concepts and I think the the leaders of this huge rally we've seen in Tech are are are really well capitalized free cash flowing machines you know the hyperscalers those types of companies and I don't feel like there's the same level of froth in today's market I mean I think it has potential to get there because there's such high concentration in these AI driven uh themes but I don't I don't
(13:29) think it's there yet you know it could happen maybe in a year or two but um not to from my standpoint I don't I don't see that because of the kind of the cash flow uh and capitalization support that that the companies have who are driving this I mean Nvidia uh has had a massive run and you know a lot of people consider it an expensive stock but um it's you know it's it's it's a stock you can value it's a stock that is isn't you know trading it an exorbitant multiple for the type of story it is and that's
(14:05) kind of the poster child for this move in the market and so I don't I don't see that as as as comparable but you know it's in you know you're you're you're definitely conscious of a bubble forming given just the incredible run these stocks have had yeah Nidia you look at it at the chart Al you're like ah this looks bubbly but then you look at they're cash FL and the fact that they're they're selling Hardware as well which makes it easier like you actually have to produce something and then
(14:36) deliver it to an end customer and it seems like there's there's a lot of demand and they're producing the machines and delivering them and they're getting plugged in so yeah it's uh I mean if somebody who's 33 was 10 when 2001 happened 17 when 2008 happened it's uh don't quite have the the wisdom of somebody who was paying attention to markets so I look in N video I'm like ah it looks toppy but they're also delivering these machines I use AI on a day-to-day basis it it brings value to
(15:07) what I do here at tftc and so like I see it up close in person like it it does seem to be working to some extent at least maybe the idea of this multimodal agent world hasn't quite materialized or AGI but uh the low-level functions of these AI Services actually do bring a lot of value to me and my business personally so it's one of those things where it looks toppy you look at everything that's going on with government debt and the expansion of the monetary Supply it's like how do you um find the signal through the noise in
(15:41) this this particularly chaotic point in per in Period of time yeah yeah and so with your experience at TCS and having gone through um starting a hedge fund at at the the depths of a bare Market in the early 2000s um what about Bitcoin sort of reminds you of things that may have been going on back then in terms of trends that were materializing and a lot of noise around those Trends but there's certainly signal in these Trends and I think as it pertains to the broader cryptocurrency Market Bitcoin is the signal and it seems like you've really
(16:24) honed in on that I see you're on the board of fun Strat with Tom Lee um what was what was your journey to fun Strat and and Bitcoin specifically yeah so I think what's important maybe to understand how that Journey started is my success as an investor at TCS capital in the early 2000s was being contrarian was kind of going against the grain as I said before and um where where I have been able to be most successful is in betting on themes or ideas that are really out of favor um and so um some of the it's hard to imagine
(17:11) some of these things but when Google went public um it was a very weak IPO people did not think Google was G to you know be the story that it is today they no one really believed in it uh I shouldn't say no one but very it was a it was really out of favor as an idea as an IPO and that was something that uh I believe strongly in and that uh I thought the market was wrong and so um I was very fortunate to be one of the you know to get a a large allocation in the Google IPO for instance and and we can talk about why I thought Google was going to
(17:52) be successful when other people didn't but if you can imagine um uh when I put in for an order on the Google IPO and we were a pretty large fund at that point um and Morgan Stanley was running the books and they called call you that morning and say hey Eric um you got your full allocation uh that's rare with um you know typical IPOs in Tech uh and you know they're they're usually over subscribed uh and you would think a company like Google wood you you couldn't give those shares away um that's the kind of investor you know
(18:37) that I am and take pride in being is kind of being one of those guys who doesn't care what other people think same thing happened with Netflix uh we were at one point one of the largest investors in Netflix uh institutionally um really out of favor company uh when they announced that they wanted to do an offering to raise Capital to fund their um to fund you know a streaming product um there was hardly any demand Leman brothers did an overnight offering we were the largest investor in it couldn't find people to
(19:18) to to sign on to Netflix's strategy that would go on to become just you know a massive Juggernaut um Pixar similar story serious satellite radio these are companies that um the market just didn't believe in and I'll be you know straight with you some of my peers uh at other hedge funds really uh who were a lot of these guys are short these stocks at the time give you a hard time for owning them I I took so much flak for being a shareholder on Netflix if you could imagine that no one thought it had a future and so um those
(19:57) types of those types of um opportunities are um I think Bitcoin kind of fits into that that that Silo that category of ideas that you know over time people have kind of beted against and now you know they're starting to come around to bitcoin as we're seeing through the institutionalization and of of Bitcoin but um you know there there in these great companies or these great Concepts like Bitcoin there you're always kind uh going to see this this friction you know and and a lot of times if you're
(20:35) right you make a lot more money because of the friction you know that that's that's why I I much prefer uh you know it's much more rewarding type of outcome too and not just financially but just uh you know phys uh emotionally you know to to be able to kind of weather that and and win and and to win you win much bigger when when when uh you know you go against the grain and you're right um Tom Lee is is is Tom Le and and I have kind of a kinship in that we do think of the world very similarly known Tom a
(21:14) long time he was um he was just an incredible analyst in this in in the wireless area where which I uh was an area that I invested in a lot in the early 2000s Tom was um similar he was a salside analyst he didn't invest directly in these companies but he he tended to like things that people hated he tended to uh be a really contrarian cide analyst which is really rare on Wall Street you don't see you the cell side the guys who like write reports and put ratings on stocks tend to be also very herd oriented uh they there's not a lot of
(21:58) independent thinking Tom really stood out as a independent think and wireless particularly companies like Western wirless and um uh companies that were heavily levered that people thought were left for dead and Tom would upgrade stocks at a dollar and they'd go to 40 bucks you know like he was just one of those guys who had the guts to to to see see you know past everyone outse else and so we we connected that way and have stayed in close touch over the years and um yeah I decided to become an investor in fun Strat a few years ago uh they
(22:41) have a terrific business and you know Tom you can see is just kind of often um a lone voice crying in the wilderness uh and just a huge admirer of his I think he's um a a refreshing independent voice on Wall Street yeah I mean he's been a stalwart on mainstream media in terms of advocating for Bitcoin for the better part of a decade now which is impressive he's been out there on an island in the in the trafi world um saying hey Bitcoin is going to be a thing he's been right up to this point but as it pertains
(23:18) to the individual Investments and the naysayers what are in your experience whether it's Google Netflix or or Bitcoin what are some of the um reoccurring themes of people who don't see what you saw in terms of the potential of these companies and this digital asset that um that forc these guys not only to the sideline but also to to short these assets do do you think it was somewhat of a a lite uh experience playing out where they couldn't see that things were changing rapidly beneath their feet or
(23:56) um was it something else you know it it usually starts with the multiple you know it usually starts with people looking at something and saying wow that's trading at 100 times revenue or 100 times earnings or you know they it looks at it's an outlier it's it doesn't make sense how could something be value that much for and they don't have that much revenue or they don't generate earnings and um and and you have to be able to kind of uh you know see a little further out and say look they are going
(24:29) to you know they're they're going to be an incredibly profitable company it's really not trading at that multiple if you look at it on you know you know a few years out now that type of investing that's called like time Arbitrage investing um uh was actually popularized by Bill Miller who was considered a value investor but he he you know he became famous for seeing that in Amazon when others didn't uh you know Amazon looked like a train wreck when it first came out it had a lot of debt didn't you
(25:00) know you know it had low margins wasn't in was in competitive businesses but Bill Miller you know he looked out and he saw that you know a company like Amazon really was going to you know become to scale up and become a dominant business that was really undervalued that has become kind of more of a you know that that type of investing because of guys like Bill Miller and and and things that have happened like with Google and Netflix that uh investors have now kind of been more open to these types of ideas um but that it usually
(25:35) starts with valuation people look at things and then it's and then it's also a new business model so Google no one had really seen Google's business model before no one had seen Netflix do what it did um Sirus satellite is another example of that it was kind of this new form factor new new business model that um really challenged the the the incumbents and um there's just a there's just kind of this natural tendency to think ah no way they could pull it off I I can't tell you how many meetings I went to uh
(26:10) even in the old days when Netflix was just a physical delivery business and you go to a meeting at Blockbuster and Blockbuster did not Blockbuster was the you know the incumbent and they did not take Netflix seriously and they convinced investors not to take Netflix seriously and um there's such there's just this kind of uh you know uh in it's like you're indoctrinated to to think that the status quo is a status quo and and and and it just it's so hard for people to think outside the box and see that
(26:46) change coming and it's particularly difficult with Bitcoin because you know you have sovereigns who are you know uh pre preventing it from you know growing in emerging and it's just remarkable to see how well it has staved off all of that resistance and I think that you know we saw that you know in the stock market with companies like Google and Netflix and Pixar and um lots of companies you you couldn't imagine now if you look back that there were people that it was hard to find investors who wanted to Institutional Investor who
(27:23) wanted to own these types of companies um because they were new and foreign and traded High multiples maybe they had a lot of debt um and because they needed the to to fund their business models and people just didn't think that they would survive or prosper and you know how wrong they were yeah with that in mind I think Bitcoin has to be even more confusing for this type of investors sort of stuck in their ways because it doesn't it's not a company it's not a business it's not producing cash flows
(27:54) it's this scarce digital asset um runs on a distributed peer-peer protocol and so looking at this and that that's funny I was at a dinner a couple of weeks ago in Austin and um ran into a Bitcoin naysay and that was like his biggest thing he like I like I like things that produce cash flows and spit out dividends and Bitcoin doesn't do any of that it doesn't have any intrinsic value and therefore I'm not going to invest in it and so um inputting this digital asset into the world and positioning it
(28:27) as a once- in a-lifetime asymmetric opportunity seems completely foreign to a lot of these types yeah and I think that's great I mean I think um we need more people to think that way like your friend because that's what that's how we make more money in in this concept I I believe or how how it succeeds you know I I think that you need that friction to continue and um and all I think most of those people will come around once they really understand what what Bitcoin is and by the way I I think that it I in some ways
(29:07) um I I think I I think that Bitcoin is re relatively um easy to Value if you look at gold and um the irony is that a lot of people that own gold are conservative you know they they are conventional and looking they're very uh risk averse and so you would it's hard to imagine those people buying Bitcoin but they're probably the most they would they would understand the valuation the undervaluation of Bitcoin probably better than anyone because Bitcoin is very much is so similar to Gold except that it's you know that it's digital and
(29:52) has you know much better characteristics and has uh optionality that gold does doesn't have the transactional potential transactional nature of it that gold doesn't have and among other things so if you look at gold it's got a market value of 16 trillion and it's been pretty uh you know gold has been a good investment over the last 20 years it's up you know from I think $500 an ounce to $2,400 an ounce you know so like it it's you can't complain about that and um and it's been
(30:27) around for centuries it's obviously not going away why gold is gold is you know it's kind of a moot point it's it's it's proven itself over time to be a you know a valuable asset it's a rare mineral it's not I don't think it's the rarest mineral but it's happens to be uh uh through time the the best store of value uh best place to uh to to you know a safe haven asset one of the best and so I just I I would think that if you if you're uh you own gold you're conservative you don't like to stretch
(31:06) to uh buy things at expensive multiples you would buy Bitcoin because Bitcoin is is is so similar to gold and better and it only has a trillion doll market value so gold trades at 16 times the value of Bitcoin if gold trades down and Bitcoin it's still Bitcoin still has a lot of upside even if if gold sells off a little bit um so I think that's your I think that's your focus in terms of valuation and Analysis I I really believe that I think that shows you how much upside Bitcoin has as an investment
(31:44) quick break here freaks this rip is brought to you by gradually then suddenly a framework for understanding Bitcoin is money by Parker Lewis I wrote the forward to the book I'm honored to have done so because it's the best 0o to1 primer if you're looking for a logical explanation of why Bitcoin obsoletes all other money buy one for yourself and maybe a few for your friends go to the safeh house.
(32:04) com gradually that's the safe house.com safe spelled s a if F the safe house.com gradually use the promo code tftc for $5 off a checkout Buy It Now freaks the price of Bitcoin is going up you need to understand it this is the best 0o to1 primer this rip was also brought to you by a good friends at zaap right if you're a bitcoiner and run a business or an independent contractor you should be accepting Bitcoin as payment if not you then who if we believe that Fiat is systemically fragile and is a risk the
(32:35) rails that that currency runs on our risk as well you need to begin accepting Bitcoin as soon as possible invest in the future of your business create a redundant rail by accepting Bitcoin as payment using zap rate and reduce risk for your business I've done this for my business here at tftc we use zap rate it allows you to easily create invoices payment links or connect e-commerce stores connect your wallets or custodial accounts and be set up in minutes we can also connect our bank accounts our stripe accounts or Square accounts to
(33:04) accept Fiat as well the time is now freaks the Fiat system is fragile invest in the infrastructure that Dr risis the future invest in yourself Bitcoin payments with zap rate go to zap rate.com tftc to get $40 off their annual subscription zap.com tftc $40 off compared to all the other Investments you've made throughout your career how does Bitcoin compare to uh other assets whether it be Google Netflix in terms of upside potential like how how good of an opportunity from a risk adjusted perspective is it to be allocating to
(33:41) bitcoin right now compared to other assets that you're investing at other points of your career um I I don't I I um I I don't see it um really uh I see it very similarly I should say you know think that it has that kind of um outsize potential return um you know that the because it's contrarian still although it's becoming less contrarian um and it has the upside into the valuation of gold I believe that you know and so um I think that it's you know anything with you know that's trading 16 times below its
(34:26) peer uh is a really attractive risk reward so hard to say uh you know when you when I was buying Google I think we thought it would do $3 a share in earnings it went public in the around 90ish a share so it was trading at like 30 times earnings when it went public turned out that they did I think close to $6 a share and earnings uh this the year we thought they would do three so Google went public at like times earnings which is you know at that time it was growing like a weed um so I think that you have that type of uh
(35:09) unpredictable upside uh given given kind of its its discount to gold and this transition to bitcoin as a treasury asset particularly for publicly traded companies um director at similar scientific again made that big announcement earlier this year why did it make sense to put Bitcoin on the balance sheet as a treasury asset um in April or May of this year and since then I I believe you made two announcements that you're adding to your position on the balance sheet and what is driving publicly traded companies particularly similar to adopt
(35:57) Bitcoin as a treasury asset why why does it make sense what does it do for the business the strength of the balance sheet and the potential to either expand or um explore new new business Avenues in the future yeah so um this a totally you know I'm talking with a different haton as the chairman of SAR scientific public company uh that I um have been an investor in since it's Inception back in uh about 20 years ago um I recently joined the board or in the last year or so in April last year I joined the board
(36:32) um had not had been just a passive investor in the company there were some um corporate there were some corporate actions that I didn't approve of and um you know approached the company with one of the other large outside investors and asked for board seats and we ended up uh will changus name uh will and I joined the similar board and became the chairman last April um we have a we we've had a very successful medical business uh we have a device called Quant flow that measures uh people uh for uh condition called peripheral
(37:09) artery disease pad and um the the product um has been you know had had been doing really well has uh very high margins and um recently before right before I joined the board had run into some issues with um changes at CMS which oversees Medicare Advantage and affected our reimbursement and so that created some TL in the stock and um since that time we have been uh spending a lot of our time looking at um additional or uh sources of revenue and new businesses or and potential Acquisitions um what what happened was
(37:58) because we have such a a high margin product and uh that that generates a lot of cash flow we we built a large cash balance uh our balance sheet got it uh we got to a point where we had um uh to decide what to do with all of our cash our our market cap uh our stock had traded down to a level where um cash had almost become half of our market value the value of our stock so it was a huge component of of our of our story uh and so we looked at Acquisitions we spent a lot of time doing that we thought about stock
(38:34) BuyBacks and other things and um as this was happening uh Michael sailor was out there for micro strategy preaching to small midsize companies to uh to use their cash to buy Bitcoin and I had been listening to a lot of his um comments and and um and I agree with him that there are so many companies in you know at our side our market cap now is around uh you know $250 million market cap there there's so many companies in our of our size are even bigger that have strong balance sheets and are not are just sitting on cash and really have
(39:20) uh not a clear picture for how to how to deploy it and he has been telling these companies you know you should buy Bitcoin that's a great you know you get a great return on that investment Etc um and as an investor in the stock market I've I I I've always been interested in smaller and midsize companies and I've seen the underperformance of these stocks it's it's a that's a whole another topic but in general investors have made so much money in much bigger more liquid companies that it doesn't
(39:51) make as much sense for them to have to you know do the surgery brain surgery to figure out if a small cap stock you know is going to go up or down it's it's uh it's hard you know it's hard when stocks aren't that liquid to find buyers and it's just it's just a a really complicated area smid called smid CAP investing so I I was aware of that and I was thinking God how how what is the best use of our cash and what Michael sailor was saying resonated with me and um we as a board discussed it and
(40:30) debated it and just decided that um maybe this is the a great use of our cash we're um we're not getting any credit for for having this cash perhaps there's a better way to you know hold the cash rather than in dollars maybe we should hold it in Bitcoin um we've seen you know we've talked about why Bitcoin has upside and um you know we can talk about all the other issues in the world with you know owning currencies and um the debasement of currencies and uh you know um I think it was in the Bitcoin standard it was
(41:12) said that you know Bitcoin is the cheapest way to buy the future because it's the only currency that is guaranteed to not be debased no matter how much it Val its value increases and I think that that is um a powerful concept and that's how we came around to uh deciding to to change our bit uh our treasury strategy yeah with that in mind like do you think again considering you alluded to considering the nature of the global macroeconomic landscape particularly as it pertains to currency debasement and fiscal dominance
(41:54) particularly here in the United States think um Boards of publicly traded companies or even privately traded companies for that matter have a fiduciary responsibility to put a heavier weight on these risk in terms of the index index of the risk analys analysis that they're doing is is if companies are not weighing the currency and debt risk that exists in the west or are they not doing their Duty as directors um I don't I don't know how to answer that question would I think there's a more practical answer to that um I know
(42:39) I I've spent a lot of time thinking about this because one thing we haven't talked about is that I I had I have spent the last part of my investing career as an activist going on Boards of public companies or or writing letters to companies where I think the board is not acting in the best interest of shareholders and um what I've learned from that serving on public company boards is that um most boards my in my opinion are are uh filled within directors who are looking to just collect a paycheck every
(43:13) quarter uh they don't tend to own a lot of the company stock that they're on the board of it's not something where they have a lot of skin in the game there tend to be older people who are retired and um almost doing this just to as a source of income and and don't feel the pain uh or the you know the the incentives maybe that that we would feel as shareholders so I think that board members generally are risk averse you know they're not looking to take to to take a gamble on something like Bitcoin
(43:54) uh they're they're just they see it as a gamble you know don't but they they see it as you know potentially a threat to their uh paycheck as a board member and it's very difficult for company boards to come around to the idea that to to think about things that um you know that philosophically I guess you know it's it's unusual to have a board that's going to really address those types of questions that you're asking they're more focused on the short term the quarter making sure that every you know
(44:33) that um just like this the the the basic nuts and bolts of the company are uh you know kind of on track and it's and they're very divorced from the actual operational side of the business our board's different our board is um mainly uh directors who own a lot of stock in in similar scientific they have huge incentive to see the stock go up and to maximize value for themselves and all shareholders so there there's this there's an alignment with the board and the shareholders of the company we all
(45:15) want to see the company's stock do really well it's much more important to us than getting uh paid you know uh a stipan for being a board member that's much more secondary our goal is to create value in the stock and that's that's why we were able to make this decision and why a lot of companies won't be able to do it because they can't get that type of consensus on their board and their board members don't want to take what they perceive as that type of risk they see it as a very
(45:53) risky kind of I think um in some cases probably you know just just too outside the box for them to make that Bolder decision um and they'd rather just maintain the status quo and so that's why we did it uh that's why we were able to do it and maybe why it's not happening as fast as it should you would think that more companies uh with lots of cash on their balance sheet big and small would turn to owning some Bitcoin just the the way that Wisconsin pension fund is buying Bitcoin or so many other institutions are are buying
(46:34) it uh now with the ETFs you would think that there would be more announcements it's surprising there hasn't been but maybe we were able to be early because our board has so much skin in the game yeah that's a very good point you want these directors to have skin in the game values lined to dry value to the the underlying shares at the end of the day and it does make sense that a board with that mindset and that skin in the game would be more willing to make a jump like this and it seems like we're in the trickle
(47:10) phase of this Bitcoin treasury strategy in public markets specifically what do you think it's going to take to get the interest of other boards in the public markets that get their interest peak to say oh maybe we should be doing this too because if you look at the reaction um particularly of the stock price for companies not only similar but others like micro strategy um a lot as Alliance resources the um coal producer that announced they've been mining Bitcoin for a few years now it it has been very beneficial to the
(47:51) underlying stock price and do you think that creates some fomo from from other boards in the public markets that will force them to seriously consider the strategy yeah yeah I do I think it's a herd mentality thing it goes full circle to what we've been talking about with stock market and you how powerful that herd mentality concept is I think you're GNA you know it helps that our stock did have a great reaction I think other companies small smaller probably rather than large will look at that and say wow
(48:25) maybe we should try that um we've had a really positive reaction from people outside the company and and investors and so I think that that definitely helps and it's probably going to take more than just us and a successful stock performance or or micro strategy to pull that off but um I think it will happen gradually and incrementally like you said I think that what will happen is uh that uh a lot a lot more uh a lot more uh board members and companies Executives will see that Bitcoin is a great store of value I
(49:05) think that just time is the best uh element to prove that so it's just more time passes and Bitcoin you know separates itself from other cryptocurrency and there's no alternative to bitcoin I think that you know that uh will just gain strength and as a store of value and people will just more and more look at it versus gold and say wow it's um you know that's a that's a huge disparity there's a huge disparity in value between Bitcoin and gold and so you have kind of this the this this uh dual uh attractiveness of
(49:43) Bitcoin it's a great store of value but it also is a great investment and um and so I think those two factors will eventually lead to a herd mentality where you'll see a lot of companies do what we did and out outside of this treasury asset what what most excites you about Bitcoin whether it be the technology or the potential it has to unleash Innovation or Freedom as we move forward through time do you find Bitcoin simply as a unique investment opportunity and good treasury asset or is it bigger than
(50:22) that to you um I don't think it I'm still EXP exporing that concept I think there's so much to think about there it has so much optionality and it wouldn't surprise me if a lot of things that talked about come to fruition but as an investment I don't really I'm not banking on that I'm I'm just banking on this kind of increased notion as a store of value and it it becoming more and more embraced by people as a store of value um I think what's really exciting is that the younger generation really Embraces
(50:59) Bitcoin and that's the future and um I think that um that's just a huge driving factor in in Bitcoin becoming more institutionalized more established and as that's happening um just to see like the huge uh you know institutions like black rock you know really supporting it that combination is super powerful having you know these massive institu it's hard to get any more impressive than Black Rock as an Institutional supporter for something um when you have black rock on your side and you have a
(51:37) whole generation uh coming up that you know a lot of whom believe in this asset and then you have these issues around the world it's probably more pronounced much more outside the United States where currencies are getting debased it's just such a it's an incredibly strong force um and so whether Bitcoin becomes more transactional or becomes you know something that's valuable in health care that's great that's gravy but I don't I'm not necessarily you know it doesn't for it
(52:11) to be a successful investment I don't think it necessarily requires those you know additional things yeah I think that's a very sober approach to it and it's refreshing to see somebody of your caliber who's really had an incredibly successful career investing through many different types of cycles and themes and emerging Technologies recognizing this and then not only that but putting your money where your mouth is and um really putting uh Bitcoin on on similar balance sheet is is I think going to be looked
(52:52) back in a decade as one of the wisest moves I mean ju toos to what saw some Sovereign Nations like Germany dumping I think more than 30,000 Bitcoin in the last week alone um you're going to look at that and then juxtapose that to yourself micro strategy Alliance resources and others who saw the signal going the other way and acted appropriately I think it's going to be um it'll be written about in history the the early mover in public markets that decided to put this asset on their on their balance sheet um to me it's a
(53:27) no-brainer you're talking to somebody who's pot committed has been maniacally obsessed with with this asset for 11 years and um something it's something that people have surmised over the course of bit bitcoin's first 15year history but I think as it stands today in 2024 um a lot of the things that people talked about 10 years ago are beginning to materialize and it's just incredible to watch play out in real time yeah that's amazing that's really impressive that it's been 11 years for
(53:58) you yeah it's uh it's been a a fun Journey it's third of my life now at this point which is hard to believe good for you Eric this has been an incredible conversation I really appreciate you taking some time out of your morning to sit down I think uh your story is very unique in the Bitcoin space and I think it's an incredible validating signal that somebody with your experience um has recognized Bitcoin and taken action to put a as position on so um kudos to you and really appreciate your time
(54:32) thank you Marty it's been a pleasure it's great meeting you and uh look forward to stay in touch definitely okay we'll have to connect on the East Coast at some point be great all right thanks for your time okay take care thank you peace thank you
